Novi Weekly Wrap - June 29 Edition

Fourth edition of the Zambia International Mining and Energy Conference

The 4th edition of ZIMEC went on this week at the government complex with the theme "Securing Zambia's growth by ensuring the sustainable development of it's mineral and energy resources". The conference featured two parallel streams focused on mining and energy. It drew many big sponsors from mining giants First Quantum Minerals to big 4 audit firm Delloite. First Quantum and Barloworld shared first prize for the best exhibition.The conference is normally attended by individuals in the public and private sector and is a great place to gain insight on the mining and energy sector.

A couple of interesting points came out of the conference. Firstly, slightly over $600m in VAT refunds were being witheld from major mining players by the government as at end of May for failing to produce import receipts from destination countries. Mining players have always stood by the fact that they sell their copper through middlemen/traders. The Minister of mines did however reveal that the miners have started producing the correct documents after a meeting with the Ministry of Finance 3 weeks ago. Could this impasse finally be coming to an end?

Secondly, it was brought up that Zambia was lagging behind in renewable energy where as the rest of the world was taking huge strides. The country has been tapping hydropower, which is fantastic but more needs to be done especially in solar energy/biogass which is currently under-utilized and under-invested. Over 75% of the population still lacks acces to electricity. Demand for power is only going to continue going up - consumption grew by 5.1% in 2013. The mining sector accounted for 54.7% of the 10.8m Khw of
electricity consumed in Zambia last year.

Zambia Railways launches Kapiri-Mposhi to Nakonde passenger service

Zambia Railways launched the Kapiri-Nakonde passenger rail service at a cost of $1.5m on Sunday June 22 after an agreement was reached with TAZARA. The service will be able to ferry 700 people at a time. This was also followed up by news that construction of the $1bn North-West railways project was set to commence this year with phase 1 (Kalumbila-Solwezi-Chingola) set for completion in 2015.

Railway infrastructure is gradually making a comeback in Zambia which will be a huge relief to the road infrastucture which has suffered over the past decade. Zambia is a vast country which requires more connectivity to take advantage of its economic potential. The more people and goods that can be carried by train the better! However, the passenger service also needs to offer faster speeds and better comfort (free wifi would give them a nice advantage too) in order to compete with buses etc. With further investment, this sector could super-charge Zambia's growth.

Treasury collects surplus revenue in May 2014

The Treasury collected K2.29bn in  domestic revenue, 2.9% above the programmed figure. Tax revenue accounted for 76% of the total revenue collected in May 2014. Total revenue including grants came in at a final figure of K2.32bn versus total expenditure of K2.31bn.

To the naked eye that might look like a very positive thing - and it is to some extent i.e. the government spent less than they collected in revenue. However, PAYE collection came in below target by K163m as some employers failed to remit the funds in time. Expenditure on public service wages and emolments accounted for approximately 50% of domestic revenue. That doesn't leave a lot of room to spend money on development related projects. The government needs to improve the business environment so that more business are encouraged to sprout out because it needs to collect higher revenues without adversely affecting the disposable income of its population like it has done to a certain extent this year (increasing taxes on clear beer, talk-time etc).