Kwacha continues fall, ends the week at 6.61
The Kwacha hit a record low of K6.71 per $US dollar before closing the week at K6.61:
The Kwacha has hemorrhaged value against not only the US dollar but other major global currencies over the last 6 months. The government’s $5.6bn infrastructure spending drive and mining sector projects have led to increased importation of capital goods. Have a look of the trade balance (exports minus imports) year over year Q1:
As can be seen, starting February 2014, import growth outstripped export growth leading to lower year over year monthly balance of trade figures. This is chiefly because Q1 2014 copper prices (which account for over 70% of exports) have decreased by 11.2% over what they averaged in Q1 2013 ($7,030 per MT versus $7,917 per MT) – meaning we are earning less forex than we were last year. This and the fact that capital goods imports (which are being used for infrastructure and mining projects account for over 30% of imports) are still very high is putting a lot of pressure on the Kwacha (high demand for dollar by importers).
Government kicks off farming input distribution for 2014/15 season
The Minister of Agriculture officially commenced the K2.1bn countrywide farming input distribution under the Farming Input Support Program (FISP). The program has also been scaled up to support 1 million small-holder farmers from 900,000 the previous season. The recently resuscitated Nitrogen Chemicals of Zambia is set to supply 106,409 MT of compound D fertilizer.
Mobile money accounts exceed bank accounts
The Central banks revealed that there are 3.4 million mobile money accounts compared to 2 million bank accounts. According to the FinScope Zambia 2009 report, 62.7% of the population did not have access to financial services:
Six years have passed since the survey was undertaken but the fact that there are only 2 million bank accounts to date still shows that there is a gap that still needs filling - mobile money is what will gradually fill that gap. There are 169 new mobile towers that are being erected in the most remote parts of the country which will increase connectivity and further boost the potential for mobile money.
TAZARA suspends operations
The Tanzania Zambia Railways Authority (TAZARA) suspended both passenger and goods trains between Tunduma and Dar- es- Salaam due to withdrawal of labour by unionized workers on the Tanzanian side. The workers are demanding their four months unpaid salaries by management. However, the service will continue to run normally on the Zambian side between Kapiri-Mposhi and Nakonde. TAZARA is a key route to the port of Dar- es- Salaam which was the quickest route to the Indian Ocean for Zambia prior to the recent linking of Nacala port in Mozambique.
NAPSA driving volumes on LuSE in May 2014
The average daily volume traded this month has shot up to 106.6 million shares from 17.3 million in the entirety of April, according to data compiled by Bloomberg. The National Pension Scheme Authority (NAPSA) has been driving the growth in volumes. The authority has approximately K8bn worth of assets under management and wants to increase its investment allocation to equities to 21% from the current 9% according to its treasury investments officer. They have a lot of excess cash which their looking to put to work on the stock market but, unfortunately, to date, there are still just 21 listed companies on the Lusaka Stock Exchange (LuSE).
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *