Novi Insight
  • Home
    • About
  • Analysis
  • Economic Indicators
  • Financial Markets
    • African Explosives Zambia
    • Airtel Networks
    • Bata Zambia
    • British American Tobacco
    • Cavmont Bank
    • First Quantum Minerals
    • Copperbelt Energy Corp.
    • Investrust Bank
    • Lafarge Zambia
    • Madison Financial Services
    • Metal Fabricators of Zambia
    • National Breweries
    • Pamodzi Hotel
    • Prima Reinsurance
    • Puma Energy
    • Real Estate Investments Zambia
    • Standard Chartered Bank Zambia
    • Zambeef
    • Zambian Breweries
    • Zambia Sugar
    • Zambia National Commercial Bank
    • ZCCM Investment Holdings
  • Contact
  • Home
    • About
  • Analysis
  • Economic Indicators
  • Financial Markets
    • African Explosives Zambia
    • Airtel Networks
    • Bata Zambia
    • British American Tobacco
    • Cavmont Bank
    • First Quantum Minerals
    • Copperbelt Energy Corp.
    • Investrust Bank
    • Lafarge Zambia
    • Madison Financial Services
    • Metal Fabricators of Zambia
    • National Breweries
    • Pamodzi Hotel
    • Prima Reinsurance
    • Puma Energy
    • Real Estate Investments Zambia
    • Standard Chartered Bank Zambia
    • Zambeef
    • Zambian Breweries
    • Zambia Sugar
    • Zambia National Commercial Bank
    • ZCCM Investment Holdings
  • Contact
Search

Zambia Weekly Wrap - April 6 Edition

6/4/2015

2 Comments

 
The IMF completed their latest Article 4 consultation meetings with senior government officials which highlight fiscal and external pressures that the economy is facing. You can read the full statement here. Below is a chart of the key takeaways:
Picture
As can be seen, some of the issues like pressure from agricultural subsidies and sub-optimal pricing of fuel, are self-imposed. Last year, the government purchased over 1 million MT of maize from farmers – 100% over-budget, which is a key reason why the farmers were paid late. Maize purchases need to stay within budget – the previous government spent billions on agricultural subsidies but that didn’t help them stay in power (hint hint’).

Fuel pump prices at their current levels are not covering costs which led to an accumulation of $257 million in arrears to PTA bank by the end of February. PTA bank finance government’s fuel procurement as per this supply chain chart:
Picture
Fuel prices need to be raised to optimal levels and they probably will be this month – low pump prices have been great for the populace but not at the expense of investment in other key areas.

Other issues like state pension deficits and expenditure on road infrastructure have built up over decades and were not addressed by previous parties in power. On pensions, the government took one step in the right direction by raising the retirement age but more bolder action is required. This will have to involve disposing of state entities like Zambia State Insurance Corp., Zamtel etc. to private buyers in order to raise and free up cash which would go a long way towards alleviating pension deficits and road financing pressures.

The dispute over the new mining taxes has had a lot to do with timing – it has been well documented that copper prices have dropped significantly to as low as $5,400 per MT (around $6,000 per MT now) – which means that miners are paying more while earning less. The idea behind the tax changes was good because mining has not contributed enough to tax revenues but timing unfortunate. In two days we will find out what the compromise will look like – the IMF (like Zambians should) is looking for a comprehensive deal and not a mine-by-mine deal, which will be better for government revenues in the long run. April 8 could also see an appreciation of the Kwacha whose supply has been low on the domestic market because inflows from mining companies have been very low (account for over 70% of forex earnings).

It is also very unfortunate that it takes an IMF consultation for Zambians to hear about the condition of government finances. What the government must realize is that a lack of transparency breeds speculation/uncertainty which is what people (domestic and foreign) will end up making their decisions off of. Amos Chanda (special assistant to the President for Press and PR) understands this, why doesn’t the Ministry of Finance get it?
$800 million in deals signed on President Lungu’s China trip

PRESIDENT Edgar Lungu has facilitated the signing of a range of investment agreements in China to a total value of US $800 million. The investment agreements, with the major one being the oil refinery and the majority private sector-driven, have been signed between Government and the Zambian private sector companies working with their counterparts in China. (Read more)

Construction of 1,600MW Batoka power plant set to begin in January 2016

ZAMBIA and Zimbabwe will start constructing the 1, 600-Megawatts (MW) Batoka power stations in January 2016, Mines, Energy and Water Development Minister Christopher Yaluma has said. Two Batoka Gorge hydroelectric power stations with the capacity of 800 MW each will be constructed around 54 kilometres downstream from Victoria Falls extending across the international boundary of the two countries. (Read more)

Mansa sugar set to inject $54 million

MANSA Sugar, is set to invest a total of US$54 million in the plantation and production of sugar in Chembe District of Luapula Province. The project which will be located in Chembe district is set to start next month.
Luapula Province Permanent Secretary Bornface Chimbwali who confirmed the development in an interview from Mansa yesterday said the plantation would be located near the Multi Facility Economic Zone (MFEZ) while the plant would be located with the economic zone. (Read more)

Key data
2 Comments
Bret
10/4/2015 03:03:21 pm

Mutale, this is a great and comprehensive update of the Zambian market! I am wondering what your opinion of the Chinese/Zambian investment agreements. Do you feel that these are predatory deals being struck or will drive longer term prosperity for Zambia. Broad question, but I am interested given China's track record of rescue "investment" from countries in need.

Reply
Novi
11/4/2015 02:33:30 am

Thanks Bret. I think that there is definitely an element of opportunism on China's part with respect to Chinese companies picking up huge contracts in Zambia. If you look at the major road projects, digital migration, energy infrastructure, etc. Chinese firms are doing most of the work and it's very lucrative!

On the flipside, Zambia (Africa) is slowly catching up with the rest of the world and even leading in some aspects like adoption of mobile money. They can focus more on investing in their people (health, education) who should be able to take better economic ownership of their country.

Long term I think it will be beneficial to Zambia even though it looks heavily tilted to China right now.

Reply



Leave a Reply.

    Picture

    Mutale M.

    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.  * * *

    Tweets by @Novi_insight

    Archives

    February 2018
    December 2016
    November 2016
    July 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014

    Categories

    All
    2015 Earnings
    2015 Elections
    2015 National Budget
    2016 Elections
    2016 National Budget
    2017 National Budget
    2019 Afcon Bid
    ACC
    AFDB
    Agriculture
    Airlines
    Airtel Networks Zambia
    Aquaculture
    Auction
    Auditor General Report
    Automobiles
    Aviation
    BaDEx
    Banking
    Bank Of Zambia
    BATA
    BATZ
    Biofuels
    Business Environment
    Cabinet
    Capital Markets
    CEC
    Cement
    Central Bank
    Clear Beer
    Coal
    Commercial Banking
    Construction
    Copper
    Country
    Credit Rating
    Currency
    Debt
    DEC
    Defense
    Derivatives
    Digital Migration
    Digital TV
    Earnings
    E-commerce
    Economic Growth
    Edible Oils
    Elections
    Emeralds
    Energy
    Equities
    Eurobond
    Exports
    Fed-tapering
    Fed-tapering
    Fibre
    Financial Services
    Financing
    Finscope
    First Quantum Minerals
    Fiscal 2014
    Fiscal 2015
    Fiscal 2016
    Fiscal Reform
    Fitch Ratings
    Football
    Foreign Aid
    Frontier Markets
    Fuel
    Futures
    FY 2014
    GDP
    Governance
    Government Expenditure
    H1 2015
    Health
    Hedging
    Hospitality
    ICT
    IDC
    IMF
    Imports
    Industrial Action
    Inflation
    Infrastructure
    Insurance
    Interest Rates
    International Women's Day
    Internet
    Investing
    INVESTRUST
    IPO
    Islamic Finance
    Kcm
    Kwacha
    LAFARGE
    Legislature
    LME Copper
    LuSE
    Manufacturing
    Markets
    Mergers And Acquisitions
    MFIN
    Microfinance
    Mining
    Mobile Banking
    Monetary Policy
    Money-transfer
    NATBREW
    Oil
    Opaque Beer
    Parliament
    Pay TV
    Policy
    Politics
    PRIMA RE
    Private-equity
    PUMA
    Rail
    Railway
    Real Estate
    Regulations
    REIZ
    Research Note
    Retail
    Rio-tinto
    RIP President Sata
    SA Rand
    SCZ
    SMEs
    South Africa
    Stadia
    Sugar
    Survey
    Tax
    Taxes
    Tbills
    T/bills
    T/bonds
    Technology
    Telecoms
    Tobacco
    Tourism
    Trade
    Transport
    US Dollar
    Venture Capital
    World Bank
    Yields
    Zamabian Breweries
    Zambeef
    Zambia
    Zambian Award
    ZAMBREW
    ZANACO
    ZRA
    ZSUG

    RSS Feed

© 2019 Novi Insight Limited. All rights reserved.
  • Home
    • About
  • Analysis
  • Economic Indicators
  • Financial Markets
    • African Explosives Zambia
    • Airtel Networks
    • Bata Zambia
    • British American Tobacco
    • Cavmont Bank
    • First Quantum Minerals
    • Copperbelt Energy Corp.
    • Investrust Bank
    • Lafarge Zambia
    • Madison Financial Services
    • Metal Fabricators of Zambia
    • National Breweries
    • Pamodzi Hotel
    • Prima Reinsurance
    • Puma Energy
    • Real Estate Investments Zambia
    • Standard Chartered Bank Zambia
    • Zambeef
    • Zambian Breweries
    • Zambia Sugar
    • Zambia National Commercial Bank
    • ZCCM Investment Holdings
  • Contact