Zambia’s newly elected President Edgar Lungu, who has promised lower interest rates, replaced the central bank governor a day after he held borrowing costs at a record high. Lungu named Denny Kalyalya, previously deputy governor, to take over from Michael Gondwe, who had been in the post since 2011, according to an e-mailed statement on Friday. Read more....
Dr. Kalyalya clearly has very strong credentials and has also held the post of Deputy Governor before under the previous administration so he knows what to expect. Key among the challenges that he’ll be facing are a weakening Kwacha and high commercial bank lending rates. One thing that has been established over the last three years is that the battle against a weakening currency and high interest rates cannot be won by the central bank alone. The first policy rate decision of 2015 has already been made – did he agree with it?
Here is a chart of the performance of the Kwacha since 2002 which, contrary to the belief of the majority, shows that the decline of the Kwacha really started in 2008 and not 2011:
President Lungu finally completes Cabinet appointments
The President’s cabinet looks like this:
He retained 60% of the previous cabinet and appointed to members of the former ruling party to the Ministries of Education and Youth/Sport. Defense remains under him “until further notice”. President Lungu’s campaign platform of ‘continuity’ actually meant ‘continuity with a twist’ judging by all the changes he is making. Strong leadership, not just by the President but also by the team he appoints will be key the development of Zambia.
Takeaways from the Auditor General’s report
The Auditor General’s (AG) report of 2013 was released last week and a copy of it can be downloaded by clicking here (in PDF). Here is a table comparing the key findings by year since 2010:
Ideally, one would want all the categories to have a zero next to them but we don’t live in such a world. There has been a lot of improvement over the last 4 years with 8 out of the 14 categories being at a 4 year low. However, Undelivered Materials (up 1,520% - yes over a thousand percent) and Irregular Payments (up 906%) are 2 of the 6 categories that have regressed significantly year-over-year.
It must be noted that the AGs office is still short of at least 100 staff and adequate financial resources which weighs on their ability to thoroughly carry out their work.
Benguela railway line launched after $1.8bn of rehabilitation works
The inaugural train on the Benguela Railroad (CFB), linking the Angolan coast to the country’s border with the Democratic Republic of Congo, arrived Thursday in Luau, eastern Moxico province, according to Angolan press reports. The journey began Tuesday, departing from the city of Lobito, and took about 30 hours to travel 1,344 kilometres to get to Luau, a town near the border with the neighbouring country. Read more....
Historically, Zambia hasn’t done much trade with its $124 billion dollar GDP and oil-rich neighbor Angola. Zambia’s benefits from this will only start being fully derived around 2018 when the North-West Railway project is complete. It will provide a tremendous boost to trade, transport, agriculture, mining and whichever manufacturing segments have blossomed by then.
LME 3-month Copper seller price closed the week at $5,720 per MT.
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. * * *