Not much going on this week except for the little matter of the 2015 presidential by-election:
Edgar C. Lungu elected Zambia’s 6th President
Former Justice and Defense Minister Edgar C. Lungu of the ruling party Patriotic Front (PF) was elected Zambia’s 6th President after a very tight vote which he scooped by just over 27,000 votes. He beat out rival Hakainde Hichilema of the United Party for National Development (UPND). The election was declared free and fair. President Lungu was sworn in today at Heroes National stadium. The results shaped out follows:
The final results shaped out as was predicted in our analysis last week but some key unexpected trends popped up which made the election closer than we thought:
There remains a lot of work to be done and as President Lungu aptly put it in his speech today, “there is no honeymoon for us”. He made his first Cabinet change by appointing Dr. Ngosa Simbyakula to the post of Justice Minister. We expect a lot of changes in personnel over the coming week from Cabinet to party level. With only 19 months until the 2016 general elections, the new president has a very narrow time frame to get things done, key of which will be the new constitution. It will be interesting to see what policies are prioritized especially with the fact that a new chunk of youthful voters will be eligible to vote in 2016.
Zambian Breweries cuts price of clear beer by 8.6%
Zambian Breweries (LUSE: ZAMBREW) announced an 8.6% reduction in the recommended retail price of their clear beer products (Mosi, Castle etc). Last year, the excise tax on clear beer was raised from 40 to 60% which they passed onto the consumer by raising prices. This led to a 23% and 28% decline on beer volumes and profitability, respectively, in their 2014 financials.
2014 was a tough year for the Zambian consumer with key items like food, fuel and prepaid talk time becoming more expensive (most of which were driven by the Kwacha’s depreciation). Raising the price of a discretionary item was always going to negatively impact sales and profitability. But there has been an over 30% reduction of fuel pump prices since December 2014 which will result in significant savings for Zambian Breweries – part of which they have just passed on to their customer base. We expect to see more companies going this route which will put downward pressure on inflation.
Rwanda Air set to begin Lusaka route at end of first quarter
Rwanda Air announced that they will begin servicing the Kigali-Lusaka-Johannesburg-Lusaka-KIgali (mouthful!) three times a week beginning on the 29th of March 2015. The company will be operating a Boeing 737 Next Generation on the route.
There are a number of Rwandans already doing business in Zambia so this is a logical move by the airline. According to the World Bank, Rwanda has a population of 12 million and a Gross Domestic Product (GDP) of $7.5 billion (2014). They are also members of COMESA which Zambia is also a member of. Rwanda is not among one of Zambia’s major trading partners but it will be interesting to see how this relationship develops over time.
LME 3m-seller price closed the week at $5,551 per MT this week.
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. * * *