Central Bank Governor Denny Kalyalya gives first media briefing
My comments this morning will focus on issues of economic growth, monetary policy, fiscal policy and how this relates to monetary policy, the external sector environment and the performance of the financial sector. We will be having press briefings after our quarterly monetary policy meetings, the next of which is in May. We are in this regard working on revamping our communications strategy to ensure that we have a more structured and regular way of communicating better with the public, principally through yourselves. (Read more)
The Kwacha has depreciated by about 5.4% this week. The briefing also coincided with a strong week of gains for LME copper which closed the week above $5,900 per MT. The briefing was thorough and provided context on the Kwacha’s weakness including these three takeaways:
-“But there have also been important domestic factors impacting on the exchange rate. The supply of foreign exchange by the mining sector has fallen relative to demand, and this cannot be purely explained by the reduction in domestic production because we have seen higher mining sector exports in 2014. This is in addition to the lower foreign exchange earnings from the non-traditional exports”.
Our lack of a diversified export base gives mining companies exclusive power to dictate how the Kwacha moves because they generate over 70% of forex earnings – and they will use that to gain advantage in any tax disagreements with the government.
-“The challenge we face therefore is to settle the right balance between long term investment needs which are critical in addressing poverty and maintain macroeconomic stability”.
Basically the Central Bank and Ministry of Finance need to work better as a team during this expansionary fiscal drive in order to achieve this balance.
-“The Press can contribute to this by being thorough in your work, presenting factual and balanced views on the issues that you report on; ensuring that different voices are heard; and yes challenging these opinions with the facts. My sense is that some of this spirit has been lost in our reporting and national conversation”.
Zambia’s media is very polarized – one side is government-owned and the other is anti-government. There is an inadequate amount of balanced/professional coverage on economic and financial issues – this is a big problem especially as it relates to market sentiment.
We like the fact that the governor pointed out the plight of small entrepreneurs and also that he didn’t immediately resort to hiking rates – which would have hurt them even more in light of the effects of last year’s tightening on credit growth and pricing.
Bottom-line: the government needs to focus more on supporting local enterprise to scale up in various sectors of the economy so that the income generated (whether domestically or from exports) stays within the country. Locals also need to be aggressive on taking the abundant opportunities on offer because they won’t last forever. Long term, this will not only boost growth/wealth but mitigate the negative impact of any future currency weakening.
Government bans importation of edible oils indefinitely
GOVERNMENT has suspended the issuance of licences for importation on edible oil, Minister of Agriculture and Livestock Given Lubinda has said. Mr Lubinda said in an interview yesterday that the indefinite suspension is with effect from March 14. “This decision has been made to allow experts from the ministries of Finance; Commerce; and the Zambia Revenue Authority (ZRA) to study the impact the importation of vegetable oil has on the Zambian market,” he said. (Read more)
Does this apply to specialty edible oils like coconut, avocado or olive oils which are not manufactured within the country (and are priced at a higher level than local edible oils)? What does this mean for SADC/COMESA (which Zambia is a member of) produced imports? Whatever the outcome of this study, imports must be allowed to compete on quality (if not price) with Zambian products. If local products are not of higher or similar grade then this ban will limit the choices of the consumer.
Olam Group set to invest $30 million in Northern Coffee Corporation
OLAM International Limited has implemented the five-year US$30 million investment in its four coffee estates in Northern Province. These estates are Kateshi, Ngoli, Luombe and Insanya.
Olam International of Singapore took over operations of Northern Coffee Corporation Limited from the Zambia Development Agency (ZDA) in 2013, with a total investment of US$30 million. (Read more)
Zambia 2014 Honey output increases by 33% to 1 million MT
ZAMBIA’s total honey production in 2014 increased by 250,000 tonnes to one million tonnes.
ZHC program manager Macdonald Kayuuna said in 2014 the industry produced one million tonnes of honey compared to the 750,000 tonnes produced the previous year. In an interview in Lusaka yesterday, Mr Kayuuna said the industry was able to achieve remarkable growth in terms of production despite various limitations in accessing some of the districts. (Read more)
Proflight Zambia and Rwanda Air sign code-share agreement
Zambia and Rwanda Air have signed a code-share agreement on the Lusaka-Johannesburg route to enhance convenience for business travelers. Proflight Zambia director of governance and industry affairs Philip Lemba said the agreement is Proflight’s first code-share, and is distinct from existing agreement it has in place with other airlines. (Read more)
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. * * *