Written by Maimbolwa Mulikelela | From Times of Zambia via AllAfrica
Commerce, Trade and Industry Minister Bob Sichinga assured local and international investors that Zambia was still a safe and credible investment destination and that political transition should not be a worrying factor.
“The recent national events such as the passing on of the President Michael Sata which has culminated into the holding of January 20, 2015 presidential election should not create a cloud of uncertainty,” Mr Sichinga said.
He said investors had no reason to worry because their investments were protected by the Constitution through the signings of different investment agreements with all investors in the country.
He said in an interview in Lusaka yesterday that investments made inZambia were protected by the Zambia Development (ZDA) Act of 2006 and could be tempered with regardless of which political party formed government.
In addition, the ministry of Commerce, Trade and Industry had signed Investment Promotion and Protection Agreements (IPPA) with several companies.
“These and among other investment laws protect investors. Like any other country whenever you have elections there is destruction and what is important is to be able to keep tap with what needs to be done and investors don’t have to worry because the constitution protects any investment people make in Zambia,” Mr Sichinga said.
Zambia remained an attractive investment destination because of the various investment opportunities.
“I understand there is hesitance and investors are holding back their investment but I want to reassure everyone that this is not a source of worry for any potential investor.
Thursday December 18, 2014, 9:35am PST
Barrick Gold (TSX:ABX,NYSE:ABX)announced Thursday morning that it will suspend operations at its Lumwana copper mine in Zambia. The move follows the Zambian government’s decision to jack up royalties on open-pit mining operations in the country from 6 percent to a whopping 20 percent.
While changes to Zambia’s taxation regime will eliminate corporate income tax, Barrick has pointed out that the new rules will also slap a 20-percent gross royalty on revenue “without any consideration of profitability.” To be sure, operating the Lumwana mine under the new tax rules would be difficult for Barrick.
“The introduction of this royalty has left us with no choice but to initiate the process of suspending operations at Lumwana. Despite the progress we have made to reduce costs and improve efficiency at the mine, the economics of an operation such as Lumwana cannot support a 20 percent gross royalty, particularly in the current copper price environment,” Co-President Kelvin Dushnisky said in a statement.
Andy Lloyd, VP communications at Barrick, said that the company has been engaging with the Zambian government in recent months to share its concerns about the newly adopted royalty regime and its impact on the mine.
In a research note from Dundee Capital Markets, Josh Wolfson states that to account for the changes, Dundee would have reduced its valuation for the mine from a NPV of $110 million down to “a $675MM liability, and the asset would have been uneconomic to operate.” Furthermore, other comments from the analyst suggest that Lumwana was not the best-performing asset to begin with.
“Barrick operated Lumwana for 13 quarters, of which we estimate the asset materially consumed capital and generated only modest levels of free cash flow in only two quarters,” Wolfson said.
The company expects to record an impairment charge of $1 billion related to Lumwana with its fourth-quarter results for this year. It will implement major workforce reductions at the mine in March, and aims to transition the mine to care and maintenance by the second quarter of 2015.
Barrick also noted that the mine supports roughly 4,000 direct jobs in Zambia’s North-Western Province, as well as various community projects in areas such as education and health care.
“We sincerely regret the impact this will have on our people, as well as the communities and the businesses that depend on Lumwana, and we remain hopeful that the government will consider an alternative solution that will allow the mine to continue operating,” said Barrick Co-President Jim Gowans.
Lumwana is a “marginal, but large copper operation,” according to Wolfson. It produced 138 million pounds of copper in the first nine months of 2014, and held 6.6 billion pounds of copper reserves as of December 21, 2013.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Announcement: Moody's: Zambia's credit rating balances growth prospects and a healthy government balance sheet against narrow economic base and institutional constraints: source: Moody's
Global Credit Research - 09 Dec 2014
London, 09 December 2014 -- Strong economic growth and robust government fiscal strength continue to support Zambia's (B1 stable) credit profile, says Moody's Investors Service in its annual Credit Analysis report, published today. However, the rating agency notes that the small size and relatively undiversified nature of Zambia's economy mean that it is vulnerable to adverse conditions in the agriculture sector and volatility in global copper prices.
The rating agency's report is an update to the markets and does not constitute a rating action.
"Zambia's economy continues to register robust growth rates, averaging 7.8% per annum in real terms since 2005. We expect that economic growth will remain at around the same level in the coming years, supported by the development of infrastructure projects. The government's fiscal position is also strong, though deficits have increased and high dependence on a single export commodity, copper, leaves Zambia exposed to adverse price movements," says Matt Robinson, senior credit officer at Moody's.
With nominal GDP estimated at $26.3 billion in 2014, Zambia's economy is on par with the Sub-Saharan Africa median, but ranks below the median for B1-rated sovereigns globally, according to Moody's. Zambia's GDP was rebased to 2010 prices in February 2014, and preliminary estimates suggest that the economy is now 25% larger than previously thought.
Although high poverty levels, income inequality and limited economic diversification -- with agriculture, forestry and fishing accounting for more than 70% of employment -- continue to constrain Zambia's credit quality, ongoing government efforts look to address the country's infrastructure deficiencies. These include projects to develop connectivity, raise power output, and to improve productivity in the agriculture sector.
As a result, Moody's expects that Zambia's real economic growth will likely remain strong, rising above 7% in 2015, slightly higher than the government's estimate for 2014 of more than 6.5%.
Copper production and related sectors contribute 25-30% to the country's GDP and generate the majority of current account receipts. This leaves it exposed to adverse copper price movements and a slowdown in Chinese growth, as China accounts for the majority of copper exports, says Moody's. In addition, facing growing pressure from the population for a greater share of mining sector wealth, the government's approach and recent policy actions, such as a change in the mining tax regime, run the risk of deterring foreign investment.
Nonetheless, Zambia's fiscal strength remains fairly high, supported by a balance sheet carrying a moderate level of public sector debt at around 32% of GDP. An expansionary fiscal policy since 2011 has put Zambia's debt on a strong upward path, with a 6.7% of GDP deficit in 2013 sharply contrasting with the deficits of below 2% on average for most of the decade up to 2011, though the government has committed to slowing expenditure growth and the rise in the public debt burden.
According to Moody's, so far, the government's commitment to fiscal consolidation is holding. The fiscal performance through the first half of 2014 was roughly on par with budget, though the original deficit target of 5.2% of GDP has since been relaxed to 5.5% in the 2015 Budget delivered in October. But pressure on the fiscal position will continue amid growing demand for higher public sector wages and development expenditure, particularly in the areas of education, health and infrastructure. Beyond the immediate presidential by-election in January 2015, these pressures will undoubtedly be amplified in the lead up to national elections in 2016, says Moody's.
The rating agency also notes that Zambia's increasingly noisy political scene, which despite relative stability over the past five decades, presents rising risk to policy predictability, the investment climate, and FDI.
Matthew Allan Robinson
Zambia's appetite for long-term finance not satisfied
LUSAKA, Dec. 4 (Xinhua) -- A conference organized to woo more investors to invest in Zambia opened here on Thursday with the country's acting President Guy Scott stressing that the southern African nation has enormous appetite for long-term finance which was not being satisfied.
The two-day Zambia Investment Conference, which has attracted both local and international investors, including British entrepreneur and founder of Virgin Group Richard Branson, is meant to market Zambia's investment potential.
In remarks delivered during the start of the conference held in Lusaka, the Zambian capital, Scott said it was unfortunate that Zambians have been subjected to short-term finances instead of long-term finances to invest in huge projects.
He said it was unfortunate that people could be subjected to short-term finances at high interest rates when the country has enormous investment opportunities and has since called on investors to explore the country's various investment opportunities.
"Zambia has enormous appetite for long-term finance but it is not being met because of high interest rates. Instead of two to three year finances, we should be talking about 20-year mortgages, " he said.
Meanwhile, Zambia's Minister of Commerce, Trade and Industry Robert Sichinga assured investors that their investment will be protected despite the current political environment following the demise of President Michael Sata.
The Zambian minister said investors coming to Zambia should not only think about the Zambian market but the southern African market where Zambia belongs to two regional blocs, the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC).
The conference will also be exploring new frontiers in the southern African nation's investment and entrepreneurship landscapes.
Delegates are expected to discuss real investment opportunities, share knowledge and experiences, network and discover with new business partners, among other objectives.
Acting President Guy Scott has implored investors to study Zambia and identify areas of investments.
Dr. Scott says any investor that wants to come to Zambia will realize that the country is actually good at peace and therefore a conducive destination for investment.
Speaking this morning when he officially opened a two day Zambia Investment Conference organized by Pangaea Securities Limited in collaboration with the Zambia Development Agency (ZDA) in Lusaka today, Dr. Scott says Zambia has managed to survive and preserve its peace in many difficult times.
Dr. Scott says on the other hand the country has a enormous appetite for long term financing.
He says this appetite is however not being met because investments the country has been receiving are short term.
The Acting president says this is why he thinks that investors should begin to study Zambia and the see many opportunities it offers for investment.
Speaking earlier at the same conference, Commerce, Trade and Industry Minister Robert Sichinga has reassured investors that their investments in country will always be protected.
Mr. Sichinga says investors should also take note that when they invest in Zambia they are in fact not investing in the landlocked country alone, but in the two regional bodies SADC and COMESA to which Zambia is a member.
And ZDA board Chairperson Songowayo Zyambo has expressed excitement that some delegates attending the conference are investors that have made huge investments in the country.
Meanwhile Pangaea Securities Limited board Chairperson Jacob Mwanza says his company believes that over the two days of the conference, real growth opportunities will be shared in non-traditional sectors including fast moving consumer goods (FMCG), Telecoms, Media and Technology, Logistics and Distribution, Infrastructure and Construction as well as Agri-processing.
Dr. Mwanza states that Pangaea is thus delighted to have partnered with the ZDA to host the conference, noting that the Agency has over the years been an important gateway into Zambia.
The business entities were registered between January and September 2014, with 5,000 being registered from August to September this year.
PACRA public relations officer Vaida Bunda said the 10 economic sectors that were leading in terms of registration were in general trading, suppliers, construction, transport, contractors, consultancy, mining, farming and engineering.
Ms Bunda said in an interview that the Agency was hopeful that the registration levels would increase significantly with the opening of a provincial office in Kabwe, Central Province.
“We have from January to September 2014 registered over 22,000 businesses across the country. We hope that registration levels will increase significantly with the opening of the provincial office in Kabwe. The opening of the Kabwe office brings the number of operational offices in the country to 13,” she said.
The presence of PACRA countrywide had helped ease and reduce the cost of conducting business as people did not have to travel long distances to access registration services.
The Agency was working on new innovations such asonline payments that would make it easy for the business community to registertheir businesses and file annual returns.
Another significant innovation to be introduced in 2015 was the PACRA call-centre to be based at its head office in Lusaka.
“It is hoped that the call-centre will reduce the number of people visiting thecustomer service centres for queries as they will be able to call for advice on all the services offered by PACRA.
The Agency pledged to continue with innovations that would ease business with various clients and sensitize people on the importance of formalizing their businesses.
CREDIT Reference Bureau Africa-TransUnion has launched the credit risk scoring mechanism on the Zambian market following demand by credit providers.
The Credit Risk Score (CRS) is aimed at giving an opportunity to credit providers to extend credit beyond their limit to lend and be objective in their assessment.
Launching the Score in Lusaka, Bank of Zambia (BoZ) Governor Michael Gondwe praised TransUnion for seizing the opportunity to develop a customer’s scoring mechanism that would contribute to enhancing the financial information infrastructure and facilitate fair access to credit.
He said the introduction of the CRS would not only enrich the value of its credit reports to the lenders but greatly improve the lender’s credit risk management.
Dr Gondwe also said the BoZ had developed two draft bills aimed at promoting a conducive environment in the financial sector.
In a speech read on his behalf by assistant director examinations and surveillance Mbinga Kafunya, Dr Gondwe said the major initiative in this regard was the review of the financial sector legal and regulatory framework.
“This includes the comprehensive review of the financial sector laws and regulations. In respect to financial information infrastructure, BoZ has developed two draft bills for Government’s consideration,” Dr Gondwe said.
The two included the Credit Reporting Bill which was meant to be a comprehensive law on credit reportingand Personal Property Security Interest Bill aimed at establishing a registry for movable assets that have been pledged as security.
The BoZ would continue to support market growth as well as market players in the development of an all-encompassing credit reporting.
Dr Gondwe said this would undoubtedly increase the supply of credit to the private sector to support Zambia’s growth and development as outlined in the Vision 2030.
“More importantly increasing supply must go hand in hand with affordable cost of credit. Above all, this credit must be destined to productive sectors of the economy to make a difference to an all inclusive growth,” he said.
It was important to note that the CRS was a powerful indicative tool as it was a summary of a comprehensive evaluation of the borrower’s credit worthiness expressed in a numeric term and provided the lender with an easy mechanism to make decisions in respect to the borrower.
“It also allows the borrower to easily determine their own creditworthiness based on a score. The Credit Scoring system however does not negate the need for lenders to conduct further credit evaluations if the case requires,” he said.
And Trans Union head analytist Mattys Swawenopoei said the bureau had in excess of 1.4 million credit records on file with 780 000 credit active consumers with a total credit exposure of K 155 billion.
By Jeff Mason
WASHINGTON | Tue Aug 5, 2014 6:04am EDT
By Jeff Mason
WASHINGTON (Reuters) - President Barack Obama will announce on Tuesday that U.S. businesses have committed to investing $14 billion in construction, clean energy, banking, and information technology projects across Africa, a White House official said.
The announcement will occur at the U.S.-Africa Business Forum, part of a three-day Africa summit in Washington meant to showcase U.S. interest in improving trade and investment in the region.
"These investments will deepen U.S. economic engagement in Africa, fueling growth that will support broader African prosperity and emerging markets for US businesses, which will support jobs in both the United States and Africa," the White House official said.
Obama will take part in a discussion with corporate chief executives and government leaders at the event, which will be attended by Commerce Secretary Penny Pritzker, former New York Mayor Michael Bloomberg, and former President Bill Clinton.
The business forum will allow dozens of African heads of state to mingle with U.S. and African executives, the official said. It will focus broadly on investment in finance, infrastructure, energy, agriculture, and consumer goods.
More than 90 U.S. companies are slated to participate including Chevron Corp <CVX.N, Citigroup Inc, Ford Motor Co, General Electric Co, Lockheed Martin Corp, Marriott International Inc, Morgan Stanley and Wal-Mart Stores Inc. Several African companies were also expected to attend.
In a brief preview of Obama's remarks, the White House did not give specifics on the nature of the business deals or identify which companies were involved.
"These agreements represent conclusive evidence that America is open for more business with Africa as the Continent’s economic ascent is just beginning," Pritzker said in a statement.
"Each day, 250,000 Americans go to work in jobs supported by exports to Africa and these deals will lead to increased prosperity on both sides of the Atlantic in the months ahead," she said.
The Obama administration has billed the summit as the first of its kind, but it comes long after Africa gatherings hosted in recent years by China, India, Japan and Europe, suggesting the United States is largely playing a game of catch-up for access to a market in several growing industries.
(Reporting by Jeff Mason; Additional reporting by Lesley Wroughton; Editing by Eric Walsh)
Zambia Daily Mail
By NKOLE MULAMBIA
Blackthorn, which is listed on the Australian Securities Exchange, plans to invest US$680 million in the Kitumba copper mine in Mumbwa.
1 August 2014 , By Maimbolwa Mulikelela, Source: Times of Zambia
THE Government has challenged manufacturers to strive to produce high-quality goods and services if the 'Buy Zambia' campaign is to succeed.
Commerce, Trade and Industry Minister Robert Sichinga said the campaign could only work if complemented by the production of high-quality goods.
"In terms of feedback it is telling us that we are not doing enough from the 'Buy Zambia' campaign, that is why I am here and this is why I am doing these inspections," Mr Sichinga said.
"We need feedback from the citizens... The Government is there for the people... the Government is not there against the people, it is there for the people."
The minister was speaking after the tour of selected stands at the on-going 88th edition of the Agriculture and Commercial Show in Lusaka yesterday.
Mr Sichinga said the Government would continue to listen to what the people would say to come up with appropriate measures to address the concerns arising from the campaign.
He said it was impressive to see the business community correctly interpreting the show's theme, 'Breaking New Grounds' and 'Commemorating 50 years of Zambia's Independence'.
Mr Sichinga said there was a considerable change not only at 50 years, but industries were now adopting new technologies and requirements which were useful for economic development.
"We need to move even further than what we have done now in utilising Information Communication Technologies to move the country further," he said.
Mr Sichinga said that industries working on similar products had failed to collaborate in improving the products.
"We need to see a lot more value-addition. We have to do our home work such as setting the standards for how we can encourage value-addition at local level," he said.
The minister toured Lwimba Ranch, Mbesuma Ranch, State Lodge, the animal section, Saro Agro Industrial Limited, MM Integrated Steel Mills Limited, Kazuma Plastics and Agricon Zambia Limited, among others.
Zambia Daily Mail
Written by Online Editor
From MWILA NTAMBI in Kitwe
According to the findings, the figure goes up to 32 percent if Pay As You Earn (PAYE) is included.
A small team of California-based organizations whose leadership have roots in Zambia teamed up for a shared philanthropic cause. The team has used its resources and contacts to acquire, store, transport and distribute over 1000 pounds of medical supplies for Zambia. The organizations include, MSI International, Shivam International Realtors, Tarsadia Foundation, Anekant Community Center, and Zambia-USA Chamber of Commerce.
The team provided all the procurement, financial, transportation, storage and facilitation services needed to make these items available for donation to Zambia. A few of the people involved in this donation visited Zambia recently and met with representatives from Ndola Central and Arthur Davidson Hospitals where they inquired about their needs. Some of the items requested have been sourced and are included in the shipment.
In addition to Ndola Central Hospital and Arthur Davidson Hospital, Churches Health Association of Zambia (CHAZ) will also receive supplies. CHAZ has 151 member health institutions. The majority of these health institutions are based in rural areas. They comprise 34 Hospitals (including 9 nurses and laboratory technologists Training Schools), 77 Health Centers, and 31 Community-Based Organizations (CBOs). Together these members account for over 50% of formal healthcare in rural areas and roughly 35% of healthcare nationally. source: CHAZ.
Arun Arya of Shivam Realtors who was born in Ndola and moved to the US over 25 years ago, stated that distance and a reliable system of distribution had made it difficult for many to provide support or get more involved with activities on the ground in Zambia. “The problem is not the supplies, the problem is the means of getting them to the right people and regularly. We have been away from home for so long that we are not familiar with all the processes and procedures.” Arya said.
Dr Shah of Anekant Community Center (ACC) reiterated the same sentiments as Mr Arya. Dr Shah through the Anekant Community Center has put on many Community health fairs locally and internationally in India, Zambia, Malawi, and South Africa. Shah further stated that he believes that this collaboration has the potential to facilitate growth and development in other areas besides philanthropy. Mr. Arun Arya and Dr. Nitin Shah are leading a team of doctors to Lusaka and Ndola for a Medical and Surgical mission from July 28 to August 1. The doctors will comprise 4 anesthesiologists, 2 ophthalmologists and 1 dermatologist. The doctors will volunteer their services at Lusaka Eye hospital and Ndola Central hospital. The team would have preferred that the arrival of the container coincide with the arrival of the doctors but logistical delays will have the container arriving later. The donated supplies are expected to arrive in Zambia in September.
Zambia USA Chamber of Commerce founder Robert Sichinga Jnr said that he is excited about the donation and how the strengths of the various players complimented each other and made this donation a reality.
“There are many healthcare facilities and not-for-profit US organizations that have access to an abundance of excess medical equipment and supplies. Many of these supplies and equipment can go a long way in alleviating some healthcare needs, particularly in the under served areas. Additionally, there are many Zambians in the Diaspora and friends of Zambia with access to such resources, however, as is the case in trade and investment, you have the resources on one end and the need on the other, but no reliable, efficient and trustworthy conduit to connect the two. This is one of the goals of the Zambia USA Chamber of Commerce. The establishment of an efficient conduit can benefit commerce as well as philanthropic activities.”
Sichinga recently became acquainted with Mr Krishna Bhakta an affiliate of Tarsadia foundation. Bhakta then made the introductions to the rest of the team and the rest is history. This past April, during a visit to Los Angeles by Zambian Ambassador to the United States of America, HE Palan Mulonda spoke with Bhakta at a Zambian meet and greet event. Bhakta shared the vision of the team. Three months after the Ambassadors visit to Los Angeles, the team had finalized its arrangements for 7 volunteer physicians to travel to Zambia and the shipment of the medical supplies. During a conference call with the team, HE Ambassador Mulonda expressed and his heartfelt gratitude on behalf of the Zambian government for what he called “a humbling selfless gesture.” Ambassador Mulonda called for a conference call with the members of the team mentioned above to thank them and wish those traveling safe travels to Zambia. During the call, the Ambassador took the opportunity to mention that the Zambian government is in the process of developing a Diaspora Policy which will focus on identifying ways to harness the skills and abilities of the Diaspora with the goal of developing Zambia. “There are many Zambians in the Diaspora who have been doing great work quietly yet effectively.” He expressed that there is a need for these efforts to be highlighted and appreciated. The Ambassador repeatedly reiterated that his mission, the embassy, should be a resource and a facilitator for the teams current and future activities. During the call Dr Shah shared three other future projects that are currently in development by the team for Zambia. Dr Shah has been trying to expose Zambia to a vast array of philanthropic and commercial opportunities available from the US. He expressed confidence that the current team with the support of the government through Ambassador Mulondas office, will see these projects come to fruition.
Some of the items donated include, Hemodialysis machine donated by Mr. BU Patel of Tarsadia Foundation, Oxygen Concentrators, Humidifies, Circumcision kits, CPAP machines, to mention a few. Shipping costs were donated by Manu and Rika Shah of MS International.
For questions please contact:
Arun Arya. email: firstname.lastname@example.org
Dr Nitin Shah email: email@example.com:
Robert Sichinga. email: firstname.lastname@example.org
By Chiwoyu Sinyangwe
Sat 19 July 2014, 14:01 CAT
ZAMBIANS have lost control of their economy because key investments are foreign owned, says commerce minister Robert Sichinga.
By Matthew Hill
While First Quantum Minerals Ltd. (FM) said last month that more than $1 billion of spending had been slowed or delayed, other companies have “shelved” investments of as much as $500 million, Zambia Chamber of Mines President Emmanuel Mutati said in an interview in the capital, Lusaka, yesterday.
“Our major shareholders couldn’t really consider any investment in Zambia for now,” he said. “Invariably there will be a drop in production at some point in the future, a drop in revenues and there could be drop in employment levels.”
Zambia Revenue Authority has withheld about $600 million in value-added tax repayments from mining companies that failed to submit documents from countries that import their copper. The mines say they can’t provide the papers because they sell to traders and don’t know the final destination of the metal. The spat that started last year may threaten plans to almost double the nation’s copper output to 1.5 million metric tons within five years, if more investment is deferred, said Mutati.
“This thing has dire consequences,” said Mutati, who plans to approach Zambia’s Vice President Guy Scott to resolve the dispute. “We’ve had meetings and meetings and we’re not progressing.”
Scott told lawmakers on June 27 that a statement by Matt Pascall, operations director at First Quantum, about $1 billion of investment being shelved was “ill-judged” and an attempt to “put pressure on us.”
Mines Minister Christopher Yaluma didn’t answer two calls to his mobile phone or a text message seeking comment. The government will repay the VAT refunds once the companies comply with the rules, he said on June 24. Mines owned by Glencore Plc (GLEN) and Vedanta Plc (VED) are also affected.
Zambia mined 790,007 tons of copper last year, according to the Ministry of Finance, making it Africa’s second-largest producer after the Democratic Republic of Congo.
To contact the reporter on this story: Matthew Hill in Lusaka at email@example.com
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Tanzania, Zambia to invest $80 mln in cash-strapped rail firm
Tue Jul 8, 2014 12:51pm GMT
DAR ES SALAAM, July 8 (Reuters) - Tanzania and Zambia plan to inject $80 million to bail out a jointly owned railway firm suffering from decades of under-investment, the company said on Tuesday.
The 1,860 km (1,155 mile) railway is a key route for copper exports from Zambia and neighbouring Democratic Republic of Congo to Tanzania's main port of Dar es Salaam.
The capital infusion from the two state shareholders is expected to provide a lifeline to the loss-making company, Tanzania-Zambia Railway Authority (TAZARA).
"The governments of Tanzania and Zambia ... have agreed to inject $80 million into the operations of TAZARA in the next 12 months, of which $9.2 million is to be disbursed immediately to cater for two months of outstanding employees' salary arrears and some working capital," company spokesman Conrad Simuchile said in a statement.
The railway firm has been hit by frequent work stoppages due to on-off strikes by workers over unpaid salaries.
Simuchile said the capital injections were also needed to buy fuels and lubricants for the trains.
The Chinese-built railway has suffered from falling cargo traffic as well as years of inadequate investment by the two shareholders.
The company said in September that revenue had averaged $1.53 million per month over the past eight months against an estimated average expenditure exceeding $2.5 million, of which salaries alone constituted an average of $1.3 million. (Reporting by Fumbuka Ng'wanakilala; Editing by Drazen Jorgic and Gareth Jones)
© Thomson Reuters 2014 All rights reserved
By Matthew Hill
June 17, 2014 10:39 AM EDT
“It is scheduled to be completed by mid-2015,” David Chewe, investments director at Zambia’s National Pension Scheme Fund Authority, said in an e-mailed reply to questions. “This is part of the renewal of the central business district, and it is hoped that other developers and property owners would respond positively.”
The development in downtown Lusaka will include a shopping mall and office block alongside the Hilton Garden Inn, which will be managed by the hotel operator, Chewe said on June 13. Hilton, the world’s biggest hotel chain, is joining other operators, including Radisson Hotels International Inc. andInterContinental Hotels Group Plc (IHG), in establishing a presence in Zambia, Africa’s second-biggest copper producer.
Marriott International Inc., the second-largest publicly traded hotel chain, paid about $200 million in April for South Africa’s Protea Hospitality Corp., which has seven hotels in Zambia. Africa is seeing the world’s fastest pace of hotel development as investors and operators tap an expanding middle class and rising travel to compensate for slowing growth in European and U.S. markets.
Hilton is taking advantage of economic growth that the Zambian Finance Ministry forecasts will be about 6.5 percent this year, before averaging 8 percent from 2015. Tourism in Zambia is also set to grow, Hilton said in a statement last week.
The government is targeting tourism to reduce its dependence on copper, which accounts for about 70 percent of export earnings. The country shares the Victoria Falls with neighboring Zimbabwe and has 10 national parks.
Tourist arrivals grew by 6.5 percent to 914,576 last year, according to theFinance Ministry’s 2013 Annual Economic Report.
Hilton has 17 hotels in Africa, according to the website of the McLean, Virginia-based company. Its first Lusaka hotel will take on the Hilton Garden Inn brand.
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The World Bank has urged Zambia to take the diversification of its economy seriously and use the agriculture sector as an engine for economic growth.
Bank Country Director for Malawi, Zambia and Zimbabwe Kundhavi Kadiresan is worried that the agriculture sector has continued to underperform.
Speaking in Kitwe when she addressed Copperbelt University Economic Association students, Dr. Kadiresan says the agriculture sector’s contribution to the Gross Domestic Product is less than nine percent.
She has also implored Government to look beyond maize production when exploring the potential in the agriculture sector and scale Non Traditional exports with a serious emphasis on tobacco and sugar exports among others.
Dr. Kadiresan says the plummeting copper price on the world market is a threat to Zambia’s economic stability and this has been compounded with the reduction in the buying of copper by China.
By Matthew Hill and Jaco Visser Mar 27, 2014 4:46 AM PT
Investors are awaiting evidence that Zambia’s efforts to shore up its currency will succeed as the government starts marketing a Eurobond, sub-Saharan Africa’s first sovereign international debt sale this year.
The kwacha, which slid to a record 6.44 per dollar on March 19, has extended its losses by 4.2 percent since Zambian policy makers scrapped laws to ease dollar shortages and took steps to reduce liquidity in the banking system. The kwacha slid 13 percent against the dollar this year, the worst performer of 24 African currencies monitored by Bloomberg.
The central bank, led by Governor Michael Gondwe, meets to decide on interest rates tomorrow after boosting the benchmark to a record 10.25 percent in February to support the currency and tame inflation, which accelerated for the fifth straight month in March. The nation, which sold Eurobonds in September 2012 with yields reaching 5.16 percent that month, may pay as much as 9 percent to sell debt now amid lower copper prices and a fiscal deficit, saidChris Becker, a market strategist at ETM Analytics.
“They’re going to be trying to market the bonds on the back foot,” he said by phone from Johannesburg yesterday. “It’s a risky one. They’re going to pay up.”
Yields on Zambia’s dollar securities, which rose to a record 8.33 percent on March 20, fell four basis points to 7.84 percent today. The notes lost 3.4 percent in 2014, the continent’s worst-performing dollar debt after Ghana, according to Bank of America Merrill Lynch indexes.
The landlocked nation, which borders eight countries and relies on copper for about 70 percent of its export earnings, said in October it may issue as much as $1 billion of Eurobonds, hiring Deutsche Bank AG and Barclays Plc in January to lead the sale. The issuance will be the first since the U.S. Federal Reserve reduced its bond-purchase program. Ghana, which planned to sell its third Eurobond in April, delayed the program because of rising interest rates.
Zambia’s planned sale comes after the last two Treasury bill auctions failed, with the central bank raising a combined 186 million kwacha ($31 million) of the 1.2 billion kwacha on offer. It also follows a credit affirmation by Fitch Ratings on March 21, which kept the nation’s debt at B, five levels below investment grade, after cutting it one level last year.
Officials start in Los Angeles today before ending their roadshow in London on April 3 and 4, according to a person with knowledge of the offering who asked not to be identified because they were not authorized to speak publicly.
Central bank spokesman Kanguya Mayondi referred questions to Finance Ministry spokesman Chileshe Kandeta, who didn’t immediately reply to an e-mail. Permanent Secretary Felix Nkulukusa also didn’t immediately return e-mailed requests for comment.
Zambia’s second dollar-debt sale probably won’t be as successful as its first, which attracted bids of about $12 billion for the $500 million it initially offered, according to Sashi Kumi, a credit and fixed-income trader with Nedbank Capital in London. The country raised $750 million amid the strong demand.
“I don’t envision investor appetite will be as strong as last time round,” Kumi said in reply to e-mailed questions yesterday. “I think that they would have to bring this issue at around the 8.5 percent level to attract investor interest.”
The central bank will keep rates on hold during the first half of this year after February’s 50 basis-point increase, which was an “aggressive move,” Celeste Fauconnier, an Africa analyst at Johannesburg-based Rand Merchant Bank, said by phone yesterday. Zambia may have to offer a yield of as much as 9 percent for the bond, Fauconnier and colleague Nema Ramkhelawan-Bhana said.
The kwacha slid 2.6 percent to 6.3950 per dollar at 1:44 p.m. in Lusaka, after dropping the same amount yesterday. The currency lost 0.7 percent this year through March 26, after adjusting for volatility, the most among African currencies, according to BLOOMBERG RISKLESS RETURN RANKING.
The kwacha may eventually strengthen back to 6 per dollar, supported by inflows, particularly into the nation’s copper industry, Ramkhelawan-Bhana said.
The central bank cannot afford to use dwindling foreign-currency reserves to defend the kwacha, Trevor Simumba, managing director at Sub-Saharan Consulting Group Zambia, said by phone March 19.
“It’s like fixing a leaking roof with a small cup,” he said. “The Bank of Zambia, to be honest, doesn’t have the money to plug this hole.”
President Michael Sata, 76, has focused on developing roads and railways in the $21 billion economy, which combined with pay increases for civil servants and fuel and corn subsidies swelled the budget deficit to a forecast 8.5 percent of gross domestic product last year. While Sata implemented a two-year wage freeze for state employees in October and has removed corn aid, finances are still under pressure from an 11 percent drop in copper this year, with prices reaching a four-year low on March 13.
“We are circumspect of the central bank’s ability to achieve exchange rate and price stabilitywhile fiscal policy is decidedly expansionary,” Irmgard Erasmus, a fixed-income analyst at Paarl, South Africa-based NKC Independent Economists, said in an e-mailed reply to questions yesterday. Short-term measures will have a limited effect and the “government needs to address the large recurrent expenditures” in its budget, she said.
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By Matthew Hill Mar 21, 2014 9:03 AM PT
Zambia scrapped two laws restricting foreign-exchange trade in Africa’s second-biggest copper producer, triggering the kwacha’s biggest gain against the dollar in 15 months.
Legislation introduced in 2012 that bans the use of dollars and other currencies within Zambia is revoked with immediate effect, Finance Minister Alexander Chikwanda told reporters today in the capital, Lusaka. The government also abandoned a law that requires companies to notify the Bank of Zambia of foreign transactions, Chikwanda said at the briefing while flanked by officials from the central bank.
“These regulations were passed principally to support the implementation of monetary policy,” he said. “Challenges have arisen in the implementation of these statutory instruments. To allow for further consultation government has decided to revoke these statutory instruments with immediate effect.”
Before today’s announcement, the kwacha had weakened by more than 13 percent against the dollar this year, more than any other African currency tracked by Bloomberg. The Zambian unit has been hit by copper prices that have retreated 13 percent since January 1 and policy announcements that damaged business confidence, Fitch Ratings said today. A weaker currency may stoke inflation in Zambia’s import-dependent economy and push up costs of repaying foreign debt, it said.
Zambia’s move to abolish foreign currency restrictions differs with the approach by Ghana, which last month tightened restrictions in a bid to stem declines in its currency.
Chikwanda’s announcement “demonstrates the absolute determination of the Zambian authorities to do whatever might be needed to halt the currency slide,” Razia Khan, head of Africa research at Standard Chartered Bank Plc in London, said in a reply to e-mailed questions. “Many market participants had seen those statutory instruments as unhelpful -– although there is probably some debate around this.”
The currency gained as much as 3.4 percent and traded 2.9 percent stronger at 6.152 per dollar by 5:26 p.m. in Lusaka, the biggest gain since Dec. 24, 2012 and the world’s best performer today. The kwacha earlier traded as much as 1 percent weaker. Yields on Zambia’s $750 million Eurobonds maturing in 2022 dropped the most in two weeks.
The laws were revoked after the government held meetings with business leaders who were “strongly” opposed to the regulations, Chikwanda said.
The implementation of the laws had a “negative impact” on businesses’ ability to contract foreign loans, Geoffrey Sakulanda, president of the Zambia Association of Chambers of Commerce and Industry, said in an interview at the Finance Ministry after the announcement.
“This is the best economic news we’ve had since the Patriotic Front government came into power” in 2012, Trevor Simumba, managing director of Sub-Saharan Consulting Group Zambia, said by phone from Lusaka today. “It’s going to calm the market and also incentivize investors that were holding back to invest.”
The World Bank supports the revocations of the laws, known as statutory instruments 33 and 55, it said. The move will improve confidence in policy making, Kundhavi Kadiresan, country director for Zambia, Malawi and Zimbabwe, said in an e-mailed statement today.
Fitch affirmed Zambia’s B credit rating and said the outlook for the southern African nation is stable. It warned that expanding government spending and the weakening economy posed risks to economic growth. The company cut its assessment of Zambia’s debt by one level to five steps below investment grade in October.
The rating “reflects Zambia’s continued strong macroeconomic performance, with robust growth and low inflation,” said Olwen Renowden, an analyst at Fitch. “However, vulnerabilities have increased as fiscal policy has turned more expansionary and the exchange rate has come under pressure.”
Preliminary data shows Zambia’s economy grew an estimated 6.4 percent last year and has expanded at an average rate of 6.9 percent since 2012, Chikwanda said.
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20 March 2014 , Source: Times of Zambia
THE Zambia-China Trade Economic Cooperation Zone (ZCCZ) is happy with Government for making amendments to the list of priority sectors for investment in the multi-facility economic zones (MFEZ).
Government recently made changes to the Zambia Development Agency (ZDA) Act Number 11 of 2006 and came up with ZDA Act number 17 of 2014.
This Statutory Instrument Number 17 of 2014 has given a wider window for investment as it now included areas like energy and water, manufacturing, construction of 50 plus houses under one management and construction of silos.
ZCCZ, who are the developers of the MFEZs, said they were elated with this positive move because it would make it easy for them to capture more investment.
ZCCZ corporate affairs manager Stephen Lindunda said in an interview yesterday that as developers, they were now looking forward to increased inflow of investment into the MFEZs.
"Our core business is investment promotion and alongside this, is to woo investors and so, it goes without saying that it is always our desire to capture as much investment as possible into the MFEZs," Mr Lindunda said.
And Mr Lindunda said the fluctuation of the Kwacha would not deter ZCCZ from its goal of building the most favourable investment platform in Africa.
He said this was because ZCCZ remained optimistic that stability of the Kwacha would be attained as Government through the Bank of Zambia had shown commitment to taking necessary measures such as the offloading of the US dollars into the economy aimed at stabilising the local currency.
Mr Lindunda called on Zambians to begin to take keen interest in the MFEZs concept by coming on board to invest.
"The misconception that the MFEZs are a reservoir for the Chinese only is wrong. The MFEZs are for Zambians just as much as they are for the Chinese and other investors," Mr Lindunda said.
He advised Zambians against being discouraged by the prescribed US$500, 000 investment threshold saying they could overcome that by forming consortiums.
"Zambians can pull resources and expertise to together and invest in the zones. Here, we have got some protection in terms of import as you know any import that enjoys the MFEZs incentive is zero-rated," he said.