President Hichilema Opens New Zambian-Owned Mine In Luapula
Yesterday, President Hakainde Hichilema opened the Luongo Musamu Manganese mine in Mutipula chiefdom of Chipili District in Luapula Province.
During the opening, President Hichilema said the mine represented another key investment into Zambia and had full government support.
The new mine houses over 40 million tonnes of manganese ore with production at the mine set to last the next 20 years.
The mine is Zambian owned and represents a key investment in the Zambian mining economy.
Musamu Resources developed the mine under the leadership of Sixtus Mulenga, the executive chairman of the company.
One of the key uses for manganese is in car batteries, something the New Dawn government has been supporting since it identified it as a key sector for development earlier this year.
Dr Mulenga also said that the company would continue to invest $20 million in the mine to meet its production target of 1 million tonnes of manganese annually.
He also stated that the mine will offer ample employment opportunities, having already employed 250 people, the mine will increase this to 1000 when it reaches its full capacity in five years’ time.
Paul Kabuswe, Mines and Minerals Development Minister, also praised the President stating that through his pro-investment stance he has unlocked more potential in the private sector.
Zambia’s Target to Increase Copper Production to 3 Million Tonnes in the Next Ten Years is Attainable
Lusaka Times, November 2, 2022
President Hakainde Hichilema has said Zambia’s ambitious target to increase copper production from the current 830,000 metric tonnes to 3,000,000 in the next ten years is attainable.
In a speech read for him by Mines and Minerals Development Minister Paul Kabuswe during the opening of the 10th Zambia International Mining, Energy Conference and Exhibition (ZIMEC) at Garden Court Hotel in Kitwe on Tuesday morning, President Hichilema said Government is committed to meeting the ambitious yet achievable target.
The Head of State said the New Dawn government is creating an attractive and competitive investment climate built on transparency, consistency, predictability and fairness while acting against corruption.
Mr Hichilema said the government has put in place favorable and predictable policies for investors to thrive and bring stability in the mining sector.
He charged that the mining sector was stagnant in the previous years because of what he termed as fights between the past government and the investors.
President Hichilema said time is right for Zambia to continue mining and ensure a win-win situation for the treasury, the investors and the community.
“I wish to reiterate our government commitment to reviving the Zambian economy anchored significantly by a robust mining sector that is amply supported by a vigilante energy sector. In marking over a year in office, our government continues to pursue a bold vision to usher in a new dawn for Zambia’s mining sector and indeed the rest of the economy including the essential energy sector. We are determined to deliver on our country’s mining and energy potential through a harmonised approach that optimally serves all stakeholders, Zambians and investors included. Premised on tenets of resilience and stability, will foster industrial development, create employment and grow national fiscal inflows for the equitable benefit of all,” Mr. Hichilema said.
“As a leading player in the global copper mining industry, we are striving to grow mineral output through new mines and expansion of existing ones in order to meet current as well as projected future demand growth. In this effort, I wish to implore all of you and emphasise our steadfast commitment to meeting the ambitious yet achievable goal of raising annual copper production levels from the current 830 metric tonnes to 3,000,000 metric tonnes in the next decade.We are creating an attractive and competitive investment climate built on transparency, consistency, predictability and fairness while acting against corruption in all its forms,” he said.
President Hichilema further appealed to investors to support local suppliers and contractors and work towards improving the communities hosting mining operations.
“Let me categorically state that investors in Zambia are assured of the rule of law guaranteeing security of tenure and investments. To this effect for example, good governance in the administration of mineral rights is being strengthened. A moratorium on the issuance of mining rights was affected while a systems audit was undertaken. We will soon launch the online payment portal that will enhance efficiency and integrity in the administration of the mining rights. We espouse collaboration and partnership as opposed to reducing nationalism. In this regard, Zambia welcomes investment that promotes local economic empowerment by allowing our people to participate meaningfully across the value chain. This reinforces the stability of your investments and fosters wide spread acceptance among our people. In the spirit of strategic engagement and partnership, Zambia recently signed a memorandum of understanding with the government of the Democratic Republic of Congo that will see two countries work closely to develop electric batteries and clean energy value chains,” he said.
Meanwhile Kitwe and District Chamber of Commerce President Emmanuel Mbambiko appealed to the government to bring sanity at Mopani Copper Mines and Konkola Copper Mines.
Mr. Mbambiko, a UPND official, said the business community in Kitwe district is affected by the dormant mine operations at KCM and Mopani.
Zambia Chamber of Mines of Zambia President Godwin Beene said the three-day conference which has attracted 300 delegates will entice investors to invest in the mining sector and help improve infrastructure, promote skills and develop communities.
Ministry of Energy Director in charge of Electricity Michael Mulasikwanda highlighted some of the plans the ministry is undertaking to grow the Energy Sector.
The 10th Zambia International Mining, Energy Conference and Exhibition (ZIMEC) that will run up to 3rd November 2022 is being held under the theme: ”The Synergy between Mining and Energy, Developing sufficient sustainable energy to satisfy Zambia’s mineral production goals.”
Zambia Investor Briefing - October 2022
ZAMBIA INVESTOR BRIEFING
October 2022
OVERVIEW
Following the presentation of the 2023 budget by Minister of Finance Hon Dr Situmbeko Musokotwane, the New Dawn government continues its focus on stimulating private sector development by introducing new measures and incentives across sectors including mining, agriculture, manufacturing, tourism, telecommunications, insurance and gaming.
Government continued to pursue its debt management plans setting out its expectation that it hopes to agree debt relief terms with creditors by the end of 2022 or early 2023 during a presentation to Eurobond holders. Meanwhile, the World Bank approved a loan of US$270 million for economic relief.
The inaugural US Zambia business summit to boost trade and investment was convened in Lusaka.
President Hichilema travelled to Namibia to enhance trade ties between the two countries, following an agreement to develop a 2,000km oil and gas pipeline earlier in the month.
A trade mission to Lubumbashi in the Democratic Republic of Congo generated export deals for Zambian firms worth US$24.5 million, including for the supply of mealie meal, chicks, meat products and maize seeds.
VAT and excise duty on petrol and diesel was re-instated effective October 1st.
2023 Budget
On 30 September 2022 Minister of Finance Hon Dr Situmbeko Musokotwane presented the 2023 budget. Titled ‘Stimulating Economic Growth for Improved Livelihoods’ it is the second budget by the New Dawn government and contains additional measures and incentives to stimulate private sector development, as well as commitments to increase social spending. These will be financed in part by the K9 billion (approx US$560 million) in additional funds the government expects to have available in 2023 after announcing an end to fuel subsidies and the reintroduction of VAT and excise duty on fuel and other commodities. Measures to improve public financial management were also announced.
In the mining sector the royalty rate regime was restructured to tax only incremental value in price at various thresholds and property transfer tax for transfer of exploration rights was cut from 10% to 7.5%. Read more at ZambiaIsBack.com.
In the agriculture sector reform of the Fertiliser Input Subsidy Programme (FISP) was announced, with the new Comprehensive Agriculture Support Programme to include extension service support, irrigation development and access to finance. In addition, 256 extension officers and supporting equipment will target an extra 1.5 million smallholder farmers, while 16 new dams will support irrigation and new farming blocks are to be established.
In the manufacturing sector the government announced tax concessions geared at stimulating investments in corn starch production and a 50% suspension on excise duty on clear beer made with cassava or malt at certain levels of production.
For tourism there is a continued suspension of customs duty on selected capital equipment and waived visa fees from certain countries including EU member states, the United Kingdom, the United States, and China.
In telecommunications a single corporate income rate of 35% will replace the pre-existing two-tier system.
In the insurance sector government announced the removal of the 15% withholding tax on investment income on life insurance.
For betting and gaming the withholding tax on winnings reduced by 5% and presumptive tax on land-based betting companies reduced from 25% to 15%.
Other notable measures include a change in the basic rate PAYE threshold from K54,000 (approx US$3,343) to K57,600 (approx US$3,566), a reduction of the tax on income received by special purpose vehicles under Public Private Partnerships during a set period, and the announcement that timber exchanges are to be set up across the country to improve transparency in the sector.
Debt Management
During a presentation to three of Zambia’s Eurobond holders the government indicated that it hopes to agree debt relief terms with creditors by the end of 2022 or in Q1 2023. A net-present value reduction of US$6.3 billion is required in line with IMF targets, equivalent to 49% of the face value. The government is currently preparing for its third official creditors committee meeting, which it hopes will take place in the coming weeks
US Zambia Business Summit
The inaugural US-Zambia Business Summit was held in Lusaka on October 12th and 13th. US companies and investors from sectors ranging from mining to technology attended alongside representatives from the US International Development Finance Corporation, the US International Trade Administration, the US Trade and Development Agency and the Office of the US Trade Representative. During the event Ambassador Gonzales stated, “Working with the Zambian government to improve Zambia’s business enabling environment is my top objective”.
Zambia and Namibia Strengthen Trade Ties
President Hichilema travelled to Namibia as a guest of President of Namibia Hage Geingob at the Swakopmund International Trade Expo. Earlier in the month the two nations signed an agreement on the Cooperation in Facilitating Private-Sector Development and Implementation of an Oil Products and Natural Gas Pipeline project. The two governments have committed to working together with private partners to assess the cost and viability of the 2,000km pipeline which could supply 100,000 to 120,000 barrels per day and help reduce the cost of delivering petroleum products, with the ambition to also supply other countries in the SADC region.
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OTHER NEWS
Sibanye-Stillwater interested in Zambia's Mopani Copper Mines -CEO, 06.10.22, Reuters
Zambia-Namibia sign MoU on gas, petroleum pipeline, 07.10.22, Lusaka Times
Zambia aims to agree debt relief with official creditors soon, 08.10.22, Reuters
Ghana and Zambia race to secure IMF bailouts, 21.10.22, DW
First Quantum bets on Zambia to address global copper, nickel shortage, 24.10.22, Africa Report
Barrick CEO says Zambia's Lumwana mine life could be extended to 2060, 26.10.22, Reuters
UPCOMING EVENTS
01.11.22 - 02.11.11
Lusaka, Zambia
01.11.22 - 03.11.22
Zambia International Mining and Energy Conference
Kitwe, Zambia
16.11.22 - 18.11.22
Lusaka, Zambia
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Zambia Attracts 1.1 bln USD Investment Pledges in Q3
Xinhua, November 1, 2022
LUSAKA, Oct. 31 (Xinhua) -- Zambia recorded 1.1 billion U.S. dollars worth of investment pledges in the third quarter of 2022 on account of a stable macroeconomic environment, its investment agency said on Monday.
The Zambia Development Agency (ZDA) said the pledges recorded were an increase compared to 631 million dollars worth of investment recorded during the same period last year.
The investments were expected to create about 8,307 jobs.
Albert Halwampa, the acting director-general of the ZDA, told reporters during a briefing that the manufacturing sector had the highest investment pledges recorded of 396 million dollars, while other pledged investments were in energy, construction, transport and services, among others.
"We are at a stage where investor confidence is at its highest level because of macroeconomic stability. Zambia has become stable in terms of macroeconomic fundamentals," he said.
‘ZAMBIA IS BACK’ INVESTMENT PROMOTION CAMPAIGN LAUNCHES
The new initiative seeks to promote and facilitate additional investment into Zambia, which has introduced a raft of pro-business measures and incentives since the election of President Hakainde Hichilema in August 2021.
Lusaka, 31 October 2022 - The ‘Zambia is Back’ campaign has officially launched in support of Government efforts to market the country to investors. The campaign aims to attract businesses interested in priority sectors, which are expected to drive economic growth and job creation under the New Dawn Administration.
Through a combination of digital platforms, in-person engagements and investor briefings the campaign seeks to inform investors about recent changes in Zambia’s business environment and champion its unique advantages.
Among the industries to be prioritised are agriculture, manufacturing, mining, ICT and energy.
Speaking on the launch ‘Zambia is Back’ spokesperson Choolwe Chibomba said, “We all know that Zambia has a lot to offer in terms of natural resources; a young, driven workforce; political stability and preferential trade ties. Through the Zambia is Back campaign, we will work to showcase the best of what our country has to offer, as well as provide practical insights and directions on how to invest in the country.”
The ‘Zambia is Back’ campaign is the latest initiative from the New Dawn government to drive economic growth within the country. Commenting on the launch of the campaign, Trade Minister Chipoka Mulenga said the government was delighted with efforts to promote investment in Zambia.
“This campaign is a key pillar in our efforts to restore Zambia’s economic reputation and channel investment into productive sectors that can deliver mutual benefits for businesses and citizens. Ensuring that Zambia has an attractive and competitive environment for business is essential for delivering on our potential as a nation and ensuring that citizens have job opportunities and better living standards.”
Recent pro-investment measures introduced by the government include revisions to the mining royalty rate regime, reform of support to the agriculture sector and targeted tax concessions in manufacturing, as well as waived visa fees from various countries.
More information on the campaign is available at zambiaisback.com. You can follow the campaign on social media: Twitter (@ZambiaIsBack), Facebook (@zambiaisback), and Instagram (zambia_isback).
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Inflation down to 9.7 pct in October in Zambia
Zambia Daily Mail, October 27, 2022
LUSAKA, Oct. 27 (Xinhua) -- Year-on-year inflation in Zambia stood at 9.7 percent in October, down from 9.9 percent in September, according to consumer price data released by the country's statistics agency on Thursday.
The decrease was mainly attributed to movements in prices of non-food items, the Zambia Statistics Agency said in its monthly release.
According to the release, the annual non-food inflation for October decreased to 6.5 percent from 7.2 percent the previous month due to decreases in prices of non-food items such as shoes, furniture, and motor vehicles.
On the other hand, the annual food inflation was recorded at 12.2 percent in October from 12.1 percent the previous month due to pricing movements in food items like cereals, vegetables, and dried beans.
The World Bank Has Approved a Loan of $270m to Zambia for Economic Relief
Business Insider, October 27, 2022
The World Bank approved Zambia's $270m (£232m) loan.
The bank is also determined to aid in the fight against climate change.
Africa is bearing the brunt of these complications.
The World Bank disclosed that the loan’s approval was in line with its efforts to help the southern African country recover from the devastations of the Covid-19 pandemic.
The Bank also cited economic relief from the war in Ukraine and the management of debt crises as other reasons why it lent the country the substantial sum.
In 2020, Zambia was reported as the first African country since the pandemic began to default on its debt.
One of the World Bank’s reports noted how much these factors are affecting Africa. According to the report, one in every five Africans goes to bed hungry and an estimated 140 million people in Africa face acute food insecurity.
The Bank, however, noted that some African countries including, Zambia, Angola, and Tanzania have vast potential to become an agricultural powerhouse if the sector is developed properly. As a result, they have created initiatives to aid such countries.
“The World Bank is ramping up its efforts and joining forces with partners across the food systems landscape to help these countries and others prepare and implement this critical transformation.” The report reads in part.
In August, the International Monetary Fund approved a $1.3bn loan to help Zambia - a major copper producer - restructure its debts.
The World Bank has been keen on combating the effects of climate change since the year began. Droughts and floods all across Africa have created massive food shortages, and the state of the continent’s food security has been abysmal, to say the least.
“Sub-Saharan Africa is feeling the brunt of what has been coined the perfect storm, a food, fuel, and fertilizer crisis exacerbated by the war in Ukraine, scarring effects from the COVID-19 pandemic, soaring inflation, rising debt, and extreme weather.” The bank noted.
Barrick CEO Says Zambia’s Lumwana Mine Life Could Be Extended to 2060
Mining.com, October 26, 2022
Barrick Gold Corp said promising drill results could see the life of its Zambian Lumwana copper mine extended to 2060 from 2042, its Chief Executive Officer Mark Bristow said on Wednesday.
Speaking at a media briefing at the mine, Bristow said since 2019 Lumwana’s fortunes had been turned around, making it one of Zambia’s largest copper producers.
He said a new mineral royalty tax regime, which is scheduled to come into effect in January next year, would unlock additional free cash flow for the company.
To attract investment and ensure increased production, Zambia’s government has planned to restructure the mineral royalty tax with regard to copper.
Zambia earns 70% of its export earnings from mining and has pledged to review its mining tax policy and increase exploration to boost and diversify production.
Asked if Barrick, one of southern African nation’s largest copper producers – and the world’s second-biggest gold miner – had an interest in investing in Zambia’s Mopani Copper Mines, Bristow said the miner was open to opportunities.
“We will look at all opportunities that come our way,” he said.
Zambia is looking for an outside investor to reinvigorate Mopani Copper Mines, which needs a big cash injection to ramp up production.
Mopani, a large mine and smelter complex, is looking for new investors after Glencore sold the asset to state mining investment company ZCCM-IH in January last year.
ZCCM-IH hired Rothschild in June to help find a new investor to upgrade and expand it.
Mopani, which is more than 90 years old, has the potential to produce 225,000 tonnes of copper annually, nearly three times its expected 2022 production, but it needs investment of at least $300 million to fund a complicated underground expansion.
Zambia Firms Ink Large Export Deals with DRC
English News, October 26, 2022
LUSAKA, Oct. 25 (Xinhua) -- Zambian firms clinched export deals amounting to 24.50 million U.S. dollars through the just-ended trade mission to Lubumbashi town in the neighboring Democratic Republic of the Congo (DRC), the country's investment agency said Tuesday.
The Zambia Development Agency (ZDA) said out of the total export deals, 10.82 million dollars were confirmed orders while 13.7 million dollars were export leads with some other companies still in discussion with their potential clients on possible export deals.
In a press release, the agency said the confirmed orders and deals are for the supply of mealie meal, day-old chicks, chicken sausage, fish, pork and maize seed, among others.
Albert Halwampa, the agency's acting director-general, said the results of the trade mission validated the agency's strategy and position that the DRC was Zambia's leading market for non-traditional exports.
"These results are further testimony that both large companies and small and medium enterprises can both earn foreign exchange and thereby significantly create jobs and wealth for the Zambian citizens," he said.
According to him, the agency's strategy was to facilitate market access for as many companies as possible to export products and expand the export base to the DRC in line with the government's aspiration of increasing trade and investment.
Zambian Traders Making Affordable Footwear from Used Vehicle Tires
XinhuaNet, October 26, 2022
LUSAKA, Oct. 25 (Xinhua) -- In an effort to create employment opportunities, a growing number of people in Zambia are taking up businesses that involve recycling old or used things.
Frank Mwaba, a resident of Kapiri Mposhi district, which is located in central Zambia, is among those engaged in recycling ventures to earn a living.
For the past four years, Mwaba, 34, has been making sandals from used vehicle tires, which he sells to residents of Kapiri Mposhi and surrounding areas.
"I earn an average of 2,400 Zambian Kwacha every month (about 150.50 U.S. dollars) from this business," explained Mwaba, while holding a pair of unisex sandals he had just made from an old tire.
He added that the sandals cost 40 Zambian Kwacha a pair (about 2.5 U.S. dollars), and that he makes a minimum of two pairs per day.
"I am currently working on investing in more in advanced tools so as to increase production and expand my customer base," he said, adding that the sandals are made from a specific brand of tires, which he buys from local dealers, specialized in selling used vehicle tires.
"The cost of the tires depends on the size. I spend around 80 Zambian Kwacha on one used tire from which I make three to five pairs of sandals," he said.
He also pointed out that making sandals from old vehicle tires is his mainstay, one that has enabled him to provide for his family's needs. He attributed his success to his mentor under whom he once served as an apprentice for over a year.
And one of Mwaba's customers Michael Chanda, 44, also a resident of Kapiri Mposhi district, said sandals made from used tires are not only affordable but also very durable.
"One can wear them for as long as five years. These sandals are practical footwear. They are particularly good for long distance walks and a great investment for those with very limited financial resources," Chanda said.
He further noted that businesses involved in making things from recycled materials not only support employment creation measures but also promote responsible use of natural resources.
Sandals made from used tires were once common among hawkers and wheelbarrow pushers and other population groups involved manual labor.
Unlike other kinds of footwear that easily gets damaged once exposed to water or sunlight for longer periods, sandals made from used tires only wear out after many years of use.
"It is for this reason that today, people from different sections of society are investing in this type of footwear," said Scout Phiri, a shoe repairer based in Petauke, a district located in Eastern Province of Zambia.
Phiri, 28, also explained that the growing demand for sandals made from used tires compelled him to start making them.
"Last year, I had a lot of customers asking me if I could make sandals from old tires because they were tired of having their shoes mended every now and then. That is when I decided to incorporate the making of sandals from tires into my shoe mending business," he recounted.
According to Phiri, the demand for durable and affordable footwear will continue to rise thereby presenting opportunities for small-scale traders like him.
Zambia Invited to the Africa Investments Forum and Awards to be held in Paris, France.
Lusaka Times, October 19, 2022
Leaders League, a French based international company designed to bring the world’s markets together has invited Zambia to participate at the Africa Investments Forum and Awards to be held in Paris, France.
Scheduled to take place on February 7th ,2023, the Forum will bring together business executives across Africa, Europe, decision makers and solution providers interested to do partnerships together.
Leaders League regional Manager Jean Salager says the forum will provide an opportunity for Zambia to create networks, partnerships and woo investors to establish businesses in Zambia.
“Africa Investments Forum is the place to be if you want to establish businesses and create linkages with people in Europe to work in Africa,” he said.
During a meeting with officials from the embassy of the republic of Zambia in Paris on Monday, project manager Chloe Gilles said it will be good for Zambia to attend the forum for investment opportunities as African and European leaders , together with the public and private sectors, will be present to explore areas of possible collaboration.
The forum is a good platform for Zambia to meet investors and participate in discussions centered on business development, opportunities, infrastructure, city planning and energy.
Ms Giles says the forum will also provide an opportunity for Zambia to market itself in terms of business and investment opportunities.
And Chargé D’ Affaires at the Zambian Embassy in Paris Alick Banda has commended Leaders League for extending an invitation to Zambia to participate at the forum as it will add value to solutions being implemented in order to develop the country.
Mr Banda said that Zambia will look forward to participating at the forum as the country needs such developmental activities to grow the economy for the benefit of the people.
“Our Country is on the fast lane to develop, we really want to take part in such developmental forums and take advantage of every opportunity to enable us get the development we need,” said Mr Banda.
Meanwhile First secretary for Economic and Trade Chibwe Chisala said that Zambia has put trade and investment at the centre of economic diplomacy and the invitation to attend the forum will benefit the country as it seeks to provide home grown solutions to improve the economy.
This is contained in a statement issued by Naomi Mweemba, First Secretary Press at the Zambian Embassy in Paris, France.
Kwacha v Cedi: The Best and Worst of African Currencies
BBC News, October 19, 2022
A cocktail of factors has sent the global economy into a tailspin in recent years.
Beginning with the Covid-19 crisis in 2020 that saw international trade almost grind to a halt, and the invasion of Ukraine by Russia in February this year.
For African economies, trouble had been brewing even before these global crises.
Debt obligations had been on the rise and commodity prices falling, eroding foreign-exchange earning power in some countries.
And with that, the goose for many African currencies against the US dollar had been cooked.
But most recently, the tale has been two-sided with the best-performing as well as the worst-performing currencies against the US dollar being from the continent.
Over the course of this year, the Zambian kwacha has risen to become the best-performing currency in the world against the dollar.
It has gained 15% so far in 2022 and was quoted at 15.93 to the dollar in Tuesday trading.
Experts have pegged these gains on President Hakainde Hichilema’s efforts to turn around the economy, mainly by reorganising its foreign debt to make it sustainable.
In September, the southern African country agreed a crucial deal with the International Monetary Fund for a bail-out loan amounting to $1.3bn (£1.15bn).
The amount will give a lifeline to key social economic programmes such as funding schools and hospitals as the government embarks on renegotiation of expensive debt with China and other creditors.
The move has restored foreign investors’ faith in the copper producer.
President Hichilema at the US-Zambia Trade Summit. Foreign investment has grown since Zambia’s international credit rating was upgraded in February.
This has also seen inflation cool off consistently at a time when even the most developed economies in the world are grappling with rapidly rising prices.
Zambia’s inflation has fallen from a high of 21% in October last year to 9.9% last month.
Further west in Ghana, the cedi is where the kwacha was in 2015.
On Monday, it was marked the world’s worst-performing currency, according to the Bloomberg currency tracker that watches 148 currencies.
In midday trading on Tuesday, the cedi was quoted at 11.64 to the US dollar. This indicates a 48% loss in value in the last 12 months.
The cedi’s position has been worsened by foreign investors losing confidence in the country and opting to dump Ghanaian dollar-denominated bonds from their portfolios.
According to the country’s Central Securities Depository, the amount of domestic government and corporate bonds in the hands of foreign investors fell to 12.3% in August.
This has seen Ghana fail to access cheap money from the international debt markets, and a Zambia-like deal with the IMF for $3bn in emergency funding is still in the works.
As a result, the cost of living in Ghana has been accelerating for the last 16 months with inflation hitting 37.2% in September.
On Monday, traders in Accra threatened to close down businesses for a second time in two months decrying the high cost of doing business.
Image: Getty Images
Zambia Finance Minister Eager to Renegotiate Debt, Awaits China's Team
Reuters, October 15, 2022
WASHINGTON/JOHANNESBURG, Oct 15 (Reuters) - Zambia's finance minister said on Saturday it is still unclear who will be leading talks for renegotiating its nearly $6 billion debt with China, the largest bilateral creditor of the first African sovereign default in 2020 after the COVID-19 pandemic hit.
China co-chairs a committee of official bilateral creditors with France as part of a debt restructuring that Zambia is seeking under the Group of 20's Common Framework, a platform for highly indebted countries to rework their debt with bilateral creditors.
"It is up to the Chinese authorities to choose who they want to represent them," Situmbeko Musokotwane said in an interview with Reuters on the sidelines of the International Monetary Fund and World Bank annual meetings in Washington.
"I don't know at this particular moment," he said, when asked who represents China on the official creditors committee.
Western countries this week ratcheted up their criticism of China, the world's largest bilateral creditor, as the main obstacle to moving ahead with debt restructuring agreements for the growing number of countries unable to service their debts.
At the end of 2021, China held about a third of Zambia's $17.27 billion international debt, according to Zambian government data. Since then, Zambia has cancelled $2 billion in undisbursed loans, many from Chinese lenders.
Musokotwane said negotiating with bilateral creditors including China before private creditors had "worked fairly well", but acknowledged there had been complaints from international investors who hold the country's sovereign bonds.
"It cannot be plain sailing because people approach it from different perspectives," he added.
Zambia secured a three-year $1.3 billion loan from the IMF in September. It is now seeking a present value $6.3 billion debt reduction, or 49% of the external debt being restructured. Some bondholders had previously said a 45% cut would be unacceptable.
"There is no point of pretending that there is something that is better, when doing so means that you leave Zambia still with an unsustainable debt situation," Musokotwane said.
"Because it means we will conclude today, then a month later or three months later, we default again."
Zambian grain exports could help to address shortages caused by Russia's invasion of Ukraine, Musokotwane said, adding that the government was hoping to host an overseas agriculture investors forum in the middle of 2023.
"We are making preparations for investors not just in Zambia, but from outside to take advantage of the land resources that we have, to come and produce food to export," he said.
The country is ready to open up to 100,000 hectares for this investment plan, and will start using a $300 million World Bank approved loan to improve roads, electricity and dams to attract overseas investors.
"Three or four" companies have expressed interest in acquiring Mopani copper mine, he said, including South Africa's Sibanye Stillwater, adding the interest was "what gives me the confidence that by the end of this year probably we should have a solution".
A proposal for the government to have "golden shares" in mining companies would enable it to veto any investors known to not be credible, he said.
The government is assuming an average copper price of $7,500 per tonne in 2023, with growing demand thanks to green technologies likely to support prices, Musokotwane said.
Image: Zambia's Finance Minister Situmbeko Musokotwane via Reuters
Zambian Kwacha Overtakes South African Rand
ZimEye, October 17, 2022
The Zambian kwacha is now stronger than the South African rand.
At about 09:20 am on Friday, one Zambian kwacha was worth R1,15.
At the same time, the rand traded at R18.20 to one US dollar, after it took a beating at close on the previous day, due to the greenback strengthening on the back of an expected interest rate hike as US inflation remained elevated.
South Africa’s economy has been dealt blow after blow this year, while still recovering from the Covid-19 pandemic.
The South African Reserve Bank has been on an upward trend of raising interest rates, in an attempt to curb soaring inflation all year, with oil prices see-sawing for most of the year, as well as dealing with the energy crisis and rolling blackouts imposed by the state-owned ailing power utility, Eskom, just to name a few.
Yesterday, the rand breached the R18.50 mark. The annual inflation rate in the US slowed for the third month running to 8.2% in September, the lowest in seven months, compared with 8.3% in August, but above market forecasts of 8.1%.
As the latest US inflation print came in above expectations, investors feared this might fuel further hawkish rhetoric by US Federal Reserve officials to keep up with hefty rate increases.
This saw emerging markets currencies suffering losses in the financial markets yesterday, as the fears drove risk-averse investors to safer havens, with the dollar again approaching its highest levels in 20 years.
Meanwhile, Zambia’s kwacha gained 27% against the dollar this year, driven by the election of Hakainde Hichilema.
Investors have bet heavily on the new government of that country securing a bailout deal with the International Monetary Fund.
The rand had already been dealt a blow by Wednesday’s US Federal Open Market Committee minutes, which revealed the escalation in the hawkish tone last month when members increased their interest rate hike forecasts in a firm focus on lowering inflation.
Analysts said the rand was at risk of further losses now, as the South African Reserve Bank (SARB) would take a cue from the Fed and increase interest rates significantly at its last meeting for the year next month.
To date, the US Fed has hiked rates by 300 basis points, while the SARB’s rate-hike cycle has encapsulated 275 basis points since it began in November 2021.
Zambia Sign Agreement with Namibia to Implement Historic Petroleum Pipeline
The New Dawn government has signed a Memorandum of Understanding (MoU) with Namibia regarding the development of the Namibia-Zambia Multi-Product Petroleum and Natural Gas Pipelines Project (NAZOP). The private sector development is set to supply 100,000 to 120,000 barrels of refined petroleum products per day.
The MoU represents both countries’ commitment to prioritising the petroleum sub-sector.
The Minister for Energy, Peter Kapala, explained; “Petroleum and its derivatives drive the engines of growth and development through the crucial role that they play in the production and transportation of goods and services. The NAZOP Pipelines system, when completed, is envisioned to supply 100,000 to 120,000 barrels per day of refined petroleum products in Namibia and Zambia. The NAZOP pipelines systems are also targeting supplying other countries in the SADC Region”.
As a member of the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA), Zambia has preferential access to a neighbouring market of approximately 320 million people.
Given the volatility of international prices, significantly exacerbated by the Russian invasion of Ukraine, the Minister was keen to emphasise the importance of utilising the best available means to reduce the cost of delivering petroleum products to Zambia and its partners. This reduction in costs will not only benefit consumers but also businesses who use petrol in their production.
The Minister also commended Basali Ba Liseli Resources Limited (BBLR) for the proactive initiative they have shown in driving the project. The Zambian government has shown its willingness to promote cooperation between private and public sector initiatives. It is believed such partnerships are amongst the best means to efficiently deliver development for the nation. In April of this year, the government established a Private-Public Sector Forum to promote precisely this type of collaboration.
The New Dawn administration is particularly welcoming to foreign investment following the upgrade of its S&P credit rating in February this year. The MoU is the latest in a series of international partnerships being discussed by the Hichilema administration. Earlier this year Zambia and the Democratic Republic of Congo (DRC) signed a historical cooperation agreement to mine cobalt for use in batteries in electric vehicles. This partnership is set to firm Zambia's position in the global supply chain.
Image: The Blowup via Unsplash
Zambia, US Hold Inaugural Business Summit to Boost Trade, Investment
Voice of America, October 13, 2022
Zambia is hosting a two-day business summit in Lusaka this week to try to attract American investors to the country.
Zambian officials say they want to diversify the economy and decrease dependence on extractive industries such as copper, which account for most of the country’s exports. Zambia’s Commerce Minister Chipoka Mulenga said the U.S. should be a key partner in that effort.
“But our focus right now is to see how best we can create jobs and revive our economic fortunes by value addition," said Mulenga. "We want to take advantage of the new energy system that the world is migrating to from fossil fuels into clean and green energy. And we are trying to take advantage of the minerals that we have and bring a consortium of developed players that have the technology already to see how we can develop our copper from exporting concentrates in its raw form into developing it into finished products for the green energy system that we want to go into.”
Zambia is Africa’s second-largest producer of copper – after the Democratic Republic of Congo – and an important source of other critical minerals like manganese, nickel, and cobalt.
But economists say Zambia’s dependence on minerals means it has not taken advantage of being a member in the Common Market for Eastern and Southern Africa (COMESA) or the Southern African Development Community (SADC).
“This is one of the challenges that Zambia has not really harnessed despite being in regional bodies such as COMESA and SADC," said Boyd Muleya of the think tank Zambia Trade and Policy Dialogue. "But going forward the engagement with the U.S. is very critical. We need to change the narrative because what we have seen in the past is mostly, we focus on aid that comes from the U.S., approximately about $500 million United States dollars annually.”
Government figures show Zambia-U.S. annual, bilateral trade was only $182 million in 2019.
Speaking at the business summit Wednesday, U.S. Ambassador to Zambia Michael Gonzales said he sees great potential in the country’s economy.
“The United States stands ready to partner with Zambia to ensure that this great country seizes the energy to become the Zambian renaissance and achieves that extraordinary potential," he said. "They are going to do this by leveraging on American technological know how to meet growing demand from ICT in every sector from health care all the way down.”
But economists such as Boyd Muleya with the think tank Zambia Trade and Policy Dialogue says another challenge for Zambia is attracting investment after becoming the first African country to default on its debt during the COVID era in 2020.
“One of the issues has been the uncertainty in terms of how Zambia’s debt will pan out. We have managed to get IMF executive approval in terms of a package, but we still are to conclude on the actual debt restructuring with respect to the terms put across in the comparability of treatment under the G-20 common framework.”
Zambia’s government is working on a debt restructuring deal with the International Monetary Fund that is expected to be concluded by the end of the year.
Despite the uncertainty, the two-day Zambia-U.S. Business Summit attracted hundreds of local and American investors from sectors including mining, technology, and healthcare.
Minister Calls for Further Investment in Tourism
Rodney Sikumba, the Minister for Tourism, has called for increased investment to spur the sector. His statement comes amidst a number of steps by the New Dawn administration to boost tourism in Zambia.
Mr Rodney, speaking at the Western Province Tourism, Trade and Investment Expo, described the government as “extending an olive branch to would-be investors” because “there are a number of places which need investment in the sector.”
The ministry would is aiming to generate more activity in the South-west tourism corridor by encouraging visitors to the famous Victoria Falls to stay in the country for longer. To this end, a bridge is set to be built across the Luanginga river to link Kalabo and Liuwa. Increasing accessibility in Zambia is perceived as crucial to boosting tourism across the country.
The New Dawn administration is also in the process of securing a $100 million USD loan from the World Bank in order to help fund infrastructure projects such as Kasaba Bay and Liuwa National Park. It is hoped that this loan will not only boost tourism but also catalyse local economic growth through its related employment opportunities.
In the recently published budget for 2023, it was announced that visa charges have been dropped for tourists from more than 35 countries. Visa fees have been removed for visitors from the EU, United Kingdom, United States, and China amongst others.
Image via Twitter @SikumbaRodney
Budget 2023: A Boost for Environmental Development
Environmental sustainability is one of the four pillars of the UPND’s economic transformation plan outlined in February 2022. The plan, which focuses on the period 2023-25, provides a platform from which the government aims to lay the foundation and grow towards medium-income status by 2030.
The recent budget includes a number of measures to support this goal. Tackling high levels of deforestation is a core government priority. To overcome unnecessary deforestation, the government will establish timber exchanges around the country in 2023 to improve transparency in the timber trade. The first exchange is set to be the Nangweshi in Sioma District, Western Province.
Environmental sustainability is vital to the long-term health of the Zambian economy. Rich in natural resources, it is crucial Zambia fosters sustainable investment initiatives to ensure the prosperity of future generations whilst attaining the full potential of Zambia’s resources. This is why the government have announced plans to diversify power generation to include more renewable forms of energy such as hydropower.
For example, the commission of the Kafu Gorge Lower 750MW hydropower station is expected both to foster economic growth and to provide sustainable, reliable, energy for Zambians. Remarkably, hydropower now accounts for 82% of Zambia’s electricity generation capacity. Building on this will not only foster more power, by meeting the government’s goal of universal power, but also provide employment opportunities across the sector. At present, Zambia generates 1,000 MW more energy that its peak demand. The excess generation helps Zambia export energy to Namibia and Zimbabwe under recently confirmed power supply agreements.
Furthermore, the government has signed a £1 billion green growth compact with the UK Government to further facilitate investment in the renewable energy sector. The UK Minister for Africa, Vicky Ford, emphasised that the investment would be important for “thousands of jobs and supporting green energy production.”
Nicholas Woolley, British High Commission to Zambia, commented; “This is an extremely exciting time for the partnership between the UK and Zambia. This Green Growth Compact enables us to formally build a stronger trade and investment relationship, based on sustainability, mutual prosperity and creating opportunities for businesses and communities in both our countries.”
In addition to this major investment from the UK Government, the New Dawn administration was pleased to announce that taxes on green bonds are to be removed. The current tax regime on bonds outlines that interest income earned by an investor on bonds attracts a 15% withholding tax. This move by the Minister of Finance and National Planning to exempt the 15% withholding tax on interest income earned on green bonds ensures that investors will not pay this withholding tax on their interest income. This draw to greener investments will act as an incentive for investors to act in line with Environment, Social, Governance (ESG) goals, will strengthen the environmental pillar of the UNPD’s economic transformation plan, and ultimately will aid Zambia in its commitment to meeting the UN’s Sustainable Development Goals.
Image: Diego Delso via Wiki Commons
Zambian Government Set to Boost Public Services and Social Protection
In order to build on the administration’s early progress, the 2023 budget includes a swathe of fresh funding for public services, such as health and education, as well as social protection schemes for the most vulnerable members of Zambian society.
Last month, Vice President, Mutale Nalumango, pledged to establish maternity wards at health facilities across the country. In particular, he praised the establishment of a ward at Luangwa, a district where previously mothers would have to travel 25 kilometres to the nearest maternity ward. The pledge comes as part of the New Dawn government’s desire to rectify the disparities found between well-funded urban constituencies and historically marginalised rural areas.
Nalumango did, however, emphasise that public-private partnerships would be crucial to the improvement of Zambia’s health provision. Speaking in Luangwa, he praised the Walkington family and the Luangwa Child Agency for their donations to the new maternity ward he was visiting. By combining the public and the private sectors the New Dawn government cements the importance of private entities in the provision of healthcare ensuring effective and efficient care throughout the region.
In continuance of this goal, the recent budget has allocated K1.1 billion to finance the construction and completion of 36 district hospitals, 16 mini hospitals, and 83 health posts, in order to reduce the long distances travelled to access health professionals. In addition to allocating K4.6 billion for the procurement of drugs and medical supplies, the government has also committed to the recruitment of a further 2,000 healthcare workers, having already recruited 11,000 health workers.
This is not the only major recruitment drive pledged in the 2023 budget. A commitment has also been made to the recruitment of 4,500 further teachers, on top of the 30,000 already hired. Whilst infrastructurally the government has proposed the construction of 120 new high schools and 56 early childhood learning centres with the financial investment of the World Bank. Further, they seek to complete the 115 secondary schools that were abandoned midstream since 2010.
The combination of state education and health services represents an important partnership in Zambia’s investment in the future. In conjunction with the NGO Healthy Learners, the government has re-stated its pledge to roll out the School Health Nutrition Policy (SHNP). As part of its commitment to “educating our future”, the nutrition programme is based on research that strongly correlates early nutritional outcomes with healthy brain development, adult health outcomes and higher economic output.
With Zambia’s young population – over half the population are under the age of 18 – such investment in health and education is an investment in the nation’s future growth. Upskilling the population is a crucial goal the government is fostering through public-private partnerships such as those with Huawei to train 5,000 students and with the EU and UN to invest $6.5 million USD.
The budget allocates K133.5 million to support the Keeping Girls in School Programme. The programme is thus far credited with keeping 5,000 girls in school and comes as part of the president’s desire to modernise the role of women in society. According to the charity Action Aid, nine million girls of primary school age will never start school or set foot in a classroom across the globe. This compares to just three million boys. According to the Gender Division Permanent Secretary, Mainga Kabika; “Hichilema is focused on eradicating child marriages by the year 2030… Children who were being married off early can now go back to school.”
In order to protect the most vulnerable in Zambian society, and to achieve the goal of becoming a middle-income country, the budget includes significant social protection measures. Social Cash Transfer and Food Security Pack Programmes are to increase both the number of recipients and the transfer value. The Social Cash Transfer Programme is set to be increased by 19.8%. The Food Security Pack’s allocation has been increased by K.1.2 billion. This food security programme is designed to support the vulnerable but viable farmers that represent a crucial pillar of the Zambian economy.
50% of Zambia’s land is arable but at present only 20% is farmed. As Zambia’s young population grows up, properly, but responsibly, realising the potential of this land will be vital not just to food security but also to economic growth. As part of the African Continental Free Trade Area (AfCFTA) Zambian acts as the breadbasket of southern Africa. As such, Zambia’s neighbours across its land borders represent an estimated market of 320 million people.
Image via Twitter @HHichilema
2023 Budget Aims to Boost Mining Investment
Last month, the New Dawn government outlined their plans to further boost investment in the Zambian mining industry.
A core element of the New Dawn government’s economic policy relies on boosting Foreign Direct Investment (FDI) into Zambia. This is expected to have the effect of boosting employment, realising the resource potential of the nation, and increasing growth across the Zambian economy.
President Hichilema at the recent China-Zambia Trade Investment Forum. Image via Twitter @HHichilema
Consequently, the most recent Budget, reduced the rate of tax payable on the transport of mining exploration rights. The rate, previously at 10%, now stands at 7.5% in a move designed to encourage further exploration activities by reducing the outgoing costs on a potential investor.
Further, the budget has restructured the mineral royalty rate to operate at incremental levels. The purpose of this is to mitigate the impact of price fluctuations and thus reduce the perceived risk of investment in mining.
These measures are designed to make the FDI climate more attractive in order to grow the economic potential of one of the country's greatest assets. The government is aiming to reach 1.5 million metric tonnes of copper production by 2023, increasing to 3 million tonnes by 2032. Such growth will require substantial foreign investment, but the outlook is optimistic.
The New Dawn government have already implemented selective measures to boost investment in the mining industry. The establishment of a Multi-Faculty Economic Zone (MFEZ) in Kalumbila will create tax benefits for mining suppliers and foster a hub of innovation that is expected to generate 10,000 jobs in 5-7 years.
Speaking in August, the Chief Executive of Barrick Gold noted; “At the moment the environment is very welcoming, driven by the new government.”
Kansanshi Copper-Gold mine already produces more copper than any other mine in Africa. First Quantum Minerals’ (FQM) further $1.35 billion dollar investment into the Kansanshi and Enterprise mines, agreed in May 2022, is set to boost the sector significantly. The Enterprise Nickel Project is set to be a top 10 nickel mining company globally.
Commenting on the investment, FQM emphasised that the government’s commitment to the predictability of the mining fiscal regime “provides the certainty needed to support large capital investments in Zambia.”
On top of promoting large scale investment, the New Dawn government is seeking to aid small-scale miners too. The government seeks to encourage mining cooperatives among artisanal and small-scale miners to facilitate access to support services and increase productivity. Measures to encourage formalisation will also be introduced to ease access to vital equipment and production-boosting training. Joint ventures between foreign investors and small-scale miners are also to be encouraged in order to increase access to affordable capital, a common growth inhibitor amongst informal and small-scale enterprises.
Image via Unsplash