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The International Monetary Fund – IMF has re-affirmed that the Zambian government has stayed the course and is broadly aligned with the commitments agreed under the staff level agreement, setting a good base to get the IMF facility.

Responding to a question from Zambian Business Times – ZBT,  Allison Holland, IMF Mission Chief for Zambia stated that “the [Zambian] authorities have shared key parameters of their economic reform program, which are broadly aligned with the commitments agreed under the staff-level agreement, and that are aimed at the overarching goal of restoring growth and fiscal sustainability.

Holland further stated that the Zambian “authorities have already begun implementing important reforms, such as increasing transparency in the procurement processes, enhancing control of budget spending and indebtedness, and moving towards cost-reflective tariffs in fuel products.

She stated that these reforms will support the IMF program once it is approved. When asked as to what the conditionality’s for the $1.4billion facility would be, Holland stated that full details would be availed after the program is approved.

“Once the program is approved by the IMF Board the full details of the program will be published – including all the reform targets and goals that will be monitored under the 3-year program”, the IMF mission chief to Zambia stated.

When asked when the IMF program would be availed to Zambia with concerns that the June timeline is fast approaching and this is affecting the national budget credibility? Holland restated that Zambia is in debt distress and needs a comprehensive debt treatment, together with fiscal reforms to restore debt sustainability over the medium term.

“We aim to bring the Zambia program to the IMF Board as soon as possible. However, the precise timing will depend on when the [Zambian] authorities can secure the necessary financing assurances from creditors. This is why we encourage official creditors to come together as quickly as possible to form the official G20 creditor committee under the Common Framework” Holland stated.

Zambia’s Minister of Finance Situmbeko Musokotwane and the hired debt advisors (Lazard) now have the task of ensuring that the credit committee is formed and that Zambia can get refinancing support from the G20 credit committee and the Paris Club in good time before they miss the timeline of getting an IMF deal by June 2022.

It it however not clear how the common debt treatment required to achieve debt restructuring from the key creditors will be achieved as a significant amount of Zambia’s debt is to China and its various financial institutions. It remains to be seen how debt owed to western creditors and that from the Chinese would eventually be treated, without the usual shadow boxing or tag of war between the two.

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The International Monetary Fund - IMF has

Markets

Energy Expert Johnston Chikwanda has disclosed that government is still subsidising fuel in form of forgone or waived 16% Value Added Tax (VAT), 25% customs duty and excise duty which translates to over 41% when these taxes are added.

Chikwanda said these taxes were suspended by the previous Patriotic Front (PF) government in order to suppress the pump prices upto 31st December, 2021. Therefore, on 1st January, 2022 the fuel pump prices were supposed to increase by more than 41% but the UPND government decided to extend the tax waiver policy to mid this year which ends on 30th June, 2022.

According to information obtained by the Zambian Business Times-ZBT, Chikwanda who is one of Zambia’s leading energy experts said that “There has been alot of conflicting statements from different stakeholders that there are no fuel subsidies in Zambia at the moment while others are saying there are still fuel subsidies.The correct position is that government is still subsidizing fuel”, he said.

A subsidy can be direct or indirect. A subsidy is simply a sum of money granted by government to help an industry or business keep the price of a commodity or service low, so when a government decides to suspend taxes and duties which they actually need to finance other sectors, they are actually subsidizing that product.

The continuing of the UPND led government to copy and extend the waiver on VAT, Customs and excise duties on petroleum products which was initially done by their predecessor the PF, simply confirms that the subsidy on fuel has continued.

See earlier ZBT article https://zambianbusinesstimes.com/govt-abandons-tax-revenue-from-imported-fuel-extends-waiver/ to appreciate the continued tax waivers and in-fact subsidizing of fuel in Zambia.

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Energy Expert Johnston Chikwanda has disclosed that

Companies

The Copperbelt Forestry Company (CFC), a Zambian wholly-owned company which was incorporated in 2000 as a management buy out company after the privatization of ZAFFICO has disclosed that it has the capacity to supply ZESCO with the required poles.

This follows assertions that no Zambian company is capable of supplying the poles that national power utility ZESCO shortlisted foreign companies. The shortlist leaked to the media showed that there was no Zambian company shortlisted, a situation that led to the questioning of what criteria was used with some accusing the committee of graft.

Meanwhile, CFC has confirmed with the Zambian Business Times – ZBT that ZESCO has since engaged them (Copperbelt Forestry Company – CFC) through a meeting that was held mid-mornings of today (31 March 2022) on concerns that they had been side-lined. ZESCO stated that they thought the company was not yet in operation after the fire situation it had in the late months of 2020.

CFC has since been requested to write to the ZESCO Managing Director and the Head of procurement and that they will be considered.

When asked why CFC was not initially considered, the company told ZBT that they are not sure if ZESCO will shortlist them or call them back, but confirmed that they have been advised to write back to the managing director and the head of procurement, stating that the previous applications to supply ZESCO with wooden poles might not have reached the Head of Procurement and the Managing Director, CFC stated.

This is in an issue where CFC said that it registered as suppliers which was the initial stage but when the list of short listed bidders was published, the company was side-lined, instead ZESCO only short- listed foreign companies only.

And the Company said that it had supplied Zesco with wooden poles before and that the last contract ended in 2020. Efforts to get comments from ZESCO procurement proved futile by time of publishing.

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The Copperbelt Forestry Company (CFC), a Zambian wholly-owned

Agribusiness

Dairy farmers and fresh milk producers have expressed concern over the steep drop of fresh milk farm gate prices by about 36% from K11 to K7 per liter. Farm gate prices are prices which diary farmers are selling their fresh milk at wholesale prices to milk processors at milk collection centers or farm gates.

One of the leading dairy farmers Guy Robinson has revealed that this drop is attributed to the dumping of milk powder (milk concentrates) which some milk processors have opted to import at the expense of sourcing from Zambian diary farmers.

He told the Zambian Business Times – ZBT that government should introduce atleast 40% duty on powdered milk in order to discourage processors from importing powdered milk and discourage the practice as there are enough dairy farmers producing milk therefore the need to stop supporting farmers from other countries and create employment for local farmers.

He explained that empowering rural people and farming communities through dairy farming brings money into rural areas, retains foreign exchange in the country as well as facilitates some dairy farmers being able to venture into other businesses such as transport through earnings from dairy farming.

Robinson has further appealed to government to consider reducing duty on milk related packaging materials so that processors can channel some of that money to paying farmers reasonable prices, which will trickle down to the consumers through better retail prices.

“Dairy farmers used to be exempted from paying Value Added Tax (VAT) but now the situation has changed and we are paying tax on all imports, so government should consider exempting large-scale farmers to help them reduce the cost of production”, he said.

He mentioned that Kushiya Farms is currently milking 500 animals and producing between 15,000-16,000 litres of milk a day and had plans of increasing the number of dairy animals from the current 500 to 600-650, but the current dampened prices of milk (K7 per litre) will not allow the expansion to happen.

“We must sell our dairy cows, so right now we are looking at selling some dairy heifers per annum to keep meeting our costs of production but if the milk price does not improve, there would be no one to buy. If the situation continues, nobody will be willing to buy the dairy heifers so what will we do, what’s the point of the ministry through DAZ importing cattle if the price of milk keeps collapsing”, he said.

Robinson further stated that the Dairy Association of Zambia (DAZ) is doing a fantastic job in terms of assisting the farmers by engaging government but unfortunately, they are failing to get through and get the desired actions from government.

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Dairy farmers and fresh milk producers have

Mining

Lumwana mine has refuted claims by some members of the public, some of whom purport to have worked for the mine that it is mining Uranium, a high value mineral used in nuclear energy generation.

According to the information and queries that were sent the Zambian Business Times –ZBT, Lumwana Mine is alleged to be mining Uranium and other minerals which are not officially declared.

When contacted by ZBT, Lumwana Mine has denied the allegations that they are mining uranium adding that the company is mining copper and not the said mineral.Lumwana mine Executive director Nathan Chishimba confirmed that the company is mining copper and not the alleged Uranium.

Speaking in an exclusive interview with the Zambian Business Times – ZBT – Chishimba said the allegations were false. When asked to comment further, on allegations of the mine not declaring other Minerals that are mined over and above copper, the Director asked for an official press query.

Lumwana mine is a large copper mine located in the North western province. It is owned by Barrick Gold and represents one of the largest copper reserves in Zambia and in the world having estimated £5 billion of proven and probable copper reserves of ore grading 0.68% copper.

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Lumwana mine has refuted claims by some

Companies

Oil Marketing Companies – OMCs as well as Bulk Oil Importing Companies in Zambia are facing tough times following the instability and continued increases in prices of global crude and refined petroleum products. With the newly introduced monthly fuel price adjustments, the sector is facing this challenge on a monthly basis.

The industry is generally facing increases in the need for working capital or cash needed to make new orders on a month on month basis which is eating away on the already slim margins that the sector comprehends with. The increases in working capital or cash needed for new orders are due to the need for more capital to make new orders which are at higher prices for every new month, a situation which is driving up financing costs.

A check with industry players has revealed that there is need for urgent action to come up with a country strategy on how to deal with this Oil price instability that is not only resulting in increased pump prices, but has a deep effect across the economy. If not handled well, the price increases risk wiping out economic strides for the entire year.

A check with Mount Meru Zambia, one of the fastest growing players the Zambian Petroleum industry revealed that the Russia – Ukraine conflict is having a direct effect on the Zambian economy. Mount Meru Managing Director, Dharmesh Patel stated that if crude oil prices goes up on the international market, the effects are direct on the prices of fuel in Zambia.

He stated that international fuel prices increase, there is a trickle down effects on the price of fuel into Zambia. The increase in prices is resulting in a reduction of the margins immediately the international prices are adjusted upwards. By the time the monthly adjustment is made, some volumes would have been sold at the old price and this is were the working capital is being affected.

In an exclusive interview with the Zambian Business Times – ZBT, Patel said that if these adjustments are not handled carefully, someone in the equation might lose money, either the government or the oil company’s, hence the monthly fuel price review by the Energy Regulation Board – ERB is helping to make sure that everything is in line with the international market.

Patel said that the purchase of fuel now is dependent on the M-1 average (which is average for the last 30 days) which is a mixed bag for oil companies because sometimes business is done on lower margins but it only for a short period of time because the price review is done every month now.

He added that it is difficult when the price goes up because it means that the company’s also need to invest more in the working capital for that increased unit, he however stated that the only possible solution is to hope for the stability of fuel price on the international market.

The Russia – Ukraine conflict is having deep economic domino effects in Zambia as it feeds into other essential commodity prices which are dependent on the transport sector. The transport and logistics sector costs and prices are heavily dependent on fuel prices. Petroleum and its by-products is also an important raw materials in the production of many goods, both consumable and non-consumable.

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Oil Marketing Companies - OMCs as well

Tech

The Insurance Association of Zambia – IAZ has rolled out a digital insurance certification system that will completely eliminate the need for customers and the Zambian public to queue up or physically travel to access motor vehicle insurance.

IAZ President Moses Siame said technology is not only a great equalizer but also an enabler as it enables service providers (insurance companies) to deliver services remotely in a more efficient and cost effective manner.

He said technology plays a great role in every insurance company to remotely reach their potential customers and ultimately increase their bottom line. This technology further goes to resolve challenges which ordinarily would not be resolved by traditional means.

Speaking during the launch event monitored by the Zambian Business Times – ZBT, Siame said this initiative in the motor insurance sector will help in resolving a number of challenges that have affected the bottom line, hampered outreach and in most cases deprive the industry’s contribution to the government revenue.

The IAZ President further said the digital motor vehicle insurance initiative will be responding to the government vision of increased e-commerce that will in turn translate into less cash being used, adding that this is basically moved to electronically means of buying and selling for which motor vehicle insurance is going to be one of those services.

And the Ministry of Technology stated that it is confident that adopting new technologies and increased use of ICT platforms will help build a stronger and sustainable economy. Minister of Technology Felix Mutati said the ICT platforms in particular have a lot of potential in terms of service delivery across the country as they allow people to provide and procure service delivery across great distances without having physical contacts.

Speaking during the launch of the digital motor vehicle insurance certificate system, Mutati said, the insurance sector plays a vital role as it provides short term and long term financial protection that help to deal with the financial shocks that result from unexpected and untimely loses.

Mutati urged and encouraged insurance companies to integrate to the government service bus to realise the benefits of the system some of which are to eliminate fraud that may involve forging motor vehicle insurance certificates which reduces business for insurance companies.

He said the solution also reduces the cost of doing business because the solution is virtual which can be made available to customers anytime and anywhere with internet access. Purchasing of motor vehicle road tax and accompanying insurance has been a pain point for consumers with queues seen on a quarterly basis.

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The Insurance Association of Zambia - IAZ

Agribusiness

Government has lifted the suspension of the issuance of export permits for day old chicks, stock feed and hatching eggs with immediate effect. The ban on the issuance of export permits came into effect in July 2021 due to the high prices of stock feed and day old chicks as well as reduced availability on the local market.

This follows a Zambian Business Times – ZBT reports of increased drowning of excess day old chicks and the expanded production capacity that could not be taken up by the local market. ZBT had earlier reported that the Zambian government had failed to make a decision despite calls for resuming of export by the Poultry Association of Zambia – PAZ. See earlier report https://zambianbusinesstimes.com/over-1-1-million-day-old-chicks-drowned/

And the Zambia National Agribusiness Development Strategies Technical Group Vice Chairperson Munyaradzi Mulonda has welcomed government’s move stating that this will earn the country the much needed foreign exchange that will help stabilize the Kwacha.

Mulonda noted that there is more money in the export of the two commodities as a bird fetches around $1-$1.50 on the export market, adding that fertilized eggs are also fetching good prices therefore the need to take advantage of the export market.

He explained that this development will allow the industry to grow and companies that have been operating at 50%-60% capacity due to reduced demand on the local market can now produce at full capacity noting that this will also encourage more players to venture into the business

“The lifting of the ban on export of day old chicks and fertilized eggs is very good because it’s going to allow us to expand our production for chicks and eggs. It also creates an alternative market which can also bring in foreign direct investment so it’s a very good initiative by government to lift that ban, we support that”, he said.

Mulonda who is also the Founder and President of Sub-Sahara African Farmers Organisation (SSAFO) however said government should give producers of day old chicks and fertilized eggs an export quota in order to avoid creating shortages and price hikes of the commodities on the local market.

He added that government should regulate the exports in order to ensure that the local market is satisfied first and exporters only truck out the excess, as this will keep the prices on the local market stable.

“Exports should not be left open, government should give export quotas as it is done with milling companies, see how much they produce and allow them to export a certain quantity. Do not let them export more than the demand on the local market”, he said.

“Leaving it open can bring shortages on the local market. We do not want to see a situation like what was happening last year where you order in June and you are told you will collect your order in September or October. Chicken prices can go up due to market forces such as supply and demand where demand increases and outweighs supply, prices go up as hatcheries will concentrate on exporting at the expense of the domestic market as they will have a higher earning there”, he said.

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Government has lifted the suspension of the

Markets

The Lusaka Securities Exchange (LuSE) has launched the LuSE Gem Portal, an innovative digital platform principally purposed to provide Small and Medium Enterprises (SMEs) with access to capital for investment into growing their businesses.

LuSE Chairperson Kayula Siame said the Lusaka Securities Exchange in collaboration with its partners is pleased to introduce the portal, an initiative admitted to and currently testing under the capital markets regulatory sandbox framework.

Speaking during the launch of the LuSE Gem Portal for SMEs, Siame said the portal digitally identifies, evaluates and enables the urgent provision of financing to qualifying SMEs.

Siame noted that in its continued efforts to make a positive and effective contribution to the growth of the national economy, LuSE has in accordance with its strategic plan continued to implement initiatives aimed at energizing the private sector’s productivity and supporting government programmes.

She explained that in providing SMEs with this digital platform, LuSE is keeping in stride with trending global digital transformation that is leading to the integration of digital technology into all areas of business and is fundamentally transforming how businesses operate and deliver value to their customers.

Siame added that accordingly, a key LuSE objective is to facilitate the mobilization of and access to the much-needed investment capital for both large corporates and small and medium sized enterprises in order to ease and sustain their operations.

She said financial support for the productive sectors of the economy largely populated by SMEs is vital for the health of the general economy noting that during and after the current Covid-19 outbreak, is an even more pressing matter requiring urgent attention.

Siame mentioned that the gem portal is particularly relevant in today’s difficult times, as an effective means of providing relief against the disruptive effects of Covid-19 on the national economy and in particular its impact on SMEs.

She noted that it is the purpose of the portal to enable SMEs to shore up their capacity to rebuild and continue in business during and in the immediate aftermath of the Covid-19 crisis.

Siame added that through the portal, all SMEs dedicated to the local production of equipment, facilities, accessories and services in healthcare, food and agriculture will be aided by United Nations Capital Development Fund (UNDCF) in meeting the expected rise in demand for such resources by an ever-growing population.

“As a securities exchange, LuSE is continually pursuing listings and in this regard LuSE recognized as far back as 2015, the necessity of broadening the opportunity to list investors, high net worth individuals who have not yet joined us, to come on board and partner with us on the gem portal and avail funding to SMEs”, she said.

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The Lusaka Securities Exchange (LuSE) has launched

Mining

Mopani Copper Mines has confirmed a fatal acccident at the Smelter Concentrate Shed in Mufulira, which occurred on Tuesday, 22 March 2022 around 16:00 hours.

According to information made available to the Zambian Business Times – ZBT by Mopani Public Relations Manager Nebert Mulenga, the Accident happened when a team of contractor employees were working on the Concentrate Shed, and one of them, Mr. Anderson Mwaba, aged 35 years accidentally fell through the roof and sustained fatal injuries.

Mopani Copper Mines says it is working closely with the Safety Department, Zambia Police Service and other relevant authorities to investigate what could have caused this tragic accident.

Meanwhile Operations at the Smelter Concentrate Shed where this incident happened have been suspended until further notice. Mopani Copper Mines Management has since expressed its deepest condolences and has pledged to render support to the family and colleagues of the deceased during the difficult time.

This is the second time Mopani is recording the fatal accident this week with the first incident at the south ore body-sob shaft in Kitwe which occurred on Sunday 20th March 2022 around 13:00 hours involving a 45 year old boiler maker, Mr. Justin Nsakanya.

The Zambian Government is yet to make clear the way forward for Mopani Copper Mines As well as Konkola Copper Mines – KCM, with some stakeholders calling for the government to support the local management of the mine as opposed to turning it over to foreign investors.

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Mopani Copper Mines has confirmed a fatal