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Tech

The Northern Technical College (NORTEC) of Ndola on the Copperbelt is reported to be facing funding and cash flow challenges which has led its workers to threaten to strike due to delayed payment of salaries.

One of the workers representative who asked for their identity to be withheld told the Zambian Business Times – ZBT that all staff members were supposed to be paid their salaries on 21st of September 2021 but due to cash flow challenges being faced by the college, management says it will only be able to pay the salaries in the second week of October 2021.

NORTEC seems to be resorting to delaying payment of salaries, but the workers are getting adversely affected due to their commitments which the management seems not to be finding solutions to.

The workers are threatening to go on strike on Monday, which puts students in a difficult position as they are scheduled to have exams on the same day, Monday 4 October 2021.

The source said management has said that it is unable to pay salaries because it is being owed huge sums of money for bursaries by government dating back as far as 2017, adding that students have been learning but government has not been paying for the students who are on bursaries.

The source said because management has not been funded, they are not able to pay salaries on time stating that their bank accounts have been depleted. Efforts to get a comment from the Ministry of Education and the Loans and scholarships board by ZBT proved futile by press time.

 

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The Northern Technical College (NORTEC) of Ndola

Lifestyle

Access Bank Zambia, a local unit of one of Nigeria’s top tier banks has announced the appointment of Lishala Situmbeko as the Country Managing Director – MD from November 2021. Situmbeko has over 25 years of experience as a renowned business leader in the private financial and public sectors.

According to information made available to the Zambian Business Times – ZBT, Situmbeko served Zanaco Bank Plc for over 10 years in various roles, with the most recent being Chief Commercial Officer and acting Managing Director before joining Access Bank Zambia.

At Zanaco, Situmbeko held an expanded role that spearheaded the bank’s key business in retail banking, treasury, corporate and investment banking, business banking, transactional banking and other support functions.

Situmbeko was seen to have been passed over for the Managing Director role at Zanaco following the departure of Henk Mulder in preference for an outside hire and the current Zanaco Managing Director Mukwandi Chibesakunda.

Before joining Zanaco, he held senior treasury roles at Barclays Bank now ABSA Bank Zambia, was a senior economist at the Ministry of Finance and an economic and financial markets specialist at Bank of Zambia – BoZ.

Situmbeko has a Bachelor’s Degree in Economics from the University of Zambia, a masters degree from the University of Nairobi and has completed the program for executive development from IMD Business School in Lausanne, Switzerland.

In addition, Situmbeko is a Hubert H. Humphrey Fellow in Banking and Finance from Boston University. He also has numerous accreditations and certifications in business and development including being an executive coach, speaker, mentor and trainer under the John Maxwell Team.

A statement from Access Bank made available to ZBT further stated that “with this wealth of knowledge and experience in the industry both professionally and personally, Situmbeko will be an incredible asset to Access Bank Zambia as we continue on our growth plan in Zambia and beyond to be the World’s most respected African Bank,” the board of directors said.

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Access Bank Zambia, a local unit of

Mining

Zambia’s economic prospects continue to remain bright with Copper prices on the London Metal Exchange (LME) recording a rebound of about 0.6% to over US$9,300 ($9, 384.50) per tonne in the month of September 2021.

According to Reuters report, Copper prices rose on Monday 27 September 2021 on the back of falling stockpiles in exchange warehouses in top consumer China and the general shortage of scrap metal boosted demand for refined copper.

The three-month copper on the LME rose by 0.6% to $9,384.50 a tonne by 02:57 GMT, while the most-traded October copper contract on the Shanghai Futures Exchange advanced 0.8% to 69,580 yuan ($10,760.55) a tonne.

Tighter restrictions and supply disruptions also limited supplies of scrap copper, forcing some users to switch to copper cathode for consumption. In September last year, copper on the LME was trading around $6,500 per tonne.

Copper is Zambia’s number one foreign Exchange earner accounting for over 70% of total exports for the mineral rich country. The country produces about 850,000 tonnes of copper annually, which at current prices would mean revenues of about US$8 billion (850,000 tons *9,300).

According to the Zanaco weekly financial markets update, heightened possibility of a debt default by China’s second largest property developer, Evergrande, sparked a sell-off among copper investors early in the week leaving the price of the red metal lower.

On average, London copper was down 2.5% to a 5-week low of $ 9, 226.81/MT from $9, 461.05. However, and on a statement that Evergrande would honour its interest obligations on a local bond, fears eased and copper was seen partially erasing part of the earlier losses Wednesday through Friday but a hint that the US may start tapering its stimulus program limited this recuperation effort.

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Zambia’s economic prospects continue to remain bright

Markets

 

An International Monetary Fund (IMF)-supported economic programme is inevitable for Zambia as it presents important opportunities for realism in setting the debt records straight, transparency and mutual accountability, and technical assistant towards establishing fiscal and debt discipline.

According to information made available to the Zambian Business Times-ZBT, a local research economist at Equilibria Consulting Limited Caesar Cheelo said through an IMF programme, Zambia would be able to replace expensive commercial loans bearing coupon rates in the region of 5.36-8.97% for cheaper zero interest rate moneys.

Cheelo said the debt service savings would create significant fiscal space.

He said an IMF programme would unlock new money saying Zambia is eligible to a quota of approximately US$1.3 billion in new concessional loan money.

“IMF loan terms and conditions of IMF loans are generally much more favourable than on any commercial debt, including any debt rearrangements (such as Bond refinancing). The IMF uses the following three concessional lending facilities to provide support to low-income countries (LICs) like Zambia.

“The Extended Credit Facility (ECF), Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF) which are all concessional. While they have different maturities and grace periods, they are all currently interest free,” Cheelo said.

He explained that the ECF, which Zambia is seeking is a sustained medium- to long-term engagement in case of protracted balance of payments problems while the SCF is financing for LICs with actual or potential short-term balance of payments and adjustment needs caused by domestic or external shocks, or policy slippages  and can also be used on a precautionary basis during times of increased risk and uncertainty.

Cheelo said the RCF is the rapid financial support, as a single up-front payout for low-income countries facing urgent balance of payments needs and possible repeated disbursements over a (limited) period in case of recurring or ongoing balance of payments needs.

He said financing under the ECF and SCF carries a zero interest rate at least through June 2021, with a grace period of 5½ years and 4 years, respectively, and a final maturity of 10 years and 8 years, respectively.

He said any commercial debt rearrangement for example, refinancing of the US$750 million Eurobonds falling due in 2022 would not introduce any new money but would simply rearrange the existing stock.

Cheelo said this would not offer much extra Balance of Payment (BOP) support or fiscal space, especially compared to financing under an IMF programme.

He observed that IMF provides a very strong signal to the international community, unlocking pockets of finance and international goodwill.

“The following examples emphasize this simple but powerful point: The G20 Common Framework of Official Creditors succeeded in establishing a moratorium, which covered part of Zambia’s official debt for a period.

This moratorium was possible because the IMF and World Bank weighed in and guided the establishment and implementation of the Common Framework.

“Despite Zambia having hired financial advisors Lazard Frères and legal advisor White & Case, refinancing talks with Eurobond holder stalled in 2020, with the Bondholder citing, among other things, the agreement of a Fund deal between Zambian and the IMF as a pre-condition for negotiating with creditors,” Cheelo said.

He said in other words, the Eurobond creditors suspended negotiations on debt restructuring until Zambia secures an IMF deal.

Cheelo said, “In addition, when Zambia defaulted on its Eurobond debt service payments in late 2020, it is a widely held secret that the IMF stepped in to keep the creditors at bay, convincing them to holt the international arbitration process of recalling the principal amounts all three Eurobonds totaling US$3 billion.

He also said the multilateral and bilateral partners are on record that their future development finance to Zambian will depend on both good standing with them individually and on good standing with the IMF.

Cheelo said this is especially important for securing budget support from various development partners, something that will not be granted without an IMF deal.

“IMF is a highly competent technical assistant and strategic accountability partner: the expertise of the IMF in economic management, governance, fiscal and debt rebalancing, macroeconomic stabilization, etc. will offer crucial support to Zambia going forward, given the recent history of significant economic mismanagement and weakening of economic institutions.

“For instance, on debt data integrity and reliability, it is well documents that the World Bank-IMF and Zambian authorities had serious disparities on debt numbers and therefore, on the understanding of the prospects for putting Zambia on a path of debt sustainability,” he said.

Cheelo said ultimately, an IMF program is not meant as a panacea for Zambia’s economic problem; however, it is a necessary element, among many others, for economic recovery.

He said economic recovery is not about finding sets of mutually exclusive policy options; it is about formulating and implementing a sequence of coherent complementary home-grown & external policies & programs.

“Of course, Zambia should not go to the IMF negotiating table with eyes closed or with a weak and poorly thought-out negotiating position.

“The country has experienced a lot, has learned a lot, including about its own self-destructive tendencies, and now has every opportunity to establish a strong strategic negotiating position and secure a reasonable deal, also riding on the domestic and international goodwill and strong political will,” Cheelo added.

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  An International Monetary Fund (IMF)-supported economic programme

Companies

By ZBT staff analyst

The only way to reduce market interest rates on loan facilities in the near to medium term is for the Treasury Bill rate [offered by the Bank of Zambia – BOZ] to decline, a scenario that will eventually culminate in reducing the cost of funds across the market, the Bankers’ Association of Zambia (BAZ) has disclosed.

According to the Bank of Zambia (BoZ), commercial banks’ nominal average interest rates on loan facilities marginally declined to 25.6 per cent in June, 2021, from 26 per cent in March, representing a decline of a meagre 0.4 percentage points. This is on the back of a Monetary Policy Rate (MPR) maintained at 8.50 per cent for three successive times.

Commenting the lethargic interest rate reduction, BAZ chief executive officer Leonard Mwanza said that cost of funds on the local financial market remained high, exacerbated by the Treasury Bill rates that government borrows at, signalling a sustained heavy government intervention on the local financial market.

“So, if you’re asking a question as to why we do not see a significant reduction on lending rates, what I’d say is it’s always a question of which one is the real benchmark rate that lenders are using. And you bring in the aspect of the cost of funds on the market; what drives the cost of funds is the interest–free rate, which government borrows when they issue securities – TBs (Treasury Bills) and also government bonds”. 

You look at the short-term rate as a guide, which is the 364-day, the one-year Treasury Bill. If you concentrate where the TB rates are, you will find they are somewhere around 24 per cent. So, that’s the benchmark rate and it’s an alternative banks can use to lend because it’s risk-free. And when you look at what the lending rate is 25.6 per cent, that’s the average interest rates you’ll find in commercial banks,” Mwanza told the Zambian Business Times – ZBT in an interview.

“If you look at inflation at 24.4 per cent, the one-year TB rates are also around that range. So, you find that interest rates, inflation, the risk-free rates are within that margin. So, the key to dropping the lending rates is on the Treasury Bill rate because if they drive downwards, then, definitely, we can see interest rates start coming down. If inflation starts dropping below those levels, definitely, we’ll start to see interest rates dropping. So, we must also look at it from the angle of what the cost of funds are in the market. They are driven by the rate at which government is willing to pay for their Treasury Bills.”

Asked if the TBill rates could start to decline in tandem with the falling annual rate of inflation, Mwanza said this was dependent on government’s fiscal policy, which ultimately influences lending rates on loan facilities.

“Maybe not directly responding to the easing of inflation. It is more of a structural issue; it is a fiscal management issue. So, it starts from there; once we manage those structural, fiscal management issues, you’ll automatically start seeing interest rates coming downwards. For instance, the good market sentiments in the last auctions pushed the interest rates downwards because of the expectation that we will have a better focus, we’re expecting a better management of the economy, and out of that, the interest rates came down. And then the promise to consolidate fiscal management issues are actualised, going forward, yes, we could see interest rates following suit, they’ll start coming down,”he replied.

“And in any case, that’s what we always hope for; banks lend more when the interest rates are favourable to the market. When interest rates are high, you tend to have fewer borrowers, a lot of defaulters and risks increasing. I know already there is quite some lending to the private sector, but I am sure more can be done once it becomes more favourable to that small-medium enterprise, individual and to that corporate to borrow.”

And Mwanza, a former Natsave managing director, expressed optimism that the Non-Performing Loan (NPL) ratio, which still remained above the industry acceptable threshold of 10 per cent, would subside.

“The latest information we got for the first quarter of 2021 from the central bank was that Non-Performing Loans were around 11.6 per cent, which was above the industry threshold and it was mainly because of the subdued economy and the effect of the COVID-19 on businesses. I am sure there should be an improvement considering that there is an increase in lending to the private sector,” Mwanza told ZBT.

Lending to the private sector picked up by 16.3 per cent, year-on-year in June, 2021, compared to 0.5 per cent in March, this year, largely supported by increased disbursements from the BoZ’s K10 billion Targeted Medium-Term Refinancing Facility. However, the expansion in domestic credit to government slowed down further to 48.3 per cent from 69.6 per cent as commercial banks scaled down the accumulation of government securities, BoZ data shows

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By ZBT staff analyst The only way to

Markets

The Securities and Exchange Commission – SEC has revealed that they are in the process of coming up with a new capital markets master plan that pivots towards coming up with a regulatory framework that supports efforts in finding ways to enable local businesses and SMEs raise capital through for instance private equity and venture capital.

When asked by the Zambian Business Times – ZBT on why Zambia has had fewer companies listing on the Lusaka Securities Exchange – LuSE, SEC Chief Executive Officer Philip Chitalu said the master plan will look into issues like why companies are not listing on the Lusaka Securities and Exchange (LuSE) among others.

“We have actually gone into asking ourselves these same questions, like why are we not seeing many companies listing on LuSE. To this effect, we are now in the process of developing a capital markets master plan which will address most of the issues surrounding the capital markets such as why the companies are not listing on LuSE,” Chitalu said.

He further explained that capital markets are first split into two, the secondary market for bonds trading and the secondary market for equities (shares) trading. SEC therefore supervised or regulates the secondary market for bonds, equities and also the collective investments schemes.

Chitalu told ZBT that the commission and the market at large, is having to rethink and redefine capital markets to include all the things that are happening in the capital markets.

He said these include things like venture capital funds and private equity funds as some of the products that the commission strongly believe can be used to channel funds into Small and Medium Enterprises (SMEs) and other developmental areas.

Chitalu said the commission would concentrate on the entire capital markets space including the green bonds.

“In the last couple of months, we have looked at green bonds; it’s exciting that there is a Ministry that has been dedicated to specifically look at the green economy. We hope that with such a ministry and our objectives of ensuring that capital markets participated in channeling funds to the green economy, it is our hope that the ministry will work with us in fulfilling our objectives as capital markets regulator.

“Basically the green economy as far as we see, it includes investments in areas where the environment is being given positive considerations, so instead of deforestation, we should be talking afforestation, instead of people using charcoal we should be coming up with industries that discourage the use of charcoal, among others,” he said.

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The Securities and Exchange Commission - SEC

Markets

The failure to attract new listing by the Lusaka Securities Exchange – LuSE has been attributed to the country having more Small and Medium Enterprises – SME’s that have not reached the stage required for listing.

Securities and Exchange Commission – SEC Chief Executive Officer – CEO Philip Chitalu to the Zambian Business Times – ZBT that “Originally in our thinking, we concentrated so much as Zambia into listing but then listing requires institutions to be of a certain size and run in a particular way with certain financial reporting requirements”.

Chitalu told ZBT that when one looks at the Companies in our economy, you would noted that over 90% of companies in Zambia are probably SMEs who were unlikely to meet that list requirements but still need capital to grow.

He said, “the question is, how do we facilitate the flow of capital to SMEs [local businesses] when they are not listed? that is why we are looking at Private Equity, Venture Capital funds, green bonds and so on being used to do the exact thing that the market and the regulator where created for.

When asked to give details on why Zambia and LuSE in particular has had low number of companies listing, the SEC CEO said one of the reasons why companies are not listing is because the country has SMEs that are small in size and cannot meet the listing requirements but still need funding.

Chitalu further stated that the other major reason is the lack of awareness among the Zambians about the possibilities of investing through capital markets. “So awareness is another reason and the use and mobilization of savings, what I mean is that we need a lot of savings to be channeled through capital markets to the relevant sectors of the economy.

The other challenge has been the macro economics which have not been very stable. “So we need everyone’s savings including the attraction of foreign savings and investments. What I mean by foreign savings is foreign investors, require a stable macroeconomic environment,” Chitalu said.

“Can you imagine a foreigner brings in US$1 million when the exchange rate is say at K10 per US dollar, so he gets K10 million at that time. But when the Kwacha depreciates and the exchange rate goes to K20 per dollar, his investment will be worth US$500,000 if converted back to US dollars at that exchange rate, so without doing anything, just the movement in the exchange rate would actually discourage a foreign investor from investing in Zambian stocks in long term” the SEC CEO explained.

Chitalu emphasized that there is need for  the country to attain a stable macroeconomic environment that entails a stable exchange rate with minimal movements and a manageable inflation rate. He stated that these and other reasons have in a way contributed to LuSE not being able to attract new listings and expand the number of companies listed in Zambia .

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The failure to attract new listing by

Companies

The Metal Fabricators of Zambia Plc (ZAMEFA) has appointed Kangwa Bwalya as managing director of the company with effect from 14th September 2021.

Bwalya, the former ZAFFICO Managing Director – MD takes over from Rosetta Chabala who resigned from the company earlier this year.
The new ZAMEFA MD is a chartered certified accountant (UK and Zambia) with vast experience in the cable, mining and timber industries.
According to information made available to the Zambian Business Times-ZBT, he worked previously for ZAMEFA Plc in various senior leadership positions as Company secretary,  chief financial officer and acting managing director.
Bwalya then joined Rio Tinto as Business development manager-copper where after he worked for General Cable Corporation as chief financial officer-Asia Pacific.
“Most recently,  Bwalya was managing director of the Zambia Forestry and Forest Industries Corporation Plc (ZAFFICO).
“The board would like to thank Johann du Plessis for acting as the managing director of the company during the last couple of months, ” Company secretary BDO Zambia said.
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The Metal Fabricators of Zambia Plc (ZAMEFA)

Tech

The Zambia Information and Communications Technology Authority-ZICTA has disclosed that they have upgraded the quality of service monitoring equipment and now have capability to monitor this parameter on a town by town basis.

According to information made available to the Zambian Business Times – ZBT, the ICT regulator further revealed that there has been a rapid increase of network usage by more than 30% across all mobile network operators in Zambia since the advent of COVID-19 and admitted that this has resulted in poor Quality of Service (QoS).

ZICTA Acting Director General Eng. Mutale Mwenya said in order to mitigate the effects of the poor QoS, the authority has upgraded the quality of service monitoring equipment that has enhanced capabilities to monitor 4G/LTE networks in addition to 2G and 3G.

Mwenya said the authority has assigned to the service providers prime spectrum in the 800MHz band with conditions to increase network capacity as well as improve the quality of experience and QoS delivery adding that the authority will also be issuing more 5G spectrum in the next three years starting next year.

He said other strategies aimed at improving the QoS and fostering an enabling environment for innovation, e-commerce and other services that rely on ICTs put in place include increased QoS monitoring activities as the authority implemented a measurement mechanism of quality of service on a town-by-town basis to localise and address poor quality of service noting that this allows for identification of specific locations with poor quality of service.

Eng Mwenya added that the authority has also metedout penalties against erring mobile network operators over the past four years and increased engagements with the mobile network operators regarding underlying causes of poor quality of service.

He said the other intervention is the promotion of investment in the sector as the level of investment has a direct impact on the quality of service and experience therefore the authority has directed mobile network operators to reinvest in their networks including the acquisition of standby power solutions to mitigate poor quality of service.

The authority continues to advocate for reduction of corporate tax and zero-rating of ICT equipment in order to make funds available for reinvestment.

ZICTA is mandated under the Information and Communication Technologies (ICT) Act No.15 of 2009 to regulate quality of service in Zambia.

Section 67 of the ICT Act empowers the authority to prescribe standards as well as issue and review the quality of service guidelines in line with market dynamics and the first quality of service guidelines issued in 2010 mainly focused on monitoring voice services while the second quality of service guidelines issued in 2019 were to deal with increased data services.

The 2019 QoS review was mainly driven by the degradation in the QoS being provided by the service providers resulting in poor quality of experience to consumers of ICT services adding that the authority has been receiving numerous complaints on poor QoS from consumers across the country.

The authority has decided to conduct an inclusive review of the 2019 quality of service guidelines to take into account the views of all stakeholders especially the consumers and members of the public will be invited to comment on the QoS guidelines being revised.

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The Zambia Information and Communications Technology Authority-ZICTA

Mining

First Quantum Mining and Operations Limited (FQMO) Mining Division has sacked some of their employees over the ‘illegal’ protest they participated in over the changes in the staff pension scheme.

The National Union of Miners and Allied Workers (NUMAW) has disclosed that they are still engaging management at First Quantum Minerals Limited (FQM) on the possibility of them reinstating the 27 employees who were dismissed for holding a sit in protests over a newly planned and voluntary pension scheme for employees.

About 275 First Quantum Mining and Operations Limited (FQMO) Mining Division employees took what has been described as an illegal strike action at the Kansanshi Mine recently over the introduction of a private pension scheme and management of the mine raised charges against them and subsequently suspended them.

According to FQM, the pension scheme was the result of a mutual agreement between FQMO Mining Division management and all the unions representing the employees’ interests during the Collective Bargaining Agreement (CBA) negotiations of December 2020.

Speaking in an interview with the Zambian Business Times-ZBT, NUMAW President James Chansa said 209 of the 275 employees have since been reinstated while 26 are still under interrogation and 27 have been summarily dismissed.

Chansa said the 27 dismissed either were ring-leaders in the ‘illegal’ protest or had already been given final warning by the management. He noted that the dismissed employees have been given chance to appeal their judgement and it was the Union’s expectation that a good number of them could be reconsidered after their appeal is heard.

“For those who were dismissed, management was looking at case by case and some of them were ringleaders while others were on final warning considering the past records and so on.

“For the other 26, their fate is yet to be known because they are still under interrogation. But even for those who were dismissed were given chance to appeal and it is expectations that quite a good number will be reconsidered when their appeal is head,” Chansa said.

He said, “As a union, we regret that our members went on strike but at the same time we pleaded with management to extend amnesty to quite a number of them and thank God it happened.

Chansa said the union would continue to engage the mine on the possibility of reinstating the 27 workers.

On September 9, 2021, shift employees from the FQMO Mining Division downed tools at the start of the night shift of Thursday 9 September 2021. Subsequently, at the start of their shift, the day shift crew of Friday 10 September also downed tools. However, the majority of these day shift workers returned to work during the shift.

 

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First Quantum Mining and Operations Limited (FQMO)