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Finance Minister Dr Situmbeko Musokotwane has announced that the 2022 National Budget which was expected to be presented in last week of September will instead be presented to Parliament by the end of October 2021.

According to information made available to the Zambian Business Times-ZBT, the Ministry of Finance is currently undertaking consultations and receiving submission on the 2022 Budget and the 2022-2024 Medium Term Expenditure Framework,

In April, the Government through the Ministry of Finance commenced preparations for the 2022 National Budget and 2022-2024 Medium Term Budget Framework. The National Budget is an important policy tool, which Government uses to set out the economic direction  and fiscal policy.

In line with Part 26, Article 202, of the Zambian Constitution, the Minister of Finance is mandated to prepare the National Budget and present it to the National Assembly for approval, not later than ninety (90) days before the commencement of the next financial year.

However, in an election year, the Minister of Finance is required to present the Budget not later than 90 days after the swearing in of the new President.

In this case, following the election of the new President Hakainde Hichilema who was sworn in on 24 August, 2021, Dr. Musokotwane announced that he would present the 2022 National Budget by the end of October.

“The 2022 National Budget will be presented towards the end of October 2021,” he said. He announced this during the 2022 National Budget Consultations with the Zambia Association of Manufacturers (ZAM) in Lusaka on Wednesday September 8 2021.

Dr. Musokotwane reiterated the need for industry to play an elevated role in industrialisation; job creation; value addition; import substitution and, tax compliance.

Zambia Association of Manufacturers (ZAM) President Ezekiel Sekele said ZAM was happy with the plan by the new administration to promote industrialization, value addition, and mitigate the encumbrances in the business environment in Zambia.

Sekele welcomed the government’s proposition to enhance the formation of joint ventures between Zambian businesses and international investors in order to create jobs and enhance the quality of goods and services supplied to Zambians.

He assured the Minister that ZAM stands ready to work with the Government in creating jobs and wealth for citizens, both corporates and individuals.

 

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Finance Minister Dr Situmbeko Musokotwane has announced

Mining

Zambia’s Copper and gold production during the first half of 2021 declined by about 4% and 5% respectively. However, Small-scale and copper output by mostly locals increased by 43.3% from 5466 tonnes in 2020 to 7834 tonnes in 2021.

According to the 2021 midyear, economic report made available to the Zambian Business Times – ZBT, copper output declined by about 4% to 393,115 tonnes in the first half of 2021 compared to 407,808 tonnes produced in the corresponding period of 2020.

The reduction in output was due to breaking down of equipment at some key mines, reduced ore grade and in one case, depletion of the ore as well as the effects of the COVID-19 Pandemic containment measures.

Former Secretary to the Treasury Fredson Yamba said gold production reduced by 4.5 % in the first half of 2021 to 1,770 Kgs from 1,854 Kgs in the first half of 2020. Yamba said this was largely as a result of the continued low-grade ores at the major producing mines.

“There was a 26.3 % increase in gemstone production to 5,025 Kgs in the first half of 2021 from 3,980 Kgs in the corresponding period of 2020,” he said.

Yamba said during the first half of 2021, coal production increased by 49.9% to 277,620.4 tonnes from 185,225.2 tonnes produced during the first half of 2020.

He said coal output has consistently been on an upward trajectory largely due to an increase in demand for coal in electricity generation.

Meanwhile, Manganese output increased by 53.2% from 25,714 tonnes the first half of 2020 to 39,397 tonnes produced during the first half of 2021. This increase was on account of increased investment in manganese mining.

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Zambia's Copper and gold production during the

Tech

The Zambia Association of Manufacturers (ZAM) has said the intention by the new government to move towards cost reflective tariffs should be well managed to ensure that it does not inadvertently hurt industry and local production in the process.

Speaking in an interview with the Zambian Business Times-ZBT, ZAM board member Chipego Zulu-Chileshe said the association was looking forward to various engagements that will surround the development of the energy sector specifically with the intention to move towards cost reflective tariffs.

Chileshe said this must be a well-managed process that cushions the adverse effects of an exponential increase in the cost of energy for the manufacturing sector.

“With respect to the energy sector we continue to monitor developments around the sector and welcome the measures that have been announced in part by the President Hakainde Hichilema and the commitments that have been made towards delivering affordable and clean energy and powering the nation.

“As manufacturers, we are constantly calling consistent and steady supply of energy that is affordable and we look forward to various engagements that will surround the development of the energy sector specifically with the intention to move towards cost reflective tariffs,” she said.

Chileshe said this would of course require a consultative process that prepares manufacturers for any changes in the tariff regime and ensures that they are able to adjust accordingly.

She said the association welcomes the opportunity to participate in various trade reforms that would be required to strengthen the performance of the private sector in exports to the region.

Chileshe said, “We welcome the measures that have already been announced specifically the intentions to strengthen Zambia Bureau of Standards (ZABS) and the intention to facilitate the flow of trade and investments as well as governments intention to put in place export financing to support various Zambian businesses.

She said when it comes to reducing the cost of doing business in order for Zambian companies to compete and be competitive in regional markets, there is need for concerted and deliberate efforts to reduce the cost of production and the cost of doing business for local manufacturers.

“We do note the intention to streamline and reduce the number of licenses and permits which has been quite tedious and costly for various manufacturers, to also address the issues surrounding processing time and transactions, to encourage e-commerce, e-registration and e-payments which will enhance efficiency as well and to extend affordable credit and finance to players in the manufacturing sector.

“We are cognizance of the fact that the cost of doing business has been hampering the ability of the manufacturing sector to achieve its full potential. As such, we do look forward to not only participate in this process of private sector led growth in manufacturing but to also to contribute to the process through the provision of technical, insight and expertise in the sector with respect to how we can reduce cost of doing business and how we can accelerate the growth of the sector,” she added.

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The Zambia Association of Manufacturers (ZAM) has

Agribusiness

A Fish Solutions and Consultancy company has disclosed that there is need for fish farmers in Zambia to acquire deeper knowledge and to start formulating their own fish feed in order to increase fish production as well as their returns on investment.

Iban Aquafish Solutions Company Director Ian Bbole said the high cost of feed is one of the reasons the country has continued to experience a national fish deficit despite the country having huge water bodies. He stated that ‘therefore, there is the need for fish farmers to make their own feed and increase their production and returns’.

Bbole said fish meal, which is the major ingredient is imported and the fluctuation of the Kwacha to the dollar determines the cost of feed to a great extent. This has made this key ingredient expensive in times of steep Kwacha depreciation adding that if the kwacha appreciates, the cost of feed is equally expected to reduce.

He said other ingredients such as soya beans and wheat bran are and can be sourced locally, noting that fish meal is imported from countries that have a sea coast as they usually produce the commodity at competitive prices.

Speaking in an exclusive interview with the Zambian Business Times – ZBT, Bbole said there is need to find alternative sources of protein for fish in order to reduce the dependency on imported fish meal. Our local researchers and research institutions such as universities can do more in this area.

He said farmers should invest in the acquisition of Pallet Mills which are able to produce floating pallets as that may help reduce the cost of feed. Bbole told ZBT that natural water bodies have maintained the same amount of fish production which is not tallying with the demand for fish and the population that has continued to grow.

He noted that if natural water bodies are well managed, the production of fish in Zambia can increase adding that allowing fish to breed and cutting down on illegal methods of fishing can cushion the deficit.

Bbole cautioned that many farmers are getting into fish farming without acquiring the necessary knowledge, this leads to sub-optimal yields, therefore the need for more learning institutions to provide the relevant information to people who want to venture into fish farming.

He said capital is also a challenge for most people as fish farming is not an easy venture to get into. Fish farms have different levels of investment depending on the target production levels, but a significant funds are required especially if one has challenges with water resources and is dependent on underground water or a borehole.

 

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A Fish Solutions and Consultancy company has

Companies

Midlands Breweries Limited has sued Professional Insurance Corporation Zambia for failing to compensate the company for the loss of funds which were stolen by its employees who were covered under a fidelity guarantee policy.

The company is claiming the payment of monies insured with the insurance company amounting to K1.2 million as compensation arising from theft of funds by Midlands Breweries company’s servants, damages for breach of the insurance policy as a result of Professional Insurance’s refusal to compensate the company, interest on the amount owed, any other relief the court may deem fit and costs of the action.

Midlands Breweries insured its business funds with and by Professional Insurance under the Fidelity Guarantee Policy No. 208/20/2018/00013.

The company’s business money was allegedly stolen by the Breweries company’s then assistant accountant, the cashier and other staff in the accounts department through fraudulently false accounting and money laundering.

At the time the thefts occurred, Midlands Breweries was still covered by the Fidelity Guarantee Policy amounting to K500,000 per year of the cover.

Under defined events of the cover, the policy covered “loss of money and/or other property belonging to the insured or for which they are responsible stolen by an insured employee during the currency of this section. Direct financial loss sustained by the insured as a result of fraud or dishonest of an insured employee all of which occurs during the currency of this section which results in dishonest personal financial gain for the employee concerned”.

The company incurred losses amounting to about K222,677 in 2017,K1,822,217 in 2018 and K1, 497 in 2019 due to the theft of the company money by the said employees.

The funds stolen were insured for the years 2017, 2018 and 2019 and the maximum payable per year was K500,000 and from the audit findings, K222,677 is payable for 2017, K500,000 is payable for 2018 as well as another K500, 000 for 2019 therefore the total claim for the theft Midlands Breweries suffered from its employees is K1, 222, 677.

The loss arising from the theft was brought to the insurance company’s attention in line with the policy requirements but no payment has been made to date, Professional Insurance was served with documentation showing that the employees who stole the money were being prosecuted but justified the refusal to pay saying “the triggers of a fidelity guarantee policy are theft by an employee for personal financial gain. Therefore, theft has to be proved for the policy to respond”

According to a statement of claim seen by the Zambian Business Times – ZBT, Midlands Breweries claims there is no clause that states that the policy must be proved through court proceedings particularly a conviction in a criminal trail of the employees as suggested by the insurance company for the policy to respond or be paid.

Midlands Breweries has repeatedly challenged Professional Insurance to point to the clause in the fidelity guarantee policy document which suggests the requirement of proof of theft through conviction of the employee and the insurance company has failed/refused and neglected to do so.

Professional Insurance in its response has introduced new and unreasonable conditions to the policy which have no basis and changed the reason for the refusal to pay the entire amount on grounds that the losses incurred were discovered and reported beyond 90 days and hence 50% of the deducted when in-fact the said theft occurred at different times some of which occurred within 90 days.

The company has suffered loss, damage and inconvenience and continues to suffer loss, damage and inconvenience as a result of Professional Insurance’s refusal to compensate the company as per the policy.

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Midlands Breweries Limited has sued Professional Insurance

Companies

Management controls and the procurement procedures at Tanzania Zambia Railway Authority-TAZARA have come under question following the company’s legal actions taken to recover advance payments, a process which should have been smooth if the company had put in place adequate advance payment guarantees from its suppliers.

TAZARA has sued another company, Kenites Investment Limited for failing to deliver after being awarded a K3 million contract.

According to a statement of claim seen by the Zambian Business Times – ZBT, TAZARA is claiming for an order that Kenites pays K784, 280 being the balance of the amount advanced to the company for the work, damages for breach of contract, interest, any other relief the court may deem fit and costs.

TAZARA advertised a tender for sealed bids from eligible potential suppliers for the supply and installation of a single Axle Drop Table and Portable Hoist System Electrical Jacks in 2012.

Kenites was the successful bidder and was awarded the tender and a contract for the supply and installation of a single axle drop table and for the supply of a portable hoist system electrical jacks.

The contract worth K3, 114, 200 was executed on 7th February 2013 and TAZARA made a 40% advance payment amounting to K1, 245,680 with the view that Kenites takes site possession and performs it’s part of the contract.

Kenites took site possession on 25th August 2014 and commenced civil works by digging a pit and engaging TAZARA’s civil department and purchasing quarry product from Mununga Quarry and according to the contract, Kenites was to complete works within twenty four weeks from the date of commencement of works.

The company then demanded that TAZARA makes another 40% advance payment and TAZARA demanded that Kenites furnish proof that the first advance payment had all been utilized and also demanded that the company provides an insurance bond of 80% to cover both the first advance and the second advance demanded for by Kenites but the company failed to secure the insurance bond of 80%.

On 8th July 2015, TAZARA and Kenites held a meeting at which it was discovered that during the bidding process, Kenites submitted documents indicating that technical support would be obtained from YALE in Germany and it was on that basis that the company was awarded the contract, however, Kenites obtained and paid for technical support from ASHOCK manufacturers in India.

Kenites did not supply or complete works on the installation of the single axle drop table or the electrical jacks and to date, the contract has not been performed.

On 5th December 2017, TAZARA reported the matter to the police and consequently, the two parties entered into a deed of settlement on 20 February 2018 in which Kenites consented to repay the payment advanced by TAZARA before 30th November 2018.

The deed of settlement expired on 30 November 2018 but Kenites did not finish refunding the advance and on 15th May 2020, the two parties entered into another deed of settlement under which Kenites was to make monthly minimum payments of at least K15,000.

On 31 December 2020,the second deed of settlement expired and Kenites only made two monthly payments in June and October 2020.

Kenites requested a six-month break from making payments due to the COVID-19 pandemic and requested to commence refunding in June 2021 but on March 22nd 2021, TAZARA advised that it could only consider the request if the arrears due under the expired deed of settlement were cleared in full.

TAZARA has not heard back from Kenites and because of the company’s actions, TAZARA suffered loss and damage. There are calls that the company should be further investigated as these advance payments seems to have been made without adequate risk assessment, which raises suspicion.

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Management controls and the procurement procedures at

Markets

The International Monetary Fund (IMF) has defended its proposed Extended Credit Facility  – ECF programme that the new Finance Minister Dr. Situmbeko Musokotwane has proposed to close before the end of the year 2021.

The IMF has stated that the programme will help Zambia to underpin the reforms that government will undertake to address macroeconomic imbalances.

IMF resident representative for Zambia Preya Sharma told the Zambian Business Times – ZBT in an exclusive interaction that an IMF arrangement would help Zambia underpin those reforms and would support the authorities’ request for a comprehensive debt treatment under the G20 Common Framework.

Sharma said at the end of 2020, the Zambian authorities requested Fund support to help implement their economic reform programme to restore macroeconomic stability and address the human and economic impact from the COVID-19 pandemic.

She noted in an interview with ZBT, that notable progress was made during earlier discussions in detailing the key policy measures to address the macroeconomic imbalances currently facing Zambia and to enable a return to sustained growth with enhanced fiscal space for social and development spending.

“We look forward to discussing the new government’s reform priorities as soon as the new Cabinet is in place and with a view to advancing the ECF negotiations,” Sharma said.

When asked if Zambia still needs the IMF bailout package even when it is getting the IMF SDR, She explained that, “While substantial, the SDR allocation does not eliminate the need for external official financing, including from the Fund, and does not change the need for Zambia to undertake the reforms necessary to address macroeconomic imbalances.

Sharma said separately, as a member country of the IMF, Zambia will benefit from its share of the recently approved general allocation of $650 billion of Special Drawing Rights.

She said this decision will help address member countries’ needs for international reserves, build confidence, and foster resilience and stability. Sharma said, importantly, it is expected to help vulnerable countries address the impact of the COVID-19 crisis.

“To avoid confusion, it is important to emphasize that the general SDR allocation is completely separate and distinct from the discussions on an IMF-supported program with the Zambian authorities.

“An IMF arrangement would only be approved if a member country’s debt is assessed to be sustainable with sufficient capacity to repay the Fund.  A comprehensive debt treatment under the G20 Common Framework would be expected to achieve that for Zambia,” she added.

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The International Monetary Fund (IMF) has defended

Tech

Zambia’s  chances of getting a fourth mobile telecoms network operator for the past four years has suffered yet another setback after Beeline Telecoms failed to start operations within the initially designated six months and has instead asked for an extension.

The Zambia Information and Communications Technology Authority (ZICTA) has confirmed that Beeline Telecoms Limited has not commenced operations because the company asked for an extension which was granted by authority.

In an exclusive interview with the Zambian Business Times – ZBT, ZICTA Public Relations Officer Hanford Chaaba said the telecom company extension is now up-to 30 June, 2022 as the deadline for which it shall be required to commence operations.

Asked the reason for the delay and why the company had asked for an extension, Chaba did not respond by press time. This is despite the fact that even the previous failed license issued to UZI had asked for several extensions before it was finally cancelled.

ZICTA awarded a fourth mobile licence to Beeline Telecoms Limited on 19 February 2021. According to then ZICTA Director General Patrick Mutimushi, the company was required to commence operations within six months, failure to which the international network and national service licence would be revoked.

ZICTA stated after awarding the successful bidder of the licence after the UZI failure that it was in line with the authority’s regulatory mandate under the ICT ACT No. 15 of 2009, which includes the promotion of competition in the ICT sector.

The decision by the ZICTA to introduce a fourth mobile operator was arrived at after conducting an analysis of the ICT sector market from the perspective of the quality of services being offered by the incumbent licensees as well as the need, or otherwise, to raise the levels of competition among others.

To award the license to Beeline Telecoms, ZICTA invited requests for proposals and applications for a network licence under the international market segment and a service licence under the national market segment with associated resources.

The Authority stated at the time of issuance of the license that after a thorough evaluation process, the ZICTA awarded Beeline Telecoms Limited the licence after it met the minimum criteria.

A review of the initial failed Licence for the fourth mobile operator in Zambia shows that on September 4th, 2018, ZICTA, under the guidance of the Ministry of Transport and Communications issued a network licence under the international market segment and a service licence under the national market segment with associated resources to UZI Zambia.

After awarding of several extensions, UZI Zambia failed to commence operations by March 3, 2019 which was the final deadline issued by the authority and this was notwithstanding  two earlier deadline extensions, the first being November 30, 2019 and the second May 30, 2020.

UZI Zambia’s licence was then cancelled and the challenges affecting the sector have continued such as reduced levels of competition, ZICTA re-embarked on seeking to licence a fourth mobile operator, which led to the issuance of a licence to Beeline Telecom Limited.

 

 

 

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Zambia’s  chances of getting a fourth mobile

Mining

The new Minister of mines has with immediate effect halted all mining activities by mostly undertaken by local small scale miners famously called Jerabo’s. The local mining activities halted are at the copper slug dump famously known as the ‘Black Mountain’ in Zambia’s second largest city of Kitwe.

Minister of Mines and Minerals Paul Kabuswe said as Government moves to bring sanity and clarity in the manner the copper slug dumpsites are operated, there should not be any mining activities happening at the sites especially the Black Mountain for now.

Speaking during media interaction which the Zambian Business Times – ZBT attended, Kabuswe said the government’s intention was to bring sanity and roll it out proper procedures to ensure that not only a few Zambians are benefiting, but to also ensure that the dumps are for everyone’s benefit.

He said this move was not to remove the youths operating on the black mountain but that Government will create a legal framework in which the youths and other small scale miners operate to encourage them to participate in small scale mining.

“For now, we need to bring sanity and order to the dumpsites, issues of the black mountain and all those things. There has to be sanity. We need to promote local and small scale mining and the black mountain falls in that category, so for now we need to sit down and bring sanity.

“There shouldn’t be any activities for now at the black mountain until we bring sanity and roll it out properly so that it benefits not only a few and I want to say this, can we please stop being selfish because there is wealth for everyone in this country,” Kabuswe said.

He said, “The new Government is talking about youths being involved in small scale mining, we are not going to remove the youths from the dumpsites but we are going to create a legal framework in which they operate so that we encourage them to participate in small scale mining.

Kabuswe noted that small scale mining is not just dumpsites but there are a number of other explored areas where the youths can participate.

He said, “The impediment mostly for Zambians was financing but if the mining value chain could be used through the big mines, suppliers on the on the Copperbelt, the value chain is worth about US$5 billion [annually], so if we get about 20% of that, that is a lot for the entire Copperbelt.

“That is a lot of capital that can be used by our youths to partner and run mines, so these are issues that we must run with as a country. We must think outside the box and begin to own this country, we must have Zambian billionaires in dollars and the mining sector can produce such, Kabuswe said.

The new mines minister further said that “for now, can we wait until we bring sanity and clarity on how these areas are going to operate. Kabuswe said government wants a proper legal framework to guide how the black mountain is operated on and how Zambians will benefit from that.

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The new Minister of mines has with

Agribusiness

Just when some price reduction benefits are starting to trickle down with some retailers reducing their prices of imported products following the Kwacha appreciation, one key household commodity, cooking oil price hike is just about to hit home.

The Crushers and Edible Oil Refiners Association (CEDORA) has revealed to the Zambian Business Times – ZBT that cooking oil prices may soon go up due to the significant increase in global shipping costs and various other challenges being encountered with shipping and the global supply chain.

Association Director Aubrey Chibumba told ZBT that according to international reports which have been reviewed, shipping a container from Asia to Europe which used to cost around US$ 5,000 is now costing around US$ 15,000 , which is a big change.

Speaking in an exclusive interview with ZBT, Chibumba said the association members import crude palm oil which is then distilled into various brands of cooking oil through shipping into places or ports like Dar es Salem – Tanzania and Durban – South Africa, therefore the increase in shipping costs might start pushing cooking oil prices up.

“I’m not so sure how much our prices have gone up by, that is shipping from Asia into Africa, I haven’t seen those [actual] numbers yet, but there is definitely some increases in shipping prices. This is so because if they have increased Shipping costs for Europe, they will definitely increase for us [Africa] too”, he said.

He said one of the major reasons why cooking oil prices had gone up in the past months was because of the Kwacha devaluation, therefore the appreciation of the kwacha has contributed to the recent reduction in prices, which may not last if high shipping costs persist.

He however said it was difficult to say whether prices would continue to go down due to various factors that play a part in terms of pricing for the commodity, which does not only include the exchange rate, but also supply chain as well as global supply and demand dynamics.

Chibumba noted that there is a severe shortage of containers used in shipping due to the COVID-19 pandemic as many containers are in wrong places. The places that need containers to ship out don’t have them, so that has affected the supply chain and it is unknown when things will go back to normal.

“Even the UK is expecting that they are going to have empty shelves this Christmas, that’s how bad it is”, Chibumba told ZBT. He further stated that the price of soya beans and oil seeds have remained elevated than what people would normally have expected in other parts of the world, which means it is possible that crude palm oil prices may start going up.

He said the association would engage the new government, find out what it wants to achieve with hopes that the association’s approach for the industry is in alignment with what government wants in order to be able to receive the necessary policy support so that the association can achieve its industry objectives.

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Just when some price reduction benefits are