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By ZBT Staff reporter 

The Bank of Zambia (BoZ) has again maintained the Monetary Policy Rate (MPR) which serves as a benchmark lending rate at 8.5 per cent. This is despite the current positive economic sentiment that Zambia is enjoying following the change of government and the peaceful transition of power.

Lending rates have resisted to follow the trend that have been seen in other economic indicators that has seen the Kwacha appreciate by about 30%, with Zambia’s Euro bonds yields having earlier been reported to have been the first to indicate the positive sentiment following the announcement of President Hakainde Hichilema’s win.

Speaking during a media briefing in Lusaka, Wednesday attended by the Zambian Business Times – ZBT, BoZ governor, Christopher Mvunga, announced that the central bank decided to maintain the MPR at 8.5 per cent for the third successive time since last February.

Mvunga explained that maintaining the MPR at 8.5 per cent was arrived at in view of the subdued economic activity and existing vulnerabilities in the financial system.

The MPR is the benchmark lending rate the central bank sets on commercial banks to either increase or decrease interest rates on credit facilities, while the Statutory Reserve Ratio (SRR) is the proportion of deposits a commercial bank, by law, must keep in cash or place with the central bank.

The SRR usually moves in tandem with the MPR.

“The Committee noted that, over the forecast horizon, inflation is projected to decelerate faster and edge closer to the target range than was envisaged in May, 2021, MPC meeting. Underlying the decline in inflation is mostly the favourable outlook for the exchange rate and improved prospects for the fiscal consolidation. In this regard, the MPC decided to maintain the MPR at 8.50 per cent. In arriving at this decision, the Committee remained mindful of the subdued economic activity and existing vulnerabilities in the financial system,” said Mvunga.

“Decisions on the Policy Rate will continue to be guided by inflation forecasts, outcomes and identified risks, including those associated with financial stability wand the COVID-19 pandemic.”

Commercial banks’ nominal average interest rates on loan facilities, which have generally remained elevated in recent years, have finally started slightly declining this year since the downward adjustment of the MPR last February.

BoZ data shows that banks’ nominal average lending rates have marginally dropped to 25.6 per cent by end-June, 2021, down from 26 per cent in March, this year. Interest rates on loan facilities linked to the MPR are directly impacted as this is the benchmark lending rate.

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By ZBT Staff reporter  The Bank of Zambia

Agribusiness

Agro experts have called for policies that will encourage local fruit production and processing as opposed to the current set up were large scale soft drinks producers in Zambia opt to import concentrates as opposed to investing in local fruit production and processing.

This follows the announcement by Mununshi Fruit Company Limited, wholly owned by the Industrial Development Corporation (IDC), that they have started to harvest their first banana fruits from the estate, and this is expected to help further cut banana imports which are estimated to be about US$430k per annum.

The company, which is located in Luapula’s Mwense district, expects to harvest 1,425 tonnes of bananas from 47,500 plants, grown on a 30 hectares plantation. Despite having all the requisite weather and soil conditions, Zambia still had a Banana production deficit that results in imports to cover the shortfall.

IDC in a statement made available to ZBT stated that they have so far invested K19.2 million (US$1 million at that time) in the banana plantation to procure suckers, irrigation equipment, land clearing and rehabilitation of infrastructure.

The greenfield project, which is in line with the IDC’s mandate to spur rural industrialisation with the aim of creating wealth and jobs, has employed 38 full time employees and 10 seasonal workers from the local community.

The project having completed a full circle, is expected to play a role in making Zambia self-sufficient in banana production, while slowly plugging the gap of importation of the fruit.

IDC notes that it is confident Mununshi Fruit Company will contribute to currency valuation through banana exports adding that the first fruit has been taken up by local off-takers who are supplying the local market as well as DR Congo.

Expansion of the estate will take a phased approach and this will include the production of commercially viable fruits like avocados and mangoes. The company is growing bananas in the current phase but will diversify to mangoes, avocadoes and vegetables in subsequent phases. See more on how Zambia spending US$432k on banana imports.

 

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Agro experts have called for policies that

Agribusiness

Livestock farmers have confirmed that stockfeed availability across Zambia has improved following the export restrictions that had been put in place. Some parts of Zambia had even started recording shortages while some farmers complained of being forced to buy in bulk to secure feed.

Lon the issue of when the prices are expected to fall following the increased supply as well as appreciation of the Kwacha of about 30% in the last three to four weeks, a source at Novatek told the Zambian Business Times – ZBT that prices can only fall after six (6) months.

And Ministry of Livestock and Fisheries Permanent Secretary Benson Mwenya stated that the suspension of the issuance of export permits for stockfeed has stabilized the availability of stockfeed in the country. Mwenya said the availability of stockfeed would help address the high cost of feed that was being experienced on the local market.

Speaking in an interview with ZBT, Mwenya said the recent appreciation of the kwacha is expected to also contribute to the reduction in prices adding that most suppliers of stockfeed would reduce prices as soon as they get rid of the old stock.

A check by ZBT showed that stockfeed suppliers have maintained prices despite the ministry’s efforts to see reduction in prices by issuing a temporal ban on the issuance of export permits for stockfeed about a month ago. Some feed outlets spoken to could not confirm when their old stocks would be finished and when they project to reduce prices.

One of the stockfeed suppliers – Quantum Foods is selling their starter feed at K427, grower feed at K401 and finisher feed at K386 with no indication of when they expect to start reducing prices. Another,  Novatek Animal Feeds is selling their starter feed at K532, feed grower at K508 and finisher feed at K490.

A Novatek Animal Feeds staff whose identify has been withheld told ZBT that their customers would only be able to see a price reduction of stockfeed after about six months as the company imports raw materials that last for about six months, which it uses in the manufacturing of stockfeed.

The company source explained that Novatek imports enough raw materials, which enables it to manufacture feed to be sold for six months, therefore the recent appreciation of the kwacha will only affect the prices of the stockfeed after six months.

A month ago, the Ministry of Livestock halted the issuance of export permits for stockfeed due to the steep increase in prices of stockfeed. The suspension of the issuance of stockfeed and its ingredients was meant to address the continued increase of stockfeed prices on the market despite the key ingredients being sourced locally.

The issuance of export permits for stockfeed was suspended with immediate effect on 25th July, 2021 and Ministry of Livestock instituted an investigation and directed producers of stockfeed not to increase prices of their products until concerns of livestock farmers were reviewed and resolved.

However, firms with valid and already issued export permits were allowed to conclude their exports as some may have already committed to contracts of supply. The suspension of new export permits issuance followed concerns that government received from some livestock farmers on the pricing and availability of stockfeed.

 

 

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Livestock farmers have confirmed that stockfeed availability

Companies

Afcons construction, a firm that is part of India’s large diversified Shapoorji Pallonji Group that was awarded the contract to undertake the Lusaka 500 kilometer Decongestion Road project dubbed L500 has been sued for land encroachment.

A Lusaka west resident Alice Tembo has sued Afcon Construction Limited together with the Lusaka City Council (LCC) and the Attorney General for land encroachment.

Tembo is claiming an order for payment as compensation from Afcons for the sum of K831,844 being the value of the uncompensated land occupied and acquired by LCC as part of the road in the Lusaka City decongestion Road project along Kasupe Road in Lusaka West.

The plaintiff is also claiming interest on the amount due to her from the defendants,further or any other relief the court may deem fit and legal costs.

As the property owner of Sub TI of farm 1938, Tembo was notified that her property was being acquired compulsorily by the state. However, LCC acquired an extra 6,652 sq metres of land contrary to the initial 2415 sq metres of land that was agreed to be taken and the total area covered by the construction works was 9,067 sq metres.

The extra 6,652 sq metres of land was acquired in order to put side roads on the subject road. The reason for the acquiring of the land was to pave way for the construction of a road under the Lusaka City Decongestion project (Road 3-off Kasupe Road) Lusaka West.

The land in question has been subject to encroachment by squatters and there is a court judgement wherein the court held that Tembo is the legitimate owner of the property.

However,the Ministry of Local Government proceeded to compensate the squatters for the extra land that was used and this is despite the fact that the initial payment was made to Tembo who is the bonafide owner of the property in question.

The Ministry did not even bother to contact the owner of the land and ascertain the position of the land. Despite requests from Tembo to receive compensation from the ministry,there has not been any payment received.

On 15th July 2020,Tembo received a letter of notification from Lusaka City Council (LCC) under the office of the town clerk with regard the valuation of properties that were affected by the construction and design of the Lusaka City decongestion project ( Road 3-off Kasupe Road) Lusaka West.

The said letter was a notification by LCC in conjunction with government valuation department for the purposes of compulsory acquiring of properties from owners in accordance with the provisions of the Land acquisition Act Cap 189 of the laws of Zambia in order to pave way for the construction of the road referred to above.

Tembo’s property, measuring approximately 2,415 Square meters, was among those affected and as such, it was valued by the government valuation department on 25th February,2020 at K302,000 and she received the said amount as per valuation report.

However, Afcon Construction Ltd proceeded to construct a side road on Tembo’s other unvalued property which was never part of the initial notification dated 15th July 2020 by LCC.

Tembo proceeded to have the said unvalued property valued as per  a letter of demand to the permanent secretary at Ministry of Local Government dated 19th November,2020 and a sketch plan dated 27th October  2020 wherein the said unvalued property measured appropriately 6,652 sq metres.

According to a statement of claim obtained by the Zambian Business Times-ZBT,Tembo claims that Afcon Construction Ltd, Lusaka City Council and the attorney General still owe her K831,844 for the uncompensated area.

Despite the numerous reminders to pay her the amount owed,the three defendants have continued to refuse, or neglected and failed to compensate Tembo the said sum owed. Tembo is demanding compensation for the extra 6,652 sq metres of land which was compulsorily acquired by LCC and was not covered by the initial compensation.

More to follow as the matter develops…

 

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Afcons construction, a firm that is part

Mining

The Association of Mine Suppliers and Contractors of Zambia – AMSCZ has called for a balanced approached were the needs of both local and foreign players in the mining industry is taken onboard to ensure that more investments and sustainable jobs are created in the country .

AMSCZ President Augustine Mubanga said in this regard, the new Government needs to craft and implement policies that will ensure a stable mining environment in the country, which is not only favorable for multinationals companies, but local Mine contractors and suppliers.

Mubanga said to achieve this, the new government needs to either revise the Mines and Minerals Development Act or issue a statutory instrument to accommodate the diversity of interests of both local and foreign investors.

He said in an interview with the Zambian Business Times – ZBT that Government should quickly implement or sign the Local Content Policy for the mining sector, which is anchored on prioritizing the consumption of locally manufactured goods in the mining sector and also the employment of Zambians with technical skills.

“The local content policy is an extrusion from the Mines and Minerals Development Act section 20. The policy will make sure that as the [foreign owned] mining companies are doing business, they need to give special prefer pence to locally manufactured goods and they need to give preference to qualified Zambians with technical skills in existing mining operations to ensure that benefits accrue to the country.

The mining companies also need to support the industry by giving those products that are manufactured locally quotas so that the industry begins to have a ready market,” Mubanga said. He further stated that the minimum percentage agreed upon initially was that 30% of locally manufactured goods and skills must be reserved for Zambians in the first year of implementation of the policy.

Mubanga said, “the initial percentages we had agreed on was 30% of locally manufactured goods and also the skills, that is a graduated approach, the first year of implementation is 30% and this will be attained through the establishment of a local content board which is going to accelerate the implementation of the legal requirements through a Statutory Instrument.

He said from there, the score sheets would be provided to all mines to fill in the levels of the implementation of the local content.

“Year one, we anticipate that 30% will be a starting point, other mines might be on 40%,  but the minimum is 30% in year one, then in year two looking at the dynamism of in sector the graduation could graduate to 35 to 40% depending on how the sector is responding.

“The quick implementation or signing of the local content policy will empower local Zambians and create wealth among Zambians in the sector. That piece of legislation will be key to achieving that dream of a win-win mining sector ,” Mubanga said.

He further said a special regulator or Agency for the mining industry should be established to be able to regulate the technical, financial and taxation of the mining companies in the country. “The establishment of a regulator or Agency, which the industry agreed on, is important that the mining sector have a specific agency or regulator.

Among all the ministries in Zambia, isn’t it strange that only the Mines ministry do not have a special regulatory agency and yet mining is the biggest industry in Zambia?, we need to have an agency with top experts which is able to regulate the operations of the mines.

“So we are looking forward to working with the new government in crafting the policies that will help to drive the economy in the mining sector in a positive trajectory,” he said.

Mubanga also called on the fair implementation of the law to compel even Chinese owned companies to do business with locals. He lamented that Chinese owned mining companies give little or no businesses to local mine suppliers and contractors in the country, a situation which needs to change.

“We want to see that this behavior by the mining companies owned by Chinese, of excluding Zambians to fully participate in the areas of contracting and procurement should come to an end.

That can only come to an end when the law is crafted and implemented fairly and across the industry. So we see hope in the victory speech by the president and shows that in terms implementation of the law, and observance of the law, we not going to have segregation of implementation of the law,” Mubanga said.

He said , “So if we walk on that path, then we don’t see the Chinese walking on the same path that they have been on of excluding Zambian businesses totally from participating in the opportunities that are created or generated in their investments.

Mubanga said the association was of the view that this trend must be broken and sanity brought so that if opportunities are created in the Chinese owned mines or any other owned mines, those opportunities must first benefit Zambians because they are the owners of the mineral resources that are being exploited.

“So that should be respected and we would also want to see them participating in the knowledge and skills transfer and supplier contractor development, they need to come up with programmes that aim at developing local suppliers to a level where they begin to engage in higher volumes of activities.” He added.

Zambia can only be developed by Zambians and this notion needs to be taken into consideration when crafting policies. Zambia by now should be talking of Zambian opening new mines, but this all depends on policies adopted.

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The Association of Mine Suppliers and Contractors

Companies

ZESCO Limited has clarified that the exercise of conducting an internal human resource audit is procedural and is in line with best practice in human resource management.

The Company Public Relations Manager Hazel Zulu said the exercise is a standard practice in human resource management and one of the activities that the company carries out periodically.

Speaking in an interview with the Zambian Business Times – ZBT,  Zulu said the corporation conducts internal audits of its assets and human resource to provide autonomous assurance that the company’s risk management, governance and internal control processes are operating effectively.

She noted that the company was not aware of who shared the internal memorandum to the public, which is currently circulating on social media. Most companies have internal memo’s and these are part of the internal communication process.

According to a ZESCO memorandum which has gone viral on social media and seen by the ZBT dated 27 August 2021, The Power utility company stated that there was an urgent need to carry out a physical employee verification exercise in all the stations countrywide.

The exercise will be carried out in an effort to ensure that the integrity of the company’s employee data in PHRIS and the data bases in respective divisions/directorate for all employees tally and align.

The Memo further stated that all employees will be followed in their respective stations to verify their physical presence/absence in the stated department according to the company’s records.

The employees should sign against their names to signify the confirmation, no employee will be allowed to sign for a colleague and some of the information required includes the Man No, Name, Station, Department and Signature of the employee. A consolidated confirmation report must be submitted by 13 September 2021 or earlier.

ZESCO recently commissioned the Kafue Gorge Lower Hydro power plant that has since ended load management in Zambia. The company has announced that it plans to become a net electricity exporter in the coming years.

 

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ZESCO Limited has clarified that the exercise

Markets

The Democratic Republic of Congo (DRC) has remained Zambia’s largest export market in Africa with exports from Zambia to DRC standing at over K10.7 billion for the six months ended June 2021.

However, successive Zambian authorities have rather concentrated on fostering diplomatic relations with western countries, some of which have little to no beneficial economic relations to the local business and people of Zambia. This is one area where we should watch closely to see a difference in the Hakainde Hichilema Presidency.

According to export data for the top ten export destinations from Zambia by volume and value in Africa obtained from the Zambia Statistical Agency (ZamStats) by the Zambian Business Times-ZBT  between January 2021 to June 2021, Zambia’s exports to DRC were the highest in Africa were recorded at K10.7 billion (about US$700 million).

This re-affirms that DRC is the largest export destination for Zambia among the top ten African export destination countries. The other advantage of exports to African countries is that local businesses benefit when compared to exports to outside Africa destinations which mostly benefit foreign owned multinational companies.

The top five products exported to DRC during the first half of 2021 which is the period under review included non-alcoholic beverages, Sulphur products, Portland cement and Detergents used for washing clothes, dishes and kitchen utensils.

Of the top five products exported to Congo DR,  non-alcoholic beverages (drinks) accounted for about K1 billion, Sulphur products accounted for K976 million and Portland cement K730 million while detergents used for washing clothes, dishes and kitchen utensils accounted for K630 million and other products accounted for K6. 6 billion

South Africa, which enjoys a large trade advantage over Zambia was the second in the top 10-export destination for Zambian products accounting for over K3 billion during the first half of 2021. The Hichilema administration has a big task of negotiating aggressively with South Africa which has always found ways to use non-tariff barriers to block Zambian goods.

President Hichilema is yet to announce his trade Minister, a role that is responsible to turn around this sorry state of Zambia’s trade relations with the world. Local businesses and individuals expect that the new government will appoint a team and ministers at both ministries of trade and foreign affairs that would be able to handle this complex but attainable goal of re-setting Zambia’s bilateral and multilateral trade and economic relations.

 

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The Democratic Republic of Congo (DRC) has

Agribusiness

Ministry of Livestock and Fisheries Permanent Secretary Benson Mwenya has confirmed that the availability of day old chicks in the country has improved on the local market and prices have slightly gone down due to the suspension of the issuance of export permits for the birds.

Mwenya said day old chicks are now readily available and the country would soon start seeing massive reduction in prices due to the temporal ban on the issuance of export permits for day old chicks.

Speaking in an exclusive interview with the Zambian Business Times-ZBT, Mwenya said the country would soon see a massive price reduction because the kwacha has started appreciating which will positively affect the prices of day old chicks.

A check by ZBT with day old chick suppliers showed that availability has stabilized but despite the suspension of the issuance of export permits for day old chicks in an effort to reduce prices, suppliers of day old chicks have maintained prices a month after the ban.

Ross Breeders is still selling their day old chicks at K16, with Novatek,Zamchick also still selling their birds at K15.50 and K16 for Quantum Foods day old chicks. This is despite the day old chicks producers having stated that their cost of production had a significant dollar component.

Last month the Ministry of Livestock and Fisheries suspended the issuance of export permits for day old chicks in order to address the escalating demand within the country that led to shortages on the local market. Some local broiler farmers were being turned away or given three months delivery timelines after payment for new orders.

The ministry disclosed that the demand for day old chicks had continued to increase with close to 2 million chicks needed every week adding that there was need to appreciate that companies needed to satisfy the local market first before resorting to exporting the excess.

Demand for day old chicks (both local and export) had outstripped the supply, which led to people waiting longer periods for their day old chicks once they placed orders with the various suppliers on the market, a situation that also led to increased prices on the local market.

Suppliers of day old chicks were also exporting fertilized eggs which were hatching in the countries they were being exported to which contributed to the shortage on the local market. Moreover, most breeders opted to export due to better prices.

The Kwacha has since been on an aggressive appreciation run for over three weeks now from the highs of K23 to a dollar to now about K15.5 to a dollar, an appreciation of about 33%. This has led to consumers calling for prices of imported to come down as well as prices for products that are said to have a higher dollar based cost components.

 

 

 

 

 

 

 

 

 

 

 

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Ministry of Livestock and Fisheries Permanent Secretary

Companies

The Tanzania Zambia Railway Authority (TAZARA) procurement processes has come under scrutiny following the company losing funds in advance payments that has left the company taking legal action to recover the said funds.

TAZARA has dragged Embrace Zambia Limited to the High Court for failing to adhere to contractual obligations and is demanding a total amount of K252,400.

Facts of the matter is that in 2012, the Authority made an invitation for sealed bids from eligible potential suppliers for the supply and installation of one set of locomotive load box.

Embrace Zambia Ltd won the tender and the parties entered into a contract for the supply and installation of a locomotive load box on 7th February 2013 valued at K950,000.

TAZARA made an advance payment of 40% of the contract price amounting to the sum of K380,000 with a view that the Embrace Zambia Ltd take site possession and perform its part of the contract.

The contract stated that the company would complete works within 30 days from the date of commencement of works,however,Embrace Zambia Ltd did not take site possession nor did it supply or install the locomotive load box but advised TAZARA that the equipment was ready for shipment and requested that the authority make a further advance payment of another 40% of the contract price.

TAZARA advised Embrace Zambia Ltd that in order for another advance payment to be made,the company raise the insurance bond provided to the the authority from 10% to 80% to fully cover both the first advance payment and the second advance payment demanded by Embrace Zambia Ltd.

The authority also requested that the project manager take steps to confirm that money had moved from the company to the manufacturers of the locomotive load box and it was discovered that no money was ever transmitted to the manufacturers by the company.

As of 19 August 2021,the contract has gone unperformed by Embrace Zambia Ltd.

On 8 December 2017,TAZARA reported the matter to Zambia Police and through it’s Managing Director, Embrace Zambia Ltd agreed to refund the authority the 40% advance on the contract price.

Consequently,the parties entered into a deed of settlement on 20th February 2018 in which Embrace Zambia Ltd consented to repay the payment advanced by TAZARA on or before 30th June 2018 together with a penalty fee of K80,500.

The deed of settlement expired on 30th June 2018 and Embrace Zambia Ltd only refunded K195,100 leaving a balance of K265,400. The parties entered another deed of settlement on or about 1st May 2020 under which the company was to make minimum monthly installments of at least K7,000.

The deed of settlement expired on 31st December 2020 and Embrace Zambia Ltd only made three monthly payments under it.

On or about 28 December, 2020, Embrace Zambia Ltd requested time relief on the debt due to Covid-19 and requested to be permitted to resume payments in April 2021.

On or about 16th March 2021,TAZARA informed Embrace Zambia Ltd that it would grant a time relief only after arrears due under the expired deed of settlement were paid in full.

TAZARA has since not heard back from Embrace Zambia Ltd and because of the actions of the company,the authority has suffered loss and damage.

Tanzania Zambia Railway Authority is demanding an order that Embrace Zambia Limited immediately pays the authority K252,400 being the balance of the 40% of the contract price advanced to Embrace Zambia Ltd by TAZARA.

TAZARA is also demanding damages for breach of contract, interest on any and all sums found due, any other relief the court may deem fit and costs.

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The Tanzania Zambia Railway Authority (TAZARA) procurement

Mining

The Zambia Chamber of Mines (ZCM) has disclosed that mining companies are ready to invest in expansion projects worth more than US$2.5 billion next year in Zambia once the industry agrees on mineral royalties with the new Government.

ZCM President Dr. Godwin Beene said First Quantum Minerals Limited (FQM) was ready to invest about US$1.5 billion into new expansion projects next year while Lubambe Copper Mine is also ready to invest about US$1.0 billion in expansion projects in the country.

He said in an interview with the Zambian Business Times – ZBT that the mining companies want the new Government to allow them to deduct mineral royalties from the tax they pay on profits and want a sliding scale tax that is levied on a pay as you earn basis.

“FQM and Lubambe are ready to invest in expansion projects in Zambia next year worth over US$2.5 billion if the industry can agree on royalties with the new Government.

“FQM will invest US$1.5 billion while Lubambe is ready to invest about US$1.0 billion in its expansion projects, this totaling more than $2.5 billion,” Dr. Beene told ZBT.

He said other companies were ready to spend hundreds of millions of dollars in capital projects that they had held back since 2019 due to tax changes. Dr Beene said President Hakainde Hichilema had reset the tone to one of rebuilding confidence and spurring growth.

“The industry is very positive and optimistic that with this common-goal approach to the way forward, there will be more of a partnership with government than we had ever seen before,” he said.

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The Zambia Chamber of Mines (ZCM) has