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Companies

Puma Energy Zambia Managing Director Pinchi Simukwai has resigned from the energy company. Reasons for Simukwai’s resignation were not made publicly available, but the energy company proceeded to announce the appointment of his replacement as Knight Silumesii.

According to information obtained by the Zambian Business Times – ZBT from, Simukwai had a rich industry work experience and had previously served in various portfolios such as Finance Director, Finance Manager and Business Planning Manager before ascending to the top position as Puma Zambia Managing Director.

His replacement, Silumesii has over 17 years of experience in various portfolios in the petroleum industry as well the mining industry, Puma energy reported.Prior to his appointment, Silumesii served as Puma Energy Zambia Country Retail Manager for several years.

Company secretary Kalunga Lutato said Silumesii is a graduate of Mechanical Engineering from the University of Zambia and holds a post graduate qualification in Business Administration from the Copperbelt University.

“The Puma Board wishes to thank Simukwai for his immense contribution to the Company over the past few years and wish him continued success in his future endeavors, as well as to congratulate Silumesii on his appointment, and looks forward to his contribution to the Company,” Lutato said.

The government of Zambia had recently threatened to revoke Puma Energy operating License over what then Energy Minister Mathew Nkhuwa termed as the company running out of fuel stocks deliberately creating an artificial shortage. See earlier article on Puma energy Zambia by ZBT Puma risk losing Zambia operating license

It is however not clear if Simukwai exit from the top job is related to this spat between Puma Energy And the Zambian government. The fuel supply situation in Zambia has improved but sporadic short term shortages are still common.

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Puma Energy Zambia Managing Director Pinchi Simukwai

Markets

The National Pension Scheme Authority (NAPSA) has effectively taken control of Zambia Industrial Commercial Bank – ZICB by increasing its equity stake from 16% to 65%.

ZICB is a product of the restructuring of the former Intermarket Banking Corporation Zambia Limited, which the Bank of Zambia took possession of in November 2016, with the then Bank of Zambia Governor Dr. Denny Kalyalya confirming that the central bank had managed to save the bank from total collapse.

Bank of Zambia in October 2018 confirmed that they “managed to secure agreements with the majority of the large corporate depositors, i.e. National Pension Scheme Authority (NAPSA), the Madison Group and the Workers Compensation Fund Control Board to convert their deposit liabilities into equity while the Industrial Development Corporation (IDC) came on board to participate in the process to ensure solvency.

According to information made available to the Zambian Business Times-ZBT, NAPSA Director General Yollard Kachinda said NAPSA has increased its stake following participation in a Rights Issue at a nominal price of K1 per share and upon obtaining the requisite regulatory approvals. The capital raised by ZICB through this transaction would strengthen its capital position and improve its cash flows.

“As a result of this transaction, NAPSA through its Special Purpose Vehicle, NAPSA Investments Holdings Company Limited has increased its stake in ZICB from 15.83% to 63%.

Kachinda said this capital injection was aimed at building capacity for market competitiveness, achieving operational efficiencies and realigning the strategic direction of the bank to facilitate growth in the Small and Medium Enterprises (SME) sector in the country, which has remained untapped.

“We are pleased to be part of the transformation of ZICB through this capital injection,” The Napsa Director General said.

ZICB was set up as a specialty bank to fund industrialization of Zambia but stakeholders say the bank is yet to show how this would be done significantly. Funding for local industries and local business still remain a challenge in Zambia. More information to follow…

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The National Pension Scheme Authority (NAPSA) has

Companies

The Competition and Consumer Protection Commission (CCPC) has disclosed that it has gone ahead and undertaken a countrywide survey to check and confirm whether the three cement companies ordered to revert to pre-cartel prices have obliged.

This is despite the cement firms confirming separately that they have not reduced their cement prices and instead appealed the decision to the competition tribunal, exercising their legal options,

But CCPC Senior Public Relations Officer Namukolo Kasumpa said once the compilation of the information collected from all the provincial headquarters is done, the commission will then advise on the next course of action

According to information made available to the Zambian Business Times-ZBT, Kasumpa said the deadline that was set by the board for the cement companies to reduce prices was 8 May, which has since elapsed.

She noted that the three companies namely, Lafarge Zambia Plc, Mpande Limestone Limited-Sinoma and Dangote Cement Zambia Limited were ordered to revert to the pre-cartel factory prices by 8 May this year.

A check done by ZBT with the top cement firms confirmed that non of them had reduced their prices, with the firms confirming that they have proceeded to appeal the order. What is most shocking is that CCPC has gone ahead to collect evidence that the prices have not been reduced.

CCPC has since stated that they will soon be making their stance known on the way forward. Consumers had been eagerly waiting for the reduction to take effect but analyst say this matter is likely to end in a long protracted legal battle.

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The Competition and Consumer Protection Commission (CCPC)

Companies

The top three cement companies who were last month ordered to cut cement prices and revert to what was described as pre-cartel prices ranging between US$4.5 to US$5 per 50kg bag have all defied the order.

A check done by the Zambian Business Times – ZBT with all the three cement producers who had been ordered to cut prices has revealed that non of them has reduced prices. One of the cement companies ordered to cut prices – Lafarge Zambia has confirmed with ZBT that they have mounted a legal challenge against the decision.

Lafarge Zambia has confirmed that they have appealed against the Competition and Consumer Protection Commission (CCPC)’s decision alleging that the company contravened the Competition and Consumer Protection Act.

The company has denied participation in an alleged price-fixing and market allocation collusion in the cement market and looks forward to presenting its case.

Responding to ZBT, Lafarge Corporate Affairs and Communications Manager Sarah Banda said in its notice of appeal filed before the Competition and Consumer Protection Tribunal, the company has emphasized that it has cooperated with the CCPC throughout its investigation into the cement industry.

Banda said Lafarge provided numerous detailed submissions, documents and testimonies to demonstrate the lawful nature of its operations in the market. The prices have therefore not been reduced pending the tribunal process.

A further check with the other cement firm that was also fined and ordered to cut cement prices, a source who asked for their details to be withheld from Mpande Limestone Limited ( popularly known as Sinoma cement) has confirmed that the company has not reduced its cement prices.

Speaking exclusively to ZBT, the source said according to the information circulating within the company, Sinoma does not intend to revert to pre-cartel prices.

“Before any price adjustment or increment they need to inform us internally, so we haven’t been informed, it means we are not reducing. We need adequate time to communicate to our clients to say okay, cement prices are going up or they are being reduced”, the source told ZBT.

The most shocking thing is that even the cement company that was not fine but ordered to cut price,Dangote Cement, has also refused to badge. Dangote Cement has also confirmed that the company has maintained its cement prices but did not confirm if they have also taken the legal route to hold prices.

Cement prices were today expected to come down after CCPC confirmed that they had given the cement companies one month probation to implement the order. It seems instead that the cement firms opted to use the one month to put together a legal defense that would effectively derail the order.

Court processes in Zambia take time to settle, some legal experts have estimated an average of three years needed to litigate and have a judgment issued in complex cases such as this one. We now await a counter action CCPC who are yet to comment by press time. More details to follow…

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The top three cement companies who were

Agribusiness

The National Union for Small Scale Farmers in Zambia – NUSFAZ, which represents local farmers has appealed to government to recaptalise the Nitrogen Chemicals of Zambia (NCZ) or immediately facilitate the set up another local fertilizer manufacturing plant so that fertiliser can be produced locally at affordable prices.

Union Executive Director Ebony Loloji said one of the reasons Zambia has continued to import fertiliser is because it has no capacity to produce locally and the equipment at NCZ is obsolete, therefore the need to recaptalise the plant is urgent.

Speaking in an interview with the Zambian Business Times-ZBT, Loloji said places where Zambia is importing fertiliser from have modern plants which has made it easy for them to produce fertiliser efficiently.

Loloji mentioned that the fertiliser produced locally and the fertiliser that is imported is sold at the same price on the local market which is surprising, because importations come with extra costs such as transportation that local producers do not incur.

He said the fertiliser that is produced locally is supposed to be cheaper than the imported one but that is not the case on the local market. This is not right if we had modern plants that would manufacture fertilizer efficiently. Zambia has all the key and bulk raw materials.

“You will find that D Compound that is imported is K650 for a 50kg bag and the one from Nitrogen Chemicals of Zambia – NCZ is also K650. We need to recapitalize NCZ or set up other local manufacturing plants so that we can start producing fertiliser competitively”, he said.

Loloji has commended government for the early delivery of fertiliser under the Farmer Input Support Programme (FISP) as it will advantage farmers because when one plants early, the chances of maximising their yields are high.

He said two factors are considered in terms of maximising profit in agriculture production, these are increasing yield and better quality, adding that receiving inputs early and access to certified and high quality seeds means farmers will plant on time and the yields will be maximized.

The Bank of Zambia – BOZ recently revealed that importation of Agro inputs as well as fuel Imports made up the two biggest contributors to the recent Kwacha slide. Stakeholders have since called on government through the Industrial Developments Corporation – IDC to prioritize fixing this gapping annual forex outflow.

The forex bleeding initiated by the huge annual Agro import bill can be stopped by IDC spearheading either revamping NCZ or coming up with a new company to manufacture fertilizers and other Agro blends locally.

Experts have stated that this forex bleeding is the very reason why NCZ was set up in the first place, but successive governments neglected local manufacturing opting for the easy option of importing.

Experts say IDC also has the option of engaging and partnering with local fertilizer trading and blending company’s such as Export Trading Group – ETG to set up local manufacturing plants and exploit local sources of raw materials. This is expected to lead to stopping the forex bleeding, contribute to stabilizing the Kwacha as well as more securing jobs locally.

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The National Union for Small Scale Farmers

Mining

Only two out of Zambias top nine large scale mining companies have been declaring profits in the country, meaning that only two mines pay corporate income tax, making the proposal of anchoring mining taxation on corporate income tax an academic exercise.

Zambia Revenue Authority (ZRA) commissioner General Kingsley Chanda disclosed during the 2021 Mining Indaba held in Lusaka last month that only two mining companies and one smelter are currently declaring profits in the country. He however did not name the two profitable mines.

But a check by the Zambian Business Times – ZBT has revealed that only First Quantum Minerals (FQM) Mines (Kansanshi and Trident Kalumbila mines) and Barrick’s Lumwana Mine, are declaring profits, with the others financial report and declarations to ZRA showing unprofitable bottom lines.

This is a scenario that has made Mineral Royalty Tax – MRT the only viable tax option to employ if the Zambian treasury is to collect any form of taxes from the other seven large scale mines. MRT is a revenue tax that is levied on sales volumes with reference prices being derived from internationally renowned London Metal Exchange – LME.

According to the Ministry of Mines and Minerals Development, which collects month on month production data from all mines in Zambia, ZBT confirmed that Zambia currently has nine top or large scale mining companies.

The large scale mining companies include [in no particular order] Konkola Copper Mines – KCM, Lubambe Copper Mines, Kansanshi Mine, Lumwana Mine, Mopani Copper Mines, Kalumbila Mine, NFCA, SINO Metals Leach Plant and CNMC Luanshya Mine.

It is also notable that non of the Chinese owned and controlled Mines are declaring profits in their operations, raising questions on their strategic and long term ability to contribute to growing the Zambian treasury, which is used to finance public infrastructure.

Chinese owned mines [NFCA, Sino Metals Leach plant and CNMC Luanshya mine] make up three out of the top nine (one third) of the large scale mining companies in Zambia. This is a significant portion that needs to become profitable and contribute to boosting public finances which need to expand to meet the needs of a growing population.

Chinese owned mines have since been challenged to work on their corporate social responsibility expectations as well as transparency in their financial reporting so that communities in which they operate can benefit. They need to start contributing significantly through both MRT and Corporate Income Tax – CIT to the Zambian treasury.

Some mining experts have called on the review of individual tax accounts of all of Zambia’s top mining companies to investigate if some mines are net contributors to the tax revenue pot. This follows the trend were some mines pay MRT but continue to draw large sums of Value Added Tax – VAT refunds from the Zambia Revenue Authority – ZRA.

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Only two out of Zambias top nine

Markets

The ministry of Finance is currently in the second phase of the three phase process of the debt restructuring which involves applying for a common framework and conducting a Debt Sustainability Analysis (DSA).

Speaking in an exclusive interview with the Zambian Business Times-ZBT, Ministry of Finance Permanent Secretary for Economic Management and Finance, Mukuli Chikuba said the Government was working with the restructuring advisor, Lazard frères during this phase of debt restructuring.

Chikuba said the second aspect of debt restructuring was currently underway and an update on what has been done so far will soon be issued. Zambia’s external debt currently stands at US$12.75 billion, with debt restructuring seen as a credible way to ease liquidity conditions in the Zambian economy.

“The debt restructuring process is being conducted in phases; the first phase (Phase 1) involved implementing a debt standstill, which Zambia got from most of official creditors and some of the Chinese who are commercial and other commercial creditors in Europe and America.

“The second aspect is underway and is being conducted now. It involves us applying for a common framework and doing a DSA which we have been working on in the past few weeks with the International Monetary Fund (IMF), a statement will be released once we are done with the IMF on that end,” he said.

Chikuba said the DSA would be shared with the creditors and the creditors will then take a view on how much of relief would be given within the framework.

He said Government would soon give an update on the development of each creditor, as it requests Zambia’s non-official creditors to form a London club for easy sharing of information.

“Updates on what is happening with each creditor regarding debt management will be shared with creditors while part of it will be posted on the Ministry of Finance website. We are working with Lazard within this space as the transaction advisor, and we will be sharing more information with creditors post what we are doing now.

“But the most critical part is on transparency, where we are with different creditors in terms of debt management. So the updates will be shared, these are updates on what is happening with each creditor,” Chikuba told ZBT.

Chikuba also said Government had requested the non-official creditors to form what is called a London club for easy sharing of information to non-official creditors similar to what the Eurobonds creditors had done.

“As you know, Zambia like most countries has many creditors and sharing information individually to the creditors can be very taxing. That information will be shared with them as soon as they are well organised and part of it will be shared on our website,” he token ZBT.

Once debt restructuring is concluded, it is expected that the economy will get relief and Ben unlocked, with more funds being made available for local and foreign payments over and above allocation for the high debt serving requirements.

However, there is need for the stability of the Kwacha, which is one of the main causes of the current debt repayment stress. Most of the taxes, high are the highest revenue generators for government in Zambia are collected in Kwacha.

A loss of value basically entails that more Kwacha is needed to service foreign debt which is mostly contracted in US dollars. Spend on Foreign payments for imports for essential commodities such as fuel also increase resulting in crippling imported inflation.

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The ministry of Finance is currently in

Agribusiness

Zambian Fertilizer, a blending plant under the Export Trading Group – ETG contracted to ensure distribution of farming inputs across the country has Confirmed that they have delivered over 60% of both basal and top dressing fertilizers to the four targeted provinces namely Luapula, Western, Central and Copperbelt.

Company Country Head Rajendran Ganapathi said Zambian Fertiliser remains committed to delivering 100% of its given target within the contractual timeline.

According to information made available to the Zambian Business Times-ZBT, Ganapathi said he is positive that just like the 2020/2021 farming season where the company managed to deliver farming inputs on time as per contractual delivery timeline, this year will not be different.

Ganapathi said this development has cheered government as the early delivery of inputs will enable timely distribution of inputs to the farmers.

Zambia has registered another bumper harvest in the 2020/2021 cropping season which has recorded notable increase in maize and other key commodities.

ETG in 2017 commissioned the construction of a state-of-the-art blending facility – Zambian Fertilizers in the Lusaka South Multi-Facility Economic Zone. The main purpose of the plant was to increase the company’s capacity to blend more fertilisers to meet the increasing demand of both local and international markets.

The Zambian Fertilizer plant was commissioned on 15 December 2017. It was envisaged to increase production from the current 80 tonnes per day at ETG’s old plant which was located along Mukwa Road to 350 tonnes per day. The plant produces blended fertilizers which are then distributed to different provinces blended to the approved levels.

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Zambian Fertilizer, a blending plant under the

Agribusiness

The Crushers and Edible Oil Refiners Association (CEDORA) says despite the association proving that cooking oil is more expensive in countries like South Africa when compared to Zambia; some individuals have refused to accept this fact.

Association Director Aubrey Chibumba said these individuals instead want to import packed refined cooking oil on basis that the locally produced cooking oil is expensive.

Chibumba said this group of individuals has however failed to provide information to CEDORA on how they will be able to import cooking oil from South Africa or anywhere in the region without incurring costs through transportation and payment of taxes and be able to sell it cheaply in the country.

According to information availed to the Zambian Business Times-ZBT, Chibumba said the association believes that the only reason cooking oil prices have gone up is because of the exchange rate that has weakened overtime and this is something that the Bank of Zambia is responsible for.

He said the challenge faced in an election year arises from opportunism that is short term and no real interest in the economic health of the country’s economy adding that unlike traders, the association has committed capital in its processing plants, its people and in the oil seed value chain.

He further said this has seen soya bean cultivation grow from less than 100, 000 MT per year in 2014 to the expected bumper harvest of over 300, 000 MT this year.

He noted that 360, 000 MT of soya bean were produced in 2016 but the poor prices resulted in over 100, 000 small-scale farmers exiting the cultivation of soya beans and the national cultivation dropped to 240, 000 MT per year after that price crush.

He mentioned that this year’s crop from small-scale farmers is expected to exceed the crop from commercial farmers for the first time, which has been made possible because small-scale farmers have noticed that crushers are paying good prices for soya beans.

Chibumba said soya beans is currently trading between K9 and K12 per Kg compared to the last season when the price closed at K5/Kg adding that this is the momentum that is needed to sustain the good soya beans prices currently prevailing on the market.

He said the association has proposed solutions that must be implemented before the 2021/2022 cultivation season which include small-scale farmers having access to the best prices and will work with the Grain Traders, ZNFU, aggregators and other stakeholders to ensure that small scale farmers are not paid below market prices.

Other proposed solutions include structured exports of oil seeds and market access support among other factors.

Chibumba said the country has huge opportunities within the agricultural space such as the oil seed cultivation and processing, a sector which has over 800,000 MT of installed soya bean crushing capacity with 2 new plants under construction which are likely to be operational by the end of the year.

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The Crushers and Edible Oil Refiners Association

Markets

The Lusaka Securities Exchange (LuSE) has finally launched the long awaited mobile trading platform dubbed MyLuSE Application, which will allow market players to buy or sell their securities online.

The Online Platform allows the public to trade shares, bonds and other financial instruments on the LuSE. This platform is now available on your phone via USSD and mobile application, your computer or your tablet.

Ministry of Finance permanent secretary for budget and economic affairs Mulenga Pamu said it is Government’s aim to ensure that Zambians participate actively in utilising the financial instruments that are made available in the market.

Speaking during the launch of the LuSE online application, which the Zambian Business Times-ZBT attended, Dr Pamu said Government is aware of the lower participation levels in the Capital Markets, especially on the stock market.

“The Online Platform will simplify the often misconceived idea that the stock market is complex, risky or only for a select group of wealthy people. The simplicity of the online platform is its accessibility; anyone with a phone and mobile money account can access the platform,” he said.

Dr Pamu said market players can purchase securities on the LuSE such as shares or bonds adding that the trading of shares on the LuSE is relatively easier to understand in comparison to bonds.

He said in addition to being able to buy and sell securities on the LuSE, the platform will further develop into an educative platform that will assist all users in understanding and demystifying myths about the stock market.

Dr Pamu said to further enhance participation on the market, the government is committed to ensuring financial education is a top priority, ensuring financial literacy is inculcated into the minds of the youth.

“As government we are supportive of this initiative and hope that the introduction of this platform will stimulate more activity on the stock market. I also wish to encourage all players in the market to make a deliberate and concerted effort to support this initiative,” he said.

LuSE Board chairperson Raphael Kasonde said the LuSE’s development and launch of the MyLuSE mobile application is in keeping with the objectives of its strategic plan and represents a significant step taken towards meeting the LuSE’s commitment to keeping abreast of important trends in the capital market industry.

“A principal goal of this effort is to keep in mind the interests of market players and ensure that both resident investors and those based abroad are offered an improved and user-friendly mode of accessing the financial products being provided on the LuSE.

“Further, the LuSE, with MyLuSE application, aims to enhance the levels of financial literacy, amongst the general public, by reaching out to a wider number of potential and current investors, home and abroad through the use of their mobile phones,” Kasonde said.

He observed that over its 27-year existence, activity on the LuSE has been predominantly driven by institutional investors who have, amongst other things, benefited from the LuSE being a secondary market for the trading of government and corporate bonds.

“I am confident in saying that the MyLuSE Mobile application, with its ease of use and convenience, will facilitate the growth of retail investor activity on the market.

“The LuSE Mobile Trading Application is a digital platform that allows users to have direct access to the LuSE market,” Kasonde said.

He said the platform enables the LuSE to target a greater number of local retail investors in urban as well as the more remote parts of the country.

Kasonde said not limited to local investors, the platform allows foreign investors to conveniently invest in companies that are listed on the LuSE from any part of the world.

“The LuSE anticipates that as the use of the platform by investors of every kind grows, appetite for new financial instruments to invest in will also grow,” he said.

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The Lusaka Securities Exchange (LuSE) has finally