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Markets

Zambia which imports large quantities of its Petroleum to power its expanding transport industry from mostly Saudi Arabia and the United Arab Emirates – UAE has no preferential trade terms or government to government trade deals with the two countries.

As a result, Zambia runs a huge trade deficit with the Saudi and UAE which has been blamed as one of the major contributors to the perpetual depreciation of the Kwacha. Efforts by Zambian based businesses and companies to embark on reciprocal exports have not been successful in the absence of high level trade deals.

What is supposed to happen is that once trade increases and reaches a material level with a specific country, those statistics should be used to negotiate and establish bilateral or special trading terms to achieve mutually beneficial trade and economic relations.

Any failure to attain mutually beneficial trade relations should result in retaliation from Zambia by sourcing Petroleum from alternative countries that are willing to establish a mutually beneficial relationship. The country should not accept to stick into this one sided and skewed relationship when It can engage in reciprocal export for its mining, tourism and Agro products.

And in response to an inquiry from the Zambian Business Times – ZBT on the skewed trade relations, Ministry of Commerce, Trade and Industry Permanent Secretary Mushuma Mulenga stated that Zambia trades with Saudi Arabia and UAE on Most Favored Nation (MFN) terms under the World Trade Organization (WTO).

MFN terms of trade implies that there are no preferential terms or treatment when trading with these two countries vis-à-vis the rest of the WTO Members. He admitted that there is need to establish stronger bilateral relations which Zambia has been working on with these two countries.

When asked if the government has plans to sign government to government deals or agreements to ensure that Zambia’s exports to both Saudi and UAE are increased to so that the trade deficit reduces, Mulenga stated that Zambia is keen to engage and sign off the government to government trade deals.

He stated that “the ministry hopes to take advantage of the Expo 2020 which has been postponed by one year due to covid 19, to strengthen bilateral cooperation with the UAE. Following President Edgar Lungu’s visit in November 2019,Zambia will participate and hold bilateral trade meetings with the government of UAE aimed at creating market access for Zambia’s products.

Another method to counter trade deficit is through attracting sizable foreign direct investments – FDI. Zambia’s trade deficit with both Saudi Arabia and UAE can be narrowed if there are strong commitments to invest into Zambia at values and volumes that can plug the annual trade deficits.

Analysts say the Zambian government needs to aggressively deal with the issue of trade deficits with South Africa, Saudi Arabia and UAE as a starting point to begin to sort out the perpetual macro economic challenge of a depreciating Kwacha, the national currency. A depreciated Kwacha robs citizens of their hard earned value in assets and savings from a global point of view.

The depreciating Kwacha has also been sited as a major contributor to high inflation which is mostly driven by imported goods and services. The imported inflation arising from the Kwacha depreciation sets into motion a domino effect on both food inflation and non food inflation.

Zambian Kwacha has this year alone in 8 months shed 42% of its value relative to international convertible currencies such as the US dollar.

The Saudi embassy in Zambia has been engaged by ZBT to give the reasons behind the lack of a trade deal despite so many years of well established trade. Watch out for the response form Saudi Arabia and UAE to follow…

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Zambia which imports large quantities of its

Tech

The impact of COVID-19 has really sent shock waves and changed the way we live. For the COVID-19 curve to flatten or better still control the spread, the Ministry of health encouraged people to stay home and engage in social distancing. This means finding alternative to do our daily transaction. And this is where the digital space (or IT) comes in.

Speaking in an exclusive interview with Zambian Business Times- ZBT, Information and Communication Technology Association of Zambia (ICTAZ) National Secretary Mulenga Sichangwa says that though we may have been pushed to use ICTs more by the pandemic, the ITC or digital space must be used or improved on.

Our expectation and hope is to see the 2021 budget that will be presented by the Finance Minister, to build on this path that we are on. We may have been pushed into it because of circumstances, but the circumstances present opportunities themselves.

We see the way parliament itself is conducting business, we saw it on the presidential address and how top leadership at government is holding meetings with other neighboring countries through digital solutions like Zoom, they are able to conduct their businesses now remotely more than ever. So we would like to see that in the budget so that we are able to foster that development.

Furthermore, Sichangwa says that we as a country must build on the new way of doing business through the digital space as the world is turning into one big computer.

“We mustn’t say that we want to go back to the old ways because we obviously do from a health and safety position, but I think now this should be that drive to make us take this digital transition more seriously at all levels of the country from the top right up to the bottom an should just be the responsibility of the ICT service providers but for all of us as citizens”, he said.

International and local travel costs have been shrinked as people now engage in online meetings. Video conferencing is now being undertaken by both public and private institutions. These benefits should be retained in Zambia.

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The impact of COVID-19 has really sent

Markets

The 2021 budget to be presented on 25 September 2020 by Finance Minister Dr. Bwalya N’gandu will have to contend with some major contingencies and unknowns as it will be presented before the outcome of the six months moratorium solicitation is concluded for the US$3 billion Euro bond.

Secretary to the treasury Fredson Yamba on 22 September announced that the ministry of Finance had commenced a consent for solicitation to holders of Zambia’s total of US$3 billion Euro bonds requesting for suspension of debt repayments for a period of six months.

Speaking in an exclusive interview with Zambian Business Times – ZBT, Association of Microfinance Institutions of Zambia (AMIZ) Executive Director Webster Mate, says micro finance institutions are hope for the best in the 2021 budget and that the finance minister tackles challenging issues like the increasing inflation, the continued depreciation of the Kwacha and basically giving hope to all the Zambians.

“We can only hope for the best, that’s how economies are, there are ups and downs. Financial players like us (micro financiers) always hope for the best. “I mean we don’t know how the minister has managed to balance this budget for 2021 the outcome on the request for repayment suspension on Euro bonds is still not complete, this issue started  when he did his last presentation, there were already question marks and that the budget looked like it was not balanced” Mate told ZBT.

“And now, we got into this year 2020 and COVID -19 created even more problems. And before the year is coming to an end, another budget has to be presented. So we can only hope for the best particularly in the area of inflation”.

Mate further stated that “because we getting into elections in 2021, experience seems to tell us that politicians in an election year don’t seem to care much about the economic fundamentals. So we don’t know whether that trend is going to continue and that’s what’s worrying us”, he said.

Meanwhile, he warned that if the trend of not taking good care of the macro economic fundamentals by politicians continues, inflation may continue rise and when the elephants are fighting, it is the grass (which in this scenario is the people) who will suffer.

Chances are that inflation might continue to go up and also the pressure that is coming from the bond holders, we have to see what the outcome will only be known after the budget is already presented as the meeting is scheduled for 29 September, 2020.

We’re likely to see pressure on our foreign exchange, the Kwacha is likely to continue to weaken against internationally convertible currencies like the US dollar, Euro, Great British Pound and South African rand. The depreciation is a major driver of imported inflation, which has continued to be a major challenge.

Ideally we hope that the minister is going to come up with great ideas or strategies that will give hope to people and especially the business community as well as the ordinary Zambians on the street.

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The 2021 budget to be presented on

Agribusiness

The Diary Association of Zambia – DAZ expectation of the 20121 national budget is that the electricity tariffs of dairy farmers will be lowered to enable growth and sustainability of intensive diary farming.

DAZ says that most of the the farmers are using generators as a result of load shedding in milk production which has resulted in a further increase in the cost of production. If the tariffs can be reduced, as power supply is expected to stabilize, it will be an advantage to the farmers and the Zambia consumers as the cost of production will be reduced.

Speaking to the Zambian Business Times-ZBT in an exclusive interview, DAZ Policy monitoring and evaluation Officer Enock Zulu stated that Association also want to see a reduction in the cost of production for the farmers, one of the things that has led to a high cost of production is the cost feed.

However, feed for dairy animals comprises of supplements and additives, most of which are imported. With the depreciation of Kwacha, the cost of imported products are higher because the dairy sector depend on the imported ingredient. For optimal production, quality of breeds and feed are key. If the cost of feed is high, most of the farmers will be unable to produce the required production rate

The dairy industry is in a growth stage, which should not be subjected to competition with outside mature industries. So there is a lot of importations of long-life milk from other countries that has led the local industry to register limited growth . DAZ anticipate that government should impose higher import taxes on the importation of long-life milk and yogurt to support its local production.

Both  milk and yogurt  are actually produced in Zambia. When these products are imported, they are sold at a cheaper price. Of which the local market for milk and yogurt are been suffocated. If the right levels of taxes are imposed on imported diary products, the local industry will take up the space and this will result into high productivity among locally based farmers.

There is also challenge in the milk industry of high tech equipment such as testing kits to enable local farmers to grade their milk. The 2021 budget should zero rate importation of these types of equipment. The grading is mostly depended on the processors, but we want to see a situation where the milk collection centers can afford to buy testing kits and are able to grade the milk on their own to help them get better prices. This will help allay any mistrust between processors and the producers.

In the livestock sector in general, the challenge that has hindered growth of the industry has been access to better breeds of animals. Most animals produced in Zambia are cross breeds. DAZ is expecting that government will still maintain the zero rating on the inputs from other countries used in the Livestock sector.

Milk production which has a deficit will surely be overturned and see the country start to export when Diary breeds are improved upon. As a country, we do not have enough pure diary breeds that can be used or crossed to ensure optimal production of fresh milk.

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The Diary Association of Zambia - DAZ

Sport

The Zambia Golf Union – ZGU has says they are hopeful of receiving a More equitable share of resources and funding from government in the 2021 budget to be presented tomorrow 25 September 2020 by Finance Minister Dr. Bwalya N’gandu.

Speaking in an exclusive interview with Zambian Business Times – ZBT, Zambia Golf Union President  Christopher Mulenga  says the Golf union is hopeful of better funding or more resources from government as they usually source their funding mostly through external sources and various activities.

“In terms of my expectations for golf, we have always wanted to draw some resources from the government. As you know golf is one of those sports that has not really received resources from central government. It is through our own activities and cooperating partners as well as through the activities that our corporation partners buy into. But I don’t think it’s too late for government to help in funding the sport, because we can do better especially in junior golf with funds from the government”, he said.

And when asked whether they have shared their challenges with the Ministry of Finance during the budget submission stage, Mulenga stressed that their channel of communication to government is through National Sports Council of Zambia (NSCZ).

“We collaborate with government through NSCZ, and the council is fully aware that we’ve got a budget that needs to be financed. But to be very honest with you, because of limited and competing needs from the various other sporting activities, we have not benefited. It’s a well-known fact by NSCZ that we need a helping hand”, he said.

Even though we have top notch golfers and have the ability to reach greater heights, football has always been treated like the last born, always favored. Fingers are crossed to see if this time it will be a different story.

Sports analysts and journalists have called on the government through the budgeting process to include other priority sports so that these receive funding to enable mass participation so that the country can also start producing international level players other than in football.

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The Zambia Golf Union - ZGU has

Mining

Finance Minister Dr. Bwalya N’gandu is tomorrow 25 September, 2020 at 14 hours expected to present the 2021 national budget. The national budget spells out how the treasury intends to apply the funds raised for the year 2021.

This budget speech is a special one as it will also reveal how the government forecasts to generate revenues through tax and non tax measures, as well as give policy directions and investment priorities for 2021.

The Finance Minister is expected to address the way forward on Konkola Copper Mines – KCM to bring some credible level of certainty on the future operations of the Chingola and Chililabombwe based Mines. The minister may also touch on the announced discussions between Glencore and ZCCM IH on the later increasing its shareholding.

As part of the built up to the presentation, the Zambian Business Times – ZBT has engaged the key associations and groups to just get a glimpse of what expectations they have so as to analyze whether the presented budget will live upto these expectations.

The cornerstone of the Zambian economy is mining, and this was definitely our first point of call. Copper exports make out over 70% of total exports from Zambia and mining remains the singlemost important industry to Zambia today.

And the Chamber of Mines Chief Executive Officer – CEO Sokwani Chilembo told Zambian Business Times-ZBT in an exclusive interview that the mining industry in the 2021 national budget is expecting the finance minister to announce the removal of non-deductability mineral royalty so that the mines can return to a situation were they can afford the cost of capital.

Chilembo further told ZBT that the Chamber of Mines are also expecting some leveled of considerations for its submission for the reduction in the mineral royalty rate itself and for the tax regime to move to the sliding scale similar to the one in the Pay as You Earn – PAYE.

The Chamber of Mines which boosts of membership of all the top copper mines such as First Quantum Minerals – FQM, Glencore’s Mopani Copper Mines, Konkola Copper Mines – KCM is further looking forward to a withdraw of all export duties on export of mineral concentrates.

With the strain in government revenues on the back of the impact of the coronavirus, it calls for an astute balancing act from Dr. N’gandu and his team at the ministry of Finance to deliver a budget that will be able to stimulate the economy and set the country back on a growth path that would see Gross Domestic Product – GDP growth rates rebound.

Mining analysts are further expecting the finance minister to give policy direction on gold mining, establishing of gold reserves and what level of reserves may accrue from this exercise. There are also other base metals like Manganese that offer areas of diversification within the mining industry.

One of Zambia’s biggest macro economic challenge has been the perpetual depreciation of the Kwacha. Analysts see the development of gold mining and establishment of gold reserves at Bank of Zambia – BOZ as a viable alternative and supplement to US dollar reserves, that could see the Kwacha begin to command resilience.

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Finance Minister Dr. Bwalya N’gandu is tomorrow

Lifestyle

The European Union – EU Zambia office is calling for Agribusiness proposals from eligible Zambians to access grant funding of up-to €1 million under its Enterprise Zambia Challenge Fund.

In an emailed statement to the Zambian Business Times – ZBT, the Enterprise Zambia Challenge Fund (FED/2019/413-674)  is inviting agri-businesses in Zambia who meet the eligibility criteria to apply for financial support in the first call for proposals. Deadline for submission of concept notes is 3rd  October 2020.

The statement stated that the “Zambia Challenge Fund, the European Union (EU) will award grants (ranging from EUR 150,000 to EUR 1 million) to eligible entities, notably agribusiness operators who demonstrate that their envisaged investments are not only innovative, but that they will also contribute to the smallholder farmers’ commercialisation and better integration into greener and more sustainable value chains development”.

The EU stated that “the project seeks to benefit around 150,000 smallholder farmers with particular attention to the creation of decent employment opportunities for women and youth”.

The Enterprise Zambia Challenge Fund is a €26 million initiative by the European Union,  which is part of the wider Support to the Sustainable Commercialisation of Zambia’s Smallholder Farmers Programme, funded to unlock, accelerate and leverage investments within agricultural value chains (including agroforestry and aquaculture).

It is a five-year agribusiness support initiative that will invest about €26 m in the sector over five years (2020-2025), which works out to be about €5 million per year. Affordable funding is one of the challenges local agribusiness firms encounter in Zambia due to high lending rates from banks and financial institutions.

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The European Union - EU Zambia office

Agribusiness

Zambia has a deficit in milk and diary production with shortfalls and upstream specialised dairy products being imported to fill the gap. This deficit can be plugged if the right policy framework and support is given to local diary farmers and locally based dairy products manufacturers.

The diary animal production landscape in Zambia is composed of both emerging and commercial farmers, therefore, policy and structural support needs to be given to both emerging and commercial farmers if the nation is to plug the deficit and stop the unnecessary foreign exchange bleeding.

According to the Diary Association of Zambia – DAZ, the country has all it takes to become a major exporter of diary products to the regional market, Zambia needs to continue to attract investments in factories and equipment used production of specialised diary products and formalize its informal exports to have the diary industry become a net foreign exchange earner.

To better appreciate the challenges the country faces to produce enough diary products to end end ‘unnecessary’ imports, the Zambian Business Times – ZBT profiled one of the largest diary commercial farms in Zambia – Kushiya farm based in Mazabuka. It is one of the largest farms in Zambia specialized in dairy production. It has also diversified into game animal production, beef cattle production and sugarcane plantation.

Kushiya farm Managing director Guy Robinson told the Zambian Business Times – ZBT in an exclusive interview that the dairy farm was started by his grand father back in 1947. “The farm started with only few dairy cross breed animals roughly about 30 cows. After a couple of years, the management changed as his mother took over and increased the animals to just over 1,000 herds of dairy cows” Robinson told ZBT.

Kushiya farm’s Dairy enterprise takes up about 500 hectare of land in total. The dairy animals take up just about 200 hectares, but if you include the land which is used to plant maize and hay grass used as feed for the dairy animals, the total land used for Diary is about 500 hectares of land. Kushiya farms dairy cows are under intensive system of diary farming.

Moreover, Kushiya farm is supplying all of fresh milk (100%) directly to Lactalis (formally called parmalat), which is later processed into different diary products such as milk, yoghurt and cheese etc. Kushiya farm is also in the process of starting to supply Varun beverages, the producers of creambell diary brands.

In terms of production and contribution to the Zambia milk market, Kushiya farms are producing about 4.7 million liters of milk annually. Which when broken down, the farm is producing about 13,000 liters of milk per day and 390,000 liters of milk per month.

So, if one large farm can produce 390,000 liters of milk per month, and Zambia still has vast amounts of arable land in all the ten provinces of the country that can support such highly intensive milk production systems, what then are the challenges being face?

When asked specifically on what Challenges Kushiya farm is facing, Robinson pointed out that inflation is one of the major challenges faced. The increase in prices of electricity, high diesel costs due to load shedding, feed prices are higher because of inputs which are imported.

Robinson also pointed out increase cost for regultory fees such as fees from ZEMA, Council Levies, WARMA and various other regulatory fees which are being increased. He pointed out that milk is sold on the local market in Kwacha to say Lactalis while some input costs are US dollar denominated which make it hard as the Kwacha depreciates.

He pointed out that for the intensive diary farming operation, due to load shedding for instance, Kushiya has to run generators between 12 to 16 hours a day, which increases energy costs by three times when compared to Zesco electricity costs.

Robinson however pointed out that the covid 19 pandemic has brought out some positives as Agriculture production has been recognized as an essential Industry. The pandemic has also made supporting the local farmers and local industry viable.

Robinson stated that the pandemic has brought about a positive increase in the local industry support due to the limited import of certain products, so there has been a stop on the importation of milk as well as beef that has led to a promotion of locally produced products. There is positive support to the local industry and has helped the farmer to produce more, and reduce on imports which is ultimately good for the growth of the Zambian economy.

Import tariffs are a source of revenue for government but they can not overtake the benefits that come from local production, so the pandemic has in some way brought some positive realization that should be built on.

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Zambia has a deficit in milk and

Companies

ZESCO through a statement made available to Zambian Business Times-ZBT by Public Relations Manager, Hazel Zulu, has disclosed that the loss of power supply to Lusaka Central Business District (CBD) on September 21 was due to punctured underground cables.

“ZESCO Limited regrets to inform its esteemed customers and general public that the loss of power supply to the Lusaka Central Business District (CBD), and other surrounding areas since Friday 18 September 2020 is due to ongoing roadworks under the Lusaka decongestion and expansion project, which has led to the damages some underground electricity cables.

However, Zulu says the technical team has already made an assessment of the affected areas and works to replace the cables are underway to restore supply in the shortest time possible. ZESCO has also advised the general public to exercise caution and treat all supply lines as live.

The affected areas included Downtown Shopping Mall, Findeco House, radio Transmission towers and surrounding areas.

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ZESCO through a statement made available to

Lifestyle

The significance of the beer and alcohol industry in the social and economic set up of the Zambian economy can no longer be second guessed.

11 September 2020 was a very special day for many Zambians going by the excitement that was witnessed with many Zambians taking to socio media to appreciate the announced the Pilot Project of partial reopening of bars, night clubs and taverns across Zambia by President Edgar Lungu.

The Bars and Night Club Owners Association of Zambia (BANCOAZ) through their Secretary General, Edmond Lifewekelo told the Zambian Business Times – ZBT that the association has approached Lusaka City Council – LCC to start joint patrols to pro-actively bring to book those who disobey the guidelines issued by the president on how the partial re-opening of bars/night clubs should operate.

“We have already approached Lusaka city council so that we start holding some joint patrols to ensure that any bar or night club owner who does not adhere to the laid down guidelines is brought to book. We want to be proactive and ensure that we weed out any unacceptable behavior. We shouldn’t forget that we haven’t had income coming in from March 27 until now” Lifwekelo told ZBT.

“So this kind of behavior whereby we want to risk our industry being shut for the second time, will not be entertained. We shouldn’t be motivated by revenues in the short term, but look at how we can be sustained and remain open to avoid another shut down. We should be motivated by the good and service we provide for the greater society”, he said.

Lifwekelo on behalf of bar and night club owners thanked President for hearing their cry by partially reopening the bars/night clubs as this will help put food on the table not only for owners, but the employees and other support sectors that supply food, beverages and other services. We also urge all our members to coordinate with their councils in all provinces of Zambia.

He however, described the behavior of some members who did not follow the presidents guidelines as regrettable as the president has the powers to re-shut operations if he sees that there is no discipline and behavior among the bars/night club owners. So the onus is on us to ensure we put in place the necessary health guidelines to curb the spread of covid 19.

“Once again, we would like to thank President Lungu for partially re-opening the bars/night clubs. From what we observed as BANCOAZ over the past weekends, we think we are a bit disappointed with a few of our own members but the majority have done their best.

“We need as an industry to show that we are serious about remaining open, we observed that there are some few members who were closing their business premises as late as 03 hours in the morning when the president announced that it should be up to 23 hours, he said.

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The significance of the beer and alcohol