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Markets

The Competition and Consumer Protection Commission – CCPC has disclosed that it has instituted investigations of top four (4) cement companies in Zambia for possible market abuse following the recent ‘uniform’ hike in cement prices on the market.

Cement prices are now an economically sensitive matter as the country is undertaking massive infrastructure projects of which cement is a key overall cost determinant. Moreover, the country has a housing shortage estimated at over 2 million houses, which individuals and private sector companies are constructing, all which relay in heavy cement usage.

A recent random market survey conducted by the Zambian Business Times – ZBT on July 29, 2020 across the top four cities in Zambia that include Lusaka, Kitwe, Ndola and Livingstone showed that cement prices have been increased by about 25 to 30% from as low as K98 for a 50Kg to K120 and K125 in the last three (3) weeks.

CCPC Director for Restrictive Business Practices Luyamba Mpamba Kapembwa confirmed to ZBT exclusively that the commission is currently investigating four cement companies which include Dangote Cement Zambia Ltd, Zambezi Portland Cement Ltd, Mpande Limestone Ltd (Sinoma) and Lafarge Zambia PLC.

Kapembwa further disclosed that CCPC has been investigating possible cartel conduct in the cement sector since 2019 when it carried out raids on four (4) cement companies and that the latest increment in the price of cement is also under investigation.

Kapembwa said good progress has been recorded so far concerning the investigations. And CCPC Executive Director Chilufya Sampa had earlier told ZBT that due to the sensitivity of the matter, the commission will be able to share the full findings at an appropriate time and inform the public on its findings.

ZBT’s random survey had shown that all major cement brands from Lafarge, Dangote and Sinoma had all increased the retail prices by a “similar margin” when they all have different cost structures, source of energy, age of manufacturing plants, technology used and limestone locations.

Some members of the public and cement manufacturing experts spoken to by ZBT indicated that the sector may be involved in suspected curtail behavior and the uniform increment and pricing is characteristic of that of market collusion to maximize their industry profits.

Cement prices on the market have continued to record an increase since September 2019 and most manufacturing companies had at those times attributed the increase to the depreciation of Kwacha and the hike in fuel pump prices, but this increment happened when the Kwacha exchange rate and fuel prices had remained fairly unchanged.

The recent cement price increase has come as a shock as it has not taken more than 6 months since the previous increment. Moreover, questions on what has triggered this hike remain unanswered as the as Kwacha has remained relatively stable and Fuel has not been increased since its last increment in 2019.

One of the industry players had attributed the gypsum shortage as the main cause of the increase but investigations and reviews done by ZBT revealed that the gypsum increase only accounts for a 5% increased on the back of the closure of Chambishi Metal which provided a cheaper source of the vital input.

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The Competition and Consumer Protection Commission –

Agribusiness

The Centre for Trade Policy and Development – CTPD has urged Government to exercise caution and seriously consider the implications of the Food Reserve Bill 2020 as it does not address the historical inefficiencies of the Food Reserve Agency – FRA in its current form.

CTPD notes that the Food Reserve Bill 2020 does little to address historical controversies associated with the FRA such as increased presence in the commodity markets, which should be the preserve of private sector players.

CTPD Senior Researcher Trade and Development Dr. Simon Manda stated that the Food Reserve Bill 2020 risks creating an FRA full of contradictions, inefficiencies and a platform for rent-seeking behavior by well-connected large-scale producers and political actors.

Dr. Manda said in a statement made available to the Zambian Business Times – ZBT that The Food Reserve Bill 2020 in its current form extends the existence of the FRA by redefining and extending its functions.

He said it also allows FRA to integrate social functions of maintaining strategic grains on the one hand and commercial functions of grain marketing driven by profitability potential on the other. There has to be clear lines of operations to ensure these two divergent objectives are not abused.

“As CTPD we think, this is completely misleading and contradictory as it can only create a fittingly relevant platform for inefficiencies and scope for corruption,” He said.

According to the Food Reserve Bill 2020, the Agency is allowed to market, and trade designated agricultural commodity on the one hand and purchase, import, sell, trade or export a designated agricultural commodity on the other.

The bill is also aimed at correcting problems relating to the supply of designated agricultural commodities arising from the manipulation of prices or monopolistic trading practices.

The Bill also allow the agency to identify, enter and operate markets in rural areas and determine prices for commodities and further states that a trader or processor shall, prior to selling a designated agricultural commodity, makes a statutory declaration to the Agency or otherwise commits an offence.

Dr. Manda added that the provisions in the bill are not progressive and that the role of the private sector actors in agriculture marketing is not clear.

The Centre has since urged Government to consider creating a clear coordination of different actors including traders and producers and how these will interact in the renewed mandate given to the FRA once the bill is enacted.

The Agro commodity market in Zambia needs a clear and transparent regulatory regime that will foster growth and support the export of various crops to ensure the expansion and utilization of the massive land and water resources in Zambia.

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The Centre for Trade Policy and Development

Companies

Unity Finance has announced a new name “Unifi” a simpler, easier version of Uni-ty Fi-nance in its aim to bring to life its ethos of offering simpler, easier financial solutions.

Unity Finance has been making life easy for clients since 2006 by offering simple and quick financial solutions. With over 25 branches across the country, the financial institution is a trusted lender in Zambia and like its long-standing clients has come a long way over the years.

In its years of operation, Unity Finance has continued to improve on their service delivery with technological adaptations and the expansion of branches across the country. With various developments by the company, Unity Finance has recognized the need to refresh the Unity Finance brand with a new look and an easier name.

“As a service provider, we value the names of our customers and believe that all great relationships begin with a name. Furthermore, in our promise to make life easier for the people in the communities we operate from, we would like to adapt with the times and evolve with our customers with a fresh look.” said Lillian Bwalya, COO of Unity Finance.

While the company has adopted a new look and name, the quality of its services remain the same with newly improved additions such as loan repayments via Pep Stores. “You will still be welcomed by the same familiar faces at our branches, we are still the same company you know and trust, and we are still committed to offering loans that are affordable, quick and simple. We are still making life easy” added Bwalya, COO of Unity Finance.

As the company welcomes the new look and name, its existing and prospective customers are encouraged to continue using the UniApp, a mobile app that gives clients convenient access to Unity Finance services 24/7 and from anywhere making life much easier for thousands of Zambians.

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Unity Finance has announced a new name

Markets

A good number of spar outlets in Zambia have been closed raising concerns on the general health of the economy. With a pessimistic attitude of most Zambians, the closures have largely been attributed to the unfavorable macro economic environment and poor economic and trade policies by the government of the day.

But a deeper look at what is currently obtaining, the fact that most if not all the Spar outlets that have been shut are being taken over and quickly re-opened by competitors perhaps questions the pessimistic view that the closures are due to poor macro economic conditions.

The real reason behind the failure of most Spar Zambia franchise outlets had not yet been confirmed, but one can deduce that the reasons for the store closures are most likely attributed to mismanagement or failure to control shrinkage (stock losses), a key success factor in the supermarket business as well as limited capital to see the business through a down time.

However, Alfred Chewe, a former franchise owner of Spar chilenje, said in an exclusive interview with the Zambian Business Times – ZBT that he the main reason why he sold his outlet is that he was making losses due to the unfavorable demand conditions caused by the shrinking market.

Essentially it’s the unfavorable demand conditions. The market was shrinking overtime. Those who are not thinking of going in for the long term, they are closing. You can only maintain your business with losses a long time, if your view is long term”, he told ZBT.

Spar Foxdale also closed but Pick n Pay has moved in the same building where Spar left which leaves people to stop and wonder how a Supermarket like Pick n Pay can rush to start operating where others have failed. Pick and Pay has also taken over the Spar outlet along Great North road, an indication that they are seeing something which Spar owners may have missed.

When asked about this takeover of former Spar stores by Pick and Pay, Chewe stressed that other Stores like Choppies and Pick n Pay (who have moved in where old Spar outlets where), might also be making losses but their view is long term.

“The ones who are taking them up, they are going in there for a long term. Much as in the short term there will be losses they are hoping the economy will turn around. I was running Chilenje Spar, and I closed my outlet because I saw this situation and I sold it to Choppies.

“The economy has to improve for the supermarkets run by locals to be profitable. Even these that are getting the old Spar outlets, if the economy does not turn around, they will close. Essentially what’s causing all this the downsizing is the state of the economy. And Covid 19 has worsened the situation”, he said.

Chewe told ZBT that at that time, his losses were about US$1.5 million. However, he sold the mall at US$2.2m dollars and the store was sold for US$700,000. He reiterated that the economy has to improve for the supermarkets to return to profitability.

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A good number of spar outlets in

Companies

Standard Charted Bank – Stanchart has announced the closure of two more branches effective 30 September, 2020. This is the second round of branch closures after the multinational bank had done a similar exercise in January 2020.

The branches earmarked for shutting down are Solwezi branch, located at the capital of now copper rich North-Western province and Mazabuka branch, located at one of the leading Agro zones of Zambia and home to Zambia Sugar.

The Bank had in January this year closed its Mongu branch, its only branch in Western Province, shut down Kasama branch, which was also its only Northern province based branch, as well as shut two Copperbelt province based branches at Luanshya and Chilibombwe.

Stanchart Head of Corporate Affairs Christine Matambo told the Zambian Business Times – ZBT exclusively that the Banks’s branch or physical transaction traffic is decreasing while it’s digital transactions have been expanding, hence the bank has been evaluating how to re-format current distribution channels to deliver the most efficient services to its clients.

She told ZBT that as the world goes digital, physical business is decreasing hence the need to leverage the growth of digital banking. We are currently investing more into enhancing the Banks digital, mobile and online infrastructure.

Traditional banking models of branches have come under severe pressure following the advent of mobile phone banking driven by the Telecoms industry. Digital financial services in Zambia has recorded significant growth with mobile money payments leading the charge.

According to the latest information from the Bank of Zambia, Mobile money payments posted an annual average growth of 126% in value from K2.07 billion processed in 2015 to K49.45 billion processed in 2019.

And when asked how Stanchart is dealing with competition from Mobile money offered by Airtel, MTN and Zamtel, Matambo explained that the Bank is not in competition with Mobile money service providers but rather have created a rapport to partner with mobile service providers.

“To grow our business further, we are also re-deploying our resources in places where clients want us and we continue to invest in technology. This technology is already delivering easy, convenient banking to our clients” She said.

She added that the Bank remains committed to the long-term interests of its staff and customers in Zambia, and continue to facilitate the development and growth of the economy given that the Bank recently announced a new investment of over US$40m into its new Head Office building in Lusaka.

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Standard Charted Bank - Stanchart has announced

Agribusiness

The Dairy Association of Zambia – DAZ has disclosed that Zambia produces enough milk to satisfy local demand with some of the excess being exported informally to neighboring countries. DAZ say its members can satisfy demand and that there is no need to import milk.

Speaking to the Zambian Business Times – ZBT in an exclusive interview, Project Manager of the Dairy Association of Zambia Victor Ngandu stated that Zambia is one of the few countries in Africa that is self-sufficient in milk production.

He stated that the milk that is being imported into the country may be a scenario of using Zambia as a “dumping ground” as the prices at which the imported milk is landing is too low when you add the transport and logistical costs.

Locally produced milk is competitively priced and the only feasible explanation for low priced imports is that most of it is just dumped in Zambia because of excess production from where its coming from.

N’gandu further told ZBT that Zambia does not need to import milk as local production is sufficient. Yes, the country can import certain types of cheese, butter and other exotic diary products which are not locally available, but said there is no need to import fresh and processed milk.

Zambia now has capable locally based milk processing companies. Some of the top milk processing companies include FINTA, Lactalis (formally Parmalat), Varun beverages (cream-bell brands), Zam-milk and Trade Kings Diary Gold. So, local processing capacity is there.

He stated that DAZ does not support the importation of fresh and processed milk and has called on the authorities to consider this when issuing import licenses. Why should we import if our members who are locally based small scale, emerging and commercial diary farmers can produce enough?

Ngandu stated that Zambia is producing about 655 million liters of milk annually. Zambia does not face any deficit in milk production but due to the challenges in raw milk collections, the formally collected and accounted for milk is only about 70 to 80 million liters. Zambia is also importing approximately 5 million liters annually.

Threrefore, there is need for an approximately 200 additional formal milk collection centers or depots each collecting of about 2,000 liters per day to be established in Zambia either by a cluster of farmers or government or cooperatives to completely eliminate the imports and save the country foreign exchange outflows.

DAZ disclosed that the consumption of milk per capita is around 36 liters (that is each person is estimated to consume about 36 liters of milk per year), if you take the current population in Zambia of about 18 million, total annual production of it works out to be 650 million liters.

When asked to elaborate on the structure of the Dairy Industry, N’gandu told ZBT that Zambia has a large informal milk market. “ If you take the total milk production in the country of about 650 million liters, the major producers of milk are smallholder farmers who account for 80% of the produced milk while emerging and commercial farmers make up the balance of 20%.

But when you look at the processed milk market, which is where the better profit margins are, the ratio is flipped back as the commercial and emerging farmers accounts for 80% while the small scale only get the 20% slice of the market.

Commercial milk in Zambia is mostly produced in Central, Lusaka, Copperbelt and Southern provinces. The Diary Association members also produce milk related products such as yoghurt (both drinking and eating), fresh milk, pasteurized milk, UHT – milk, lacto, cheese, butter, milk blended drinks and milk cream.

N’gandu told ZBT that Milk is an affordable and a high nutrition supplement. And Diary farming is now a wealth creating Agri-business among Zambian. He stated further that Milk production is a notable contributor to the country’s GDP and has serious potential to drive foreign exchange earnings for the country.

He also stated that the dairy value chain is a major employment sector with jobs and diary business farm owners at different levels such as farms, milk collection centers, milk transportation, milk processing and milk marketing making economic contribution to the country.

A local milk processing company whose name has been withheld complained to ZBT that milk imports have flooded the market frustrating their efforts to expand local milk collection and processing.

They stated that they have planned investments which are now being threatened by some authorities who are issuing import permits without due regard for companies that have set base in Zambia. They challenged the companies who wish to sell products in Zambia to equally set based and invest into local production so that they can support local farmers and employment creation which are badly needed in Zambia.

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The Dairy Association of Zambia - DAZ

Agribusiness

The “Buy Zambia Campaign” Chairperson Rosetta Mwape-Chabala has disclosed that locally produced Agro products are now over 90% in both value and volumes being sold in key chain stores in Zambia.

Chabala has disclosed to the Zambian Business Times – ZBT in an exclusive interview that overall production of agriculture products in the country has increased in the past few months given that most of the food products are not being imported amidst the Covid-19 pandemic, hence Zambian producers have taken lead in production.

She said key chain stores like Pick n Pay, Choppies and Shoprite have also corroborated with the “buy Zambia campaign” team and are now ensuring that at least 40% of local products are sitting in chain stores and these are both manufacturing and agriculture products.

“All the meat products that you see in chain stores are being bought locally and not being imported. Some local companies done very well in production and this comes with an engagement of local farmers who supply vegetables, fruits among other products to these chain stores,” She said

She added that her committee is currently working on a local content strategy which will be turned into a policy and that this will guide local sourcing where both manufactures, wholesalers and retailers will be required to comply with the guidelines to be finalized.

Chabala said the strategy is being worked on in conjunction with the Ministry of Commerce, Trade and Industry as it is meant to support local inputs adding that a threshold of inputs will be provided to manufactures with at least 35% of local content to be able to access support from other local businesses or government procurement.

“There is quite a lot that we are working on which can even encourage Zambians to participate in big sectors such as mining and construction in terms of suppliers and producers, however it is a good strategy which can build up local content and contribute to the growth of the country’s economy at large,” She added.

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The “Buy Zambia Campaign” Chairperson Rosetta Mwape-Chabala

Agribusiness

The Workers’ Compensation Fund Control Board (WCFCB), National Pension Scheme Authority (NAPSA)and the Industrial Development Corporation (IDC) will jointly be investing about K100 million (about US$5.6 million) to revamp the Mwinilunga fruit processing plant.

Speaking in an exclusive interview with Zambian Business Times – ZBT WCFCB Head of Communications and Customer Service Maybin Nkholomba says WCFCB, NAPSA and IDC have joined hands to come to revamp the fruit processing plant in Mwinilunga which will cost k100,000,000

We are just returning from Mwinilunga, where we have joined hands with NAPSA and IDC to revamp the Mwinilunga Kalene Hills Fruit Processing plant. The three institutions will invest K100 million in that project and it will be commissioned this year in October, 2020.

Nkholomba also disclosed that the fruit processing plant will not be restricted to processing pineapples, but stressed that there are a medley of fruits that will be processed to support diversification and expansion of other fruit plantations.

The fruit processing plant will process pineapples of course as the major crop, but also oranges, mangoes and several other fruits that are grown in Zambia. It will have seven production lines including mineral water processing.

Furthermore, he said that the Kalene fruit processing plant will be a major boost to local farmers and also help create self employment opportunities. “It will have 1,500 out grower scheme for farmers, obviously it will bring about job creation in the region and it will create 40 to 50 direct jobs and obviously it will help revamp the economic activity within North-Western Province”, he said.

Apart from processing mineral water ant juice, the processing plant will also be able to produce tomato paste and the products from The Kalene Hills Fruit Processing plant will be enjoyed by both local and international customers.

“When those fruits are taken there, they will be processed into fruit juice, fruit paste and dried fruits mainly. Things like tomato paste will also be products that the plant would deliver. The products will be intended for both the local market and export”, he said.

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The Workers' Compensation Fund Control Board (WCFCB),

Markets

One of Zambia’s prominent economist, Yusuf Dodia, has urged the Zambian Government to quicken the process of rebasing its Gross Domestic Product – GDP in order to align it with the recent changes that the country’s economy has experienced.

Dodia said despite the country going through difficult times currently, it is important to measure its wealth every after few years to accommodate changes from both the domestic and global economy. GDP annual growth rates have been recorded from 2010 to 2019 and its only in 2020 when we expect the economy to contract to negative growth.

He told the Zambian Business Times – ZBT in an exclusive interview that challenges such as change in copper prices, insufficient electricity, raising inflation rate and the high cost of labor put pressure on the overall GDP number, hence the need to rebase it in order to take these pressures into account and get the net effect.

He added that rebasing GDP further gives a picture of the country’s economy to citizens and explains what is happening on the ground, therefore making it easier for them to know how wealth is generated and who it benefits.

“GDP rebasing is important because it focuses on what goods the country is producing and measuring its value, for instance countries like Zambia where about 80% of our GDP is being produced by less than 10 companies, it cannot directly account for the welfare of more than 17 or 18 million people”.

“Rebasing GDP gives it some level of connection to the domestic economy but we have to be careful with numbers. If we strictly look at it in figures, all Zambians are living as middle income people by GDP per capita term, but the realistic view is that a lot more of our people are poor and generation of the biggest amount of production feeding into the overall GDP number is only coming from the mining sector,” He said.

Dodia has since called on government to find ways of sourcing for funds from its bilateral donors or get into negotiations with its partners as rebasing the country’s GDP is an absolute necessity.

The rebasing of GDP is ideally supposed to be done every after 5 years in a bid to account for changes that have occurred in an economy over time. The rebasing provides government with information on the size and the composition of the economy, however Zambia last rebased its GDP in 2010 and the results clearly revealed that it was understated by 25%, a trend which experts project would be the case if rebasing is done in 2020 or 2021.

From 2010 when the last GDP rebasing exercise was done, Zambia’s largest mining company, First Quantum Minerals – FQM has come on stream, various landmark investments in tourism such as hotels, airports and resorts have since been opened with large Infrastructure projects launched from 2011 to-date are all expected to bolster the overall GDP number.

A revised GDP number also enable the setting of the correct tax revenue and non tax revenue collection targets. Tax revenue collection targets for instance are general set at 18% of GDP if efficient methods are employed.

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One of Zambia’s prominent economist, Yusuf Dodia,

Tech

Zambia’s power utility company ZESCO Limited has disclosed that it is currently assessing additional load shedding hours for all its customers owing to the loss of 130MW of power from the national grid.

The company had on August 08,2020 announced to its customers and the general public that is that there is a loss of 130MW of power from the national grid owing to a technical failure on one unit hence creating variations in adherence to the current load shedding hours until the situation is normalized.

And when contacted for further details regarding this fault, ZESCO Public Relations Manager Hazel Zulu told the Zambian Business Times – ZBT in an interview that ZESCO is preparing a report which will indicate estimated loss amount in revenue terms, additional load shedding hours from the current 10 hours per day and the duration in which the situation is expected to normalize.

In a statement released earlier, ZESCO has ensured its customers that it is working round the clock to assess the impact of the deficit.

She said the power utility company will further ensure that customers and the general public are kept informed on the implications of this development on the current load shedding schedule.

“We would like to thank our customers for their cooperation and patience and urge them to continue employing energy efficient initiatives such as completely switching off appliances when not in use, migrating to the use of energy efficient lighting and using gas for cooking,” She said

Hazel added that these power saving initiatives will help both the corporation and customers to jointly manage the current power deficit and ensure that the available power is shared equitably amongst all customers.

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Zambia’s power utility company ZESCO Limited has