IFAD injects K13.5 million in rural sustainability

The International Fund for Agriculture Development – IFAD has committed to injecting K13.5 million (about US$750,000) in Zambia as contribution towards the handling of economic challenges beset on rural communities by the Covid – 19 pandemic.

IFAD Regional Director for East and Southern has announced in a letter addressed to Finance Minster Dr. Bwalya Ng’andu that Zambia is one of the 59 selected countries that will benefit from IFAD’s newly established Rural Poor Stimulus Facility.

According to information made available to the Zambian Business Times – ZBT by Ministry of Finance Spokesperson Chileshe Kandeta on July 1, 2020, IFAD has put in US$40 million of its own funds as seed money for the Rural Poor Stimulus Facility to get started while more funds will be raised from other development and cooperating partners around the globe.

It is anticipated that the funding to recipient countries will increase as more donors contribute to the facility and that IFAD’s facility resources are intended to support the Government’s interventions in responding to the Covid-19 crisis by financing targeted investments that support rural based small-scale producers and poor households.

The latter written to the minister further indicates that some of the areas to be financed through the IFAD’s Rural Poor Stimulus Facility include providing inputs and basic asserts to enable small-scale producers maintain production and establish fast-maturing alternatives agriculture enterprises.

Other areas include facilitating access to markets in conditions of restricted movement and ensuring that market remain open, and break even demand, feasible and delivering targeted funds through existing financial institutions that work with rural based small-scale producers and small and medium agricultures enterprises to preserve services, markets and jobs.

Dr. Ng’andu has since thanked IFAD for the K13.5 million support saying the facility will effectively supplement rural sustainability interventions that the government has so far developed in response to the Covid-19 induced economic slowdown.

The International Fund for Agriculture Development –

Exercise prudence in application of K8b Covid 19 bond – Prof Saasa

Prominent economist Professor Oliver Saasa has stated that the establishment of the K8 billion (about US$444 million) COVID-19 bond is a positive move provided proper assessments on how the funds will be applied has been conducted.

Prof Saasa stated that there is need for clarity as to which sectors the funds will be disbursed to, to ensure sufficient return is attained after investments. Otherwise, the country risks increasing its debt stock even further.

The Zambian government’s highest decision making organ (Cabinet) had on June 22, 2020 approved in principle the establishment of a K8 billion economic stimulus package that will be financed through the issuance of the COVID-19 bond.

The bond proceeds are expected to be utilized to settle outstanding payments to local contractors, suppliers and retirees which is projected to result in injecting liquidity into the local economy after the slow down on following the COVID 19 restrictions.

Prof. Saasa has since advised that the application of funds be prioritized to local Zambian contractors and suppliers, saying the industry has been unable to access financing that is needed to expand and retain their labor force due to the delayed processes of dismantling of domestic arrears.

He told the Zambian Business Times – ZBT in an exclusive interview that access to finance by most local companies, many of which are Small and Medium Enterprises – SME’s has been a big challenge as some companies have failed to service their bank loans, hence chances of borrowing or extending their credit lines from banks and other financial institutions are slim.

He noted that the historical challenge of implementation continues, there has been a gap between what the government commits to deliver and the follow through to ensure that what was committed is actually implemented and delivered.

Prof Saasa stated that he is hopeful that the established local bond will be applied prudently and correctly, as local contractors and suppliers are the engines of economic growth in Zambia.

“The move to pay down the domestic debt is important, however implementation is an issue, we must also know that bonds are borrowings, therefore if the money has not been carefully planned for, it will increase domestic borrowing levels and this will adversely affect the country’s economy even more,”

“Government should therefore apply proper assessment on how the money will be applied and not getting money first, then look for programs. Proper assessments and application of funds would avoid future debt restructuring which becomes very expensive, this is a challenge we have had for many years and needs to be rooted out,” he added.

Prominent economist Professor Oliver Saasa has stated

Local products only make up 35% in chain stores

The Zambia Association of Manufactures – ZAM has disclosed that the percentage of local products being stocked in the key chain stores in Zambia is currently sitting at only about 35%.

The key chain stores in Zambia include Pick n Pay, Choppies, Shoperite and Spar. No local Zambian store has been able to grow and scale to be among the top five at a national level after the privatization of state owned Mwaiseni and ZCBC chain stores, whose warehouses were mostly sold to shoperite.

This information has come to light following the Zambian government setting up a select committee composed of key industry associations and experts headed by Rosetta Chabala (former ZAM President and currently CEO of ZAMEFA).

The committee’s mandate is to review all products sold in chain stores with a view of coming up with a proposed list of products, which are currently being imported, that will be replaced with locally grown or manufactured products. The ultimate aim is to enhance the import substitution drive and saving up on unnecessary foreign exchange outflow.

Committee Chairperson Rosetta Mwape Chabala disclosed to the Zambian Business Times – ZBT in exclusive interview that there is a local content percentage for a product to qualify to be called ‘proudly made in Zambia’.

She said the ZAM standard for a product to qualify to be classified as a local product is in line with regional requirements of 35 -45%. Chabala sated that the committee will go with the requirements under the rules of origin in COMESA which is 35% value addition while in SADC its 45% value addition. she however stated that In fact, under the Proudly Zambian campaign, the preference is for 50% value addition.

When asked if ZAM or Zambia laws have a pre-set percentage to guide the process of determining the locally made or manufactured products as opposed to locally assembled products? Chabala stated that Zambia is guided by the rules of origin and the Zambia Trade and Industrial policy, which is able to differentiate the difference between assembling and manufacturing.

“It is also important to note that some lines are doing very well especially those by producers who have capacity to produce quality and to scale. She told ZBT that some of the product lines which are doing well and need to be further consolidation include fruit and veggies, meats and poultry, soaps and detergents, honey, dairy etc,”.

Chabala further confirmed that the committee has received the list of all products being imported by top chain stores in Zambia and that the committee would work in a phased manner and start with the Agro sector.

So far the committee has only worked on fruits and veggies and then will be moving on to dairy. She said a lot of fruits and veggies have so far been identified for import substitution either by growing more or by extending the farming and production season beyond the rainy season. Some of the products identified for import substitution include Kumquats, litchis, oranges, Pineapple Queen, Beetroot, Brocolli, Brussel, Carrots, Mushrooms (white and brown), onions, etc.

She added that the committee is working in a phased manner therefore, manufactured products will be last and almost towards the end of the year as it is currently working on agriculture – fruit and veggies, next is dairy and processed meats and then conclude with manufactured items and textiles.

The local manufacturing sector is today said to have been outrun by imported raw, semi-processed, processed and finished products. There is need to identify specific products that can be locally grown, processed and manufactured to develop a viable manufacturing industry in Zambia.

The Zambia Association of Manufactures - ZAM