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Agribusiness

The Cotton Board of Zambia – CBZ has disputed the forecast cotton production figures which indicated a reduction of 43% of seed cotton for this’s marketing season announced by the Minister of Agriculture.

CBZ is on record to have confirmed that local cotton production and textile industry can earn Zambia over US$220 million in exports if well managed. Moreover, more can even be saved in terms of forex if the local textile industry is harnessed and developed.

Agriculture Minister Michael Katambo had last week announced that production of seed cotton is forecast to reduce by 43% to about 41,000 metric tonnes from about 73,000 metric tonnes produced in the last farming season.

CBZ Executive Director Dafulin Kaonga has disagreed with the announced figures stating that figures submitted by the board where double the digits leading to over 80% reduction in total production numbers.

He told the Zambian Business Times – ZBT in an exclusive interview that the industry has faced a reduction in production over the years and this is mainly due to adverse pricing mechanisms and the competition of other commodities such as Maize and Soya beans which have attracted more growers and are deemed to be more profitable.

Kaonga disclosed that pricing of seed cotton has continued to be stagnant and range between K3.50 to K3.70 per Kg hence the stagnation in pricing on the market has led to a reduction in production with farmers opting to grow other cash crops.

He further said currently pricing of seed cotton is determined by the buyer (buyers market) as there is no law that requires the Cotton board to intervene in determining pricing. The cotton board has called for all stakeholders to come up with a transparent pricing mechanism which will create a win-win situation for both farmers and buyers.

He added that the board has since made submissions to government on how cotton should be produced in the country and proposed methods of production but that there has not been any effective response, hence hoping government will get back to the board soon to urgently stem the drop in production.

“We also questioned the quality of inputs that affect production which is also a major shift in terms of what farmers are able to get, however we are still pushing for response and hoping all will be better in no time,” He said.

Zambia has a large local market for apparel and textile products which is currently satisfied from imports and an open market for second hand clothing (locally known as Salaula).

The cotton industry needs an integrated approach that would see trade policies tuned to support local cotton cultivation, that would feed into a local textile industry that would then be the anchor to mop up and buy off locally produced cotton.

Only after an integrated development from cotton cultivation, processing and the local textile and apparel industry that is supported and able to produce finished clothing products for low, medium and high end would the industry resume its growth trajectory.

Zambia’s population is now about 18 million people and this should give the authorities a platform to rethink the policy on second hand clothing and allowing cheap imports which in effect is exporting jobs to other countries.

There should be policy coordination with the ministry of trade to ensure that local manufacturing is allowed to grow before its subjected to competing with imports from mature industries and countries.

The Copperbelt, Central, Lusaka, Southern and Eastern provinces still have some textile companies that are currently operational but rely heavily on imported apparel. These can be engaged to kickstart this industry and build it up from group up.

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The Cotton Board of Zambia - CBZ

Mining

The preliminary report of the gold quantities (or reserves) available at the much talked about Kasenseli mine site has not yet been finalized.

Mines permanent secretary Barnaby Mulenga told the Zambian Business Times – ZBT in an exclusive interview that detailed exploration has not yet been completed and that detailed reports on the availability of huge quantities of gold are tied to drilling which is still on-going.

He said Zambia Environmental Management Authority – ZEMA has already granted the Gold company a license for exploration works which are currently on-going and will be concluded within a period of three months.

He added that once mining activities begin at Kasenseli gold, the ministry will be issuing monthly reports and that this will be done while exploration works are taking place.

“The detailed exploration hasn’t been completed but we have a report which confirms the availability of gold however volumes of this gold will be told as explorations works continue and quantities are tied to drilling,” He said.

Meanwhile, ZCCM Gold Company has injected approximately K45 million for the initial phase of the Kasenseli Gold Mine Project in Mwinilunga district and with the granting of the exploration licence by end of March 2020.

The Gold company had moved on site and started mobilisation in the first week of April 2020 to undertake detailed exploration that will determine the extent of gold mineralisation in the license area.

Mulenga has disclosed that mining activities at Kasenseli Gold in Mwinilunga district will begin this week (last week of May 2020) as the ministry is granting a mining license to ZCCM Gold Company to commence works at the site.

Mines Minister Richard Musakwa had recently during his visit to the Copperbelt indicated that there are substantial volumes of gold in Kasenseli in North Western province which can help the country fight poverty and pay off its debt and as well ad build on national gold reserves.

Kasenseli mine is reported to have alluvial gold which saw a gold rush on Mwinilunga resulting in state security agents sealing off the area from further exploitation.

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The preliminary report of the gold quantities

Companies

Lafarge Zambia and Zambian Breweries – ZB have donated K100,000 to the University of Zambia – UNZA School of Engineering to help develop the nation’s first prototype ventilator.

The two giants of industry are backing the UNZA innovation as part of their wider support to the fight against COVID-19. Lafarge Chief Executive Officer Jimmy J Khan says health and safety is Lafarge’s core value, thus the health and safety of its communities, customers, suppliers and transporters is of great importance to the company.

“With the increase in COVID-19 cases around the country, the need for ventilators has never been as compelling as now. That is why Lafarge Zambia sees the importance of being part of this project. The project will not only assist in relieving certain pressures off our health system and help save lives; but it would also instill national pride, as this would be the very first ventilator that would be manufactured by Zambians in Zambia,” he said.

And Zambian Breweries Country Director Jose Moran said the company believed in working together for a better Zambia, and the collaboration with Lafarge fitted well with its dream to improve the lives of local people.

“The people of Zambia are at the heart of what we do. Their safety and wellbeing are paramount to us. We also have a track record of supporting entrepreneurs and innovation, so we will be backing UNZA and look forward to the ventilator being perfected and potentially saving lives,” he said.

In a statement made available to the Zambian Business Times – ZBT on June 1, 2020, Both Zambian Breweries and Lafarge has implemented a number of initiatives internally and externally to ensure the health and safety of their employees, transporters, customers and suppliers.

Internally, Lafarge has installed temperature checks, hand sanitisers and mandatory wearing of masks for all employees, transporters and guests that enter its plants.

In the communities near its plants in Chilanga and Ndola, Lafarge has provided vehicles branded with COVID-19 messages and public announcement systems to sensitise people on preventive measures, to help curb the spread of the pandemic.

Meanwhile, Zambian Breweries has developed a hand sanitiser formula and is manually bottling it for donation only to healthcare workers and staff, as well as importing 5,000 face shields made from recycled plastic for use by healthcare workers, and donating over 6,000 posters and 10 billboards for COVID-19 communication to government since the breakout of COVID-19 in March this year.

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Lafarge Zambia and Zambian Breweries - ZB

Companies

The Zambia National Commercial Bank – ZANACO acting Chief Executive Officer Lishala Situmbeko  has confirmed that the Bank’s clients has started tapping into the K10 billion facility and is giving relief packages to its customers that have been negatively hit by the Covid – 19 outbreak.

Situmbeko has told the Zambian Business Times – ZBT in an exclusive interview that ZANACO is availing funds on its normal credit process and conditions, given that the whole lending environment is regulated and following the guidance given.

“Right now, we are focusing on helping our customers by giving them cash flows especially those hit negatively, however we are making sure that funds are available but I cannot mention how many have so far applied or to what percentage is this process being done,” he added.

Situmbeko has also noted the need to strengthen Zambian businesses by gaining extra support from customers to enable the business community deal with the current problems arising from the Covid – 19 pandemic.

He said it is important to not only concentrate on the lending side but also ensure that the behavior of customers meet satisfactions of commercial banks.

BOZ introduced a K10 billion Medium- Term Refinancing Facility (stimulus package) to enable Financial Service Providers (FSPs) support businesses and households that are being impacted by COVID-19.

The ministry of finance further indicated that the facility is only available to individuals and businesses through their respective FSPs, however priority is to support sectors that will propel economic recovery and stimulate private sector led growth.

BOZ has explained that sectors identified in the 7NDP such as the agriculture, manufacturing, energy and tourism are priority and will receive 60% of the facility while the rest of the sectors shall access the remaining 40%. BOZ Governor Denny Kalyalya however stated that there has been no disbursements yet, though about 30% of the applications from the various FSPs have been approved.

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The Zambia National Commercial Bank - ZANACO

Agribusiness

Millers Association of Zambia (MAZ) President, Andrew Chintala, during an exclusive interview with the Zambian Business Times – ZBT has confirmed that “Millers are ready and have started buying maize”.

Chintala stated that “we can only appeal to the small scale farmers to encourage them to take advantage of the market which the millers are offering as long as they reach the 12.5% moisture content in their grain, they are more than welcome to approach any miller because we have already started buying the grain and they are assured to get a fair price as we are offering quite competitive prices.”

On 27 May,2020. Minister of Agriculture Michael Katambo held a media briefing on the Crop Forecast Survey and Food Security Status for 2020/2021 Marketing Season where he announced that Zambia is expected to harvest 3.4 million tonnes of maize this year. This price is thought of more as a floor price but delays by FRA to pay cash on delivery lowers the actual market price on the ground.

MAZ however stated that it will respect the principles of free market economy, which is supply and demand to come at play because only that will determine the actual value of the commodity and at what price it will be trading at on the open market.

Chintala added that , the association doesn’t encourage anyone to make any interventions that will influence  the market as it starts, because any interventions that can be made at any level may bring about distortion in the market.

Chintala further said in terms of price stability, looking at the stock figures that the minister announced, it is clear that, millers are assured of the stable  supply of the commodity and if there’s price stability in the input supply of the maize to millers they will definitely be stability in the output price of mealie meal.

And prices will remain relatively stable due to the fact that the supply will meet the demand. “Prediction is that the prices will remain stable because of the high production yields that have been recorded.” He added.

In relation to ensuring that smuggling of the commodity is taken care of, MAZ needs to formalize trade, to monitor everything that goes out of the country and be able to account for it.

In conclusion Chintala said, “It is imperative that government quickly engages the appropriate players as Minister of Agriculture stated, to meet to look at how we can formalize the trade between Zambia and neighboring countries where we could have the market for the surplus crop because that’s the only way to take care of smuggling. If boarders are kept closed for trade, people will look for alternative ways to export the surplus of the commodity.”

Analyst say the price of mealie meal has had some stability mainly due to the enforcing of the tripartite agreement but it remains to be seen if a revised one will be signed off to ensure that prices are stabilized.

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Millers Association of Zambia (MAZ) President, Andrew

Agribusiness

The Food Reserve Agency – FRA has announced that it will maintain the purchase price in the 2019/2020 crop marking season and purchase a K50Kg bag of white Maize at K110 and has fixed the price of a 50Kg bag of Soya beans at K150 and Paddy rice at K70 for a 40Kg bag.

Ministry of Agriculture had two weeks ago directed FRA to outline its plans for the 2020 crop marketing season and avail to the public its buying price for maize and other designated commodities.

And FRA Executive Director Chola Kafwabulula has explained that in arriving at determined prices for 2020, the Agency acknowledged that this year is unique in nature and notes the urgent need to replenish the strategic grain reserves from a dynamic grain market obtaining locally and in the region.

The Agency is also expected to purchase 1 million metric tonnes of maize for the national reserves, indicating a surplus increase of more than 710,000 metric tonnes, from the usual purchase annual purchase of 500,000 metric tonnes.

Speaking at a media briefing in Lusaka on May 29, 2020, Kafwabulula said it is anticipated that the FRA prices shall not disadvantage the private sector who are expected to purchase the larger share of the 3.4 million metric tons produced in the case of maize.

He said FRA undertook a process of crop price scenario analysis that includes a survey of the prevailing farm gate and open market prices, indicative crop gross margin budgets taking care of input costs in relation to commercial pricing and the subsidy beneficiaries of the government farmer input support programme (FISP).

The agency since wishes to remind and urge farmers to adhere to the general practice of ensuring they clean the maize at their farmsteads to avoid congestion at the FRA depots.

“I wish to also implore all FRA personnel and other stakeholders to uphold rationality, prudence, transparency and accountability for public resources that have been entrusted in our charge,” He added

Agriculture Minister Michael Katambo had last week announced that this year’s maize production is forecast to increase to about 3.4 million, up from about 2 million metric tonnes produced last season presenting an increase of 69%.

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The Food Reserve Agency – FRA has

Companies

The Zambia Railways Limited – ZRL passenger train operations remain suspended until further notice. ZRL public relations head, Caristo Chitamfya in an exclusive interview with the Zambian Business Times – ZBT confirmed that “the passenger service operations remain suspended till further notice as the railway company is monitoring the Corona virus situation.

Chitamfya however stated that freight services and the cargo train is still running. He stated that for the passenger services to resume operations, the company will have to get guidance and clearance from from the Ministry of Health.

The Zambia Railways passenger train suspended all services on 6 April 2020 in consultation with the Ministry of Transport and Communication as well as the Ministry of Health.

Zambia Railways Limited, apart from Tazara is the only company that provides the lowest cost mode of transport in Zambia and its suspended passenger services has affected many people who especially in rural and Peru-urban areas who solely rely on travelling with the railway company on cost consideration.

ZRL operates ordinary trains, namely the Zambezi and Kafue trains, which run between Livingstone and Kitwe. The travel classes offered on the ordinary trains are business, sleeper, standard and economy classes.

It also has what is referred to as mixed trains, such as the Mulobezi mixed train which operates between Livingstone and Mulobezi. The train moves both passengers and livestock. The other is the parcels service, where the railway company Zambia provides a service for conveyancing of parcels or unaccompanied luggage.

ZRL was privately held from 2003 to 2012 and was repossessed by government in September 2012 with the aim of making the rail firm the main carrier of bulk cargo and passengers. There has been some progress on bulk cargo service but revamping of the passenger service has little to write home about as the service remains erratic with speed remaining one of the challenges.

In May 2019, ZRL confirmed that it had invested about US$15 in million to procure state of the art signal and communication equipment as derailment of locomotives was the biggest challenge that the company faced in the past, it remains to be seen if this company will be able to revamp its operations and become profitable.

The company has of late concentrated its efforts on its estate business segment, calling on removal and demolition of buildings along the railway line when its core mandate is to revamp the passenger and freight train services.

Analyst argue that if the Railways lines were busy, do you think that people can even start constructing near the lines? Trains have strong vibrations when traveling at the right speeds which in itself can deter people from building near them. There is need to see the passenger and freight services become more competitive and offer a low cost option for freighting.

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The Zambia Railways Limited - ZRL passenger

Lifestyle

The Zambia Chambers of Commerce and Industry – ZACCI immediate past president Micheal Nyirenda has passed away. In a notice to members made available to the Zambian Business Times – ZBT, ZACCI stated that its saddened by the death of its past president.

Michael Nyirenda served as ZACCI President from 2017 to 2019 while representating the Association of Building and Civil Engineering Contractors ( ABCEC) within the apex body of the private sector.

He sat on the ZACCI board from 2015 – 2017 before taking on the leadership role in 2017. The Zambia Chamber of Commerce and Industry – ZACCI is the umbrella organization representing businesses across the country and across all sectors of the country.

Nyirenda showed commitment and contributed heavily to industry advocacy, was as prominent participant in the private sector and the business community. He will be greatly missed. MHSRIP stated Nyirenda.

ZACCI was established in 1993 and registered on 11 October 1990 with the mandate of advocating an environment that promotes business growth. The chamber promotes cooperation between the public sector and business as the foundation for building an economy which creates employments and equitable wealth and the back-bone of such an economy is a diverse and resilient Small and Medium Enterprise Sector.

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The Zambia Chambers of Commerce and Industry

Markets

Zambia has for the second consecutive month recorded a trade surplus valued at K2.2 billion in April 2020, up from K359 million recorded in March 2020, indicating a 521% increase. The trade surplus means that Zambia exported more than it imported in the months of March and April 2020.

Indications from the statistics shows that the covid 19 effect of chocking consumer goods imports from South Africa may have had a bigger effect trade balance and enabling Zambia to record these consecutive trade surpluses.

Zambia Statistics Agency – ZamStats has announced that exports which mainly comprise domestically produced goods increased by 4.7% from K8.5 billion in March 2020 to K8.9 billion in April 2020.

Speaking a media briefing monitored by the Zambian Business Times – ZBT on May 28, 2020, ZamStats Interim Statistician General Mulenga Musepa explained that the increase in exports is mainly due to a 7.6% increase in intermediate goods (mainly copper and copper related products) exports earnings to K7.7 billion, up from K7.3 billion in March 2020.

He said imports decreased by 18% from about K8.2 billion in March 2020 to K6.7 billion in April 2020 and that the decrease in imports was mainly as a result of a 45% and 20% decrease in imports of Consumer goods. Zambia’s biggest consumer goods trading partner is South Africa.

He added that the total goods traded from January 2020 to April 2020 increased by about 6% to K63 billion, up from about K59 billion in the same period of 2019.

Meanwhile, Traditional Exports (mainly copper) earnings increased by about 10% from K6.4 billion in March 2020 to about K7 billion in April 2020, and in terms of share in total exports, Copper accounted for 79% of total export revenue earnings in April 2020.

Musepa also disclosed that share in total Non-Traditional Exports- NTEs (non copper exports) decreased by 12% from K2.1 billion in March 2020 to K1.9 billion in April 2020 and that in terms of share in exports, NTEs recorded a 21% in April 2020.

“Refined copper exports earnings during April 2020 rose by 8.4% to K6.7 billion in April 2020 from K6.2 billion in March 2020. And Refined Copper export volumes during April 2020 rose by 2.6% to about 74,000 tons.

And on the international commodity prices, the London Metal Exchange – LME copper prices also decreased by 2.5% to US$5,048 per ton in April 2020 from US$ 5,178 per ton in March 2020,” He added.

President Lungu has directed the finance and trade ministers to engage the major chain stores in Zambia that include Pick n Pay, Choppies, Shoprite, Spur etc with the view of increasing the proportion of locally manufactured goods with the aim of import substituting some product lines to save on forex outflow.

A committee was constituted, headed by Assistant Secretary to the treasury – Christopher Mvunga that includes the Zambia Association of Manufacturers – ZAM, the Zambia Chamber of Commerce and Industry – ZACCI, Zambia National Farmers Union – ZNFU among others but its results are yet to be made public.

The Zambian Business Times – ZBT has been informed that the process is more complex than meets the eye as some companies which are heavily marketed as local manufacturers have products which are low on local content to levels of even below 20%. More on this to follow…

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Zambia has for the second consecutive month

Markets

Inflation pressures have persisted in the second quarter of 2020, with the year- on-year (annual) inflation rate for May 2020 increasing to 16.6%, up from 15.7% recorded in April 2020.

Zambia has for the past months continued to record an increase in inflation rate mostly driven by the lagged effects of the increase in retail fuel pump price and electricity tariffs, as well as the pass-through from the notable depreciation of the Kwacha against the US dollar resulting in imported products price hikes.

Meanwhile, the Bank of Zambia – BoZ has maintained that although the projected path for inflation is higher than the February 2020 MPC forecast horizon, it is expected to trend towards the upper bound of the 6-8% medium-term target range at the end of the forecast horizon.

And speaking at a briefing monitored by the Zambian Business Times – ZBT on May 28, 2020, Zambia Statistics Agency – ZamStats Interim Statistician General Mulenga Musepa has explained that the increase in the May 2020 annual inflation rate means that on average, prices of goods and services increased by 16.6% between May 2019 and May 2020.

He has disclosed that the increase in the annual inflation rate was attributed to price increase in both food and non-food items. Musepa said the food inflation increased to 17.5% from 17.0% of last month and the increase was mainly attributed to increase in prices of food items such as Fish Fillet steak, Mixed cut, Beef, Sausage, Dried bream, Frozen fish, Bukabuka and oils such as Cooking oil, Margarine and Butter. Other foods like table salt and Soups also recorded increased prices.

He added that the non-food inflation increased to 15.5% from 14.2% and the increase in the annual non-food inflation was mainly attributed to price increases in items such as Charcoal, Household Textiles, Soaps, and Pharmaceutical products.

And on provincial level, Northern Province recorded the highest annual inflation at 12.0% followed by Lusaka Province at 18.5%. North-Western province has the lowest contribution of 0.5% percentage points.

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Inflation pressures have persisted in the second