BOZ challenged to revise its Q2 single digit inflation projection

Financial analyst Maambo Hamaundu has observed that the country does not show any sign of its inflation dropping to a single digit in two to three months time. This is in the wake of the earlier Bank of Zambia – BOZ projection that inflation will rebound to a single digit in a second quarter (Q2) of 2020.

He said the projection for single digit may have been feasible before the outbreak of COVID 19 but BOZ now needs to consider varying the projection in view of the Coronavirus outbreak and its impact on the economy.

In an exclusive interview with the Zambian Business Times – ZBT on March 30, 2020, Hamaundu explained that unless the impact of the coronavirus is cleared within the next three months, then a different picture could be seen. He said that in the short term, inflation rate may continue to trend in the double digit range even in the next three to nine months.

“I think as we go into April, May and June the inflation will still be in a double digit range and bound to increase even further due to this COVID-19. Because even when the country recovers from the virus outbreak, we are looking at the Kwacha, which has lost strength and this is further driving up inflationary pressure”, he told ZBT.

The question is, how do we deal with the inflationary pressure that will come from Kwacha depreciating against the US dollar and other major international currencies?, how are we going to deal with price increases on imported goods because we use dollar to import our goods into the country. The price of fuel could also be affected, and most of the consumer goods imported from outside the country will also be affected, Hamaundu told ZBT.

He said the BOZ projection that inflation would come down to a single digit of between 6 to 8% does not give confidence looking at the movements in the exchange rate and the performance of the agricultural sector.

The financial analyst also stated that Zambia is practically in a lockdown in most sectors of the economy, citing the closure of Bars, Nightclubs, Casinos, Gyms and other businesses that attract many crowds. He added that when recovering from this lockdown, businesses are most likely going to consider increasing prices of their goods and services to recover the revenue lost during the lockdown, resulting in more inflationary pressure.

“If we can work on our production costs then we can control inflation, but domestically how do we control our production costs which rely on the cost of fuel, the cost of electricity and the cost of labour. All these factors have recorded price increases, which does not give confidence of the national inflation rate rebounding to single digit,” he said.

Zambia’s latest annual rate of inflation for the month of March 2020 hit 14%, up from 13.9% reported in the previous month. This increase was mainly on an account of price increases in non-food items such as vehicles, airfares that are US dollar related. Non-food inflation for March increased to 12% from 11.6 % in February 2020.

Financial analyst Maambo Hamaundu has observed that

Cross border association backs calls for suspension of passenger services

The Cross Boarder Traders Association – CBTA has backed calls to suspend cross boarder public passengers at boarder entries to curb the spread of Coronavirus (COVID -19). This follows public concerns over the Chirundu border, Zambia’s border with Zimbabwe which is said to handle the highest traffic from South Africa.

South Africa is considered to be southern Africa’s epi-center, and has so far recorded the highest number of laboratory confirmed cases in both southern and Eastern Africa. South Africa is Africa’s second largest economy by GDP.

CBTA Secretary General Jacob Makambwe told the Zambian Business Times – ZBT in an exclusive interview that the recommendation to end cross border public passenger services would help to mitigative further spread of the virus which has a massive negative impact on businesses in the country.

He said Zambia is already grabbling with a weak economy which is likely to be exacerbated if the number of confirmed cases continue to increase hence the need to urgently close passenger entry points to curb the disease.

Makambwe added that local manufactures should take advantage of the situation and begin to look within the country by improving production of local products in order to boost the local industry.

“Yes, COVID-19 has negatively affected our businesses but we urged our members to look within and get products from local manufactures to complement the ‘Buy Zambia’ campaign. It is time to improve our production and manufacturing capacity if we are to sustain ourselves with products that we need in this COVID-19 situation,” He said.

The cross border traders board has since urged all its member to abide by the rules that have been prescribed by health experts and has called on government to put in place restrictions on land boarders that are still open with countries that have confirmed cases of COVID-19.

Health Minister Dr. Chitalu Chilufya had told ZBT in an exclusive interview on March 18, 2020, that the Ministry has placed health officers at all land boarders and Airport entries across the country to monitor travelers and ensure those with symptoms of COVID-19 are invested and quarantined.

The Cross Boarder Traders Association – CBTA

Businesses battle for survival on COVID 19, inflation & Kwacha slide

The continued rise in the number of new cases of the COVID-19 across the globe and in Zambia threatens to bring the economy to a halt and something needs to be done. Local and private businesses risk losing their capital during this difficult period.

So far, government has curtailed certain businesses and social activities deemed to be high risk of facilitating the spread of COVID 19 as the minister of health announced safety measures to prevent further spread. The three edged sword of COVID19, Kwacha depreciation and escalating inflation is already breaking down some businesses.

Some of the businesses that attract huge crowds such as bars, nightclubs, casinos, cinemas, and gyms have been shut down for an initial period of 14 days. Revenues for these businesses have disappeared overnight leaving the employees and taxman grappling.

This move has hit harder on the business owners, with some of even finding themselves on the wrong side of the law, some abrogating the health directives just so that they can survive and be able to keep their staff.

Small and Medium scale traders that deal in imported goods are equally affected by the Pandemic due to restrictions in the movements of both people and goods, across countries. Though some measures have been put in place for trucks to relay the goods, this is mostly for large businesses that can negotiate for these provisions.

Zambian Business Times-ZBT spoke to some local traders on March 27, 2020, who sell fruits such as, Bananas, Oranges, Apples and Nuts at City Market and Town Center and they expressed concerns that it has become so difficult to order and restock their wares now, unlike before.

One trader identified as Samuel Mulenga told ZBT that the price of Bananas and oranges has swiftly gone up due to COVID-19 presence. He said this has badly affected his income. ‘‘I cannot manage to pay all the bills and rentals now, because we are barely breaking even, profits if any is very small. Before, I used to make 50% to 70% return from one order, now am making only 20% before costs of operations due to the fall in Kwacha against the dollar.

The problem with our business is that some fruits are not locally produced and with restrictions in movement, it means at some point, imported fruits may completely stop getting into the country, so we may be forced to divert to new businesses which is not an easy thing,’’ he said.

Another trader, appealed to government to consider the economic stability of especially private citizens and business owners, saying people will soon be left homeless, as they will be evicted from houses due to non-rental payments, which will pose a further risk of disease contraction.

“I am not against the preventive measures that government is undertaking, but, my concern is that about more or less 70% of people live in rented houses in this country and these people are rooted into self-employment. Very few are into formal jobs, so basically its very tricky to just leave them like that, some solutions need to be found.

Personally I sell Nuts that come from South Africa and Mozambique and it has been in low supply to almost extinct of late after COVID 19 outbreak, so no income at the moment ,’’ he said.

The country’s economy has continued to receive economic shocks, it has just recovered from chemical and gas attacks on citizens across the county and is now faced with the spread of the coronavirus.

The continued rise in the number of

Zambia revises downwards its 2020 GDP growth rate

Minister of Finance Dr. Bwalya Ngandu has confirmed that following the outbreak of COVID-19 across the globe, Zambia’s economy has negatively been affected with global trade slowing down following closure of borders and the lock down in major economies.

Speaking at a media briefing in Lusaka on March 27, 2020 attended by the Zambian Business Times- ZBT, the Minister explained that the reduction in merchandise trade has impacted negatively on revenues particularly for commodity exporting economies like Zambia and the cancellation of flights by major carriers which has further impacted negatively on trade in services such as tourism.

He disclosed that in view of the recent developments, Gross Domestic Products – GDP growth rate has been revised downwards from 3.2% to around 2%. This is despite the anticipated significant recovery in the agricultural sector.

Dr. N’gandu stated that tourism, mining, manufacturing, construction and retail trade sectors are projected to slow down adding that the full extent of COVID 19 impact will depend on the severity and duration of the pandemic.

“In the case of copper, prices opened the year at US$6,165 per metric tonne but are now at about US$4,754 per metric tonne on Wednesday 25th March 2020, this will negatively affect Zambia’s revenues,” He added.

The Finance Minister said financial markets have not been spared by the pandemic as the international economy has seen investors divesting their funds from traditional assets such as Commodities, stocks in emerging markets, to safe havens and currencies that include the US Dollar, hence has resulted in the US Dollar strengthening against other currencies, including the kwacha.

And in response to the challenges that the country’s economy is facing on COVID-19 threats, Cabinet has approved a COVID-19 contingency and response plan with a budget of about K60 million under the Disaster Management and Mitigation Unit – DMMU.

The Minister added that if the situation persists, government will scale up resource mobilization from the 2020 budget to curb the spread of the disease. As of March 30, 2020, Minister of Health Chitalu Chilufya confirmed at a media briefing that Zambia has recorded 35 cases of COVID-19.

The latest update from the World Health Organization – WHO indicates that over 470,000 confirmed cases have been recorded around the world and more than 20,000 deaths have been reported. The Zambia Public Health Institute has been actively engaged to spearhead the fight against #COVID19

Minister of Finance Dr. Bwalya Ngandu has