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Government has vowed to revive and revamp the Country’s railway and aviation sectors that have been facing challenges in the past, and that the country will benefit greatly from the current huge investments, minister of Transport and Communication  Mutotwe Kafwaya has said.

He stated that government has been investing heavily in reviving the railway and aviation sectors, which have not performed to expectations in recent years. The Minister said developing the two sectors will go a long way in the country’s efforts to achieve sustainable development. Kafwaya was speaking to the media on January 27 2020 in Lusaka.

‘‘We want to ensure that the railway sector, the aviation industry and the telecommunication sectors are well developed,’’ he said. The Transport Minister added that government has set targets to ensure the development of railway and aviation sectors in line with the country’s national development Plan.

Zambia’s aviation industry has been struggling since the demise of the country’s sole national carrier, the Zambia Airways, in 1994 and the lower investment levels in airport infrastructure. Government has been engaged in various efforts to revive the sector and entered into a strategic partnership with the Ethiopian Airlines in 2018 to re-launch the southern African nation’s national carrier.

The government has also invested heavily in the development of Livingstone’s Harry Mwaanga Nkubula International Airport which is now completed. The other massive investment in airport infrastructure projects are the US$360 million Lusaka’s Kenneth Kaunda International Airport upgrade and the US$397 million Copperbelt’s Simon Mwansa Kapwepwe International Airport which are both currently under construction.

The Minister further said efforts to revamp the railway sector have involved improving the railway infrastructure to raise efficiency and win back business taken by the road sector. This has been achieved by an SI which have seen the sector get bulk cargo back on the railway lines in Zambia.

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Government has vowed to revive and revamp

Markets

The year on year inflation rate as measured by all items Consumer Price Index – CPI for January 2020 has increased to 12.5 percent, up from 11.7 percent recorded in December 2019, with Southern Province recording the highest rate of annual inflation at 15.5 percent followed by Lusaka at 13.3 percent.

The increase in inflation rate means that on average, prices of goods and services increased by 12.5 percent between January 2019 and January 2020. The Zambia Statistics Agency – Zamstats has disclosed that the increase in the annual rate of inflation was mainly attributed to price increase in both Food and Non-food items.

Addressing the media in Lusaka on January 30, 2020, attended by the Zambian Business Times – ZBT, the Agency’s Interim Statistician General Mulenga Musepa explained that the year on year food inflation rate for January 2020 was recorded at 15.4 percent compared to 15.2 percent recorded in December 2019 attributing the development to price movement of food items such as Bukabuka, Dried bream, Dried Kapenta Mpulungu, Cooking oil and Fruits such as Oranges, Pineapples and Pawpaw.

Mulenga added that the year on year non-food inflation rate for January 2020 was recorded at 9.4 percent compared to 7.8 percent recorded in December 2019, indicating an increase of 1.6 percentage point.

This increase was mainly attributed to items such as electricity, diesel, and petrol. Meanwhile, at provincial level, Southern Province recorded the highest rate of annual inflation at 15.5 percent followed by Lusaka at 13.3 percent. The southern parts of the country has continued to receive relatively less rainfall compared to other provinces in Zambia, which are now benefiting from seasonal and early maturing crop harvest.

A disaggregation of the annual inflation rate by provinces shows that the annual inflation rate for January 2020 increased for Central, Copperbelt, Eastern, Luapula, Northern and North Western provinces. Western province recorded the lowest annual rate of inflation at 9.5 percent.

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The year on year inflation rate as

Tech

A science advocate and founder of Dziwa Science and Technology Trust – DSaT, Veronica Mwaba, has observed the need to have innovation hubs constructed in all the provinces and districts of the country to inspire the youth to study Mathematics and Science in schools and find innovative solutions to the peculiar challenges we face.

She said this will spar interest in both the intelligent and underprivileged to have an opportunity to explore their ideas and make positive contributions. Mwaba said the effective communications require a coordinated approach which is sustainable to bring all key actors to share thoughts and fears through meaningful discourse that could take the country to the next level.

In an exclusive interview with the Zambian Business Times-ZBT on January 27, 2020, Mwaba said Science and Technology are key drivers for Zambia to reduce poverty by 2030. ‘‘Zambia like any other countries in the world is facing a myriad of challenges, for example, the effects of climate change.

Therefore, Zambia should rise up to the challenge and have dedicated platforms for scientists and key stakeholders to explain complex issues in a simple vocabulary to be understood by a layperson. Citizens have a right to information and their involvement provides timely feedback to the experts to mobilize support for science,’’ she said.

Mwaba who has a background in media studies said that she has learnt that an information gap exist in communicating science within the region. She said the media space is overwhelmed with politics, sport, fashion and entertainment adding that there is need to bridge the information gap, strike a balance and get all key actors including policy makers to develop interest in science and information technology.

‘‘The 21st century has its own challenges ranging from climate change, disease and pests devastating the crops. Today, it is clear that the impact of climate change is being felt. The landscape is changing, Technological advancement is rapid and so it is quite evident that with the rising populations and unpredictable weather patterns, food security is threatened.

Science is a problem solver across all sectors, for example, agriculture, health, environment, education, engineering and ICTs,’’ said Mwaba. The science advocate further said her nonprofit making organization, Dziwa Science and Technology- DSaT is embarking on a campaign on 5th February 2020 to enhance the communication outreach to mobilize support for Science.

‘‘DSaT will lead various stakeholders, women and youths to walk for Evidenced-Based Science. Walking for science is key to getting heard by all interest groups,’’ she said.

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A science advocate and founder of Dziwa

Tech

Airtel Networks Zambia Plc and Tecno Mobile Limited have announced their partnership to enable new Airtel Smartphone users get double data.

The two companies have expressed excitement about the offer which is open to new customers who have just joined the Airtel Network and are using a Smartphone and existing customers who were initially using a feature phone but have upgraded to a smartphone.

Commenting on the partnership, Airtel’s Marketing Director, Hussam Baday, said his company had always been the leader in innovation and value-addition, therefore the double data offer was another opportunity to show the company’s vision to bring everything internet to everyone, everywhere.

“We are thrilled to bring this offer to new smartphone users who will just need to purchase any normal data bundle worth K10 or more if they so wish and will immediately redeem the extra data. Terms and Conditions will apply as for any offer which will be communicated to the customers upon redeeming of the extra data,” Baday said.

He added that the Airtel will continue to provide affordable and customer centric products and services in its bid to make it possible for the nation as a whole to connect with the world, and in so doing facilitating real-time and full economic, social and political integration in the sub-region, continent and beyond.

And TECNO Mobile Limited said that “will further expand its partnership with Airtel to provide customers with more sophisticated and powerful smartphones and High-speed 4G network top-class services”.Corporate Affairs Manager, Steve Mufasa said they were delighted to embark on this journey with Airtel.

“We are excited about this partnership because with the newly launched Country-wide Airtel 4G, the network is equipped with cutting edge, revolutionary fast all Access systems which gives all users a good experience and more so on smartphones,” Mufasa said.

This is contained in a statement made available to the Zambian Business Times –ZBT by Airtel Networks Zambi Corporate Communications Manager Yuyo Kambikambi.

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Airtel Networks Zambia Plc and Tecno Mobile

Mining

The Center for Trade Policy and Development – CTPD has lamented that the recent ‘instability’ in the mining sector are likely to reduce the country’s export earnings and further impact negatively on the already weakened economic sentiment.

CTPD Executive Director Isaac Mwaipopo has explained that Zambia gets a significant portion of its foreign exchange from the export of minerals which accounts for over 70 export of total export values, and in situations where the sector is facing challenges, exports are likely to reduce.

In an exclusive interview with the Zambian Business Times – ZBT on January 23, 2020, Mwaipopo said there is need to engage and negotiate with key players in the mining sector while enabling them contribute fairly to taxes in the country and create win-win opportunities for both the investor and the country at large.

He added that the recent discoveries of gold mining in places like Lufunsa, Petauke, Mwinilunga and oil being confirmed in Gwembe is a reminder of how rich the country is, hence the need to prudently utilize the resources and create wealth for the country.

“Zambia has been blessed with resources like copper, coal, gold and emeralds. We should however ensure that the discovery of such resources do not add to the poverty of this country like the trend that has been seen in the recent past where despite having much resources in the country, we still have a significant portion of our citizens living in poverty and are not having access to opportunities that will help improve their lives,” He said.

Mwaipopo has further noted the need by government to craft strategies that will ensure resources are being used or exploited to the benefit of the citizens adding that with the number of legislations like the mines and minerals Act, if implemented should help advance the interest of Zambians.

He has observed the recent growing challenges between government and mining players in the mining industry concerning proposals that government undertook to prove its benefits hence hoping that government gets back to a discussion table with players within the sector to address any outstanding issues that mining companies may be grieving about.

“We have also seen that there was a big challenge in the performance of prices of commodities such as copper on the international market which was partially attributed to the trade war that was going on between countries like China and the US. And now that it is changing within the global environment, we are hoping to see an improvement on the market.” he added.

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The Center for Trade Policy and Development

Mining

The announced shut down and placement on care and maintenance of Chambishi Metals threatens to impact the construction industry negatively through price escalation as the company is the country’s major producer of gypsum, a key ingredient in the manufacturing of cement.

Chambishi Metals, which is now owned by Eurasia Resources Group – ERG produces gypsum which is used in cement manufacturing which is a very important ingredient. So if Chambeshi Metals has a problem, the cement price will most likely go up because the manufacturers of cement have to resort to imports from South Africa and else where.

The Mine Workers Union of Zambia – MUZ and Chambeshi Metals have been meeting with a view to compel the owners of Chambishi Metals not to close the operations. ‘‘Unfortunately, we had prolonged meetings with management of Chambeshi Metals where they informed the union that the company will be placed on care and maintenance beginning month end of January owing to the fact that the company has failed to find feedstock to run the metallurgical plant,’’ said  MUZ President, Joseph Chewe.

He described the development as ‘‘very unfortunate’’ because the community of Chambeshi will be crippled economically. He also disclosed that management indicated that the plant might not be re- opened in the next two years.

However, the MUZ has demanded that ERG hands back its license so that government can find a serious investor. MUZ President Joseph Chewe argues that the investor has not been pumping money into the firm to boost operations.

He disclosed at a media briefing on January 20 2020, that only 28 workers would remain maintaining the mine, while 229 others have since been retrenched and would leave the mine at the end of this month. Managers are expected to leave immediately.

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The announced shut down and placement on

Markets

Bankers Association of Zambia – BAZ has attributed the sporadic and under-subscription of the Treasury bills – T-bills to the general low liquidity on the market. The Association has since urged government to unwind on the tough monetary policy stance taken last year to help bring some liquidity on the local market.

BAZ Chief Executive Officer Leonard Mwanza stated that there is less liquidity on the market due to some monetary interventions that were carried out to stem inflation from further increasing and also to bring stability to the Kwacha. He said the country crossed the year with these measures and they mopped out more liquidity from the market.

‘‘Government can help by pumping in a bit more liquidity onto the market by unlocking the arrears and paying down the various contractors whom they owe some money, there is a pile of arears to businesses and firms who provided a service to the government, if that money was released on the market it could help to improve market liquidity”.

“For as long as the liquidity situation remains tight as it is, we expect that there will be less money that will be going towards Securities portfolio like treasury bills and bonds.’’ Said Mwanza.

The BAZ chief was speaking in an exclusive interview with the Zambian Business Times – ZBT on January 20, 2020. He was reacting to last Thursday’s 56% under-subscribed Treasury bill that saw the debt instrument only attracting ZMW531 million worth of treasury bill subscription out of the total ZMw950 million offered by the central bank.

This signified a low apatite by both foreign and local investors. The Treasury bill is the security instrument that allows government through the central bank to borrow money from the public. Any member of the public is eligible to take part in the Treasury bill auction with the minimum amount of about K30, 000, with different tenors.

It can be either 90 days, 180 days or the maximum tenor is 364 days, and it is up to the individual to state the interest rate they wish to earn as part of their bid. Last Thursday’s Treasury bill auction was under-subscribed as the Kwacha also continued to be under pressure against the United States (USD) dollar on the back of thin foreign currency supply in the markets.

Analyst have challenged the Bank of Zambia – BOZ to be more innovative and further reduce the minimum amount from the current ZMW30,000 to as low as ZMW1,000 to allow members of the public to place funds which is currently lying in savings accounts with banks at less than 5% to 9% annual interest rates. Other frontier African central banks like the case in Kenya even went further to allow the public to place small amounts via mobile money.

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Bankers Association of Zambia - BAZ has

Agribusiness

The Tobacco Board of Zambia – TBZ has announced that it is currently conducting a research on the viability of planting tobacco seeds from Malawi and Zimbabwe in Zambia as way of increasing varieties and revenue in the tobacco industry and bringing more buyers on board.

TBZ Chief Executive Officer James Kasongo has told the Zambian Business Times – ZBT in an exclusive interview that the board has currently grown 34 hectares of tobacco seeds from the named two countries saying the initiative is aimed at contributing to the increase in tobacco production aside sharing the outcome of the research.

He disclosed that the industry had in the 2019 marketing season recorded total production of 28 million Kilograms compared to 31 million Kilograms recorded in 2018 hence the move was also prompted to arrest the decline in production recorded in the previous years.

“This initiative is an agreement between the board and the two countries, once the tobacco is ready, are going to sell it and that’s part of the research because we want to see how it will perform on our soils and our expectation is that it yields positive results, because that will be an added advantage to the Zambian market,” he said.

Kasongo has further revealed that the board is currently undertaking an exercise of yield estimation for all tobacco growers in the country which will determine the yield expected in the country for this year’s marketing season.

He added that the process which is set to be complete by March 2020 will also disclosed the number of farmers involved in this year’s marketing season and will announce the hectares grown. He said the board is ready to engage with stakeholders in declaring profit for the industry by calling for more buyers on the market as it will add to the growth of the industry and improve forex inflow for the country at large.

“We want to get back to the positon where the industry can effectively contribute to the national treasury, before 2014 we were contributing 3% to the nation’s GDP but of late, we have been contributing about 1% due to low production, therefore having more buyers on board will lead to the increase in production and benefit the country as a whole,” he said.

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The Tobacco Board of Zambia – TBZ

Markets

The Pensions and Insurance Authority – PIA has disclosed the authority has for the year 2020 granted licenses to 317 Insurance entities out of which 26 are insurance companies, 17 general insurance companies and 9 are long term insurance companies.

The Authority has also licensed three (3) reinsurance companies, three (3) reinsurance brokers, 44 brokers, 222 agents and 19 other intermediaries.

According to a statement made available to the Zambian Business Times – ZBT on January 20, 2020 by PIA Communications Manager Doreen K. Silungwe, the authority has pledged it commitment to continuously monitor and scrutinize the operations of all licensed entities focusing on prudential supervision and market conduct in order to protect the interests of policyholders and beneficiaries.

Meanwhile, the pensions industry registered a positive growth in net asset value of K7.70 billion as at 30th September, 2019 from K7.60 billion as at 30th June, 2019, representing an increase of 1.3%. On a year to year basis, net assets grew by 5.5% from K7.30 billion at 30th September, 2018 to K7.70 billion at 30th September, 2019.

Equally, total investment income increased from K62 million as at 30th June, 2019 to K182 million as at 30th September, 2019 representing a 93% increase in investment income. This improvement in investment performance is mainly due to exchange gains earned during the period.

The industry also recorded a reduction in contributions from K282 million as at 30th June, 2019 to K274 million as at 30th September, 2019 representing a reduction of 3% as opposed to a 7% increase in the previous quarter.

Silungwe said refunds of contributions upon members leaving the sponsoring employers increased to K241 million as at 30th September, 2019 from K103 million as at 30th June, 2019.This represents a 31% increase in refunds during the third quarter of 2019.

“The pensions and insurance industries also faced some challenges which, included increased delays in remittance of pension contributions, rising insurance claims, poor liquidity and rising policyholder debt. The debt in premiums owed by policyholders to general insurance companies stood at K722 million as at 30th September 2019 as compared to K627 million as at 30th September 2018,” She added.

The Authority is also concerned with the growing policyholder debt as this affects the liquidity of insurance companies causing delays in settlement of claims.

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The Pensions and Insurance Authority – PIA

Companies

By Mulenga Kaluba

Audit and Assurance Services
An audit and assurance service can be defined as a professional service that involves inspecting and evaluating an organisation’s accounts, internal controls and any statutory records, and subsequently expressing an opinion on the examined set of information, as well as whether the organisation’s financial statements and all accompanying disclosures give a true and fair view of its affairs.

Start-up Businesses

A start-up business is simply a business that is in its’ early stages of operation. The early stages may be timed as months and sometimes years since the business’ inception. Such businesses are usually managed by the business idea bearers, otherwise known as entrepreneurial founding members.

Start-up businesses have over the years become a major economic focus, especially in third world countries, with nations such as the Republic of Zambia being ranked at 117 in terms of the ease of starting a business, based on a previously conducted study of a total of 190 selected world economies by the World Bank Group for purposes of a investigating the ease of starting a new business, according to the Doing Business 2020 Report published on October 24, 2019.

Benefits of the Audit and Assurance Service
Expensive as the audit and assurance service may be seen by some start-up and small business owners in a given economy, the service can yield the following benefits;

Providing assurance to the business owners. Start-up businesses may not always be directly managed by the entrepreneurial founders. The founders may instead decide to hire other qualified people to run the day to day affairs of their business, and therefore entrusting such people with the owners’ monetary and physical resources invested into the business. Under such a circumstance, engaging an independent auditor to conduct an audit of how the invested resources are being utilised to generate more profits for the business, what measures are being put in place to ensure these resources yield more returns and how feasible these measures are, would provide assurance to the business owner on the overall running of the business.

Increased chances of access to credit. Banks and other creditors are interested in giving loans to start-up businesses as this segment of their target market is undeniably profitable especially that such businesses have the potential to grow and succeed. Engaging audit and assurance service professionals in the audit of financial statements would increase the confidence of creditors and other capital suppliers in the start-up business’ financial information and therefore increasing the chances of accessing credit from the capital suppliers.

Improving business processes. Managing a robust new business may require business owners to design and clearly define business processes to be used in the business operations. As the operations and events unfold, the business processes may sometimes become inefficient or obsolete and may therefore need to be re-designed or replaced in order for the new business to be run much more efficiently. Involving audit experts in examining and evaluating the existing business processes can be of great benefit to start-up businesses as the audit professionals may offer sound advice on how best such processes can be improved and may also advise new business owners to employ other value adding business processes that would in turn increase a business’ profitability.

Improving controls. A control is simply a procedure to determine the actions of a given process. From a business perspective, controls can be categorized into those that affect the entity as a whole and those that affect particular transactions. Entity level controls ensure that the relevant applicable laws and regulations, and management directives pertaining to an organisation as a whole, are adhered to. Transaction level controls are those that affect particular transactions. Prominent entrepreneurial scholars such as Scarborough and Zimmerer (1993) point out factors such as lack of experience and managerial incompetence together with insufficient financial controls as some of the major causes of small business failures. Engaging audit experts can highly benefit start-up and small business owners as the experts can be of great use in designing and implementing internal or financial controls, as well as reviewing the controls to ensure that they are continuously improving and are operating effectively. This step is key to start-up businesses as it will ensure that the resources invested into the business are adequately safeguarded.

Real life success story thanks to Audit and Assurance Services (India’s Skoda Company)
Quick facts
Skoda is an Indian automobile company that manufactures cars and has over four models in India at the moment. Skoda’s vision for the future had a clear path: ramp up product offerings and drive growth in India’s booming auto market. Critical to success was delivering a consistently excellent customer experience at each of their 70-plus dealerships at the time. Skoda engaged KPMG in India to help steer them in creating a unified and outstanding experience across every dealership’s customer sales and service journey. KPMG’s professionals identified the gaps and ‘pain points’ in Skoda’s existing customer experience and devised a sweeping initiative for dramatic improvement.

The Ultimate Result
A comprehensive new training and innovation program that included: major process changes to integrate technology and mobility platforms; new dealer management and measurement systems; data analytics tools to monitor customer data; and enhanced digital marketing and sales pitches. Customer engagement and satisfaction have increased and so have sales.
According to The Hindu Business line publication made on December 4, 2019, Skoda is now in the fast lane to driving growth, with auto looking at nearly 138 dealerships within India by 2023, up from the existing 63.

Conclusion
As a start-up business owner, one needs to look beyond the cost of engaging audit and assurance service providers and consider the great benefits that the service may come with in the long term. Audit and assurance services remain key to business success at all stages of the business life cycle, especially for the start-ups.

References
• World Bank Group (2019) Doing business 2020 report: USA 1818 H Street NW, Washington DC 20433.
• Scarborough N. M and Zimmerer T.W (1993) Effective small business management: USA, New York Macmillan publishing.
• https://www.thehindubusinessline.com
• https://home.kpmg/xx/en/home/insights/2018/08/skoda-client-story.html
• www.google.com

Mulenga Kaluba is an Accountant with KPMG Zambia. The views expressed in this article are his own and not necessarily those of KPMG.

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By Mulenga Kaluba Audit and Assurance Services An audit