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Zambia’s trade deficit has decreased by 42.5% (about 43%) from K786.2 million in July 2019 to K451.9 million in August 2019 meaning that the country imported more that it exported in nominal terms.The Central Statistical Office – CSO has stated although an an increase was observed in both imports and exports, the increase in exports outweighed that of imports.

However, a review of Cross boarder traders import and export activities are still largely unreported by the CSO but remains the most viable and applicable to local Zambian businesses. This import and export activities need to be streamlined with specific policies and support given if exports are to have a real impact on local markets.

Presenting the CSO monthly bulleting in Lusaka on September 26,2019, CSO Intermin Statitian General Mulenga Musepa desclosed that exports incraesed by 16.3 percent from K6,795.4 million in July 2019 to K7,903.6 million in August 2019 adding that the increase was mainly attributed to the 10.1 percent and 36.2 percent increase in exports earnings of intermediate goods and consumer goods categories.

Meanwhile, imports increased by 10.2 percent from K7,581.6 million in July 2019 to K 8,355.5 million in August 2019 and the outturn was mainly attributed to the increase in imports of intermediate goods and consumer goods by 22.9 percent and 12.4 percent, hence the net effect of the dynamics in trade was descreased in the trade deficit.

Musepa further desclosed that Asia was the largest market for Zambai’s total exports, accounting for 36.7 percent in August 2019, while in the same group China was the dominant market with 67.8 percent adding that other notable markets were Singapore, Hong Kong, India and United Arab Emirates.

In addition, he said Switzerland, home of Mopani Copper Mines parent company Glencore, was the second largest market for Zambia’s total exports in August 2019 accounting for 31.7 percent.

“Asia was also the main source of Zambai’s imports, accounting for 39.8 percent in August 2019. Within this regional grouping, China was the min source of Zambai’s import accounting for 35.8 percent. Other notable markets were United Arab Emirates, India, Malaysia and Hong Kong.
And SADC exclusive grouping was the second main source of Zambai’s imports accounting for 36.8 percent in August 2019.

CSO has been challenged to start gathering statistics on import and export for local businesses as most of the statistics reported are important but mostly cover large foreign owned multinationals, most of which externalization their proceeds.

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Zambia's trade deficit has decreased by 42.5%

Markets

The Zambia Congress of Trade Union – ZCTU has stated that the 2020 National Budget presented by the Minister of Finance Dr. Bwalya Ng’andu on 27 September 2019 has not prioritized some critical areas of the economy and that it is not aligned with the prevailing economic conditions.

The Union’s Secretary General Cosmas Mukuka said the 2020 budget did not address the opportunity to prioritize rail transport by enforcing statutory instrument number 7 (Railways Transportation of Heavy Goods, Regulations Act of 2018) that provides guideline for transportation of heavy cargo.

Addressing the media in Lusaka on 2 October 2019, Mukuka said in order to enhance economic growth and job creation, government should revitalize the rail system, as it will help to create jobs and provide relief for road infrastructure hence the need of dedicating resources towards the railway sub-sector.

The Union has further stressed that government’s proposal to reduce spending on education from 15.3 % in 2019 to 12.4% in 2020 and health from 9.3% to 8.8% in 2020 is a serious drawback as the decision could have adverse effects on literate levels in the in the years to come.

Mukuka said the decision also goes against the international instruments that the country is already signatory to such as the SADC protocol in education and training, which states that 20% of the national budget should be allocated to education and training.

The secretary general has in this vain proposed that government should reduce allocation on Defense Forces and Public Order Act to finance higher priority programmes in education and health stating that Zambia is not at war hence investment in education and health will have much higher economic returns.

Meanwhile, the union is saddened that the Income Tax Thresholds has remained unchanged stating that considering that there was a minimal increment of 4% during the bargaining for public service workers for 2020 fiscal year, many employees in the private sector got marginal increments to their salaries.

Mukuka has since explained that 2020 budget needs to adjust the non-taxable thresholds for the current K3,300 to K5,000 in the with the current basic needs basket as per studies done by the Jesuit Center for Theological Reflection – JCTR.

“The adjustment will free some income currently being taxed under the lowest tax band and add to disposable income for workers and avoid imposition of tax on workers who cannot meet basic need,” he said.

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The Zambia Congress of Trade Union –

Tech

The Royal Air Charter has launched a new Aircraft, an Embraer Jet – ERJ 145 worth over $4 million. The ERJ145 is so far the biggest plane owned by the company with a 50 seater capacity and it is set to cover Zambia’s major towns and cities that include Lusaka, Solwezi, Kulumbila and Ndola.

Speaking during the launch at Zambia’s largest international airport – Kenneth Kaunda International  Airport – KKIA on October 5, 2019 attended by the Zambain Business Times – ZBT, Royal Air Charters Business Development Consultant Dr. Joseph Mulenga disclosed that the company has so far employed 11 full time Zambian pilots, 6 dedicated full time cabin crew members and 31 Zambian citizens employed as maintenance and supporting staff. He added that among the employees includes individuals who were recently trained to fly the ERJ 145.

Dr. Mulenga further said the company is focused on building local capabilities and expanding the aviation sector, adding that it is committed to engaging all key stakeholders in the industry with the goal of increasing competition and thereby service quality in the aviation market.

And Zambia Airport Corporations – ZACL Vice Board Chairperson Prisca Chikwashi commended Royal Air Charters for the step taken stating that it speaks to the growth of not only the aviation sector but the tourism industry as well.

She said the growth in the fleet through acquisition of the new aircraft speaks to Zambia’s  intention of attaining the status of becoming an aviation hub for the Southern Africa. At the same event, Permanent Secretary in the Ministry of Tourism and Arts, Amos Malupenga said the launch of the new Aircraft will grow the number of tourist arrivals in the country and help alleviate the challenges of infrastructure and air transportation faced in the aviation sector.

Malupenga added that the improvement in the aviation sub-transport sector will help the country achieve tourism-related targets. “With the launch of the new Royal Air Charter aircraft, I trust that the tourism sector will benefit and have an opportunity to provide domestic and foreign tourists with quality transportation options that will reach different parts of the country,” he said.

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The Royal Air Charter has launched a

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The Zambia Institute for Policy Analysis and Research – ZIPAR, a think tank organisation has stressed the need for government to show commitment in funding the 2020 National Budget item, which is meant to unlock the private sector growth among other sectors.

ZIPAR has stated that despite budgeting K1.3 billion in 2018 to liquidate arrears, only 33% was funded adding that the same situation applied in 2019 where only 18% was allocated for funds towards arrears hence the need to show commitment towards the 2020 allocation of about K2.3 billion.

Speaking during the post budget analysis co-hosted by ZIPAR and Ministry of National Development and Planning in Lusaka on October 3, 2019, ZIPAR researcher Shebo Nalishebo said arrears have a detrimental effect on the local economy as they hit businesses badly which can lead to delayed wage payments and postponed investments hence holding back on economic growth.

ZIPAR has also projected debt servicing costs to increases by 43% in 2020 stating that unrestrained borrowing has put Zambia’s public debt on an unsustainable path of 76% of Gross Domestic Product – GDP.

Nalishebo has explained that despite government borrowing to finance infrastructure development, the very infrastructures expected to bring economic growth and social transmission are killing growth hence the need to deal with issues around cost escalations in infrastructure projects by leveraging on the use of PPP’s if the country is to stimulate growth again.

“we would also like to note that the budget’s measures to the mining sector have been introduced against the backdrop of a long-held view that mining companies do not contribute their fair share of taxes to the economy as well as, in the Minister’s words “to raise revenue for the government and discourage transfer pricing”, while these measures are intend to increase government revenue , they are too burdensome on the mining companies to achieve the objectives of encouraging value addition as indicated by the Finance Minister”, he said.

And delivering a speech on behalf of Ministry of National Development and Planning, the Ministry’s Permanent Secretary Chola Chabala said the 2020 national budget is aligned with the pillars of the Seventh National Development Plan – 7NDP which demonstrates government’s commitment towards realizing the objectives of the 7NDP and the visions 2030.

Chabala added that economic diversification and job creation have been priotized and anchored on the agriculture, tourism, mining, energy and manufacturing sector in line with the 7NDP.

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The Zambia Institute for Policy Analysis and

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The Centre for Trade Policy and Development – CTPD has stated that despite the 2020 National Budget having improving allocation towards some sectors, it is full of contradictions as many policy pronouncements are not being supported with spending and tax changes.

The center has expressed concern that the budget has not carried enough matching measures to support the proposed theme: “Focusing sNational Priorities towards Stimulating the Domestic Economy”.

CTPD Executive Director Isaac Mwaipopo has told the Zambian Business Times – ZBT in an interview that government has only improved its assessment of the current economic challenges and pronouncement of measures to be taken but has not translated them into meaningful policy changes and commitments.

Mwaipopo said the general increase in the budget does not reflect a commitment to austerity measures as the K106.0 billion (about US$8.2 billion) is way above the planned expenditure for 2020 in the Medium Term Expenditure Framework.

Meanwhile, he has commended the move to start dismantling domestic arrears of about K20.2 but that there is not target by which government will reduce the domestic arrears as the allocation of K2.3 billion for the year 2020 is less than the increase in domestic arrears of K4.6 billion within the last six months.

“Clearly, there is no real commitment to the dismantling of arrears since the pace of accumulation is greater than the proposed rate of dismantling. CTPD is particularly disheartened that the allocation of K1.2 billion to the sinking fund is insignificant compared to what the country needs to raise annually towards the US$750 million Eurobond principal payment due in 2022,” he said.

The Center has also welcomed the move to maintain VAT and has advised government against the implementation of sales tax, especially to the wholesale and retail sector. Mwaipopo added that this progressive tax change, which has been mingled with proposals to increase non-tax revenue through increased user fees and fines charged by government departments, will negatively affect consumer’s disposable income and would not result in stimulating the domestic economy.

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The Centre for Trade Policy and Development

Markets

Zanaco Chief Commercial Officer – CCO Lishala Situmbeko has advised government to show commitment towards its decision to slow down on debt accumulation on both external and domestic debt stating that the proposed administrative measures are extremely critical and we’re flaunted, should have consequences.

Finance Minister Dr Bwalya Ng’andu had on 27 September 2019, during the 2020 budget presentation stated that he will address the challenges of domestic areas and increase the allocation of funds to reduce the stock of domestic areas, use of debt swaps to liquidate part of the outstanding areas and enhance commitment control systems to curb further accumulation.

Situmbeko told the Zambian Business Times – ZBT in an exclusive interview that the measure put across are important and need full support from various ministry’s and government officials if the plan is to be fully implemented.

He said there is need to slow down on debt accumulation especially external debt, which has to be paid by the foreign exchange earned from mining and other exporting entities hence making it difficult when the mining sector is under performing.

Situmbeko further said despite government paying particular attention to servicing external debt which is not a bad idea, domestic debt is another burden that requires special attention as it directly affects ordinary Zambians who in turn struggle to run their business and fail to contribute to the growth of the economy.

“The measures that the minister has put in place are very important and we urge him to work closely with other government wings to ensure they are implemented in full because those measures require commitment and if anyone commits on behalf of government without treasury authority, there must be consequences,” he said.

He further noted the need for fiscal discipline if both domestic and foreign debt is to come down.
Meanwhile, he has welcomed government’s decision to maintain Value Added Tax – VAT and do away with Sales tax and has expressed hope that the introduced administrative measures to strengthen enforcement and efficiency will be effective.

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Zanaco Chief Commercial Officer - CCO Lishala

Markets

Barclays Bank Zambia PLC has announced its preparations to rebrand to Absa Bank Zambia by starting to open a new branch branded as Absa at Kubulonga on 7th October 2019.

Barclays Bank Managing Director Mizinga Melu has stated that despite the changes that the bank is undertaking, it will continue to operate and trade as Barclays Bank Zambia until its name officially changes by Mid 2020.

Speaking during a breakfast meeting in Lusaka on October 2, 2019 attended by the Zambian Business Times – ZBT, Mizinga said the Bank is already in talks with customers across the country who she said have been supportive and that through this transition, customers will not be required to change their bank accounts or change any information as all records will remain the same before and after the transition.

She added that Absa is in Zambia to stay and has assured its employees that no job losses will be recorded when the bank transitions to Absa.

“In 2018, our parent company Absa group announced a decision to rebrand all our operations across the continent to Absa. While Barclays Plc continues to have a notable stake in Absa group at 14.9% stake, it is no longer our majority shareholder and the group has undergone an extensive managed separation process to detach its operations in Africa from those of Barclays Plc,” she said.

At the same event, Barclays Retail Managing Director Harton Maliki disclosed that the bank has so far rolled out 25 new branded ATM’s which are now operating as Absa and that they have better capabilities with focus to have latest technology.

He said over 70 million Kwacha has been spent for upgrading ATM cards in the last two years and it includes digital channels from the United Kingdom to South Africa.

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Barclays Bank Zambia PLC has announced its

Companies

Finance Minister Dr Bwalya Ng’andu has justified that government moved to maintain Value Added Tax – VAT instead of Sales Tax comes after inherit problems that were discovered around sales tax which include cascading effects, negative impact on GDP growth and job losses through elimination of intermediaries in the supply change.

However, some economists and financial analysts have raised concern questioning why Zambians should be asked to ensure austerity while the copper mining houses are allowed to draw huge VAT refunds, amounts that could even pay off the country debt without international borrowing.

ZRA Commissioner General Kingsley Chanda in May 2019 revealed that VAT refunds had increased from K 774 million per month to K1.4 billion (about US$108 million) a month, meaning that VAT refunds annually would reach in excess of US$715 million to US$1.3 billion. The first Euro bond due for repayment is US$750 million.

The newly appointed Finance Minister had last week during the presentation of the 2020 National National Budget announced government’s plans to maintain VAT and instead, introduce administrative measures to strengthen its enforcement and efficiency, which some analyst doubt would yield much due to the highly complex and financially powerful mine owners,

In the 2019 budget address by former Finance Minister Migrate Mwanakatwe, government proposed to abolish VAT and replace it with Sales tax, which was meant to stem the massive VAT refunds mostly by mining companies. However, the mines threatened to cut off the middlemen which led the the proposed sales tax implementation to be widely rejected by the business community who mostly are mere traders in the copper industry value chain.

Speaking at the Post Budget analysis at Lusaka’s government complex on 27 September 2019, Dr Ng’andu said a wide analysis on Sales Tax was conducted and that various stakeholders highlighted problems which could have risen in the implementing Sales tax hence its decision to maintain VAT.

“The debate that took place around VAT/Sales tax was quite interactive and I came out with this horrible feeling such that I had no idea of what was right or wrong because I was completely lost, but with the continued discussions we finally concluded with my ministry that we will maintain VAT and address challenges that surrounded it,” he said.

He added, maybe the problem was not with changing the VAT policy but examine the VAT regime hence possibly fix its administrative challenges which could have at one point found their way in the implementation of Sales tax.

H said there is need to deal the with the frauds and lubricating that surrounded VAT which has proved to be the best and most exercised system across the globe adding that shunning from its problems wouldn’t have had made a different if the country moved to Sales tax.

He has since pledged government’s commitment in collaboration with the Zambia Revenue Authority – ZRA to ensure administrative measures are put in place to stop the VAT scums that was taking place.
During the Minister’s 2020 budget presentation, he heighted some measures to be in place which include, making it mandatory to use Electronic Fiscal Devices – EFD for VAT and other tax types and facilitate accreditation and Virtual EFD software suppliers and vendors.

Some stakeholders have however lamented the drop of sales tax saying that the mining houses are too powerful and rebuff VAT audits which reduce the incidences of huge refunds. Sales tax was suggested because the mining houses have been claiming huge VAT refunds and ZRA has over the years failed to stem these refunds.

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Finance Minister Dr Bwalya Ng’andu has justified

Companies

The Zambian government plans to spend K106 billion (about US$8.2 billion) for the National Budget representing 32.4 perscent of Gross Domestic Product – GDP indicating an increase from the 2019 budget of K86.8 billion which was 28.9 percent GDP.

Presenting the 2020 National Budget at Manda Hill, Zambia’s legislative house in Lusaka on 27 September,2019, Finance Minister Dr. Bwalya Nga’ndu explained that government intends to increase domestic revenue mobilization to at least 22.0 percent of GDP, a stretch for the Zambia Revenue Authority – ZRA, Governments Agency responsible for tax revenue.

The Finance Minister has further increased allocation towards dismantling of arrreas to K2.3 billion in 2020 from K437 million in 2019 and has proposed to reduced borrowing from the domestic market to 1.1 percent of GDP from 1.4 percent of GDP in 2019. This moves is aimed at shoring up the domestic liquidity conditions and support mostly local suppliers who are now given preferential treatment with the newly introduced procurement guidelines.

Meanwhile, government aims to grow GDP to a modest 3%, the fiscal deficit is projected to reduce to 5.5 percent of GDP in 2020 from 6.5 percent projected for the financial year 2019, a demonstration of governments resolve to restore fiscal health and stabilize the economy. The Finance Minister also announced that Zambia will maintain the 2019 target inflation range between 6 to 8% into 2020.

Dr. Ngandu, has also allocated a total of K44.1 billion for General Public Services and that notable expenditure under this category include K33.7 billion for servicing debt obligations and K2.3 billion for dismantling of arrreas to unlock the much needed liquidity in the market. K636.0 million has also been allocated towards redemption of the Eurobonds.

“In order to finance expenditure spelled out for the 2020 Budget, government expects to raise a total of K106.0 billion for the 2020 Budget. K53.8 million will be raised from taxes, K18.2 billion will come from non-tax revenues, and K3.1 billion will comes as project support grants from our cooperating partners, ” he said.

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The Zambian government plans to spend K106

Markets

Studies by the United Nations Economic Commission for Africa – UNECA have reviewed that successful implementation of the African Continental Free Trade Area – AfCFTA by African countries will enable Africa’s manufacturing sector double in size, with annual output increasing from $500 billion in 2015 to $1trillion by 2025, and contributing additional 14 million stable well-paid jobs.

On 21st March 2018 in Kigali, Rwanda, over 40 African Countries gathered to launch and sign the AfCFTA agreement and on 30th May 2019, the AfCFTA went into effect after securing the required number of 22 ratifications by member states. Currently, 54 countries have signed the AfCFTA and 27 Countries have ratified, however Zambia is still in the consultation process with various stakeholders before it ratifies the treaty.

And UNECA Director for Southern Africa Said Adejumobi has explained that the rectification of AfCFTA by Zambia will complete government’s efforts towards diversifying the country’s economy, promote manufacturing and will boost Zambia’s agricultural production with increased and expanded market.

Speaking during a media sensitization workshop on the AfCFTA in Lusaka on 24 September 2019, Adejumobi disclosed that the AfCFTA is set to create the biggest free trade area in the World with a market of more than 1.29 billion people and a combined GDP of more than US$2.5 trillion.

He added that the AfCFTA will further seek to promote inclusive and sustainable economic growth, accelerated economic development and integration in Africa hence a win-win situation for the regional and global commitment of Zambia.

“The AfCFTA is the biggest ticket item on the Continent today because it expresses our collective pan-African dream of transforming our economies and the Continent, as envisaged by the founding fathers/mothers of post-colonial Africa. However, it has to be backed up by increased productive capacity, enhanced regional value chains, and removing internal obstacles to the growth of SMEs so that African countries can compete well in the liberalized regional market,” he said.

He has since challenged participating media panels from across the country to development interest in the AfCTA to enable them educate the masses on its important.

Concerns however loom as different African countries are at different stages of economic development, raising risks that some countries may merely become dumping grounds and markets. Others concerns are that non tariff barriers may still continue leading to some more sophisticated economies taking advantage of the more open and embracing countries.

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Studies by the United Nations Economic Commission