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Markets

Consumers should brace for steep fuel price hikes after revelations from the published IMF deal details of the conditionalities expected.

The International Monetary Fund (IMF) Board approved a new Extended Credit Facility (ECF) arrangement for Zambia on August 31st, 2022. The $1.3 billion 38-month program is expected to underpin government’s efforts to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

According to the IMF Report on Zambia’s ECF, obtained by the Zambian Business Times-ZBT, one of the conditions of the IMF bailout package is removing implicit subsidies on fuel.

The Report noted that, to address fiscal imbalances while creating additional space for social spending, the ECF-supported programme will target a large, front-loaded, and sustained fiscal consolidation through reforming regressive and wasteful subsidies such as removing all fuel subsidies in 2022.

In January 2021, to ease the impact of higher oil prices and the kwacha depreciation, government reduced excises on petrol and diesel and zero-rated them for Value Added Tax (VAT) purposes. These tax expenditures are projected to cost the budget 1.7% of GDP in 2022 but government will eliminate them this month.

The ECF Report explained that government will eliminate explicit fuel subsidies as they are known to be regressive and are crowding out critical social spending adding that prior to the IMF approving the bailout package, government restored cost-plus pricing for petroleum products in December 2021, also shortening the pricing cycle from 60 to 30 days.

Government had last year 2021 resorted to waiving both excise and customs duty in what was largely seen as an attempt to avoid a fuel price hike as the country was heading for polls in August 2021 and the price hike was indeed averted.

The current Government leaders as well as prior successive governments have been challenged by various energy experts to actualize the procurement of oil from neighboring Angola through a pipeline to realistically cut out middlemen and the huge logistical/shipping cost to realize true value from this sector.

Moreover, a medium to long term drive to adopt bio-fuel as a key fuel blend which would cut down on huge fossil fuel imports and dollar outflows as these bio-crops have been proved that they can be grown locally. Biofuel is seen as a more strategic and economically beneficial approach which would also benefit and expand the local Agro sector.

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Consumers should brace for steep fuel price

Markets

Economist Yusuf Dodia says as the Kwacha strongly gains, there is need to make both the agriculture and manufacturing sectors more competitive, efficient and cost reflective as the two sectors are the future of Zambia’s economic growth.

Dodia said a strong currency means that there is stability of the exchange rate and this translates into predictability in the economy which avoids price change every now and then hence the need to keep the kwacha stable.

In an exclusive interview with the Zambian Business Times-ZBT, Dodia said the Zambian economy is one that is considering the inflation rate and as inflation goes down, prices of commodities also reduce because it calls for the need to buy foreign currency in order to import raw materials and goods which are found and sold in Zambian shops thereby having more forex in the Zambian economy.

He explained that it is important that Zambia maintains a stable exchange rate and continues to see the inflation rate come down adding that the agriculture and manufacturing sectors are in need of competitiveness among other things in order to maintain and help the sectors grow as opposed to banning foreign products from the Zambian Market.

“What we need to do is not to protect the Zambian farmers and manufacturers by banning imports, what we need to do is to study why some imported products are cheaper than those grown by our local farmers”, he said.

Dodia stated that Zambia is a member of the African Union, SADC and the COMESA free trade area and as such Zambia is not supposed to ban products coming from neighboring countries as that is going off the protocols it signed into noting that what is needed is to make Zambian agriculture and manufacturing sectors more competitive.

He said in order to protect these two sectors, there is also need to look at familiar experiences that other countries have experienced.

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Economist Yusuf Dodia says as the Kwacha

Mining

Mumbwa Member of Parliament (MP) Credo Nanjuwa has called for the quick and proper reorganisation of illegal mines in Mumbwa, Chisamba, Chibombo and other districts of Central province in order to allow the local people to benefit more from the mines.

Speaking in an exclusive interview with the Zambian Business Times-ZBT, Nanjuwa said there is need to reorganise the gold mines which were closed up due to illegal mining activities that were taking place.

Nanjuwa said this was done in an effort to ensure that resources in the province can be exploited in the right way and government can be able to realise taxes as well as have people in the area get sustaining jobs and business opportunities.

He said Government should move in quickly especially the Zambia Environmental Management Agency (ZEMA) and do the approvals and give licenses to the potential investors for the benefit of the province and the country.

The MP said he hopes to see all those qualified investors who have applied for approvals from ZEMA be given a go ahead so that the province can improve and has also appealed for the imperative reopening of the cadastre at the Ministry of Mines as there are potential investors that have so far shown interest.

Nanjuwa noted that even after removing the illegal miners and suspending operations at 100%, there are still some people that chose to sneak in some mining areas and exploit the resources at the end of the day hence the need to expedite the reorganising of the mines.

Meanwhile Minister of Mines and Minerals Development Paul Kabuswe has assured that formalisation of artisanal and small scale mining is on the cards and the document is almost ready adding that it has taken long because government wants to do their best.

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Mumbwa Member of Parliament (MP) Credo Nanjuwa

Markets

The Petroleum Transporters Association of Zambia (PTAZ) says consumers should expect an increase in fuel prices following government’s decision to reintroduce Value Added Tax (VAT) on fuel.
In 2021, a Statutory Instrument (SI) zero-rating Value Added Tax on imported petrol and diesel was issued. However, government has noted that it will reintroduce VAT on fuel next month as it is one of the conditions that come with the International Monetary Fund (IMF) bailout package.
Association General Secretary Benson Tembo said this will force transporters to increase the cost of transporting the product because the association needs to have a good mark up in order to be able to benefit from the transportation business.
Speaking in an interview with the Zambian Business Times-ZBT, Tembo said the cost of the commodity will go up because for transporters to smoothly move the product from one point to the other, they will increase the cost of transportation which means the company hiring the transporters will also increase the price of the commodity and the end consumer will bear the cost.
Tembo explained that this will force transporters to increase the cost of transporting the product because the association needs to have a good mark up in order to be able to benefit from the business.
“We are not doing this business for charity, we are doing this business to make a profit so anything that triggers the upward adjustment of costings will result in transporters requesting for an increase in the transportation charges”, he said.
He noted that government wants to completely remove the subsidies on fuel and reintroduce Value Added Tax which means the landing cost of the product will go up and this will trigger an increase in the cost of the product so even transporters will have to adjust upwards the transport rates.
Tembo added that this will affect the transporters negatively because any upward adjustment of petroleum products will affect the transportation of fuel.
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The Petroleum Transporters Association of Zambia (PTAZ)

Lifestyle

Former Minister of National Guidance and Religious Affairs Godfridah Sumaili says it is a shame and an abomination that the Lesbian, Gay, Bisexual, Transgender and Queer LGBTQ community is freely and openly parading themselves in the country.

Speaking in an interview with the Zambian Business Times-ZBT, Sumaili said it is an embarrassment to the nation and an abomination before God that the LGBTQ community is not being put in its right place.

The Former Minister noted that it is surprising that government is quiet on the matter which is very embarrassing adding that when the president was sworn in, he swore to protect and defend the Constitution of the nation thereby being employed by the Zambian people to watch over the constitution so that the nation remains in order.

Sumaili explained that it is important to ensure that Zambia holds on to its values and principles that it has given itself as a people.

She added that Zambia is Christian nation and it is enshrined in the constitution that citizens also have the responsibility to defend the constitution, values and principles of the country and not allow the LGBTQ community to exist.

“Zambia is a Christian nation, it will remain a Christian nation, it is in our foundation and we shall stand and defend our identity of who we are as a people”, she said.

Sumaili mentioned that the defense should not be based on human rights because human rights have a context and the rules and regulations surrounding the LGBTQ community come from what Zambia is and its identity.

She said Zambia has put values in its constitution and morality and ethics are number one adding that Zambia has a culture and history where it originates from and as such certain things must not be tolerated.

The Former Minister stressed that the law is in place;homosexuality is not condoned in Zambia as it is illegal and so the government must be embarrassed for keeping quiet on this sensitive matter.

 

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Former Minister of National Guidance and Religious

Tech

The National Action for Quality Education in Zambia (NAQUEZ) has challenged the Examinations Council of Zambia (ECZ) and the Ministry of Education to explain why the country still cannot print examination papers locally after being independent for 58 years.

NAQUEZ Executive Director Aaron Chansa said ECZ should make known to the public how much they are spending on printing and importing of examination papers and should disclose why they are still importing exam papers when they have the capacity to print papers on their own.

Speaking in an interview with the Zambian Business Times-ZBT, Chansa said it is disturbing and worrying that the Examinations Council of Zambia has continued to expensively print examination papers abroad because the practice is not only wasteful but also embarrassing.

Chansa added that the continued printing of examination papers abroad has potential to fuel corruption, one vice the country is making efforts to wrestle down.

“At a time when Zambia is reconstructing its economy, when the country needs to put to good use every Kwacha and Ngwee it has in hand, we cannot afford the luxury of wasteful expenditure, which we can avoid by localising prudent expenditure in line with the principles of right price, right quality and timely delivery of goods and services within the country”, he said.

He mentioned that in February 2020, the Ministry of Education called for an Indaba to discuss issues that affected the education sector at the time and one of the resolutions of the meeting was for ECZ to build its own printing facility like many countries’ examination bodies in the region had done and the Council agreed with the stakeholders to satisfy the resolution in three years.

Chansa said it is regrettable that three months before the end of the three years, the Examinations Council of Zambia has done nothing to actualise the desire of all stakeholders by constructing a modern printing plant adding that Zambia and Zimbabwe are the only countries in the SADC region which are still printing their examination papers abroad, a situation he stressed is embarrassing.

He said the country should not continue empowering other nations when the same can easily be done locally as a home-grown solution to the challenge of printing is more economical and sustainable than otherwise noting that if examination papers were to be printed locally, the ECZ would be in a position to save millions of Kwacha to motivate invigilators, examiners and markers, who labour so much to make the assessment of Grades 9 and 12 examination candidates a successful national practice.

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The National Action for Quality Education in

Markets

Economist Bright Chizonde has advised Zambians in the business world to invest and not save because the recently approved US$1.3 billion International Monetary Fund (IMF) bailout package will provide space for the country to grow in the next three years.

Chizonde said because of the space government is trying to stimulate in the economy,this is the best time for private investments to be made in line with the particular type of growth that the government is trying to put in place.

In an exclusive interview with the Zambian Business Times-ZBT, Chizonde said with the economy currently improving, there are indications that interest rates will start dropping hence it will become cheaper for companies and businesses to borrow and invest into their respectful trade.

He explained that everyone should be thinking of how to improve their customer base knowing that the business environment is slowly gaining its stability with the appreciation of the kwacha.

Chizonde added that it is time for people in the business world to look at their investment on a bigger picture because it has become cheaper to import equipment and other things.

The Economic Analyst noted that in order for companies and businesses to become more profitable, there is need to look at the function of two aspects with regards to profitability of improving the revenue side of the business and the cost aspect.

He said a combination of both aspects, revenue and cost is what companies and businesses are supposed to do in order to increase profits.

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Economist Bright Chizonde has advised Zambians in

Mining

Minister of Mines and Minerals Development Paul Kabuswe says government does not have short term measures to revamp both Mopani Copper Mines (MCM) and Konkola Copper Mines (KCM) in order to support businesses on the Copperbelt.

According to Mine Unions, the court cases at Konkola Copper Mines and the unprofitability of the Mopani Copper Mines-Glencore deal have left local businesses limping as some suppliers and contractors are going for six months without payments.

Speaking in an exclusive interview with Zambian Business Times-ZBT, Kabuswe said government only has long term solutions to issues surrounding the mining sector on the Copperbelt.

The Minister said the Ministry is very aware of the current happenings of the mining sector on the Copperbelt and is working to give the life line that is long lasting.

“Yes people have not been paid because Mopani needs money, it needs capital injection, I have been very clear that we are doing all we can to revamp the mine. It is not something that we want to waste time about but we want to do it properly”, he said.

Kabuswe argued that the current status of Mopani does not need short term solutions but long lasting solutions.

“We don’t want to give it Panadol, we have to get it healed and not giving it a pain killer and it is not even something that we want to waste time on but we want to do it correctly”, Kabuswe added.

 

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Minister of Mines and Minerals Development Paul

Markets

Energy Expert Dr. Johnstone Chikwanda says the fuel pump price reduction of August 2022 saved consumers K440 million.

Chikwanda said the reduction in the fuel pump price for September 2022 will save consumers K240 million by the end of the month adding that by the end of September 2022, consumers will have been saved a total of K680 million which is considerable combined savings on the part of the consumers.

According to information availed to the Zambian Business Times-ZBT, Chikwanda said from January 2022 to July 2022, return on Investment (ROI) in the oil Industry covering Oil Marketing Companies (OMCs) and Retailers deteriorated by at least 40% due to continued price hikes by the regulator while the regulated industry margins remained fixed leading to significant pressure on the working capital thereby leading to recapitalization options in most cases.

He explained that due to the immediate past two fuel price reductions, pressure on working capital is expected to reduce ranging between 15 % to 20% and subsequently lead to an improvement in the Return on Investment.

Chikwanda further added that it is a welcome development if the international price of crude oil does not increase significantly by end of September 2022.

The Expert noted that there is a significant possibility of a further fuel pump price reduction triggered by the continued strengthening of the Zambian Kwacha.

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Energy Expert Dr. Johnstone Chikwanda says the

Agribusiness

Alpha Commodities has refuted claims that the Company has already secured a fertilizer supply deal from government stating that the Company has only been shortlisted.

The Company has revealed that it currently has about 30, 000 metric tonnes of fertilizer in its depots with more shipment at the port of Beira in Mozambique waiting for onward transportation to the country.

This has raised questions as some people have argued that a Company cannot stock so much fertilizer without an assured market therefore the Company is already assured of a market from government through the Farmer Input Support Programme (FISP).

Speaking in an interview with the Zambian Business Times-ZBT, Company Operations Manager Miyanda Ndeleki however said from inception, the company looks at the market requirement for Zambia when stocking fertilizer and not the market from government through tenders.

Ndeleki explained that currently,the Company doesn’t have a contract from government as it was just shortlisted as one of the Companies that would be awarded contracts to supply farming inputs to farmers under the FISP programme but government has not finalised the list yet.

“We know the market requirement for the country, the market requirement is over 500, 000 metric tonnes for the country so the 100, 000 metric tonnes is just a drop in the ocean. We are not assured of a market, if you look at this fertilizer, its been coming in the country from February. We have been in operation since 2017, that was under the previous government, we were not getting government contracts but we would move in stock in the same model. This is how we have operated from the time of our inception”, he said.

He mentioned that the Company is ready to deliver fertilizer to the farmers in the 2022/2023 agricultural season as the Company has stock all year round.

 

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Alpha Commodities has refuted claims that the