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Monday, 29 June 2015

Zambia's Fiscal Deterioration

Ratings agencies have been weighing in on Zambia's current fiscal woes. Here is Fitch's rating latest assessment, which seems to point towards a credit downgrade in August if the external position worsens :
The increasingly large budget gap in Zambia may prove costly to finance, Fitch Ratings says. Domestic financing conditions are constrained, and new external financing could push government debt toward 40% of GDP by end-2015. 
The fiscal deficit could now jump to 7.7% (on a cash basis), according to IMF projections released earlier this month. The government expects the outturn to be lower, but has indicated that it expects the fiscal deficit to come in significantly above the 4.6% target announced in the 2015 budget. Mining revenue has come under pressure from lower copper prices and changes to the mining tax regime. 

Thursday, 25 June 2015

Judicial Reforms in the Justice System in Zambia

Editor's report: We have been sitting on this report of the Parliamentary Committe on Legal Affairs that was published last year on the judicial reforms that are in needed in the Zambian justice system. Minor edits have been made for ease of reading.
In any democratic society, the Judiciary, as one of the three Arms of the State, is at the centre of ensuring that the rule of law, constitutionalism and protection of human rights prevail by providing checks and balances to the exercise of power by the other two Arms of State (the Legislature and the Executive). It was, therefore, critical for the Judiciary to remain independent in the context of the separation of powers if it was to effectively discharge its functions.

Monday, 22 June 2015

Small victory against corruption

The Supreme Court recently sentenced former Labour Minster Austin Liato to two years in prison for possession of K2.1 million (in today's rebased currency) because it is "reasonably suspected" to be proceeds of crime. The sentence will run effect 2 June 2015. Liato’s farm and money has also been forfeited to the State.

Thursday, 18 June 2015

Diversifying Zambia's Agriculture

Editor's note : A recent Daily Nation editorial laments Zambia's agriculture policy. In recent years the newspaper has distinguished itself with its balanced and thoughtful pieces. The aricle below is well worth the read:
If we truly put our minds to it Zambia could become the bread basket of the region, if not the continent. Out of the 75million hectares of land, 43million has potential for agriculture production and yet we are using about 6million or just under 14 percent for the purpose. Our national irrigation potential stands more than 2.7m hectares.

Monday, 15 June 2015

Sustaining African Growth

Editor's note:  The article below by Marcelo Giugale for Vox EU argues  that the current positive growth in Africa is due both to good policies and higher prices of certain commodities (such as oil, gas, and minerals). To ensure sustainability governments should not rely only on these higher rents but rather implement policies that take advantage of them. We have reproduced it below because it's policy lessons are relevant for Zambia. 
Sub-Saharan Africa is doing well. The region has never grown so fast for so long.
  • On average, the growth has been around 5% per year over the past decade; the region even breezed through the Global Crisis.
  • Nine African governments have managed, for the first time, to sell bonds in London and New York – and, in a sign of confidence, these bond issuances were oversubscribed.
  • The proportion of Africans living in poverty is, at last, on a downward trend.

Thursday, 11 June 2015

Zambia's Credit Rating - Moody's (May 2015)

Editor's note: Moody's recently affirmed Zambia's credit rating at 'B1', but has revised its outlook to negative based on rising debt levels, poor track record of fiscal management and worsening trade deficit. Details below.
Moody's recently affirmed Zambia's B1 government bond rating and changed the outlook to negative. The key drivers for the negative outlook are:

» Deteriorating debt metrics, as evidenced by a rapidly rising debt burden and increasing debt servicing costs;

» A trend of missed fiscal targets that points to high execution risks in current deficit reduction plan to arrest the upward debt trajectory, particularly amid spending pressures in the lead up to next year's presidential election; and

» The shift of the current account into deficit, removing a key credit support that has historically suppressed external vulnerability.