As is customary since this website was founded, I will be taking 1 month off to recharge the batteries. Over the years I have come to value this period and I hope you agree that it has served us well.
Many thanks for all your support through this year, especially those who have made financial contributions. A special thanks to our many Facebook (7900+) and Twitter (2500+) readers. Your contributions continue to be insightful and relevant.
Wishing you all a wonderful Christmas and fantastic 2013!!
See you on 7 January 2013, the Lord willing.
Founder, Zambian Economist
Friday, 7 December 2012
Thursday, 6 December 2012
Wednesday, 5 December 2012
Tuesday, 4 December 2012
Monday, 3 December 2012
Sylvia Masebo MP (Tourism Minister) recently signalled that Government may soon abolish Visa fees for "tourists" visiting Zambia. The proposal will be tabled before Cabinet, following appeals by some Lodge owners who are complaining that visits to Zambia have been dwindling due to "prohibitive tourist visa fees currently set at US$50 per person". She has promised to consult widely before taking the matter to cabinet for possible consideration.
The proposal will need to be much clearer. Is it no visa fees or no visas period? Logic demands that she must mean the latter because having a visa regime that does not recover costs would be costly to maintain. Presumably part of the visa fees goings towards administration and processing costs. But then again, abolishing visas to Zambia will have other implications. There's the question of losing the "security benefits" of a Visa regime. How much consideration will be given to that?
The obvious question of course is the extent to which the visa costs impacts on demand for tourism. Where is the evidence on this? Just how elasticity is international tourism demand to Zambia? Are the Lodge owners really correct that a US$50 waive will boost demand? It seems to me that what is important is having a common SADC Schengen system that is underpinned by a clear software system. Where individuals can be tracked across borders but would pretty much move freely.
This of course is not the first time these ideas have been proposed.
Sunday, 2 December 2012
The much talked about new documentary of the plunder of Zambia copper by multinationals is available on You Tube. Two things struck me. First, how pivotal the death of Mwanawasa was for the mining companies. If Levy had not died, the windfall tax would never have been reversed and Zambia would be a better country for it. Rupiah Banda was a perfect present for the mining companies. Secondly, I was struck by how we still do not have a public inquiry into the mining privatisation process. Surely that is the mother of all inquiries we need! Everything else pales in comparison!
Please share he video around.
Friday, 30 November 2012
Thursday, 29 November 2012
Wednesday, 28 November 2012
Tuesday, 27 November 2012
Monday, 26 November 2012
Maize subsidies are perceived as government’s indirect support to commercial millers. But it is a well-documented fact that even small millers (hammer mills) play a major role in ensuring competition in the grain milling industry in the country. Therefore, if the playing field is not levelled their activities are hampered by selective subsidies and as a result lessening competition in the grain milling industry. The end results are high marketing margins between wholesale maize grain and breakfast meal retail prices.The foregone analysis indicates that selective subsidies conferred to certain players in the market do not necessarily have desired consequences when the market is not fully competitive. If the market were competitive, then subsidies conferred to millers would be passed along fully to consumers, which appear not to be the case in Zambia. Subsidies to maize millers have instead proved to be a drain on the government treasury without trickling down anticipated benefits to intended beneficiaries – urban consumers in this case.
Friday, 23 November 2012
Thursday, 22 November 2012
Tuesday, 20 November 2012
Monday, 19 November 2012
The question of connectivity is a central factor in the development of Zambia’s tourism sector. This can only come about where there is a viable national airline. There is consensus in both Government and industry that Zambia needs a viable national airline..
As things stand there's insufficient demand on long haul routes to run a profitable airline. At present key destinations are already serviced. Where does Mr Phiri think there's demand gap that's yearning to be filled by tourists? His he planning to fly directly to the USA? All tourists coming to Zambia now have options with BA, KLM and Emirates. Where exactly are is hoping to fly this new airline to make money in tourism? Unless Mr Phiri expects the new government airline would run empty and subsidised routes - all paid by taxes of poor Zambians who will never dream of flying abroad!
Friday, 16 November 2012
"The outlook on these ratings is stable. The B1 ratings reflect the following key factors: 1) Expectation of continued rapid growth, which should support economic diversification and over time increase the country's low wealth levels. 2) The country's track record of political stability, which benefits its developing institutional strength. 3) Zambia's low albeit improved financial strength, following debt forgiveness from official creditors in 2006"
Wednesday, 14 November 2012
Tuesday, 13 November 2012
Monday, 12 November 2012
Friday, 9 November 2012
How to benefit from the mining sector depends on choices you make as a country and mining is capital intensive and requires sufficient investments which can take the entire government funding if nationalisation is put in place. So since mining capital is mainly foreign, the only linkage the mines have on the local economies is through taxes....So government should find ways of maximising revenue collection from the mines. But even when taxes are captured effectively, governments and its civil servants spend these monies in a greedy manner such that the social welfare of the people is not improved. What can Zambia show for the huge taxes the government gets when patients are still sleeping on the floor at UTH and university students are still squatting and learning with few teaching aids, yet advocates of better taxes are called ‘lunatics’ by government officials....Kenya, which predominantly doesn’t produce minerals, has better economic indicators than Zambia, and Peru, which is rich in minerals, is poor compared to Brazil, a non-mining country, while Ivory Coast doesn’t have minerals, but its economy is better than oil-producing Nigeria...
Thursday, 8 November 2012
Zambia is considering improving the legislation so as to strengthen the legal framework by introducing an EITI Act which will among other things institutionalise, protect and ensure that all those institutions such as EITI are fully incorporated and protected....We want to see a situation where this revenue that will be generated as means of our compliance would go into creating more jobs because [this is] part of our campaign promises. As a new government we want to see more money in the pocket of our people and we want to ensure our people have more jobs" (Source : Time of Zambia)
Wednesday, 7 November 2012
It is sad that this was a purely political decision. No single economic assessment was done by GRZ! This of course is largely due to the "blind faith" of ordinary Zambians in the ability of government to think through things. Too many Zambians are content with simply saying, "government has thought through it, so it must be true". It is 2012, it is shocking posture to hold that can only be explained by the psychological effects of the colonial legacy. More critical thinking is needed among our people. We are lacking this as a nation. Government is certainly not smarter than you. The reason no economic analysis was done in this instance is because it knows that real economic evidence will undermine its conclusions. As "intelligent customers" we need to hold it to account. Which of course is why this website exists - to give you the information you need, allow you to think through them and then influence the powers that be!
Tuesday, 6 November 2012
Monday, 5 November 2012
Friday, 2 November 2012
Thursday, 1 November 2012
Tanzania recently launched an online mining cadastre portal, also using the Spatial Dimension technology. Mozambique also has one in an effect to bring transparency and root out corruption. If indeed it is true, this is a step forward. It would be great if the maps of all mining licences in the provinces could also be made available, so that people can check which mining company is operating or exploring where in there village! Such a move does not solve everything, especially land squabbles, but it certainly helps know who is doing what.
Tuesday, 30 October 2012
"This is a 'don't kubeba budget' because they are not telling the Zambian people the truth about what they are going to do in this country. It is meant to be a campaign budget to cool down the youths who have no jobs. The CDF must be increased to K5 billion; without that we are not going to support this budget"
Monday, 29 October 2012
Friday, 26 October 2012
Thursday, 25 October 2012
Given the widespread poverty and extreme high informality of employment with its consequent low wages, poor working conditions and lack of protection of rights, a strategy to formalise the informal economy should be among the main priorities in Zambia. Organising strategies, incentives for formalisation and social protection coverage are some of the steps to be taken to help this transformation.The large size of the agriculture sector of which a substantive part is subsistence farming also accounts for high levels of poverty, informality, low or unpaid jobs and low productivity. A dual strategy to increase on the one hand productivity levels in agriculture and on the other the development of an industrial policy to stimulate manufacturing and higher value-added production is crucial for Zambia to get out of the dependence on agriculture and mining and to increase formal economy employment. Such an industrial policy should go beyond the current plans to promote low value added manufacturing linked to agriculture and mining, and should be far more ambitious with targeted investments in higher value added segments and creation of production, learning and research and development clusters.
Wednesday, 24 October 2012
Tuesday, 23 October 2012
The paper revisits and extends the evidence on the relationship between development and landlocked status. Development is here measured by the level of per-capita GDP. The landlocked status is allowed to affect per-capita income not just through trade, but also through its effect on institutional quality. A residual effect is also accounted for, which might pick the impact of landlockedness on proximate determinants of income (like human and physical capital or technology) and/or on cultural values. Estimates of a structural model of three equations indicate that: (i) institutional quality rather than trade openness seems to be the main channel of transmission of the effect of landlockedness and (ii) there is a negative residual effect of landlockedness on income after controlling for the transmission through institutional quality (and trade). These findings are generally robust to the use of different estimators and to the exclusion of the most advanced economies from the sample.
Monday, 22 October 2012
Zambia – Exploring copper price vulnerability; Razia Khan; Standard Charted Focus; Commentary:The resounding success of Zambia’s maiden Eurobond issuance has focused attention on economic prospects in the copper-rich country. The order book for the 10Y USD 750mn Eurobond totalled USD 11.9bn, far exceeding expectations. With a coupon of only 5.37%, the lowest yet achieved by a frontier African sovereign, financing costs on Zambia’s Eurobond (the current yield is 5.26%, down from 5.625% on its debut) compare favourably with the cost of domestic financing (current yields on infrequently traded 10Y ZMK debt are c.14.75%). The success of Zambia’s Eurobond reflected in part a resurgence of risk appetite following the announcement of new easing measures in mature economies. However, it is mostly believed to reflect strong appetite for relatively limited external issuance by African sovereigns. Despite the subdued global outlook, Zambian prospects are still regarded favourably. The IMF expects 7.7% growth this year, following last year’s negative copper-sector growth, reflecting production declines (overall GDP still rose 6.6% in 2011). August CPI rose to 6.4% y/y on higher food inflation but remains in mid-single digits and still represents the best inflation outcome achieved in Zambia in decades. While the kwacha (ZMK) has weakened since the authorities released a new directive banning the use of FX for domestic transactions, it remains relatively stable.
Wednesday, 17 October 2012
Friday, 12 October 2012
Zambia Budget 2013 - Tax Highlights
Thursday, 11 October 2012
Zambia’s tourism industry is under-performing relative to those of other countries in the region, as well as to its own potential. By achieving a number of results, the industry can come closer to reaching its potential. These results include: a lower cost of supplies; improved labour productivity; easier access to and lower cost of finance; more extensive and more effective destination marketing; upgrading and diversifying Zambia’s attractions and locations; cheaper and more convenient travel to and within Zambia; a more stable and predictable regulatory environment; greater competition in tourism and related/supporting industries; stronger support for the tourism industry from Government and the wider population.The scope for and potential benefits from improved industry productivity are substantial. They are also much needed as, despite sustained macroeconomic growth, poverty levels in rural Zambia remain high. Given the potential of the tourism industry, and the strong commitment of Government, business, civil society and donors to improve industry performance, there is a real opportunity for stakeholders to chart an effective way forward and to monitor their progress over time.
Wednesday, 10 October 2012
Tuesday, 9 October 2012
"In September 2012 about 100 middle-class houses were pulled down in Lusaka. Over 50 houses were demolished in the Zamtan shanty area of Kitwe, Copperbelt Province, and in Eastern Province, about 100 houses in a forest reserve of the provincial capital, Chipata, have been identified for destruction." The PF Government responded to outrage of the destruction by saying, "....constructing houses on private land and in undesignated areas should not blame the government for having their structures pulled down."
The latest assessment (for 2011) is embedded below. The section on Zambia is on page 52. The general picture is that Zambia performs better than Sub-Saharan Africa average on all indicators, especially when compared against resource rich countries. But we need to remember that "average" does not really help us since all of Africa in these areas. What is more important is the change from year to year. It is here that we see no change between 2007 and 2011. It seems to me that according to these scores the Banda presidency was largely wasted. But that is just conjecture - one must look underneath the indicators, a task I leave to informed readers!
Monday, 8 October 2012
Saturday, 6 October 2012
Friday, 5 October 2012
Thursday, 4 October 2012
Wednesday, 3 October 2012
Rwanda's current stunning development results suggests real value to Zambia of learning from it and other countries on the quickest way to ensure high economic growth is accompanied with poverty reduction. While Zambia shares Rwanda’s high growth success, it does not share its poverty reduction results. Over the last five year’s Kagame's government has lifted one million Rwandans out of poverty, with poverty rates declining from 56.7% in 2005/6 to 44.9 percent in 2010/11. Zambia’s poverty remains around 70%, in some provinces even as much as 80-90% with inequality continuing to increase.
Tuesday, 2 October 2012
Monday, 1 October 2012
Friday, 28 September 2012
Green Paper: 2013 - 2015 Medium Term Expenditure Framework
Thursday, 27 September 2012
The impact of aid in terms of democratic consolidation is linked to the development of the party system, the efficacy of key democratic institutions, and accountability in relation to tolerance of participation by the media and civil society in the political process. The study suggests that there are many good reasons for so-called traditional donors to phase out aid to Zambia. Zambia has recorded economic growth for the most part of this decade, but poverty levels still stand at near 70 per cent and both equity issues and poor human development indicators provide reasons for concern. The study cautions against an aid exit at a time when economic growth and new foreign partners may strengthen the executive office vis-à-vis civil society, opposition and agencies of restraint. The study argues for an enhanced emphasis on democracy assistance that may strengthen stakeholders and institutions with capacity to hold the executive to account for their policy actions in terms of development.
Wednesday, 26 September 2012
Tuesday, 25 September 2012
Monday, 24 September 2012
Friday, 21 September 2012
Thursday, 20 September 2012
With the poor economic and financial returns to railway investment and the uncertainty over Congolese traffic, public investment in railways in current circumstances appears highly risky. Few of the new rail routes proposed in the Sixth National Development Plan appear economically viable under any circumstances. While certain new routes could possibly be viable if mines are prepared to sign long term contracts, such decisions are best left to the private sector. Given its poor track record in railways and the under funding of essential public services, rather than investing in railways itself, the Government’s role should be to: (a) facilitate private investment in the sector; and (b) ensure that trucks cover the full cost of the damage they cause to the roads by enforcing appropriate road user charges.
Wednesday, 19 September 2012
As we approach the rebasing of the Kwacha, there are still many unanswered questions as to the procedure. In a technical paper from earlier this month, the Bank of Zambia explains the outline procedure for rebasing. The paper is embedded below.
Tuesday, 18 September 2012
We have 16 producing copper mines, three new ones coming on stream in two years, backed up by existing and new smelting and refinery capacity..and known reserves for at least 50 years of future production. However, we have reshaped our mining investment strategy as we need to intensify exploration for the development of new mines and mineral based exports to deliver a new level of long term benefits from our resources...This more intense focus includes required new investment in our oil and gas potential, boosting manufacturing capacity to process a wider spectrum of minerals, and to parallel that growth with new manufacturing capacity for mining industry consumables....There is a major gap in Zambia’s economy in downstream processing our gemstones industrial minerals and dimensional stone and there are few if any local manufacturers of mining equipment such as drill rods, bits, jack hammers and piping....On that basis, we need both junior and large mining companies and resources investment houses, to install Zambia on their high priority investment agendas.
Monday, 17 September 2012
Mr Chipuwa explained that the road transporter does not meet the full cost of the infrastructure and is able to charge lower transport rates to the shipper or traveller, whereas the railway operator who meets the full cost of the track maintenance is forced to charge high tariffs compared to road users in order to recover costs. "Roads are constructed and maintained by Government with very little contribution from road users in form of road user charges. On the other hand, railway infrastructure is funded fully by the railway operator. In the Zambian context, this is further exacerbated by the fact that the railway operators pay the road levy for the fuel consumed by locomotives. This is indirectly subsidising the competitor who is the road transporter. The two factors mean that the railway operators namely Railway Systems of Zamia (RSZ) and Tazara become artificially expensive and, therefore, uncompetitive compared to road transport", Mr Chipuwa said.