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Sunday, 27 April 2014

Zambia Debt Watch (GRZ Statement)

Government last week issued the press release below on the current levels of public debt. GRZ is not known for this level of information flow, so the update represents a right step in keeping people informed :
The Zambian Government is on course with all external debt obligations. This is consistent with the need to maintain credit worthiness and safeguard macroeconomic stability through debt sustainability.

In addition, both external [adding the USD 1 Billion Sovereign Bond] and domestic debt levels remain below the international thresholds of 40% and 25%, respectively. To ensure that we continue on this path, the Ministry of Finance will continue to maintain high standards of financial and economic governance.

Death of MMD?

A convention is the only way to end the wrangles. If he (Dr Mumba) doesn't want, then it is better to voluntarily de-register the MMD. The party stands a better chance of bouncing back but it cannot with Dr Mumba still president.
(Spokesperson, MMD)

Leaving aside the internal politics of MMD we should all recognise that this is an economic issue. Zambia needs a strong opposition to develop as a country. A fairly obvious point that unfortunately is not always appreciated.

Friday, 25 April 2014

Zambia's online journalism is broken

I agree with recent government statements that the level of online journalism in the country is very poor. In most cases there's no analysis and it is simply full of insults. 

I also agree with what various members of the PF [e.g. Lusaka Province Youth Chairman] have said that there is need for respect to be shown to the Head of State. It is important that those that criticise the president do not damage the institution of the presidency in the process. 

The question is what should be done about these challenges? 

Banning websites has its own pros and cons. There are certainly many countries that block access to certain websites deemed to violate the law (e.g. child pornography, malicious websites). 

Tuesday, 22 April 2014

Analytical Comedy

I came across this comment in the Times of Zambia by a "concerned citizen" (whatever that means) :
"The increase in fuel prices by the Energy Regulation Board (ERB) last week cannot be blamed on the Government. The price of the same commodity has been upped on the world market and with the depreciation of our Kwacha the increase was unavoidable. Painful though it is, it is important sometimes to live in reality than artificial world were you move with time. Once the Kwacha stabilises we expect a reduction in the price of fuel without delay. Traders and all those who will increase prices of their goods and services are equally expected to swiftly reduce without much ado. With the coming of more dollars from the newly subscribed Eurobond we anticipate the Kwacha to gain"
(Source : Times of Zambia)
When I first read this, I thought it was a foolish comment. But then I remembered that the comment is entirely logical if one believes that the depreciation of the Kwacha has nothing to do with GRZ but is purely due to global factors [as PF supporters have long argued]. 

In his world government is the hero that will deliver low prices when the Kwacha allegedly becomes stronger, against the odds. Its analytical comedy, but many people hold that position. So "concerned citizen" is being entirely consistent. To be clear, he is being "foolishly consistent". But consistent nevertheless. We have to give him that!

Chola Mukanga | Economist
Copyright © Zambian Economist 2014

Sunday, 20 April 2014

Fuels Prices Rise

ERB last week released the following press statement :

The Energy Regulation Board (ERB) has increased the pump price of petroleum products by 7.22% for petrol, 8.75% for diesel and 9.54% for kerosene, while wholesale prices have been adjusted by 11.15% with effect from midnight 17th April 2014.

The exchange rate of the Kwacha against the US Dollar depreciated significantly from K5.40 at the last price review in April 2013 to the current level of K6.20 to the US Dollar by 14.8% cumulatively. This cumulative depreciation of the Kwacha against the US Dollar has been the major trigger for this fuel price increase.

Saturday, 19 April 2014

Mealie Meal Prices

It is very shocking that a bag of mealie-meal is very high in the country and I have already met ZNFU and I am yet to meet MAZ in order to resolve this matter
(Agriculture Minister)

The price of mealie meal is around K82 per 25kg bag in some parts of the country. It is costing 50% more than it did this time last year. Unfortunately, as Elias Chipimo (NAREP President) has helpfully pointed out the situation is much worse:
Studies show that a 25 kilogramme bag of industrially milled maize costs between K75 and K90 (or more depending on which part of the country you are buying it from). What these surveys do not reveal, however, is that the majority of Zambians do not have enough money to buy their monthly mealie meal requirements at one go. Instead, they often have to purchase their staple diet one meal at a time. Being forced to purchase mealie meal in small units (pamela – one standard cup measure at a time) means that the poor spend in total K126 (over Kw50 more) on buying a full bag of mealie meal than those in the middle class who may have enough ready income to purchase a full bag at one time for Kw75. For the poor, the cost of living has become so high that relatively few people can afford to have even one decent meal a day.
(NAREP President)

Thursday, 17 April 2014

Debt Worries

“Our debt situation is becoming unsustainable and if you look at the country’s economic report of last year, the external debt is at US$3.5 billion, and if you look at the Bank of Zambia first quarter report states that the total amount of domestic borrowing is K20.7 billion and if converted will give you another US$3.5 billion bringing the total debt to US$7 billion which the country has as at now....By the end of the year both local and external debts would be about US$11 billion which is unsustainable because it [would be] above half of our equity of the country’s GDP which stands at US$25billion, according to the current CSO statistics which they are now using"
Economist | Politician

(Source : Daily Nation)

Wednesday, 16 April 2014

Coming Clean!

"We are creating very few jobs...the direct employment from the mining sector is only 1.7 per cent...Go to the Copperbelt, look around and what you see is a ghost town in many ways. Everything has collapsed; the social sector and the mines are just sitting there, sinking new operations in the middle of this devastation. We have a lot of work to do to establish ourselves as a copper country with proper effect on the people"
(Vice President, Zambia)

Monday, 14 April 2014

A waste of resources

Zambia Union of Journalists (ZUJ) has called on the Government to bail out state media workers (e.g. Daily Mail, Times of Zambia). It draws its membership from the state media. ZUK president James Muyanwa says :
Our members at Times Printpak Zambia Limited, have suffered for a long time now. The workers have been getting their salaries late for about four years now. For instance, currently they are in two-month salary arrears, and have literally been surviving by the grace of God.....Given this situation, we feel the Government should move from mere words to action on the matter to salvage the company from total collapse and also address the plight of our members. We feel that the company, as a public institution, deserves the same treatment as Nitrogen Chemicals of Zambia (NCZ) and Zambia Railway Limited (ZRL) have received. It requires a bail-out package in line with what was given to NCZ and ZRL. We realize that even if it is a limited company Times needs subvention from the sole shareholder – the government." (Source: Mwebantu)

Saturday, 12 April 2014

Constitution limbo

I would like to state here that if we are going to have a referendum as it seems to be the case, the legal process leading us to that cannot be completed before the year 2016. A referendum under our present law requires that we should first conduct a national consensus of all those citizens who are eligible to vote (above 18 years old)

The justice minister is merely stating the obvious. Everyone knows that the draft constitution cannot be delivered before 2016. This is consistent with what I have said previously. It seems to me that the referendum won't be held in this parliament. I am glad he is finally being clear on this point. And people still need a clear road map not merely media statements.

Friday, 11 April 2014

Energy Developments (Oil, ZESCO)

GRZ is currently importing expensive finished petroleum products through tankers hired by foreign suppliers Trafigura and Dalbit. According to Energy Minister Christopher Yaluma the arrangement is because Indeni Petroleum Refinery, Zambia’s sole crude oil refinery is obsolete. Yaluma says, “Indeni has outlived its usefulness and cannot meet the country’s demand. In fact, it is running obsolete and all we are doing is that we are pushing it along; otherwise its production capacity has fallen more than three fold" (Source: Daily Nation)

Garry Nkombo MP has advised GRZ to liberalise the energy market and allow more people to supply fuel if the cost of the commodity is to reduce. He believes the solution to fuel challenges lies in government allowing anyone to bring in the commodity without surcharging the 25 percent import levy. (Source : FlavaFM)

Wednesday, 9 April 2014

Zambia's New Eurobond

Zambia has finally launched its US$1bn 10-year Eurobond at a final yield of 8.625%, according to government sources. The bond was allegedly oversubscribed by US$4.25bn, much lower than last time. The government tried to do this before Christmas but held back to see which way the liquidity wind was blowing.

As this is a 10 year bond, Zambia will be paying interest of 8.625% or $86m per year for the next 10 years. It will then need to pay back the final $1bn in 2024. Zambia is currently paying around $40m interest annually on its first Eurobond of $750m. It is due to pay back the full $750m in 2022.

This means whoever is in charge from 2021 will immediately have to find nearly $2bn to pay back on top of all other interest repayments from loans accruing between now and then.

Monday, 7 April 2014

Transport Developments

The long awaited Chipata –Mchinji railway line is now operational after stalling over three decades. It is now operating with a locomotive and 51 wagons. ZRL is working towards having 200 wagons including five other locomotives into Chipata by the end of this year so as to create additional capacity. The route now connects Chipata to Nacala port in Mozambique via Mchinji and Nayuchi. (Source : Lusaka Times)

GRZ has begun the rehabilitation of the Mulobezi railway line to facilitate transportation of cargo and people between Livingstone and Mulobezi district. Contractors have been engaged to resuscitate the Mulobezi railway line and will employ a minimum of 600 workers. Transport Minister Yamfwa Mukanga says to ensure that the railway line is viable, Mulobezi railway will be connected to the proposed Kazungula Bridge to maximise regional links and facilitate trade. (Source : Daily Mail)

Saturday, 5 April 2014

Fixing Broken Councils

Municipal councils around the country are currently electing new mayors and deputies, with district councils electing chairpersons and deputies. The new office bearers are being elected by councillors, from existing councillors, and for the councillors! It is democracy but not as we know it!

In many councils what should be an issue about deepening local democracy and governance has become mere politics. In many places most candidates are first being subjected to approval by the PF before running for office, with little internal democracy. And yet these "elections" are but a symptom of a much larger problem! The bigger issue is that our local government model is totally broken.

The current system does not promote accountability because the people have little direct say in what takes place in our councils, let alone who should be the local mayor or where money should be spent. You can create many districts and devolve all the revenue to the local areas, but that will NOT a make a difference as long as you have poor and unresponsive local leadership.

Thursday, 3 April 2014

Income and Wages Policy

Editor's note : A good editorial in the Daily Nation on an important issue. It is telling though that the Daily Nation believes that it has to quote the World Bank to substantiate a very basic point. It is a shame that 50 years after independence an opinion carries more weight when it is buttressed by foreign organisations and not poor ordinary Zambians. As I have repeatedly said Zambians have to learn to increasingly think for themselves if the country is to move forward. It would have made more sense to quote a Zambian education institution on these issues. Where are the academics?
Apart from all other negative influences that have driven the Kwacha into a free fall is the unmanageable wage award granted to public service workers which has driven the cost of Government beyond acceptable limits.

Close to 52 percent of Government expenditure is now being spent on personal emoluments of public service workers who are receiving salaries far in excess of employees in the private sector whose taxes fund the Government!