Zambia Road Tolls

The Road Development Agency (RDA) recently announced that it has raised over K100 million from toll fees at various weighbridges since January. Last year RDA raised K296 million from toll fees comfortably exceeding its target of K250 million. The target this year is K360 million which RDA should be able to meet assuming the quoted figures only cover the first quarter or exclude border entry points.

We are still early days in the road tolling programme. One expects it will generate significant revenue going forward. The programme was launched by the PF government in November 2013 in order to provide much needed revenues for road maintenance. The MMD government had laid down the groundwork with the Tolls Act (2011) after mulling over the idea for three years.

IMF - Zambia Watch (May 2015)

Editor's note: The latest IMF statement on Zambia paints a picture of a Zambian economic policy that has gone off the rails. This is the most negative assessment to be issued on Zambia during our seven year watch over IMF Zambia relations  This is not to say that all the IMF says makes sense, but it does seem, to any regular reader of this website, that Zambia is squandering opportunities to build a better country her people due to lack of basic understanding of economics.

IMF Executive Board Concludes 2015 Article IV Consultation with Zambia

Press Release No. 15/233

May 22, 2015

On May, 20, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Zambia.

Zambia has strong growth potential, but lingering vulnerabilities pose risks to the outlook. In the last two years, the Zambian economy has been weighed down by large fiscal imbalances, lower copper prices and policy uncertainties. Real GDP growth has slowed, the current account has deteriorated, international reserves have fallen and the exchange rate has been under downward pressure. Fund staff estimate that real GDP growth slowed from 6.7 percent in 2013 to 5.6 percent in 2014, driven by a contraction in copper production. Year-on-year inflation fell from a peak of 8.1 percent in November 2014 to 7.2 percent in March 2015, largely driven by lower fuel prices. The fiscal deficit on a cash basis rose sharply to 6.5 percent of GDP in 2013 and remained elevated at 6 percent in 2014.

Begging for Infrastructure

President Lungu recently met FQM senior management officials as part of the tour of the open pit mine and copper smelter in Solwezi. He urged the mining company to partner with GRZ to “deliver local roads” and “light up Solwezi Airport” which is restricted to day flights due to inadequate infrastructure at the airport. President Lungu said, “we have to do 21kms of roads here in townships, come on board to help improve roads including the airport. Expand your corporate social responsibility to non-traditional areas. ..”

The call for the private sector to contribute towards investment in local roads and airport infrastructure is certainly welcome. Government is spending significant sums on the current roads programme through borrowing, and that does not even include “township roads”. Not only is the programme insufficient to upgrade all roads, it is also an extremely expensive and unsustainable undertaking to maintain some of the roads that are being upgraded. So one can see why President Lungu appears to be begging the mines to help.

Zampost Rising

Zampost Microfinance Limited (ZML), a subsidiary of the parastatal Zampost, is planning to issue its first tranche (K40 million) of the K100 million bond on the Lusaka Stock Exchange (LuSE) by the end of this month to support expansion of its credit business. ZML provides salary-backed loans to the public. According to its parent company Zampost, there is increasing demand for loans. ZML’s loan book has grown to K10 million from mid-2013 to date.

Zampost is certainly one of the more genuine success stories of the PF government. Prior to 2011, the company was plagued by inefficiency and corruption. A 2008 Parliamentary Committee Report observed that Zampost suffered from “serious operational problems….lack of innovation…it has failed to reposition itself in the highly technologically advanced business environment….”

Fuel prices go up!

The price of fuel has gone up. ERB has released the following press statement :

The Energy Regulation Board (ERB) has adjusted the pump prices of petroleum products as follows by K1.14 for petrol; K1.00 for diesel; K0.71 for kerosene and K0.99 for low sulphur gasoil (low sulphur diesel), effective midnight of 12th May 2015. Consequently the prices will now be as follows:

Zambia Monetary Policy Statement (May 2015)

Editor's note : The Bank of Zambia released its quarterly monetary policy statement this week. It notes that lower than programmed revenue is putting pressure on the financing requirements for the Budget from the domestic market which is causing yield rates on Government securities to rise. BOZ believes "further fiscal adjustments are required to address revenue shortfalls and rationalise expenditure to achieve fiscal sustainability. This is critical to achieving a stable macroeconomic environment going forward"

The Monetary Policy Committee (MPC) met on 12th May 2015 to consider developments in the domestic economy as well as global economy over the first quarter of 2015, outlook for the second quarter and decide on the Policy Rate to achieve the Central Bank’s inflation objective to support macroeconomic stability.