Business News

Wed, 19 Apr 2017 12:59:52 +0000

New power tariff to  cripple SMEs-Chabala

BY MAILESI BANDA

SMALL and Medium Entrepreneurs (SMEs) will be the most affected by the increase in electricity tariffs as they do not have the financial muscle to invest in adequate and effi-cient alternative sources of power, Zambia Association of Manufacturers (ZAM) presi-dent Rosetta Chabala has said.

Ms Chabala said SMEs lacked the capacity to invest in generators and solar power to complement the hydro power deficit.

She said the SME’s would lose the few contracts they had organized with the domestic market, adding that the potential of growth in the sector to reach the export market would be hindered.

“The most hit by the electricity tariffs are the SMEs who are the job creators and the ac-tive participants in the economy. We have policies that are developed to support SMEs but with the implementation of measures that tend to injure their growth such policies are likely to achieve nothing,’’ she said.

She said SME’s would collapse as they did not have enough resources to invest in alter-native power sources.

She explained that the electricity tariff increase proposal within a short period of time was untimely and would make it difficult for the business community to adjust.

She said the measures would affect the business performance on the domestic market, industrial development, employment creation and competitiveness on the export market.

“Our products will become very uncompetitive due to the high cost of production and investment in power generation plants take time to mature to a level where the plant is able to produce power and during this period the manufacturing sector would be paying and getting nothing in return,’’ he said.

She said Zambian firms were likely to lose out on business contacts due to higher prices, adding that this would slow down the much needed industrial development.

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NAPSA chief appointed to Zambeef board

By Sheila Sakupwanya

NATIONAL Pension Scheme Authority (NAPSA) director general Yollard Kachinda has been appointed non-executive director on the board of Zambeef Products, highlighting the company’s diverse Zambian ownership structure.

According to a press release availed to the Daily Nation, the appointment of Mr Kachinda recognizes NAPSA as Zambeef’s biggest shareholder with 25 million shares, amounting to 8.3 per cent of the company.

And lawyer as well as  former director of the Zambia Information and Communications Authority Margaret Kunda Chalwe Mundenda, and prominent Zambian academic Professor Enala Lyson Tembo Mwase have also been appointed as non-executive directors on the board of the country’s leading cold chain food processor and retailer.

Because of NAPSA’s shareholding, thousands of people across Zambia have a stake in the success of Zambeef and own shares in the group through their pension funds.

Zambeef chairman Dr Jacob Mwanza said the company’s shareholding structure demonstrated the company’s commitment to growing the local agribusiness and retailing industries, making it possible for every working Zambian to participate in the company’s business of feeding the nation.

“We are a deeply rooted Zambian company and the country’s success is our success and vice versa. The fact that most pension funds in the country are shareholders of the company only goes to show how deep those roots go with every working Zambian having vested interest in Zambeef,” Dr Mwanza said.

Meanwhile Dr Mwanza has announced the resignation of Graham John Clark as a non-executive director to take up a full time role of Fiji Sugar Corporation chief executive officer.

“I would like to thank Mr Clark for his contribution to Zambeef since he was appointed on the board. Mr Clark’s extensive business experience has been greatly appreciated. On behalf of Zambeef I would like to wish him the very best in his new role,” Dr Mwanza said.

Zambeef is listed on the Lusaka Stock Exchange (LuSE), enabling the public to buy and trade its shares.  Apart from NAPSA, Saturnia Regna Pension Funds, Barclays Pension Fund, Bank of Zambia Pension Fund, Zambia State Insurance Company, Konkola Copper Mines Pension Fund, Kwacha Pension Fund, the Workers Compensation Fund and Professional Life have shares in Zambeef.

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Zambia can repay her debts, says Habazoka

By BUUMBA CHIMBULU

GOVERNMENT’s ability to pay off both external and domestic debt is unques-tionable as it is able to meet its obligations, Dr Lubinda Habazoka has said.

Dr. Habazoka, an economist, explained that Government was still in a position to pay off both its domestic and external debt despite the obligation being extremely high.

“Zambia’s debt is extremely high and the economy is now under attack because of high debt; it is not very good to deny that fact. If we had enough reserves, we should not have called for austerity measures,” he said.

He added: “Government’s ability to pay off debt is not questionable, we are able to pay debt, only that debt is competing with other social programmes.’’

Dr. Habazoka explained in an interview that Government had so far not default-ed on any debt repayment, a sign of commitment to meet its obligations.

He said Government’s debt ratio to the Gross Domestic Product (GDP) was sta-ble when compared to other countries.

GDP is the value of a country’s overall output of goods and services, it is one of the primary indicators used to measure the health of an economy.

Dr. Habazoka however said the GDP only reflected on paper and not on the sta-tus of Government’s income.

“We have not defaulted on any external debt, we are actually paying especially Eurobonds, we are managing to do that but maybe in the long-run, and it might have a negative impact on our reserves because we need to meet those payments on time,” he said.

He said it was unfortunate that Government needed money to finish the projects it started, thereby putting people handling the fiscal policy in a tough decision making position whether or not to contract more debt.

Dr. Habazoka also called for a specific legal framework that would ensure the in-troduction of a sinking fund to service the Eurobonds.

“We need specific legal framework that is going to come up with such a sinking fund so that if we are to use that money prematurely, we need approval from Par-liament,” he said.

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PWC ticks off ‘pervasive’ monetary policy stance

By BUUMBA CHIMBULU

COMMERCIAL banks closed the year 2016 with K12 billion worth of liquidity, a reduction from 2015 owing to the tightening of monetary policy rate by the Bank of Zambia (BoZ), Price Waters Coopers (PWC) has said.

Liquidity is a measure of the ability and ease with which assets can be converted to cash.

According to PWC, commercial banks’ liquidity reduced from K11 billion in May 2015 to K9 billion in June 2016.

The group, in its 2016 Zambia Banking Industry Survey: Adapt to Thrive report, however, said the average market liquidity by December 2016 was at K12 billion, an indication of a shift in the BoZ liquidity easiness.

“One of the biggest issues faced by commercial banks in 2016 was liquidity risk. Since the adoption of a tight monetary policy stance, liquidity in the market has been volatile, with an overall downward trend,” reads the report.

PWC says its survey indicated that over 70 percent of the respondents conducted before BoZ monetary policy statement of February 2017 proposed an easing of the policy rate.

The BoZ in its February monetary policy statement signaled a cautious easing of monetary policy by reducing the rate to 14 percent.

“In our view, any proposal made with respect to the monetary policy stance adopted by the BoZ, while reasonable in isolation, should be considered in the broader context of the central bank’s objectives of maintaining price stability and safeguarding the stability of the financial system,” reads the report.

PWC further said five of the top banks still ranked liquidity risk joint-fourth in the list of issues that impacted their businesses in 2016 despite the 75 percent deposit market share.

The group said that such a development emphasized the pervasive impact of the monetary policy stance adopted by BoZ.

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Kwacha  fights back to K9.400 per US dollar

By Sheila Sakupwanya

THE Kwacha made a comeback against the U.S dollar on Thursday following increased supply on Interbank as well as the weakening of the vehicle currency against most major convertibles.

According to the Cavmont Bank market report, the Kwacha closed the day at K9.400 and K9.450, appreciating by K0.03 compared to the day’s opening levels of K9.430/K9.480.

And the Cavmont market report released on Friday indicated that the Kwacha was likely to remain strong in the short to medium term should demand remain weak, coupled with tight liquidity in the money markets.

Meanwhile, commercial banks’ aggregate current account balance decreased by K64.89 million to K270.79 million. Total funds traded on Interbank were decreased by 0.02% to 13.45 K102.20 million.

The Central Bank was still conducting open market operations and was looking to withdraw K100 million in excess liquidity. Accepted rates were averaging 17.00 percent on 7 days.