Today's business news

Tue, 30 May 2017 10:59:34 +0000

‘Don’t be cheated by briefcase maize traders-chief

By SIMON MUNTEMBA

DO NOT sell your maize to briefcase buyers who have started trekking in the chiefdom, warns Chief Chikanta of Kalomo district in Southern Province.

The traditional leader has cautioned his subjects against selling their maize to unscrupulous buyers, but to be patient and sell their maize at the appropriate floor price.

Chief Chikanta implored farmers in his chiefdom and across the country not to be misled by briefcase buyers that offer other commodities in exchange for maize.

In an interview, the chief said some commodities do not match the value of maize they exchange with.

“Most farmers are selling to anyone who approaches them for business because they do not know Government’s planned floor price,” he said.

He added that the large majority of farmers especially in rural areas were deceived to sell their maize in exchange for clothes, shoes and other goods that were not readily available in their areas.

“These briefcase buyers are selling the maize at a high price across the border while cheating our local farmers to sell at a low price,” he said.

Chief Chikanta called on Government to provide market for farmers before they risk selling their produce to briefcase buyers.

He said farmers were still relying on Government to buy crops such as maize through the Food Reserve Agency (FRA).

The chief appealed to the Government to buy maize from farmers at a reasonable price then sell it to other countries where the crop was scarce.

‘’This will help to reduce cases of smuggling of maize to other countries as reported in the past,“ he said.

And Chief Chikanta revealed that the harvest for the 2016/2017 farming season was ‘‘massive’’ despite the earlier reported cases of armyworms in some parts of the district.

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Decentralisation policy cheers South PF

By PRINCE CHIBAWAH

THE decentralisation policy currently being implemented by Government will enhance effective social economic development, PF Southern Province vice information and publicity secretary Trymore Mwenda has said.

“Under this policy, Government will build capacity in councils for them to improve performance in planning, budgeting and financial management, hence taking development right to the doorsteps of rural populations,” he said.

In a statement to the Daily Nation yesterday, Mr. Mwenda said the policy would also promote people’s participation in democratic governance at local level.

“We are alive to the fact that the policy will also promote participation of traditional leaders in governance and preservation of cultural heritage, whilst respecting cultural diversity,” he added.

He explained that once the policy was fully implemented, Southern Province will be among the regions that would benefit in sectors such as agriculture, health and education, among others.

“It will improve living standards of people.

“The decentralisation policy will also bring about benefits such as political stability which would be secured by active participation of the local people in developmental activities,” Mr Mwenda said.

Mr. Mwenda said the ruling party in the province was therefore happy that Government had continued to attach great importance to the decentralisation programme.

He commended Cabinet Office for providing leadership and direction towards the implementation of the policy.

“We therefore beseech all stakeholders to take keen interest in the implementation of the policy, which seeks to ensure that benefits of Government programmes accrued to citizens regardless of political affiliation, cultural and economic status or indeed gender.

“It is evident that Government under the able leadership of President Edgar Lungu places great importance on local government, as it is the engine for delivering public infrastructure and services, local economic development and participation,” said Mr. Mwenda.

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Sinkamba demands Govt disclose debt stock

By SIABANA KELVIN

THE country’s sky-rocketing external public and private debt stock since 2011 is extremely alarming and Government should make a quarterly full public disclosure of the debt stock so that the public keeps track of the financial status of the country, says Green Party president Peter Sinkamba.

The opposition leader said the most unfortunate situation is that the public is kept in the dark on the total debt stock of the country.

Mr Sinkamba noted that recently Finance minister Felix Mutati signed confirmation agreement of a US$246 million credit facility with Export- Import Bank of India (EXIM) and meantime, Government is in the process of acquiring a US$1.6 billion loan from the IMF.

“In the interest of transparency, accountability and good governance, we demand that the Minister of Finance Felix Mutati makes a full disclosure of the current status of the external public and private debt stock as well as the domestic public debt and we also demand that the public disclosure be made on quarterly basis,” Mr Sinkamba said.

He said when Alexander Chikwanda was Minister of Finance, he had an open- door policy on the financial issues which made it easier for the public to track budget expenditure and conduct debt sustainability analyses on regular basis.

“We are aware that at the end of 2014, Zambia’s stock of external public and private debt stood at $6.9 billion or 24 percent of Gross Domestic Product (GDP) compared to US$3.6 billion or 15 percent in 2011 and we are also aware that the domestic public debt increased from US$2.8 billion or 12 percent of GDP in 2011 to US$3.8 billion or 17 percent of GDP in 2014,” Mr Sinkamba said.

Mr Sinkamba said after issuing separate sovereign bonds in September 2012, April 2014, and July 2015, the country’s public debt to international investors significantly increased by about US$7 billion, through Eurobonds.

“We are extremely worried because the share of central government’s debt from multilaterals has fallen sharply since 2012, while the share owed to private banks and investors has increased, further, though inflation has reduced from 22 percent to 6-7 percent,” Mr Sinkamba said.

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Treasury bills go like hot cakes in K1.6 bn bid

By BUUMBA CHIMBULU

THE Bank of Zambia (BoZ) treasury bills auction was last week over-subscribed by 100 percent, attracting total bids amounting to K1,619.88 million as the Kwacha is expected to continue trading in the range of K9.270 / K9.320 per dollar.

A treasury bill is a short term instrument that Government issues to borrow money through BoZ for a period of one year or less.

Over-subscription is a situation in which investors show much interest in a new issue of a security that demand exceeds supply.

If investors order more shares than there are shares being issued, the security is said to be over-subscribed and this may affect the price when the security is actually issued.

According to Cavmont Bank Zambia daily market report, the bills on Thursday attracted bids amounting to K1,619.88 million against an auction size of K810 which was being offered, leading to yield fall across all tenors.

The bank also indicated that the Friday trading session saw the Kwacha open stronger at K9.200 / K9.250 from Wednesday’s close of K9.270 / K9.320.

“The Kwacha’s performance was boosted by increased inflows from corporate sellers coupled with subdued demand from importers and buyers who have continued to trade the currency pair cautiously,” read the daily report.

The report further indicated that the local unit was expected to continue with its current momentum, should supply continue to outweigh demand.

The local currency closed its Friday trading session at K9.220 / 9.270, K0.02 weaker than its opening levels.

On the money market, commercial banks’ aggregate current account balance increased by K38.59 million to K2,834.61 million while the overnight borrowing and lending reduced by 0.02 percent to 14.00 percent.

Total funds therefore traded on Interbank were K89.50 million.

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Economic outlook gloomy, says IMF

By BUUMBA CHIMBULU

COMMODITY exporting countries such as Ghana, Zambia and Zimbabwe, are grappling with larger fiscal deficits with already high debt levels and concerns about growth, says the International Monetary Fund (IMF).

According to the IMF, economic growth in the three named countries were affected in 2016 as a result of larger fiscal deficits.

This is contained in the IMF report on the Sub-Saharan African region ‘‘Restarting the Growth Engine’’ published last month.

“Furthermore, on the external front, the somewhat improved global outlook comes with significant uncertainties and downside risks.

“External financial conditions for frontier economies in the region have loosened from the peaks reached in early 2016, but they still remain tighter than conditions for emerging markets in the rest of the world,” reads the report.

The IMF in its report however indicates that economies in these countries could rapidly tighten further against the backdrop of fiscal policy easing and monetary policy normalisation in the United States.

It said a faster-than-expected pace of interest rate hikes in the United States could also trigger a more rapid tightening in global financial conditions and a sharp U.S. dollar appreciation.

And the Fund also said the Sub-Saharan Africa economic growth is this year expected to register a modest rebound of 2.6 percent owing to a bounce in oil exporting countries.

According to the IMF, growth for the region as a whole will however continue to fall well short of past trends and barely deliver any per capita gains.

“This deteriorated outlook is partly a result of delayed and still limited policy adjustments, with an ensuing increase in public debt, declining international reserves, and pressures on financial systems placing stress on private sector activity,” reads the report.

It also indicates that the rebound comes after the region was hit with external shocks in 2016.

The report explains that the pains from this shock continue to do damage to the Sub-Saharan economies, with the risk of generating even deeper difficulties both within and across borders if unaddressed.

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SMEs struggle to supply mega chain stores

BY MAILESI BANDA

THE expansion of supermarkets in Zambia has a profound effect on domestic suppliers since about 80 percent of their products are imported from their country of origin, says the Zambia Institute for Policy Analysis and Research (ZIPAR).

ZIPAR research fellow, Mwanda Phiri, said the consolidation of the marketing structures and the adaption of procurement systems had improved towards the market demands of the supermarkets.

She said research had revealed that during the first phase of operations of supermarkets over 80 percent of their processed foods and other products were imported from their country of origin.

That made it difficult for local suppliers to be integrated into the supermarket value chain.

“Over 80 percent of all the products in supermarkets are imported from their country of origin and this has made it difficult for local suppliers to integrate into these value chains,’’ she said.

She said the rate at which supermarkets substituted local produce for imports was dependent on how adaptable local suppliers were to the needs and requirements demanded by supermarkets.

She explained that supermarkets procured bulk quantities and often preferred suppliers who could supply a chain of their stores consistently in addition to meeting quality, demand and compliance measures for products.

She said the ability to supply consistently to a number of stores suggested large capital requirements which were lacking for small firms, adding that as a result large Zambian suppliers with the capacity and capital generally found it easier to comply with the supermarket’s set standards.

She lamented that small scale suppliers were excluded from trading with supermarket chains due to structural and strategic barriers.

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Short term loans hit manufacturers

By BUUMBA CHIMBULU

SHORT-TERM lending by commercial banks has continued to hamper the manufacturing industry as such businesses require long-term financing, Zambia Association of Manufacturing (ZAM) has said.

ZAM president, Roseta Chabala, explained that access to long-term financing had continued to pose a challenge to the manufacturing industry.

“We still do not have access to long-term financing, the interest rates for most of these banks are high and short-term.

“Manufacturing is not about short-term, it cannot turn around in one year. You need to be in there for a long time. So if you are going to access funding for manufacturing, it has to be 5 to 10 years, it cannot be a 2 or 3-year loan,” she said.

She was speaking on the ZNBC Sunday Interview programme this week.

Ms Chabala explained that Small and Medium Enterprises (SMEs) were the most hit with short-term loans from commercial banks.

She also said the cost of financing also affected the growth of the manufacturing industry in Zambia.

“SMEs are stagnant because they are the ones hit the most, they are the ones that do not have other alternative places to access finances from.

“They are either stuck to a micro lender who hammers them with 65 percent or with a bank hammering them 40 percent per year,” she said.

And Ms Chabala said the association was working on making the association exist through as an Act of Parliament and ensure that all manufacturers were registered.

Ms Chabala explained that once the association was turned into an Act, ZAM would deliver accurate information on the industry.

She said the Act would also assist in policy making as it would be easy to identify what each manufacturer was doing.

“We are currently discussing how we can make ZAM all-inclusive so that when we do reports, they are based on each and every manufacturer. We are also making ZAM an Act of Parliament so that all manufacturers are registered there.

“Some people register at PACRA and they do not operate, while some have been operating as backyard entities but we do not have those figures to make tangible decisions,” she said.