Evolution of the risk landscape occasioned by climate change effects and disease pandemic is pushing the worlds creativity and innovation in product offerings. Global warming has been fueled by pollution effects due to mining practices, usage of fossil fuels to power manufacturing and industrialization while deforestation has played a major role overtime in deteriorating the ecosystem. Energy bottlenecks have continued to weigh manufacturing pulse due to erratic rainfall patterns which have resulted in depleted dam levels causing constrained hydro electric power generation. Funds have in this age become more sensitive to sustainable avenues of preserving the environment. The world developed…
Author: The Editor
Grappling with a double whammy of selective default ratings and narrowing compensation premiums above a rising inflation rate, the central bank in Africa’s red metal producer Zambia, were only able to sell K683million worth of 2-15yr paper of the K1.5billion of assets on offer it the November government bond sale. Friday 27 November saw decent interest in the 3 and 5yr tenors that absorbed K403million of the demand while the other tenors saw anemic interest. Zambia was recently downgraded to selective default by Standards and Poor’s while Moody’s kept its rating at ‘Ca’ following fiscal fragilities. However post default, the…
In the labyrinth of currency scarcity where Zambia grapples with foreign exchange supply bottlenecks outwitted by ballooning demand, the trading environment in the copper producer remains challenging. Zambia’s performance on the access to foreign exchange pillar of the AFMIndex 2020 scored 60 out of 100 weighed by falling reserves leaving the central bank with little ammunition to sell dollars on the open markets for price stability purposes. Speaking at the AFMIndex launch in Lusaka, Absa Zambia Plc Director Global Markets Stanley Tamele said trading has been challenging in the current environment. “Apart from the supply concerns which are systematic across…
Despite downside risks in the African financial markets posed by disease pandemic, sustainability and resilience was observed in the period. The continent saw green bond issuances in Egypt and Kenya while usage of technology as an enabler could not be appreciated more. The East African market led the curve by using mobile money platforms as MPESA to purchase securities allowing retail investors place their liquidity is stocks and bills. Cost of capital continues to hurdle and constrain Zambian capital markets, this is because it is benchmarked to government securities whose yields remain elevated. Speaking at the launch of the Africa…
Post default when Africa’s second largest copper producer skipped a $42.5million coupon payment on its bond 2024 dollar bond, BNP Paribus issued a statement to its clientele that it would be suspending custodial services to Zambia. This move was seen as one that would breed asset and currency sell-off pressure to weigh the Kwacha even further. Responding to a Q&A session at the AFMIndex 2020 launch in Lusaka, Director Market Supervision and Development at the Securities and Exchange Commission -SEC Mutomboi Mundia said perception in a crisis time as Zambia is in, is everything. “We need a communication strategy across…
Lagged effects of the Kwacha depreciation effect on food and non-food prices jumped 140 points to 17.4% for the month of November sending the 3m and 6m treasury bill yields underwater. This is the highest Zambia has seen in close to 4 years. Inflation has been on a climb since August 15.5% with the rise attributed to a steadily depreciating currency impacting food prices and other non – food prices. Post default, currency sell – off is expected in the copper producer, a risk that the central bank is well aware of. Last week in his debut rate decision announcement,…
Six days after Zambia defaulted on its coupon payment of $42.5million on its dollar bond maturing 2024, the central bank continues to see appetite for one year government securities paying 24.5% in the 24th T-bill of the year. With liquidity as measured by aggregate interbank account balance north of 3 yards in local currency terms, the Bank of Zambia was able to sell paper worth K1.26billion a few Kwachas shy of what was on offer, across the curve. Of this amount K612million was housed in the one year tenor while the next sought for risk bucket was the 3months with…
In the labyrinth of litigation clouding the mining sector following commenced liquidation proceedings against Vedanta Resources Ltd in Africa’s second largest copper producer Zambia, the Court of Appeal November 20, delivered a judgment ordering that these proceedings be stayed to allow the parties to proceed to arbitration. Last year the Zambian authorities and other shareholders took on majority shareholder in Konkola Copper Mines for a number of purported violations culminating into mining license breaches exacerbated by pollution to taxation inconsistencies triggering a decision to wind the miner down. However this matter has been one of the biggest dent on…
Finance Minister in Africa’s copper hotspot Zambia bemoaned challenges in the insurance industry citing weakness in balance sheet and liquidity positions. Dr. Bwalya Ng’andu flagged the current uneven insurance brokerage skews revealed by 2 firms accounting for 80% of business in an industry comprised of 35 companies. The MinFin head challenged the many players in the brokerage industry to consider merging so as to create synergies and achieve competitive scale to grow corporates. Finscope reports have revealed that insurance uptake remains low in Zambia weighed by the general weak demand for insurance products. “The challenge with insurance products is that…
In Christopher Mvunga’s debut rate decision meeting, the monetary policy committee kept the benchmark interest rate unchanged at 8%. The committee had previously cut rates 125 basis points to 8% the lowest Zambia has seen since the policy rate started being tracked on account of lacklustre demand. In arriving at today’s consensus, the Bank of Zambia were alive to the risks in the economy posed by fiscal fragilities that were compounded by Zambia’s ballooning debt obligations while weighing the need to claw back growth in a feeble environment. Private sector activity remains constrained as measured by Purchasing Managers Index – PMI…