According to the World Bank Global Economic Prospects reports for June 2020, Zambia’s estimated growth forecast for 2020 was revised higher to -0.8% from the -2.6% pronounced at the IMF virtual spring meetings in April earlier. This was part of a Sub Saharan Africa – SSA revision to -2.8% 580 basis points weaker than earlier forecast. SSA economic pulse has been ravaged by the COVID19 disease pandemic leading to supply disruptions, border shut downs and health protocols that have muted economic activity as jurisdictions channel funds to public health and have to deal with budget rebalancing. Zambia’s private sector…
Author: The Editor
With the Zambian authorities having directed the mines to remit all taxes, over an above mineral royalties, in dollars effective 04 June, the markets are left in limbo as to what this step means. Some schools of thought dub it as the second step towards a managed currency regime which will be drastic shift away from a free float which the copper producer has been nodded for in Africa evidenced by the high rating in the ABSA index pillar almost at par with South Africa. The third will be usually be a foreign exchange auction system inferring from the widened…
The central bank in Africa’s second largest copper producer sold K1.3bln in treasury bills in a debt sale that was oversubscribed with bid cover ratio at 1.91. With cash flush markets north of K2.25bln, the Bank of Zambia absorbed 57.6% of this which was housed mainly in the 1- year which paid 25 basis points lower at 28.7501% while the 9 month tenor attracted K370.7mln at 26.9999%. This is the fourth consecutive oversubscription. Thursday 04 May outcome reveals a risks skew towards shorter dated higher yielding assets compared to long dated fixed income (bonds) evidenced by the deep undersubcription recorded…
In a recent development, the mines in Africa’s second largest copper producer will now remit taxes over and above mineral royalties in dollars. The Revenue Authority wrote to all mines effective 04 June, to remit all taxes in dollars and directly to the central bank. This is in a move to share up foreign exchange reserves that have plummeted to decade lows. The correspondence to the mines prescribes that provisional income tax, annual company income tax, domestic and withholding value added tax, withholding tax, customs duty, excise duty and import value added tax will all be remitted in dollars effective…
The Zambian Kwacha has gyrated on either side of 17 as vulnerability and volatility persists in a disease pandemic era. COVID19 has amplified some of the fiscal risks that have successfully transmitted to the currency and money markets such as depreciation trajectory and an elevated yield curve. Zambia’s central bank runs feeble reserve levels shy of one and half yards in dollars yet import cover in nominal terms has widened to 2.6 months (Reserves: $1.39bln vs Imports: $544.1mln) as imports shrivel in a muted business environment. The Bank of Zambia does not have adequate reserves to sell dollars in the…
It is that time of the month that Markit Economics shares the private sector pulse for African nations. One thing that stands out is that COVID19 disease effects are still evident in headline readings for most African nations that track the index. Jurisdictions have implored health safety protocols and partial to full lockdowns which has dented growth through suppressed manufacturing activity. We take a look how Zambia, Nigeria, Ghana, South Africa, Mozambique and Egypt have performed in the month of May. ZAMBIA. The copper producer slid 2.5 index points to the lowest ever in history since the index tracking began.…
Lusaka Securities Exchange indigenous financial institutions, Investrust Bank Plc, is in the market for K400.5mln ($22.3mln equivalent) for capitalization purposes. According to a Stock Exchange News – SENs update Investrust Bank (ISIN:ZM0000000235 – ‘INVESTRUST’) will have an extraordinary general meeting on the 05 June 2020 to pass resolution to approve the raising of K400,497,909.75 through a 5 for 1 renounceable rights offer through issuance of 40,825,475 K1 par value ordinary shares at a value of K9.81 per share to shareholders on record date. This was according to a notice issued by the bank signed by its Company Secretary Brian Msidi.…
Lusaka Securities Exchange listed Copperbelt Energy Corporation – CEC Plc’s stock has year to date shaved 20.8% in share price on account of asset sell-off pressure following energy distribution quagmires. Trading as ISIN0000000136 on the Zambian bourse, CEC Plc last traded at K0.99 a share from levels of K1.38 per share at start of year. The stock has gyrated from April 2019 highs of K2.1 per share levels when the Commonwealth Development Corporation – CDC deal for a K380mln takeover excited markets but stalled on one key factor, the Bulk Supply Agreement – BSA which had been mispriced and would…
With K2.73billion of liquidity into Friday 29 May fixed income sale, the central bank in Africa’s copper producer, sold K202.44million ($11.06million equivalent) worth of government bonds, a deep undersubscription from the K1.10billion assets on offer. This dismal performance reflects the risk skew towards shorter dated higher yielding assets as players shy away from longer tenors on account of uncertainty exacerbated by deteriorating sovereign risks especially in COVID era. Market bids totaled K331.85million while strongest appetite was observed in the 2 year that housed K109.77million paying 30.95% while the 5 year absorbed K56.96million paying 33.00%. Yields were unchanged save the 3…
Africa’s second largest copper producer Zambia recorded a 90 basis point jump in inflation to 16.6% for the month of May. This is on account of an increase in both food and no-food prices in the month according to Zamstats. Zambia’s inflation forecast remains elevated given strained macroeconomic fundamentals in disease pandemic era. Currency weakness continues to exarcebate higher input costs while COVID related disruptions weigh the non food side of the consumer price index. Key Drivers. Key drivers of the May inflation were rise in charcoal prices, household textiles, soaps and pharmaceutical products (cafe mol, aspirin, fansidar, cough syrup…