Economic analysts positive over Zambia’s growth By NELLA MUKALENGE

A GROUP of renowned economic research analysts say Zambia’s economy has grown by 6.8 percent this year and is expected to grow by 7 percent by 2013.
ABSA Capital Principal Ridle Markus of South Africa says the growth was underpinned largely by agriculture, manufacturing, construction and the transport sectors.
Mr Markus said the other major driver of Zambia’s economic growth lies in the mining sector adding that copper production increased by 2 percent last year and is expected to expand in the years to come as Governments’ targets to attain a million tonnes.
He said this in a presentation on 2012 Local Macro Perspective during the Barclays Bank Zambia research road show held in Lusaka yesterday.
The Barclays Bank Zambia research road show was designed to give insight on global, regional and local economic trends.
Mr Markus said along with the mining sector, investments in infrastructure and low inflation environment will boost economic growth.
“Although economic growth softened somewhat from 2010(7.6percent),it remained efficient at 66 percent year in year out in 2011 as growth was underpinned largely by agriculture, manufacturing ,construction  ,and transport sector,” he said.
He said Zambia will positively benefit from the $700 million Eurobond which will be used for infrastructure development.
Meanwhile, foreign exchange and rates strategist Mike Keenan said the Kwacha has become more competitive with the currency expected to strengthen in the fourth quarter compared to the United States Dollar (US$).
“The Kwacha is expected to remain strong over the fourth quarter due to high copper prices, Foreign Direct Investments (FDI) and other positive macroeconomic fundamentals,”he said.
Mr Keenan said with the current Policy Rate set by Bank of Zambia (BoZ), the inflation is likely to remain within the target of 7 percent this year.
“We expect inflation to average 6.6 percent in 2012 and expect the policy rate to remain unchanged,” he said.
At the same function, Barclays Bank Zambia managing director Saviour Chibiya said  economic research is vital for the undertaking of sound economic policies and business investments that boost sustainable economic growth.
Mr Chibiya said prospects for Zambian’s economy are good but faced with challenges and risks which need to be addressed.

Kampamba Shula view:
I can only but concur with the sentiments echoed by these economic analysts ,some of the fundamental data seems to support their assertions but I think its too early in the year to pinpoint where inflation will be at the end of year,it could undermine growth.
Mining sector growth cannot be understated in its influence in driving Zambia's growth...period.
The $700 million bond issue will definitely help build a base for strong growth in infrastructure.I am betting La farge will be set to benefit nicely from this one.

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Zambia Commodities Exchange Expected to Resume Trade in May

The Zambia Agricultural Commodities Exchange Ltd. plans to resume trading next month, ending a nine- month halt in which it sought to attract shareholders and asked lawmakers to pass a bill to regulate and boost trading.
The Zambia National Farmers Union, which represents growers, is among those that may invest in the exchange once it has distributed stock to members through demutualization, Executive Director Brian Tembo said. The Lusaka Stock Exchange (LUSEIDX) last year expressed interest in a majority stake while the nation’s newly licensed Bond & Derivatives Exchange, based in Lusaka, is “keen on operating the derivatives side of our market,” he said.
“We are looking at a partner who will bring in trading systems,” with both domestic exchanges being options, Tembo said in an e-mailed response to questions on April 4. Zamace, as the bourse is known, is also checking if South Africa’s JSE Ltd. (JSE) “can extend its systems,” he said.
Zamace, a 15-member bourse set up in 2007, provided a trading platform for grains such as wheat, soybeans and sunflowers as well as cement and fertilizers until it suspended operations in August. The government of Zambia, southern Africa’s biggest corn producer after South Africa and Malawi, is the largest buyer of grain in the country, with the nation’s Food Reserve Agency purchasing 1.8 million metric tons of the 3 million tons produced last year, according to Zamace.

Policy Uncertainty

The agency, originally set up to manage strategic grain reserves, used the exchange to trade 17,761 tons of corn in 2010, or the equivalent of 1.5 percent of the 1.1 million tons of corn it bought that year, Zamace said in a
The Zambia Agricultural Commodities Exchange Ltd. plans to resume trading next month, ending a nine- month halt in which it sought to attract shareholders and asked lawmakers to pass a bill to regulate and boost trading.
The Zambia National Farmers Union, which represents growers, is among those that may invest in the exchange once it has distributed stock to members through demutualization, Executive Director Brian Tembo said. The Lusaka Stock Exchange (LUSEIDX) last year expressed interest in a majority stake while the nation’s newly licensed Bond & Derivatives Exchange, based in Lusaka, is “keen on operating the derivatives side of our market,” he said.
“We are looking at a partner who will bring in trading systems,” with both domestic exchanges being options, Tembo said in an e-mailed response to questions on April 4. Zamace, as the bourse is known, is also checking if South Africa’s JSE Ltd. (JSE) “can extend its systems,” he said.
Zamace, a 15-member bourse set up in 2007, provided a trading platform for grains such as wheat, soybeans and sunflowers as well as cement and fertilizers until it suspended operations in August. The government of Zambia, southern Africa’s biggest corn producer after South Africa and Malawi, is the largest buyer of grain in the country, with the nation’s Food Reserve Agency purchasing 1.8 million metric tons of the 3 million tons produced last year, according to Zamace.

Policy Uncertainty

The agency, originally set up to manage strategic grain reserves, used the exchange to trade 17,761 tons of corn in 2010, or the equivalent of 1.5 percent of the 1.1 million tons of corn it bought that year, Zamace said in a submission to the Zambian Parliamentary Committee on Agriculture in January.
“By drawing significant volume away from the exchange and introducing a high degree of policy-related uncertainty into food markets, the potential for Zamace to foster beneficial changes in Zambia’s food markets is limited,” it said. In the last three marketing seasons, the government has maintained the FRA purchase price of corn at 1.3 million kwacha ($247) a ton. “Current FRA sale prices are between $135 and $170 a ton, depending on location,” Zamace said. “This buy-high and sell- low approach is clearly distortive.”
The Cabinet in 2010 asked the Securities and Exchange commission to draft a Commodities Exchange Bill that would would regulate Zamace’s operations, bolstering trust. The bill is expected to be presented in either June or July for enactment, allowing Zamace to regulate itself, Tembo said.
Corn is known as maize in southern Africa.

Corn Prices

“An exchange can only develop in a particular environment and an environment of import or export bans and active state participation, for instance, in marketing of maize is not conducive for growth,” Tembo said.
South African white corn for July delivery, the most active contract, fell for the first time in seven days, losing 0.5 percent to 2,300 rand ($286) by 10:30 a.m. in Johannesburg.
On the Chicago Board of Trade, corn futures for May delivery rose for the first time in three days, adding 0.2 percent to $6.3625 a bushel. submission to the Zambian Parliamentary Committee on Agriculture in January.
“By drawing significant volume away from the exchange and introducing a high degree of policy-related uncertainty into food markets, the potential for Zamace to foster beneficial changes in Zambia’s food markets is limited,” it said. In the last three marketing seasons, the government has maintained the FRA purchase price of corn at 1.3 million kwacha ($247) a ton. “Current FRA sale prices are between $135 and $170 a ton, depending on location,” Zamace said. “This buy-high and sell- low approach is clearly distortive.”
The Cabinet in 2010 asked the Securities and Exchange commission to draft a Commodities Exchange Bill that would would regulate Zamace’s operations, bolstering trust. The bill is expected to be presented in either June or July for enactment, allowing Zamace to regulate itself, Tembo said.
Corn is known as maize in southern Africa.

Corn Prices

“An exchange can only develop in a particular environment and an environment of import or export bans and active state participation, for instance, in marketing of maize is not conducive for growth,” Tembo said.
South African white corn for July delivery, the most active contract, fell for the first time in seven days, losing 0.5 percent to 2,300 rand ($286) by 10:30 a.m. in Johannesburg.
On the Chicago Board of Trade, corn futures for May delivery rose for the first time in three days, adding 0.2 percent to $6.3625 a bushel.

My view on this matter is that it is clear that the FRA intervention in the market by buying high and selling low clearly distorts the market self regulation.The move to allow Zamace to regulate itself is a welcome improvement.Lets hope the commodities exchange bill can be enacted ASAP.

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Bank of Zambia intervenes in Forex market,Depletes reserves.

According to the a recent bank of zambia report Zambia's gross international reserves have fallen from US$2.371.4 to US$2.317.7 billion.
BOZ says the recent sale of foreign exchange to the market was aimed at moderating the depreciation in the exchange rate and it amounted to US$152.5 MILLION.BOZ in this case intervened for the purpose of mitigating instability in the exchage rate.
In reflection the reduction in forex reserves is minimal and the country can withstand a major crisis.
A report by Citi bank zambia expected the kwacha to be trading at levels lower than K5200 on the premise that demand for the greenback had slowed.
CITI BANK REPORT
My assumption here is ...and it is an assumption ..is that the kwacha could reach levels of  K4900 to K4700 given the intervention by the bank of zambia coupled with less greenback demand. 

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COMMODITIES-Euro zone woes fuel risk aversion Copper at 3-month low

Copper at 3-month low, platinum at weakest in more than 2 months
* Firmer dollar also weighing, euro hits one-month trough
* Coming Up: U.S. New York Fed Empire State Survey; 1230 GMT
By Manolo Serapio Jr
SINGAPORE, April 16 (Reuters) - Commodities slid on Monday, with copper hitting fresh three-month lows and oil and grains also in the red, as worries about the global economy from China to Europe pushed investors out of risky assets.
Gold, otherwise a safe haven, fell too, as the dollar strengthened with rising Spanish bond yields renewing fears about the debt-plagued euro zone, and platinum sank to its lowest since January.
Worries about Spain, China's slowest first-quarter economic expansion in nearly three years and growing doubts about a U.S. economic recovery have combined to fuel aversion to risk assets.
"There's not much optimism out there. We think the second quarter should be the low point of this cycle as far as economic growth is concerned," said Jeremy Friesen, commodity strategist at Societe Generale.
Investors may be stepping back from markets, waiting for central banks from the United States, Europe and even China to boost their economies through more policy stimulus, he said.
Market players shrugged off China's weekend move to let the yuan trade more freely against the dollar, which economists say suggests Beijing is optimistic the economy is strong enough to withstand currency movements.
That vote of confidence, however, was not enough to allay the pessimism fueled by Friday's data showing that China, the world's No. 2 economy, grew an annual 8.1 percent in the first quarter, less than the 8.3 percent economists were looking for.
"The weaker than expected Chinese data appears to be the key driver of the market right now," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
Three-month copper on the London Metal Exchange fell nearly 1 percent to a three-month low of $7,915 a tonne, adding to a 2.8-percent slide on Friday.
By 0334 GMT, LME copper was down 0.7 percent at $7,931.50, taking its Shanghai counterpart with it. Benchmark Shanghai copper fell as low as 56,700 yuan, its weakest since Jan. 11.
More on the story at
reuter markets-commodities

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Shoprite Zambia Review: Outlook and dividends

MINORITY shareholders of the Lusaka Stock Exchange (LuSE) listed Shoprite Checkers have taken up legal action against Africa’s largest retailer for failure to pay them the 2011 and March 2012 dividends, the Zambia Daily Mail has learnt.
The legal action was taken out on the retail giant – with 18 outlets in Zambia – last week on Thursday after Professor Patrick Mvunga’s law firm was engaged by the 250 Zambian minority shareholders to act on their behalf.
The minority shareholders are complaining that while their South African counterparts had been paid for the duration in question, the giant retailer for unknown reasons chose to allegedly not pay them in direct violation of the Zambian Securities Act on the equal treatment of shareholders of a company listed on the bourse.
This is the second time Shoprite is appearing in the news for all the wrong reasons after its billionaire chairman Christo Wiesel – one of the richest men in the entire world – was stopped by security at an airport in London for being illegally in possession of some 670,000 pounds or K5.5 billion in cash against United Kingdom laws that prescribe that a person can only carry 1,000 pounds.
Mr Wiesel, who is eyeing Nigeria as he spreads his wings and rolls out shops – in addition to his current 78 outlets – said he was carrying the hard cash for tax purposes.
The company employs about 1,000 people in Zambia presently in its 18 outlets spread over the country but the 250 shareholders are not even sure on whether they have shares in Shoprite South Africa as they were told when they bought Zambian shares.
This matter of holding shares in both Shoprite Zambia and South Africa is also in contention.

My view on this matter is that this spectacle is really dampening shoprite's prospects as a retail stock in zambia because there is a high chance investors will not get their dividends when they invest which raises its risk profile.Investors are looking for stable dividend payouts and fair value stocks.

As for the LUSE index it still shows Shoprite trading at K55,000 ..fairly flat during the year reaffirming the fact that this spectacle may not be inciting investors to sell given shoprite's price but rather just collect dividends owed to them.
 Shop rite has always been a favourite retail stock of mine but given that over the recent short term it hasnt shown any decent growth and dividend payouts are risky I wouldnt consider it a buy right now.

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Lusaka Stock exchange update a Zanaco special

Thursday 12th April, 2012

DAILY COMMENTARY FOR WEDNESDAY 11th APRIL,2012

The index closed at 3,925.44 points ,down by 0.13% from yesterday's close of 3,930.54. A total of 892,753 shares were transacted in 33 trades worth K596 million. Price movements were recorded in ZAMEFA - (K93.00), ZAMBREW -K10.00 and FQMZ -(K8.00). Trading activity was recorded in CEC, NATBREW, CZ, ZANACO and ZANACO . The dual listed companies as at 15:00hrs (Zambian time) today traded at : FQMZ - 19.40 C$, SHOPRITE - 13,519 SACents, ZAMBEEF - 41.25 Pence, ZCCM-IH - 2.06 Euros.

I remember weeks back when the commission led an inquiry into the sale of zanaco I said if the Inquiry was unfruitful the share price of zanaco would bounce back to original levels as investors would have their confidence in the bank restored and fears of nationalisation could be averted.

My instinct still tells me that Zanaco shares are still grossly undervalued and at a price of K1200 which was K1080 during the inquiry and K1300 before the inquiry began is still to low.

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StanChart projects kwacha gain against dollar

By Kabanda Chulu
STANDARD Chartered Bank has projected that the kwacha will in the short term trade below K5, 100 against the US dollar due to expected inflows ahead of mineral royalty payments.

However, the bank warned that oil procurement related demand will continue to pose some pressures on the local currency, which has depreciated rapidly in the last six months and has been trading in the range of K5, 300 against the US dollar.

According to market data released by the bank, the kwacha closed last week on a firm note at K5, 250 -K5, 270 per US dollar.

"The market was even with enough inflows from the mines to meet demand mainly from the telecom and manufacturing sectors. The Interbank appears to have consolidated around K5, 250," it stated.

"The break lower is imminent with initial target of K5,220 below which could pave way for K5, 170, with key market movers remains mining inflows ahead of mineral royalty payments while oil related demand will continue to pose some pressures on the local unit."

Last week, Bank of Zambia attributed the depreciation of the kwacha to uncertainties associated with external factors relating to unfavourable global economic prospects.

"Developments in the euro zone crisis have triggered widespread concerns and uncertainty about the global economy amongst investors. Even though Greece has continued to make other progress towards resolving its sovereign debt issues, investors have remained cautious," stated BoZ's head of public relations, Kanguya Mayondi.

"In light of these developments, BoZ has provided liquidity support to the market amounting to US $132.5 million since the beginning of 2012. This action is aimed at dampening volatility in the exchange rate. However, it is expected that with the resolution of the euro debt crisis, global growth prospects may be rekindled and hence benefit risk aversion prone currencies including the kwacha."

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Recent Kwacha depreciation reviewed By Kampamba Shula

 By Kampamba Shula
The Zambian kwacha has been depreciating considerably over the last four months and there is plenty speculation and pointing of fingers as to what could be the cause. Some accusations of the current of government as being at fault in issuing incoherent statements may have some ground but I highly doubt that can waver the fundamentals.
A recent article by the daily mail highlights them here.
What could be the cause of the Kwacha depreciation?

Key fundamentals are the money supply which has remained fairly stable as we have not seen an increase in the sale of bonds and treasuries apart from the anticipated sovereign bond issue.
Domestic policy to lower interest rates may also attribute to the depreciation but I chose to overlook this since lags are usually involved.
Foreign currency reserves held by banks could also be a factor given some uncertainty and investors looking for a safe-haven.But again overlooking Fitch rating recent downgrade the fundamentals for doing business in Zambia remain solid.
Another possible cause could be a trade deficit,according to the last release of the data by the Zambia statistical office,Zambia recorded a trade surplus in the first 2 months of 2012 ruling out the possibility of national trade as the cause of deflation.
Central Statistics Reports
A phrase by Sherlock Homes says "After considering all alternatives ,whatever remains no matter how improbable is the answer"
In our case the what remains is that too much money was printed during the elections,it had a lag effect and this is the result..and people looking to change "mattress money" have been doing it now.

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Rebasing of the kwacha should be postponed ,urges Consumer Unity and Trust Society.

 By Gift Chanda
THE rebasing of the kwacha should be postponed to allow for more sensitisation, urges Consumer Unity and Trust Society.

CUTS international Zambia board chairperson Ambassador Love Mtesa yesterday observed that the time frame allocated for the rebasing of the kwacha or knocking out of three zero from the local currency was not enough.

"We are cognizant of the fact that the Bank of Zambia is in a hurry to finish this work, however, the time frame which is six months allocated for this mammoth task vis a vis sensitisation is too little," Ambassador Mtesa said.

"A massive sensitisation is paramount hence the need to postpone the launch."

Ambassador Mtesa said postponing the rebasing of the kwacha would give the government a sufficient window period for effective country wide sensitisation.

He said enough sensitisation before the new currency comes into effect mid this year was fundamental in avoiding rampant fraud and swindling activities during the transition period when consumers are not yet sure of fair pricing.

"The time frame that has been allocated for this process is not enough. We say this because when the members of parliament have been sensitised about it, it needs a bit of time for them to assimilate and understand the whole concept of rebasing," Ambassador Mtesa said.

"This is the first time Zambia is going to rebase her currency, as such there is great need for the Bank of Zambia to sensitise the members of the public and other stakeholders on the process before implementing it. This would help both BoZ and the stakeholders to reflect and understand the benefit that would come along rebasing and thereby spell over the doubts in many minds. As a consumer organisation, we realise that this process will adversely affect consumers on a number of fronts."

He proposed that the rebasing of the kwacha be delayed until the country ensures that all macro-economic variables are stable, including exchange rates.

"At the moment, the exchange rates in the financial markets are far from  stable as the kwacha is currently in a downward spiral and so before government rebases the kwacha, there is great need that this and other macro-economic variables are in a more predictable and stable state which is not the case at the moment. The local currency has since depreciated by over 10 per cent against major convertible currencies the lowest in more than two years trading at K5, 400 to one US dollar," said Ambassador Mtesa.

"The government is also yet to explain to the public its plan on how to handle the short term inflationary pressure that is likely to arise from the rebasing process through speculation and rounding off effects. It is most likely that prices for certain goods that are slightly less than a rounded kwacha figure will be rounded off cumulatively causing short term inflation. For instance, a retailer selling a good currently priced at K850 will have to adjust it to K0.85. This retailer is likely to round off this figure to K1 for accounting simplicity's sake but on an aggregate scale this will cause the general price level to rise. Hence, the need for government to set measures to cater for this inflationary bump and mitigate negative consumer effects."

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