Zambia has a long history of mining and a large known resource base of copper, emeralds, and other deposits. It also has very good potential for further discoveries.  The sector is also a significant source of government revenue and formal employment, both directly and indirectly. Continuing to attract investment in the sector is crucial to the country’s growth since it constitutes 62% of foreign direct investment.

Given this rich endowment of natural resources, an array of stakeholders in Zambia, including investors, government agencies, and civil society organizations, have long questioned why minerals are not bringing as much benefit as they should.

“Zambia is rich in minerals but we haven’t fully managed to convert that wealth for the benefit of the people,” said Ina Ruthenberg, the World Bank’s Country Manager for Zambia. “We need to know where to improve and what changes to make so we can harness this wealth to benefit not only current, but also future generations of Zambians.”

This is why the World Bank chose Zambia as the first country to pilot The Mining Investment and Governance Review (MInGov), which collects and shares information on mining sector governance, its attractiveness to investors, and how it contributes to national development. The review, based on data from in-country interviews and desktop research, assesses sector performance from the perspective of three stakeholder groups—government, investors in the mining value chain, and civil society—and identifies gaps between declared and actual government policy and practice.

MInGov findings in Zambia highlight that the country is an attractive place for investment due to favorable geology, its long history of mining, its political stability, and a relatively favorable economic environment. Zambia is also safe and secure—since the country’s independence in 1964 there has never been a war.

But these positive aspects are overshadowed by a lack of transparency and accountability regarding revenue management, a lack of consistency surrounding fiscal policy, and lack of support for diversifying the economy and leveraging of infrastructure for the general population.

“We need to stick to the rules of the game in the long-term to foster a stable investment environment, while simultaneously diversifying our economy so we are not overly dependent on mining,” said Paul Chanda, Zambia’s Permanent Secretary for the Ministry of Mines.

Throughout the survey, key stakeholders noted the need for the mining industry to more effectively use local products and services. Currently there is no national supplier development policy for the industry. Consequently, 95% of goods and services used by the mining industry are imported.

“MInGov has pointed out that local supplier development policy is an area where stakeholder agreement is a priority and ripe for policy action,” said Martin Lokanc, Senior Mining Specialist at the World Bank Group. “We’re pleased the Zambian government is in the process of preparing regulations in this important area.”

Increased openness and transparency is another priority issue that government, civil society, and industry agree on. More specifically, stakeholders agreed on a perceived lack of independence of the licensing authorities. On this front, the Zambian government is making progress through an updated Mines and Minerals Act (2015) and implementation of the Extractive Industries Transparency Initiative (EITI), which they began implementing in 2009 and advanced to compliant status in 2012.

A key challenge for the Zambian government will be to fully integrate the mineral sector into national development plans.

“Zambia has a national development plan, but no mining sector development plan,” said Ruthenberg. “With so many different expectations for mining—as shown through the different priorities areas identified in MInGov—a sector development strategy should be a high priority.”

There are also concerns about social and environmental issues surrounding the mining sector. Zambia’s regulations in this area are a good starting point, but regulatory and monitoring agencies must be strengthened to conduct more meaningful consultation among stakeholders on issues affecting the sector.

The MInGov study in Zambia was made possible by support from the Extractive Industries—Technical Advisory Facility (EI-TAF) and the German Development Cooperation. Moving forward, MInGov studies will be developed in Botswana, the Democratic Republic of Congo (DRC), Mozambique, Peru, Ghana, and Kenya. Results will be published later this year. The complete report for MInGov Zambia and information about the project can be found at: www.worldbank.org/mingov

Source: World Bank

Two countries – SA and Mozambique – have registered “a noteworthy decline” in overall score in the latest Global Real Estate Transparency Index 2016.

Botswana‚ Zambia and Ethiopia fare better‚ coming in among the top improvers in the sub-Saharan Africa region‚ according to the survey by JLL‚ which tracks the countries that provide the most favourable environments for investors and developers.

Other countries in the region commented on for making “reasonable progress in transparency” are Nigeria‚ Angola and Ghana.

“Advances in the Market Fundamentals‚ Performance Measurement and Governance of Listed Vehicles sub-indices have supported the overall regional improvement. Despite these advances‚ the region has crucially also seen a slight deterioration in the sub-indices scores for the Regulatory and Legal Environment, and Transaction Process sub-indices‚ as development in improving the legislative and operating environment appears to have slowed in several markets‚ with two countries – South Africa and Mozambique – registering a noteworthy decline in overall score‚” the report states.

SA also scored lower on another international report released recently: the Fragile States Index. Released by the Fund for Peace‚ the 2016 report placed SA on a “warning”‚ amid concerns about its weakening economy and surging public dissatisfaction.

For the 2016 Global Real Estate Transparency Index‚ SA remains sub-Saharan Africa’s most transparent market‚ supported by an active listed sector. JLL notes: “It is the only country from the continent to feature in the Transparent category‚ although it has struggled to maintain its global ranking in the last couple of years.”

Weakening economic conditions and an outflow of capital are cited as a concern in a separate report by JLL on Johannesburg. It states: “With a weakening rand most likely to put upward pressure on inflation‚ substantial interest rate increases are highly likely in the short to medium term. Combined with a slower office market‚ investor confidence is likely to decline in the short to medium term (six months to two years). The hike in inflation forewarns of a rise in building costs while higher interest rates point to rising lending costs‚ both dampening supply-side considerations.

“The currency depreciation is also telling of an outflow of capital from SA which is discouraging for the secondary investment market. Capitalisation rates are expected to be on the rise‚ reducing property values and contributing to a foreseeable decline in property values.”

In addition to SA‚ Botswana and Zambia round out the three most transparent markets in the region‚ with Zambia moving slightly ahead of Mauritius to take third place this year. Kenya has maintained its position as the only other sub-Saharan Africa market in the Semi-Transparent category.

Three of the region’s markets are in the bottom 10 globally – Mozambique‚ new entrant Ivory Coast and Senegal.

“Renewed political instability and resulting policy uncertainty has negatively affected Mozambique’s market transparency and resulted in a decline in its index score‚” the report notes.

“New entrants Tanzania and Ivory Coast join (the index) in the ‘Opaque’ tier‚ reflecting the early stage of formal real estate market development in these rapidly-growing economies.

“While progress across the region has been variable and generally slower than in 2014‚ three of the region’s markets are among the global top 10 improvers. Botswana is the most improved market in the region and among the top five improvers globally‚ with advances in the Market Fundamentals‚ Governance of Listed Vehicles, and Regulatory and Legal sub-indices. Meanwhile‚ Zambia has entered the Semi-Transparent category for the first time‚ while Ethiopia is also among the top 10 global improvers but from a very low base‚ with the country remaining firmly in the Opaque category.”

Globally‚ the UK‚ Australia‚ Canada and the US hold the top positions. Germany has joined the Highly Transparent group for the first time‚ in part due to growth in its listed sector‚ while France has consolidated its position among the top tier.

In addition‚ a further 20 countries have been identified as Transparent and 14 of these are in Europe. Poland is now close to joining the Highly Transparent group with operating conditions similar to those in its Western European neighbours.

Asia Pacific has been the most consistently improving region‚ notably in Singapore‚ Hong Kong‚ Taiwan and Japan.

The sub-Saharan Africa region overall has a long way to go to improve its status. The Global Real Estate Transparency Index report noted: “While tangible improvements in transparency are being made‚ sub-Saharan Africa is still some distance from competing equally with its regional counterparts and sizeable efforts will be needed to close the gap with other global regions.”

The index quantifies transparency based on 139 variables relating to transaction processes‚ regulatory and legal frameworks‚ corporate governance‚ performance measurement, and data availability. Higher real estate transparency is associated with stronger investor and corporate real estate activity.

The world’s 10 most transparent markets account for 75% of global direct investment into commercial real estate and are home to nearly half of the world’s 2‚000 largest public companies‚ JLL says.

Source: BD Live

TRYNESS TEMBO, Lusaka
COPPER price on Friday hit its third week highs on the international market stimulated by possibility of monetary policy easing in Britain and China.

Last week, Bank of England governor Mark Carney said the central bank would probably need to pump more stimulus into Britain’s economy over the summer after the shock of last week’s decision by voters to leave the European Union.

The commodity, which is Zambia’s top export, has gained over seven percent in the past three weeks.

According to Reuters, copper was trading up 0.2 percentage point at US$4,855 a tonne.

“London copper was on track on Friday for a third week of gains as expectations of monetary stimulus and lower interest rates underpinned the market, although gains were capped by concerns over growth in top consumer China,” Reuters reports.

Three-month copper on the London Metal Exchange has gained over seven percent in the past three weeks.

Commenting on the development, Singapore’s United Overseas Bank analyst Alan Liew said, “We had Brexit and there is market expectations of interest rates to remain low. It’s good for the commodities such as copper and zinc.”

Meanwhile, prices in minor metal cobalt climbed 99.3 percent representing a 10 percent increase over the last week, because of supply problems combined with production cutbacks.

The highest grade of cobalt, which is 99.8 percent, rose to around US$15 and US$17 a pound versus US$15 and US$16 a pound last week. Cobalt for a battery which is 99.3 climbed to about US$14.50 and US$16.50 a pound, from US$14 and US$15 a pound.

On Zinc, prices on Friday climbed to over one-year high, rising for a fourth straight session on expectations of shortages .The price increased by 1.1 percent to trade at US$2,128 a tonne the highest since June, 2015.

Expectations of potential shortages have fuelled buying in zinc but an inventory overhang means the metal is readily available for consumers.

Source: The Daily Mail

GOVERNMENT is in the process of developing a national industrial policy aimed at promoting manufacturing to create jobs for the people.

Minister of Commerce, Trade and Industry Margaret Mwanakatwe said during a business forum in Ndola yesterday that Government has started implementing a number of initiatives in the national industrial policy.

She said Government has availed K220 million through the Citizens Economic Empowerment Commission to facilitate the implementation of the policy.

Mrs Mwanakatwe also said there is need to scale up the local processing of goods and value addition to agricultural products so that Zambia can start exporting high value finished products.

“Engaging in value addition and processing of our agricultural products will enable us as a country to reduce dependency on export of copper ore and primary agricultural products, which leaves us vulnerable in most cases to external shocks,” Mrs Mwanakatwe said.
MUBANGA NONDO
Ndola

Source: The Daily Mail

Zambia’s kwacha rose to a near six-week 6 high against the dollar on Wednesday, after companies exchanged greenbacks for the local currency to meet quarterly tax payments and the copper price firmed.

The metal’s price hit an 8-week high with investors betting on more global stimulus measures after Britain’s shock vote to leave the European Union, extending gains for Africa’s No. 2 copper producer’s currency.

The kwacha reached a session high of 10.2100 per dollar before pulling back to 10.4000 by 0814 GMT in volatile trade, but was still up 3.17 percent from Tuesday’s close.

Traders said company tax was due on July 14.

“Firms are buying kwacha to comply with quarterly tax obligations on top of the usual salary payments at month-end,” said NKC Economics southern Africa analyst Irmgard Erasmus.

The kwacha was also supported by the copper price that was more resilient to the results of the Brexit vote than expected, said Erasmus.
Some traders said the kwacha was also buoyed by a shortage of the local currency.

“Apart from dollar conversions by companies preparing to pay month-end obligations, the kwacha is also getting support from the central bank’s open market operations which entail reducing the amount of kwacha in circulation,” independent financial analyst Maambo Hamaundu said.

Source: The Guardian Nigeria