ON SATURDAY, Minister of Finance Bwalya Ng’andu confirmed that Government has started re-engaging the International Monetary Fund (IMF) for a possible bailout package. He also confirmed that the IMF has agreed to bring back a resident representative to Zambia to help in the process of engagement. The previous envoy, Alfredo Baldini, was recalled at the end of August last year after protracted negotiations over a failed bailout.
Admittedly, the IMF and the World Bank are not the most popular institutions in Zambia. In fact, when the negotiations for a bailout collapsed, there are some among our people who welcomed the news.
These are the people who cite the IMF’s Structural Adjustment Programme (SAP) as having brought misery on the country. They also blame the IMF and World Bank for Zambia’s past debt which eventually led to foreign debt forgiveness in 2005. Oxfam, in its 1996 report titled Multilateral Debt: The Human Costs, accused the World Bank and the IMF of creating a “bizarre financial circus in which more and more aid was being recycled in the form of debt repayment while the debt stock was increasing” for poor countries like Zambia.
The debt forgiveness came at a cost. The country had to attain certain benchmarks as one of the Highly Indebted Poor Countries (HIPC) to qualify for debt forgiveness.
One of these conditions required privatising certain State-owned enterprises. A number of parastatals were privatised, including the units or divisions under the Zambia Consolidated Copper Mines (ZCCM), which was the goose laying the golden egg for the country. Most of the mining deals turned out to be disastrous. In fact, the degeneration of life on the Copperbelt, where most of the ZCCM units were located, was blamed on the privatisation of the mines.
Most of the mines were privatised under the first administration of the Movement for Multi-Party Democracy (MMD) of President Frederick Chiluba. However, HIPC was only attained in 2005, which was towards the end of his successor Levy Mwanawasa’s first term as President. Knowing how opposed the Zambian public was to further privatisation of the remaining parastatals, notably Zesco, Zamtel and Zanaco, Mr Mwanawasa sought a compromise with the IMF. In place of privatisation, he proposed commercialisation, which the IMF thankfully accepted. To date, Zesco remains a symbol of the country’s resistance to the IMF policies which some members of the public believe have been disastrous for the country’s socio-economic life.
In fact, this is the reason why some celebrated the news of the failed IMF bailout to Zambia because they thought the Bretton Woods institution will insist on the privatisation of Zesco or an astronomic hike in electricity tariffs.
You can, therefore, understand why the IMF is not wholly popular.
However, we need to understand the role of the IMF. This is a specialised agency under the United Nations which provides policy advice to countries in economic difficulties. It also helps to achieve macro-economic stability. With its own governing structure, it also provides routine economic surveillance of its member countries. In fact, it is the first institution that multinationals, investors and indeed donors rely on when it comes to assessing the economic performance of a country.
We know what the IMF’s position on Zambia’s debt is; it has expressed deep concern on public debt, which it believes is the main cause of the deterioration of the country’s economy. It believes that the debt, if not well-managed, will put the country in debt distress.
This is why engagement with the IMF is crucial.
Our external debt stood at US$10.23 as at June this year, while domestic debt was at K60.3 billion. In his budget address, Dr Ng’andu said as a key strategy to stimulate economic activity, he has increased the allocation towards dismantling of arrears to K2.3 billion in 2020 from K437 million in 2019. Further, Government will reduce borrowing from the domestic market to 1.1 percent of GDP from 1.4 percent of gross domestic product (GDP) in 2019.
While this is welcome, we also need to worry, as a country, about the external debt, whose interest payments have been escalating, causing a switch in expenditure from social protection while triggering accumulation of domestic arrears.
Why is the IMF bailout crucial? IMF loans are normally interest-free or low interest financing. Experts say the nation is currently entitled to a quota of US$1.3 billion as IMF. They believe that with a standby bailout package, Zambia can pay off the full amount of the US$750 million in 2022 and then also another US$562 of the US$1 billion Eurobonds in 2024. In the 2020 budget, Dr Ng’andu has allocated K636.0 towards redemption of the Eurobond.
Simply put, an IMF bailout will be a confidence vote for the country and will help in its economic growth recovery efforts.
However, having supported an IMF bailout, we do not believe that that alone will solve the country’s debt problem. We need to continue pursuing other avenues, including tight fiscal policies.

INCREASED investment in companies under the ZCCM-Investment Holding (IH) Group has boosted the holding’s financial portfolio, posting a profit of over K3 billion in assets.
The significant increase translates in a 30 percent growth, attributed to an increase in plant and equipment, investments in associate, inventories, trade and other receivables as well as held-to-maturity investment.https://epaper.daily-mail.co.zm/

Mineworkers Unions of Zambia (MUZ) president Joseph Chewe has urged government to prioritize the awarding of mining licenses on the gold deposits found in North-Western province to Zambians.

In an interview, Chewe said the country had long suffered with foreign investors who continued to externalize huge revenues from their mining operations to other countries.

“This country has learnt lessons. Look at the capital flight that is leaving the country all the proceeds go to (other) countries. I can tell you that, for example, Vedanta (Resources) is a family, even FQM (First Quantum Minerals) the biggest mines in North-Western (Province); they are a family. So, I think the challenge to us Zambians to rise to the occasion and start owning some of these mines either in partnerships or bringing in other partners to develop the gold deposits that have been found in North-Western,” Chewe said.

“Otherwise, we have the potential, though we may not reach there now, but I think the President (Edgar Lungu) must drive that one day, a Zambian should own a mine, which should be run as profitably and efficiently. So, I think the gold deposits in North-Western should be an eye-opener and I think the President should encourage Zambian ownership because there’s no money that is being left in the country. So, it will mean just a name having gold here in Zambia; beneficiaries are outsiders! Look at Switzerland; Switzerland is a country where billionaires are sitting and syphoning money there.”

He said Zambians had a successful trackrecord of managing mining companies, citing the old ZCCM as a success story.

“Yes, we may not have resources as a country, but I think we need to start somewhere. I can tell you that, currently, there are Zambians running KCM; you have seen how production is now going up. Even Mopani, the people that are actually doing the mines are Zambians, so, we have the capacity. What we just need is capital and also sustainability. We have run the mines before; ZCCM was one of the best companies in the world and foreigners destroyed it! So, we still have that capacity. We have the capacity, we have the brains,” argued Chewe.

But in a separate interview, Zambia Chamber of Mines president Goodwell Mateyo stressed that the challenge for locals to own mining companies lay mainly with the need to mobilize large capital investment.

“There is nothing wrong when equating Zambians from applying for mining licenses. But, of course, there is a challenge of mining being largely capital intensive and, therefore, what Zambians would need to be able to make that work is to have access to big fields of capital and finance because it is a highly capital intensive venture and it has very long time to profitability; that is the biggest obstacle into Zambians owning (mines), not to say that we can’t run or we can’t own mines, but Zambians are free to apply for mining licenses and a number of them are holders of mining licenses. But when it comes to developing them and working them, the biggest challenge is access to finance. Because, locally, we don’t have a sort of big pools of capital that will work a large mining enterprise endeavor for a period say, 15 to 20 years, from the time you start exploration to the time you actually start mining unless you can access it from abroad. That is the reason why Foreign Direct Investment (FDI) is still critical in the working of mines in Zambia,” said Mateyo.

https://www.africaintelligence.com/ama/exploration–production/2019/07/16/zccm-ih-to-move-into-manganese-mining-in-august,108365690-bre

At its Special Board Meeting held on 29 March 2019, the ZCCM Investments Holdings Plc (‘ZCCM-IH’) Board approved the incorporation of a mining operating Company. In line with one of its strategic objectives in mining value creation, ZCCM Investments Holdings Plc (‘ZCCM-IH’) wishes to announce the incorporation of Kabundi Resources Limited (‘KRL’) a wholly owned subsidiary. KRL is located in Chief Muchinda’s area in Serenje District, Central Province. KRL is a mine operating company whose main activities include mining, processing and marketing of manganese and other non-ferrous metals. KRL was registered on 8 May 2019.

The ZCCM-IH Board is confident that KRL will add value to the Company’s current mining portfolio and provide an opportunity for ZCCM-IH to expand its activities in the mining sector.

By Order of the Board
C Chabala
Company Secretary

Issued in Lusaka, Zambia on 28 June 2019

Lusaka Securities Exchange Sponsoring Broker
	T | +260-211-232456 E | advisory@sbz.com.zm W | www.sbz.com.zm Stockbrokers Zambia Limited (SBZ) is a founder member of the Lusaka Securities Exchange and is regulated by the Securities and Exchange Commission of Zambia

First Issued on 28 June 2019

MINING will for a very long time continue being part of Zambia’s economic development. There is abundant evidence of this right across the country.
What may not be in abundance, however, is information or plans on how best Zambia will manage this resource.
It is heartening though that State enterprises are earnestly taking a keen interest in being direct participants in this activity.
A case in point is the revelation by the Zambia Consolidated Copper Mines-Investments Holding (ZCCM-IH) that it plans to invest US$2.4 million in a manganese plant in Serenje district, Central Province.
According to ZCCM-IH, operations at the mine are set to start in the next two months. The mine has potential to produce about 20,000 tonnes of manganese per annum.
Kabundi Resources Limited, a subsidiary of ZCCM-IH, will oversee the management of the mine, which will create 300 jobs for the local people.
This decision is good news for the country as a whole, the people of Central Province, in general, and Serenje, in particular.
For a long time, the country’s major mining activities were confined to Copperbelt Province. This contributed to a massive rural–urban drift as citizens from various parts of the country flocked to the Copperbelt in search of jobs and business.
But today, mining in Zambia is becoming even more entrenched with a wide range of activities in virtually all of its 10 provinces: copper and cobalt in North-Western Province; manganese in Luapula and Central provinces, gold in Eastern Province, as well as gems and coal in Western and Southern provinces.
Of course, there are a lot more activities than these examples. The bottom line is that the mining activities are spreading.
Notably though, most of these mines are in private hands.
That is why it is heartening that ZCCM-IH, a firm with over 70 percent ownership by Government, is expanding its activities by investing in manganese mining in Serenje.
Zambia needs foreign investors in all sectors of the economy but the best investors should be the local ones, especially those who internalise most of their earnings.
ZCCM-IH is one of such local investors. It should, therefore, be encouraged to make the most of its vantage position to grow the sector for the good of Zambia.
Mining accounts for 12 percent of the country’s gross domestic product and about 70 percent of total export value.
The mining sector is, therefore, Government’s cash cow as well as a major employer with tens of thousands of jobs created directly and indirectly.
Despite the focus having been on copper and emeralds, there has always been this belief that the country also has very good potential for further discoveries.
ZCCM-IH has moved a step ahead by converting potential into reality by ensuring that mining is actualised, and more importantly at a comparatively massive scale.
By beginning operations through Kabundi Resources Limited, its subsidiary, ZCCM–IH has taken care of concerns that minerals are not bringing as much benefit as they should.
This is given that ZCCM-IH intends to diversify its portfolio by venturing into mining and manufacturing.
Zambia is endowed with so much mineral wealth that some of the minerals are now being mined by artisans.
This is what is happening to manganese deposits in Luapula as well as gold deposits in Luano, Central Province, Rufunsa in Lusaka Province and several parts of Eastern Province.
Zambia produces about 700 tonnes of amethyst annually. These precious stones are found in Mapatizya in Kalomo and Mumbwa-Namwala areas.
It is good that ZCCM-IH intends to explore for mineral wealth in Eastern Province besides buying gold from small-scale miners.
ZCCM-IH should not be a mere spectator in this sector, where foreign investors and illegal miners are cashing in.
With ZCCM-IH being proactive, there is hope that the country will benefit more from its mineral endowment.
Zambia should not be in financial challenges amidst plenty of natural and mineral wealth.
We hope that other local institutions or companies will emulate ZCCM-IH by taking stock of other natural resources such as timber, especially the much sought for mukula and fish, which are not benefitting the country sufficiently.
Zambia must have more of its own investors.