2017 ECONOMIC FRONT REVISITED
ZAMBIA, a southern African landlocked country is endowed with rich natural resources and has potential for more investments and tourism attractions.
This follows Government’s tireless efforts in ensuring that more investors are attracted in the country while guaranteeing that Zambia was a safe destination for tourists.
However as we close the year 2017 we focus on some of the positives and slight negatives that characterised the year.
In June, prices of mealie meal, Zambia’s staple food, dropped, a situation which Millers Association of Zambia (MAZ) President, Andrew Chintala attributed to a successful consultative meeting the association had with President Lungu.
It was noted that a permanent solution had been found to reduce the commodity which from 2011 had increased from K33.00 to K100 and K200 in some parts of the country.
This sent ripple effects on the Copperbelt with prices of mealiemeal falling.
In some parts of the Copperbelt a 25kg bag of breakfast mealie-meal was selling at K73 while the same quantity of roller meal was going at K57.
A 10kg bag of breakfast mealie-meal was being sold at K35.
The drop in mealie meal prices was also attributed to the retail price of maize in the country which dropped from K120/25kg [K4 800/ton] to K73/25kg [K2 920/ton] for white maize, and from K90/25kg [K3 600/ton] to K67/25kg [K2 680/ton] for yellow (brown) maize.
The Copperbelt, Lusaka, Central Province and parts of Southern Province had all recorded a drop in the price of mealie-meal which Mr Chintala attributed to the country’s bumper crop yield of 3.6m tons.
The price drop meant that millers could buy maize at “reasonable prices” which benefit could then be passed on to consumers.
Accordingly the retail price of maize peaked in the past at K130/25kg [K5 200/ton] for white maize and K100/25kg [K4 000/ton] for yellow maize.
According to government sources, these prices prompted the state to intervene through a tripartite agreement involving millers, grain traders and the Food Reserve Agency (FRA).
In terms of the agreement, the FRA bought maize from grain dealers at K2 650/ton [K66.25/25kg] and sold it to millers for K2 2 000/ton [K55/25kg].
Government made up the difference with a 20% commoditybased subsidy to the millers.
While there was excitement regarding the fall in prices of mealie meal, a stand-off between Food Reserve Agency-FRA- and Zambia National Farmers UnionZNFU- over the floor price of a 50 Kilogram bag of white maize which was set at 60 Kwacha under the 2017 crop marketing exercise ensued.
Nonetheless, President Edgar Lungu emphasised that he would not want to intervene in the maize saga but would rather allow the market forces dictate the correct price and value of maize.
On the other hand agriculture permanent secretary, Julius Shawa threw weight behind the FRA’s decision to peg the price at K60 disagreeing that there is need to allow the agency to set realistic prices of the staple food while making profit.
ZNFU did not argue over the FRA’s unilateral decision and urged farmers to hold on to their crop or better still look for alternative buyers willing to give them a better return on their investment.
In 2016 the price of the staple food was pegged at K75.
Regarding Copper outputs, is was reported that the country’s 2017 output was expected to increase to between 800,000 and 850,000 tonnes due to stable power supply and higher copper prices from 774,290 tonnes in last year.
Mines minister Christopher Yaluma was recently quoted as saying Zambia’s copper production is next year likely to increase further to reach 1 million tonnes.
Accordingly, Zambia's mining sector will see solid growth between 2017 and 2021 following proposed changes to the country's regulatory environment.
According to focus economics, an economic forecast from the world’s leading economists, Zambia’s economy had a promising start while overseas sales of copper grew 25.2% in October over the preceding month, translating into a leap in metal export earnings and a substantial reduction in the trade deficit.
The country’s heavy debt burden continues to be a sticking point, however.
The IMF is awaiting further details on the government’s external borrowing plans before continuing discussions around a prospective support program, which it put on hold in August after the government unveiled large
In June, prices of mealie meal, Zambia’s staple food, dropped, a situation which Millers Association of Zambia (MAZ) President, Andrew Chintala attributed to a successful consultative meeting the association had with President Lungu.
borrowing plans that it deems would jeopardize debt sustainability.
On the local currency the Kwacha it broke the K9 mark and continued to appreciate against the US dollar and other convertible currencies with analysts projecting that it will remain strong.
The local currency has made dramatic gains, appreciating from K14 to US$1 at the end of 2015 to K8.7 against US$1.
The 2018 National budget which Finance Minister Felix Mutati unveiled in Parliament proposes to spend K71.6 billion or 25.9% of GDP.
In his Budget speech to Parliament, Mr Mutati said of this amount, K49 billion or 68.5 percent of the total budget will be financed by domestic revenues and K2.4 billion or 3.4 percent by grants from various co-operating partners. He said the balance of K20.1 billion or 28.1 percent of the budget would be financed through domestic and
external borrowing. And in a report dubbed “INCREASE IN GOVERNMENT SECURITIES TENDER
SIZES’ the Bank of Zambia announced that all investors in Government Securities would have auction adjusted upwards effective 13th December 2017.
The tender size for Treasury bills had been increased to K950 million from K900 million and the new auction size for Government bonds is K1, 650 million, up from K1, 000 million, per auction.
On Zambia’s economic growth, a report compiled by Focus Economics indicate that it is expected to accelerate next year on the back of strong agricultural and mining output, and higher investment.
A high debt burden poses downside risks to the outlook, however. panelists expect economic growth of 4.6% in 2018, which is unchanged from last month’s forecast, and 4.7% in 2019.
According to focus economics, an economic forecast from the world’s leading economists, Zambia’s economy had a promising start while overseas sales of copper grew 25.2% in October over the preceding month, translating into a leap in metal export earnings and a substantial reduction in the trade deficit.