COMMERCE GAZETTE
P. O. Box 36607 Lusaka - Zambia Tel: +260 211 292 046 Cell: +260 977 872427 +260 955 769767 E-mail: commercegazette@yahoo.com Web: www.commercegazette.ucoz.com
Contents
Bruce was appointed Managing Director of Zanaco in January 201 He had previously served as Board Chairman for the period 201 till 2013. He has over 35 year`s experience in Retail and Wholesa Banking. Prior to taking up his role at Zanaco he had responsibili for Rabo Developments retail bank investments throughout su Saharan Africa and Latin America.
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REGULARS
On the cover
Zambia’s vice president, Dr Guy Scott with UN resident coordinator and UNDP resident representative, Janet Rogan
03 04 06 14 16 17 20 21 22 22
Editorial Appointments Spotlight on: Job well done - Navi Corporate Eye: LS-MFEZ The Industry hub of tomorrow Economic indicators Legal News Africa Business News International Business News Jokes Quoted
NOTEBOOK
07 Natsave using technology to work more effectively 08 Finance Bank & ZRA unveil e-payment tax partnership 08 MeTL Group’s US$59 million investment brings hopes of employment to Kabwe 10 High levels of inequality persist in Zambia - Rogan 11 While the packaging is weak the message is good - Kasonde
Editorial Editor:
Sukizi Sichinga
Advertising & Publicity: Creative Group
Layout, Design & Photography: Mutale Chanda Lupili
Contributors:
Dameseke K. Chibale Jones Kabengeke Charity Chaaba Peter Siluwamba
Printers:
Mission Press
The informal sector attracts about 80% of Zambia’s labour force, its importance to the Zambian economy comes second only to agriculture where about 61% of Zambians live and rely on rain-fed farming as their primary source of income. With most of the world’s fastest growing economies in sub-Saharan Africa, couple with this is a growing middle class of local and African consumers, both of these demographics represent an expanding market for Zambian goods and services. But, Zambia will not be able to exploit these enormous growth opportunities without investing in its local entrepreneurs in the informal sector, most of who are youth and women earning a living through micro small medium enterprises (MSME). An example of these entrepreneurs is Justine Nkonge and Andrew Chihungu that have ventured into manufacturing, a sector that is expected to grow by 4.3% this year. They represent the new face of economic growth that can take advantage of the expanding markets. But their success cannot happen in a vacuum, it needs to be harnessed in the same way South Africa, the US and China have assisted their SMEs in trade and export sales across Africa. Last year, the government allocated K107 million to the Development Bank of Zambia to support the financing needs of industry with focus on SME. This is a beginning but SMEs need more than that. Over the next five years, government should commit more cheap low-interest financial support, so that they can attract more private investment in the SME sector. Growing SME’s is not about overnight solutions or harp-hazard one-off incentives, but is about long-term collaborative efforts.
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FEATURES
06 Millenium Challenge Account 08 ZRA must pay outstanding input VAT refund - Chamber 10 Reports have a rather negligible impact on reality and solutions - Scott 10 Government focused on improving labour’s Long-term prospects - Shamenda 11 Pre-paid Water Meters: Giving Power to Customers 11 Cash transfers are helping people out of extreme poverty 12 EFC edges up entrepreneurs 13 Budget policy aims to make development legally binding 13 LS-MFEZ The Industry hub of tomorrow 18 Justine Nkonge ventures from accountancy to metal crafting 19 Kamwala South designer launches luxury shoe line 19 A growing company - Sikale Wood Manufacturers
For Justine and Andrew’s venture to become competitive their business relationships must evolve to include more meaningful and mutually beneficial partnerships. Government’s support must come through commitment and enduring policies that promote true skills advancement and trading opportunities. Entrepreneurs should have seamless assistance that will lead to increased trade and direct linkages between their businesses and larger trading companies in their sector and with foreign investors whose businesses are export driven. Government must lead in matchmaking, with an eye on increasing Zambian exports. In this vain, government should be more proactive and facilitate a nationwide forum, held annually if possible, between SME’s, financial institutions, investors and exporters to give all parties a chance to discuss what is needed on their sides to move our economic growth forward. Among the institutions that have assisted SME’s are National Savings and Credit Bank, and the micro lending institution Entrepreneurs Financial Centre. Their commitment to financing SME’s is unmatched and their operational growth is celebrated, as they will empower more entrepreneurs. Government wants more job opportunities, through innovation endeavours like the Lusaka-South Multi-facility Economic Zones the opportunity for increased partnership between these investors and local businesses should be sought to help bring about an evolution of Zambia’s SMEs. Good reading.
Commerce Gazette is published every other month by Creative Group Limited. P. O. Box 36607 Lusaka - Zambia. Conditions of sale and supply: Commerce Gazette shall not, without written consent of the publisher first given, be lent, resold, hired out, or otherwise disposed of by way of trade except at the full retail price of K 10.00 and it shall not be lent, resold, hired out or otherwise disposed of in a mutilated condition or in any unauthorized cover, by way of trade or affixed to or as part of any publication or advertising, literary or pictorial matter whatsoever.
Commerce Gazette 03 SME Special Jubilee Edition 2014
Appointments Who: Andréanne Ratté New gig: Chief Executive Officer, Entrepreneur Financial Centre (EFC), Zambia Old gig: Credit Advisor for the Développement international Desjardins, Canada What’s her new job all about?
As CEO, Andréanne Ratté is responsible for overseeing overall activities of EFC in Zambia. In 2013 EFC Zambia realized annual profits of about ZMW 4.2 million increasing the total corporate earnings by 65 percent from 2012 and total assets in excess of ZMW 100 million. EFC has more than 250 employees, 5 branches in Lusaka and single branches in Chipata and Kitwe which generated over ZMW 85.5 million in outstanding loans last year.
Prior experience
Andréanne has over 28 years experience with the Desjardins Group which is the largest integrated financial cooperative and the sixth largest financial institution in Canada. Over the years, Ratté has acquired vast experience and expertise in the area of credit and savings management as well as monitoring of banking operations and implementation of efficient operational process for achievement of set goals. She has in the past, worked as a high level manager, supervising more than 100 employees and managers in area of business development. Andréanne joined Développement International Desjardins in April 2011 to support the credit department of la Fédération Le Levier in Haiti. By May 2013 she had worked her way up to credit advisor responsible for developing instruments and collaborating in the implementation of services related to risk, performance, marketing, information management as well as transaction systems in Tanzania and Zambia’ EFC’.
Professional Qualification
Andréanne grew up in Québec City and graduated from Université du Québec in 2001. She holds a University diploma in Administration and Commercial Credit.
What is her area of priority?
Andréanne’s plan is to share her vast experience and expertise with the local staff at EFC Zambia’ operations and also the local entrepreneurs, in order to build capacity, enhance the management style and help EFC Zambia evolve and continue to grow organically to achieve its goals and grow its profitability. Looking at the upcoming five-year plan that comes to effect in 2015, she plans to grow the company’s branches annually so that EFC Zambia’ growing customer base can gain access to its services across the country beginning with the provisional districts, such as Ndola on the Copperbelt province.
Interesting tidbit:
Andréanne is an active person who enjoys outdoor activities and travels. She is particularly enthused by Africa and sees herself retiring on the continent. Between 2009 and 2013 she has visited Tanzania and Burkina Faso in Africa and Germany, France, Malta, Mexico, Nepal, Peru and Australia. Andréanne is married and resides with her husband in Zambia. She has two grown children and a grandchild in Canada, who is planning to visit her in Lusaka soon.
Who: Charles Kapoma Nakhoze New gig: Managing director, ZSIC General Insurance Limited Old gig: Chief Executive Officer, African Grey Insurance Limited Prior experience
Nakhoze has extensive experience and an established track record of over twenty-five years in general insurance. His appoint at ZSIC General Insurance brings him back full circle to the company where his professional career in the insurance industry began. While with ZSIC, Nakhoze moved through several assignments and he gained invaluable experience working in diverse positions including in Sales, Fire and Accident, Claims and Branch operations. Nakhoze pushed himself to excel and over the years he built his reputation in the insurance industry holding the post of general manager of business development with ZIGI Insurance and operations manager with NICO Insurance. Among the high points of his profession was when he co-founded Liberty Insurance Brokers where he served its first chief executive officer.
Professional Qualification
Nakhoze holds a master of business administration degree; a bachelor of arts (Hons) degree in Banking, Insurance and Risk Management; and is an Associate of the Chartered Insurance Institute (ACII).
Who: Andrew Kapula New gig: Managing director, CEC Liquid Telecom Old gig: Has worked within CEC management including serving as a board member What’s his new job all about?
Kapula will direct the CEC Liquid Telecom’s continued expansion of its fibre and wireless backbone infrastructure where no fixed network has existed before. Liquid Telecom supplies wholesale fibre optic, satellite and connectivity services in Africa. Its customers include some of Africa’s largest mobile network operators, ISPs and financial institutions. In Zambia CEC Liquid Telecom operates in all ten provinces offering wholesale broadband connectivity telecommunications service, both at national level and within the region. CEC Liquid Telecom has built the largest single fibre network with more than 1200km laid across the country with customers from all sectors.
Prior experience
Having served on the board of CEC Liquid Telecom since 2011, Kapula is no stranger to the company where he has worked for more than 18 years since joining the company in 1995. He has vast experience in Information and Communication Technologies. Among the notable contributions he has made during his service with the company is his work with the team that designed and built CEC’s fibre network, which runs alongside its power network. Among the high points of his profession was when he co-founded Liberty Insurance Brokers where he served as chief executive officer.
Professional Qualification
Andrew holds a degree in Electronics and Telecommunications Engineering and a master’s in Computing Systems Design.
Commenting on his priority task as M.D.
Andrew says, ‘It’s great to be leading the team in Zambia and we will be working extremely hard to increase our market share, penetrate new markets and continue to provide fast broadband as well as outstanding customer service’. In 2014, CEC will invest more than US$15m to make fibre-based broadband more extensively available to all Zambians using ‘GPON’ fibre technology. This initiative has already extended the availability of fibre to a wider number of residential, commercial and business premises. The first area where GPON has been deployed is in the Rhodes Park area of Lusaka.
04 Commerce Gazette SME Special Jubilee Edition 2014
Pamela told Commerce Gazette that the consequence of the infrastructure deficit has meant that, people without water-borne sanitation have had to rely on pit latrines, most of which are not properly designed and therefore result in the good limestone aquifers of groundwater becoming contaminated, primarily impacting the shallow wells used for drinking water by people without access to treated water supply. All of these things have contribute to a high prevalence and incidence of water-borne disease, which is exacerbated by widespread flooding resulting from an inadequately drainage system. She said that the city’s residents and businesses lose precious time needed for productivity due to water supply shortages, leakages and delays. The LWSSD project, Pamela said is government’s solution to addressing these challenges and exploiting the opportunities in the water and sanitation sector that will lead to long-term sustainability of the entities responsible for these operations. To the end, on 10 May 2012, government signed a five-year $354.8 million compact with the MCC which will have a big impact on the city, and help ensure that the water, sanitation and drainage infrastructure systems continue to grow and develop. Pamela is the woman with the huge task of seeing that the project succeeds. The LWSSD project will be the single largest investment in the water sector in Zambia since independence in 1964. This article profiles Pamela in her role as CEO and how she oversees U.S. foreign assistance channeled from MCC, a US government agency, into MCA-Zambia, a local company, where she is responsible for the day-to-day operations of the project. Before joining MCA-Zambia, Pamela spent 17 years working at the Ministry of Finance. From 2009 until 2012, she was seconded as the deputy national coordinator and economist for the unit within the Ministry to coordinate the development of an investment programme, or compact, to be financed by MCC. She was part of the core unit that initiated the compact development process that eventually saw the LWSSD project approved for implementation.
It is a huge project and it has to be implemented in a 5 year ‘period. One special feature of this program is that you can’t extend
the completion date and once it elapses the US treasury will not released any more money to Zambia even if work is outstanding. The timeframe started ticking on the 15 November 2013 and come November 2018 MCA-Zambia will be out of business, Pamela says.
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As MCA Zambia CEO Pamela is responsible for the LWSSD project and must ensure its successful from beginning to end. She must make sure that the designs, development and implementation are carried out on budget and within the time scope of the end dated. Among the many responsibilities that she has to carry out, re-enfocing project ownership by Zambia stands highest among them. This simply means that MCA Zambia must help build local capacity of Lusaka Water and Sewerage Company (LWSC) and Lusaka City Council’s (LCC) who were identified as implementing partners and whose roles and responsibilities are central to the completion and sustainability of the projects. These two institutions must be able to manage the water and sanitation infrastructure, and the drainage systems profitably in the foreseeable future for the benefit of the city’s residence.
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art one of our interview with Pamela Kasese Bwalya, CEO of Millennium Challenge Account (MCA) – Zambia, in the Women’s Special issue of Commerce Gazette, explained the genesis of the Millennium Challenge Corporation’s (MCC)support to the Zambian government’s Lusaka Water Supply, Sanitation and Drainage (LWSSD) project.
The article also examined the historical basis of why governments and the utility companies failed to invest in the essential infrastructure of water and sanitation for over 30 years. This failure resulted in the water and sanitation system’s core infrastructure assets becoming, dilapidated and unable to meet demand levels that have swelled from catering for approximately 134,000 people since 1954 to having to meet the needs of 2.3 million people now residing in the capital city, Lusaka.
MCA Zambia must provide technical assistance in the area of environmental management and monitoring. It must ensure social and gender inclusion by making sure that once the infrastructure has been upgraded it is affordable to customers from peri-urban areas as well as, to the poor and vulnerable populations. Discussing how the project is funded Pamela says MCC can only release money to Zambia based on it attaining certain yardsticks. These include Zambia’s commitment to good governance particularly the control of corruption and the upholding of democratic values. She says that MCC approaches the funding that is given as a grant from a business prospective, where it expects that every coin given is accounted for and gives the best return to American taxpayers who entrust their government with the money for use in the development of poor countries. Governments that rule justly, invest in their people through health and education, and other social sectors and promote economic freedom receive funding annually as long as they maintain the MCC eligibility criteria, and are compliant with the conditions of funding during the lifespan
Opinion
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Navi - Job Well Done
he reason why the name of Navi Pillay is on everyone’s lips these days is because she symbolizes a leadership that is selfless, fearless and that is working whole-heartedly for the human good. As of September 2014, Pillay will have served six years in the position of U.N. high commissioner for Human Rights and her tenure will be completed. Yet many people don’t want to see it end.
Very few ‘ordinary’ men and women who have had the good fortune to observe Navi Pillay carry out her duties, know that she has taken on giant abusers looked them in the eye and appealed to them to do the right thing. Navi Pillay has shown unwavering commitment in defending the most vulnerable people in the world. She has castigated all offenders in equal measure and has done so without becoming part of the political scene, a conundrum many envoys find themselves in as they walk the thin line between getting justice for the vulnerable and confronting the all powerful. For Pillay speaking the truth against human right violation is not a piecemeal nor is it a hard choice, it is a reality that must be confronted and corrected. For her it is obvious that there is no political correctness when addressing injustice, only truth. Governments whose human rights abuses she has spoken against will take solace in knowing that Navi Pillay no longer has the mantle of the UN to wield against them. Their corrosive behaviour against
06 Commerce Gazette SME Special Jubilee Edition 2014
their perceived opponents may become much less visible without Pillay at the UN. Her outrage that war crimes and crimes against humanity have become common place has emboldened her ‘to speak truth to power; to confront privilege and entrenched hierarchy with an unshakeable belief in human dignity, equality and freedom,’ Pillay says. ‘There is a road to perpetration of human rights violations. And hate speech – particularly by political leaders – is on that road.’ No other UN high commissioner for Human Rights of recent times has left an impression quite like Pillay. In her final remarks to the UN Security Council, Pillay lays the responsibility for the failure to keep world peace and harmony squarely where it belongs, with them. ‘There has not always been a firm and principled decision by [Council] members to put an end to crises. Short-term geopolitical considerations and national interest, narrowly defined, have repeatedly taken precedence over intolerable human suffering and grave breaches of – and long-term threats to – international peace and security. I firmly believe that greater responsiveness by this Council would have saved hundreds of thousands of lives.’ Bidding farewell Pillay says ‘It has been an honour to serve’, in reality, her popularity shows that the world was better served with the likes of Niva Pillay at the UN.
Natsave using technology to work more effectively
Cephas Chabu, managing director, National Savings and Credit Bank, (Natsave) shakes hands with Venkatramana Gosavi, Infosys vice president and regional head after signing the software contract.
Venkatramana Gosavi, Infosys vice president signing the contract for the procurement of a new core-banking software Cephas Chabu addressing the press
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ince the millennium, technology has sparked the growth of many economies. Aware of the need for efficiency to serve its growing customer list and keep ahead of the competition, the National Savings and Credit Bank, (Natsave), marked another milestone in its operations when its managing director, Cephas Chabu signed a contract with Infosys limited on the procurement of a new core-banking software.
‘The software will increase the level of financial inclusion which is the bank’s main mandate, especially for the marginalized rural population.’
Natsave is being equipped with a robust and modern IT system which will create a positive impact on product innovation and transform the bank into a financial institution that will not only meet the current needs of its customers but also their future needs.
Natsave is helping many people and the new software will improve information for everyone and increase performance for the staff.
To make sure that Natsave was acquiring the top of the line software, it under took a vigorous and transparent procurement process that started in February 2013 that saw a combination of fifteen local and international companies submit expressions of interest under the International Competitive Bidding Process. The bidders went through a five-phase evaluation process that involved preliminary, technical, financial, system demonstration and due diligence or post qualification and finally negotiation process. At the conclusion of the tender process Infosys Limited emerged as the most competitive bidder. Celebrating the momentous occasion that will change the operations of Natsave, Chabu - the bank’s chief executive officer since 2011, says the software contract is enormously important to Natsave, as it shows the great infrastructure investment the bank is making. This demonstrates Natsave’s growing business commitment to national development. Chabu recognized government’s assistance through the Ministry of Finance for recapitalizing the bank through fresh equity of K60 million, with an additional K50 million pledged before September 2014 quarter-end. ‘It is with this injection of capital that we are able to procure this new IT system. Negotiations have been successfully concluded with Infosys Limited and we have agreed to sign the contract for the supply and implementation of the core-banking software at a total cost of US$2,650 million.
Infosys vice president and regional head, Venkatramana Gosavi paid tribute to Natsave for its policy of financial inclusion saying it would assist Zambia economically.
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Growing the economy The software will surely enhance the operations of Natsave’s various tailor made products that are aimed at benefiting its customers’ diverse needs. Natsave’s increasing role in banking, is relevant to Zambia’s economic prospects and presents a unique presence committed to the communities in which it operates. More than any other bank Natsave, a state owned bank, specializes in local customers and local business needs. Its experience with its customers helps it develop local-made banking solutions. The software will also have a positive performance effect on the numerous partnership agreements that Natsave has entered into with both private and public sector institutions, aimed at enhancing access to financing. Among the agreements enter into, is the 2012 Memorandum of Understanding between NATSAVE and the Zambia Chamber of Small and Medium Business Associations (ZCSMBA), a private sector membership driven organization that has increased the uptake of SME loans. SMEs are among Natsave most important client base. These businesses need to be served and developed as they are key to the economic development of the country. They are a major source of employment for a huge section of the population.
Commerce Gazette 07 SME Special Jubilee Edition 2014
ZRA must pay T
he Chamber of Mines recently released a statement stating that it was surprised by media reports saying it has reached an agreement with the Zambia Revenue Authority to resolve the non-payment of ‘input’ value added tax (VAT) to exporters. Referring to the issue of the repayment of the input VAT to exporters as ‘contentious’ the Chamber dismissed that it had reached any agreement with Zambia Revenue Authority and ‘regretted the cynical and gross misrepresentation being perpetuated that the issue of VAT refunds only applies to the mining industry’. ‘It is incorrect to characterize the issue of VAT refunds as an issue for the mines alone. Zambia Revenue Authority has been withholding refunds for all exporters, as evidenced by a letter from the Zambia Chamber of Commerce and Industry to the minister of Finance. This issue therefore concerns the entire economy. ‘The Chamber recognizes that a number of other important sectors such as agriculture and manufacturing have been adversely affected by the current requirements by ZRA under Rule 18(1)(B).’ To try and resolve the impasse, the Chamber said its finance committee had attended a meeting to discuss its outstanding VAT refunds which has accumulated to over US$600 million with Zambia Revenue Authority’s senior management that included the commissioner general Berlin Msiska. The meeting also discussed the value added tax rules of 1997, Rule No 18(1) that has never been fully enforced due to the impracticalities of doing so, the Chamber said. ‘However in 2013, the Zambia Revenue Authority began to enforce this rule creating difficulties for exporters to reclaim their input VAT.’
Maureen J Dlamini CEO, Chamber of Mines Zambia
As a way of resolving these difficulties the Chamber proposed to the Zambia Revenue Authority that the requirement that exporters of goods and services should submit documents from importing countries be amended because shipping inspection verified at the Zambian port of exit, through their Asycuda system and accompanying documents were sufficient proof to demonstrate that an export of goods and services has taken place. The Chamber says Zambia Revenue Authority’s assertion that it cannot resolve the input VAT refund dispute because they were in court with some Chamber members was an irrelevant argument as the issues were ‘separate’ and should be dealt independently from each other. ‘It further is of the view that the cases in court relating to Rule 18 will automatically be resolved once the necessary amendment to the rule is enacted,’ a point the Chamber said it has been making to all relevant authorities including, as part of its submission on the mining sector national budget proposals for 2015 and also the 2015-2017 medium expenditure framework.
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Zero rating of exports is not a tax incentive and is applicable across many countries. It is designed to promote the growth of export earnings through competitive pricing in the international market,’ the Chamber said, adding that ignoring this obligation ‘will render Zambian products uncompetitive.
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The Chamber complained that the non-refund of US$600 million has impacted both on the mining companies and the ancillary industries. It has caused liquidity problems resulting in mining companies unable or delaying payments to suppliers and contractors who are in turn having problems procuring their imports. Some companies also have difficulties funding employee salaries and worse still others have slowed down or completely stopped investment of capital expenditure and improvement on projects, the Chamber said.
MeTL Group’s US$59 million investment brings hopes of
employment to Kabwe Finance Bank & ZRA unveil e-payment tax partnership
Helen Lunda executive director, Corporate, Retail Banking and Marketing - FBZ , Berlin Msiska , ZRA commissioner general, Barkat Ali FBZ MD and Raphael Kamoto, commissioner general Malawi Revenue Authority
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inance Bank customers can now access their Zambia Revenue Authority (ZRA) accounts through its online e-payment system, making it the first bank to launch the domestic taxes solution using its internet and automated teller machine (ATM) channels.
property transfer tax, withholding tax, presumptive tax, mineral royalty tax, pay as you earn and many more other services related to domestic taxes, electronically using the web portal.
‘The on-going efforts ZRA is making to modernise it operations is a way of simplifying tax obligation payment for taxpayers to make compliance easier. It also limits faceto-face contact in the customs clearance process and in turn mitigate opportunities for corruption. This obviously is expected to increase government revenue and ultimately grow the development agenda of government Managing director and chief executive officer of Finance for the benefit of all Zambians,’ Msiska said. Bank Barkat Ali spoke of the importance of the occasion which will benefit customers by allowing for on-line real ‘The current wave of innovation at the Zambia Revenue time payments for taxes and reducing the down time Authority is anchored on implementation of modern they will spend queuing at the ZRA pay points. internet based systems, namely ‘asycuda world’ and ‘taxonline’, which we envision will form the underlying ‘Globally financial institutions and banks in particular platform for electronic based tax services and propel ZRA are investing a lot in technology, promoting cashless to be a world class organisation recognized as a beacon of transaction and as a bank we have been investing in excellence in revenue administration.’ developing e-products and as such the launch of the e-payment platform in partnership with the Zambia The synergies that Zambia Revenue Authority has with Revenue Authority is a huge step in the right direction. Finance Bank to make their systems compatible and connected to the ‘taxonline’ system will make it easier ‘We are honoured and proud that in addition to offering for taxpayers to pay their taxes wherever they are in the time saving and convenient services to our customers, country and at any time of the day. we are able to contribute through Zambia Revenue Authority, to a revenue collection mechanism that This latest e-payment service joins other Finance Bank allows the government to collect taxes more efficiently products such as I-Finance, ATMs, as well as Makumbi and timely,’ Ali said. banking, a web based product which allows customers to access their funds by use of mobile phones, tablets and The e-payment platform will enable taxpayers to personal computers. register for; taxpayer identification number (tpin), Launching the e-business platform at a colourful event at their Levy Park Branch, the occasion was graced by the commissioner general Zambia Revenue Authority Berlin Msiska and his counterpart commissioner general Malawi Revenue Authority Raphael Kamoto.
08 Commerce Gazette SME Special Jubilee Edition 2014
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overnment could not resist pointing out that it is upholding a campaign promise when it announced that the Zambia-China Mulungushi Textiles plant will soon reopen for business.
This news was not just music to the ears of the ruling party’s officials and supporter but to thousands of jobless residents of Kabwe that rushed to the plant site in the hope of securing employment. The Mohammed Enterprises Tanzania Limited (MeTL) Group signed a 12-year lease agreement that will see them renovate and invest in new machinery as operations start at the plant. The Group expects to invest a total of US$59 million over the next three years, and has kick started the venture with an initial start up capital investment of US$10 million. The plant holds an existing textile workshop but a denims plant that will have a 20 million meters production capacity annually will be established. The residents of Kabwe can expect the creation of over 2000 jobs within the next three years. MeTL is promising to work with cotton out grower schemes that will have no less than 10,000 members.
say it too strongly but ‘weI cannot need to be experts in our own
country. And not to simply accept theories, formulas and even success stories from other countries or from offices in Washington. We should be able to have our influence and understanding by our observations and our knowledge of our own country even in the most exotic halls of excellence. VP, Guy Scott
’ Reports have a rather negligible impact on reality and solutions - Scott
Dr Guy Scott, vice president with Janet Rogan, resident coordinator - UNDP
Dr Guy Scott, vice president
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ice President Guy Scott is not much of a speech giver, on more than a couple of occasions I have witnessed him set aside his speech and speak off the cuff. It’s obvious he wants to interact with people on a personal level to reflect on the reality the situation he is addressing as opposed to reading a package dialogue. On the occasion of the launch of the 2014 Global Human Development report, given his distain for theoretical hyperbola it could hardly have been a surprise that speaking to technocrats, policy makers and diplomats his emphasis raised questions about how the report gets translated in the real world and more specifically how it speaks to the ‘ Zambian situation. It may not have been the good Dr’s intention but he had me in stitches laughing when he set about dismissing the reports title of ‘Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience’ as an overdone play of words. Am not sure which word irritated him more ‘sustaining’ ‘vulnerability’ or ‘resilience’ but either way Dr Scott would have felt better if the report spoke plain english and deferred from using ‘big’ words. The vice president’s point was that broad cross analysis by well meaning reports of development abroad cannot be translated with the same results to Zambia. He is of the view that statistical research like those reflected on the Human Development report cannot bear out the reality of life experience. It’s an elevation of ideology over the plain facts. Dr Scott went on to illustrate a point about an agriculture programme in Indonesia saying, ‘A couple of years later I complained to the World
Bank that I didn’t see the program as very successful in Zambia, and their response was ‘yes but it’s working brilliantly in Indonesia… He spoke of the US forcing Zambia to enact the 1995 Land’s act enable it to access loans, the out come of this action, well intended as it was, is the current land wrangles ensuing the country.
‘What we’ve done for the time being as a holding party is to put a ban of all large-scale transactions in land until we have an improved lands act that is better than the 1995 Lands Act, that was produced at the barrow of a gun, from a certain donor who shall not be nameless, except that it’s the United States who felt that we must have land as something we can use as security to get loans from the banks. It didn’t work that way, it worked by opening a new business, which is grabbing land and getting title deeds and then selling it to people who’ve got need for some more money… ‘I think we should be aware that there are cultural differences within Zambia that you can spend your entire lifetime trying to understanding and still not get very far. The idea is that you can just go and work for 2 years or 3 years, in some other countries at random and then take the whole katundu (package/goods) of what you have developed there and bring it to Zambia or bring it to Zimbabwe or bring it anywhere else, this is something that has to be shaken down.’ Africa’s repeatedly arrested development has been a long-running subject for international development thinkers, which has subjected their various development experiments that have recorded mixed success results.
High levels of inequality persist
Vice president Guy Scott is good with ‘telling it like it is’, and he is not ‘politically correct’ in the western sense, but when you look at what he is saying and compare it to the reality on the ground, who needs correctness when lives are affected, he has a point.
and expected years of schooling and the Gross National Income (GNI) per capita, the UN Human Development Index report states.
‘What we want is our people to participate in the growth that the country is experiencing.
To improve the employment positioning of the country even further government is making reforms on the labour laws and the social security system. The existing twelve labour laws will be transformed into five up-to-date pieces of legislation that will reflect the current trends on the labour market and be easier to enforce.
nemployment tends to lead to an increase in crime, suicide, violence, drug abuse and other social problem, the 2014 Human Development Report says. Therefore, the social benefits of having a job far out weighs the personal gains of earning a salary, the report adds.
Shamenda says soon after the PF government came into power, it noticed that the economic growth was not corresponding to job creation. To correct this scenario government is revising the National Employment and Labour Market Policy as well as implementing the Zambia Decent Work Country Programme with the support of ILO to ensure that the jobs being created in the country are decent.
On social security, government wants to increase the retirement age to 65 and abolish lump sum retirement package payout. It is seeking to introduce a singular social security system at three tier levels that will have private sector participation in pension fund management all managed under a singular legal and institutional framework. As a way of reducing the vulnerabilities that the elderly face when transiting from work-to-retirement, government wants to establishment mortgage facilities and national housing schemes.
He gave the example of the improvement in Zambia’s Human Development Index as one of the many signs that government’s policies and programmes are bearing fruit.
The report calls for national policies that promote full employment - particularly formal employment rather than informal employment, which tends to increase poverty and vulnerability. Beyond this it says social protection should be strengthen, including unemployment
Zambia’s HDI value for 2013 was 0.561, which qualified her into the medium human development category and moved the country’s standing up to 141 out of 187 countries and territories. This improvement is mainly attributed to increases in life expectancy at birth, mean
For the younger population that forms the majority of Zambia’s population government is working on the introduction of an apprenticeship and internship programme with the aim of improving their employment opportunities. Public employment exchange services, in addition to career guidance and job counselling services were re-introduced to help shorten unemployment spells for job seekers, Shamenda says.
She said the report strongly reflects the current state of economic and social development across Africa, and in doing so it reflects a paradox which, on one hand, shows it enjoying the highest rates of economic growth and human development of any region but at the same time, showing that it has also experienced the highest rates of loss in human development due to inequalities. The gains for Africa Rogan points to include the average annual growth which stand at 1.37% in comparison to the world average of only 0.73%. Africa’s disparities include stark gender inequalities, the highest rates of workers in vulnerable jobs, it has large areas of insecurity, conflict and climate vulnerability in places such as the Sahel, the Great Lakes, Central Africa and the Horn of Africa.
10 Commerce Gazette SME Special Jubilee Edition 2014
‘You can’t go to a textbook about poverty and understand about Zambia, you have to understand how Zambians live and what has evolved and even what their recent history has been. At the same time you have to be consistent; we have to say what we are doing now we must still be doing in 10 years time. What’s the point of experimenting with people’s lives?’
Minister of Labour Hon Fackson Shamenda, M.P. speaking at the meeting said government ‘believes inclusive development is the way to go in tackling unemployment and poverty’.
U
According to the report areas of poor development in Zambia highlighted by Rogan at the launch, are centred around high levels of inequality on; income - measured at 0.60 (by the Gini coefficient), it is among the highest in the world. Gender is another area, where Zambia ranks 133 out of 149 countries with 62% of the population recognized as multi-dimensional poor.
Simply stated Dr Scott’s point is that development is largely about life, about unique individuals and their daily struggles. Development cannot be isolated from a nation’s culture or be easily reproduced in a different environment. Dr Scott believes that spending billions on administrative reports or to implement untested or foreign delivery models, is therefore useless. These approaches are weak.
insurance, pension programmes and labour market regulation.
nited Nations resident coordinator and UNDP resident representative, Janet Rogan explained the theme of the report as focusing on the importance of the sustainability of human progress and how vulnerability and lack of resilience in some sectors of the populations can undermine and slow down progress overall.
To carry out this new development agenda, the UN is seeking to identify and address the vulnerabilities that the 2014 Global Human Development report is showing by working through a strategic partner with government.
‘I think we need to know our country and we need to understand the dynamics of it and we need to apply our own solutions to these kinds of issues. And of course it’s good that it’s captured in a worldwide report somehow. But at the same time you don’t want to fashion issues; for 3 years you worry about land, then land becomes boring and there are no more allowances for attending meetings on land so now we switch to social cash transfer…’
Government focused on improving labour’s long-term prospects - Shamenda
in Zambia - Rogan
With the Millenium Development Goals set to conclude in about 500 days the UN is seeking to define the new sustainable development agenda after 2015 whose main thrust will be based on the premise of ‘Leave No-one Behind’, Janet said.
Dr Scott says ‘life is too complicated, reality is too complicated’ to overlook the history, socioeconomic idiosyncrasies and to a greater extent, the genetic and culture composition of a country’s citizenry when looking at issues of development.
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Pre-paid Water Meters: Giving Power to Customers
T
he responsibility of providing water services in Lusaka is as old as the city itself and is a duty that has been bestowed on Lusaka Water and Sewerage Company. Running the water and sewerage company has been a challenge because there has been a low metering ratio compared to the number of people accessing the water which resulted in many of Lusaka’s residents not paying for the water they used. The majority of Lusaka residents were on the fixed billing system which simply meant that rather than paying for the water they used, most residents were on an approximated billing system which generally underestimated their true water usage. Compounding the problems of the water utility company was the further loss of revenue due to water lost on account of its old dilapidated infrastructure and the increased thief of water by people making illegal connections to its water structures. All of this resulted in the Lusaka Water and Sewerage Company having a high ratio of non-revenue water usage. Therefore, it became very critical that the water utility company knows what it produces and distributes at any given time as it has been proven that ‘that which cannot be measure cannot be managed’. For a long time, the Lusaka Water and Sewerage Company was bankrupt and unable to meet its operational obligations due to its inability to lower the ratio of non-revenue water use which stood at 65 % in comparison to 35% of the total water paid for by users. Lusaka Water and Sewerage Company’s debt run into billions of kwacha and impacted negatively on its ability to maintain and develop the water infrastructure to meet the city’s growing population needs. As a measure of last resort the water utility company was forced to turn off water at the homes of customers behind on their bills. The shut-off campaign was carried out to help the company hastened recovery of revenue which was desperately needed for its operations, including employee wages. To overcome this challenge Lusaka Water and Sewerage Company has over the years employed many
approaches to ensure that the percentage for nonrevenue water is reduced to manageable levels. By 1990, the company started installing water meters called the brass and bonze meters. Overtime, the Kent meters which were more effective and less prone to vandalism and theft replaced this type of water meters. In 2010, Lusaka Water and Sewerage Company piloted the pre-paid meters that proved to be very success and made business sense for both the customer and the company. So in 2012, the water utility embarked on an ambitious pre-paid metering installation exercise through its areas of operation in Lusaka Province.
water units, Lusaka Water and Sewerage Company advises them to always use the meter number which is reflected on the user interface unit that comes with the pre-paid meter. In as much as water is a human right and the service is provided as a public-health right, access to water does not imply that it should be available for free and Lusaka Water and Sewerage Company’s key concern is to make water available and affordability for all.
So far, Luangwa, Chongwe and Kafue districts are 100% installed with pre-paid water meters. Other selected areas of Lusaka City are being installed with the meters. The aim is to install all properties with pre-paid water meters. There are many advantages of using pre-paid meters such as: • Customers no longer receive disconnection notices • As the meters gives customers the power to decide consumption • This reduces disputes over water bills • And customers have the freedom to purchase water units at their convenience and according to their budget, in the long term meters • Encourage good water conservation habits and practices Since the metering exercise began revenue at Lusaka Water and Sewerage Company is up. The department has seen an increase in collectables of customers’ accounts on revenue water compared to previous years. To ensure that customers are not inconvenienced when purchasing
Cash transfers are helping people out of extreme poverty ‘
For me the words of vulnerability, reliability, reliance, when I first saw them, really they were a puzzle to me. I could not see the connection between what they were saying and the actions and activities that we are trying to do in the Ministry of Health in support of health… For us it would have been much easier to say ‘one Zambia, one nation.
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Dr Joseph Kasonde, minister of Health
T
he Millennium Development Goal Report 2013 says extreme poverty is more prevalent among femaleheaded households and Zambia’s rural population has consistently experienced higher poverty rates than urban dwellers. The report also shows that around 89 of every 1000 children born die before their fifth birthday.
Hon Joseph Kasonde, minister of Health
While the packaging is weak
the message is good - Kasonde
T
ired of the trend by international organisations that are in the habit of coming up with new complex labels to describe the same old problems such as hunger, poverty, and disease among the many afflictions faced by society, minister of Health, Hon Joseph Kasonde, M.P. joined the group of people that include vice president Guy Scott, who are seeking simple rhetoric to move Zambia towards development and a new politics of problem-solving.
Questioning the title of the Human Development Report 2014, ‘Reducing Vulnerabilities and Building Resilience’ Dr Kasonde asked ‘Why do we want those who are rich to be in different countries in the same country? It is one Zambia one nation, it is as simple as that,’ he said. Where as Dr Scott showed little patience with the lofty title of the 2014 Report, Dr Kasonde is willing to let the United Nations Development Program technocrats who come up with this jargon, especially its country director Janet Rogan – who is just the messenger, off lightly. Dr Kasonde took the words and reapplied them to the actions and activities of the health sector in Zambia and quickly comes up with a new paradiam. From his analysis, Dr Kasonde believes that Ministry of Health’s strategic plan has focused more on infrastructure, human resources capacity and supply as a definition of ‘development’.
Moving forward Dr Kasonde wants to apply the UN mantra of vulnerability, reliability and reliance to those areas that still remain the fundamental causes of disease and of which vulnerability is the most predominant. By devising a different approach, Zambia can re-build health sectors beginning with vulnerabilities, taking into account the life cycle and looking at what makes it impossible for the country to be one Zambia, one nation, Dr Kasonde says. ‘There is a kind of fishbone structure to health and disease, the first 24 hours of birth are the most risky. Later, as people grow up there is a major divergence between the health of women and men. We see them having different diseases. We see them having different attention from our health system. Later in old age they receive the same kind of attention. So there is this life cycle element to those vulnerabilities and their capacity to be handled.’ Dr Kasonde says, by wearing another pair of spectacles and reviewing the message that the report conveys, he sees an opportunity to bridge the gap between how strategies for development are designed, ‘beginning with identifying areas of weakness in our health system and in our communities that make them vulnerable to disease. I think that’s a good message’, Dr Kasonde concludes.
To find a solution to tackle the high rates of poverty, a nation-wide consultative process involving various stakeholders who included traditional leaders, civil society, government departments, cooperating partners and ordinary citizens resulted in a policy document titled ‘Zambia Vision 2030’ which expresses the people’s aspiration for a better standard of living and for the country to become ‘a prosperous middle income nation by 2030’. Contained in Vison 2030 is the aim to reduce the national poverty head count to less than 20 percent of the population and to reduce income inequalities measured by a Gini coefficient of less than 40. To assist the vulnerable and marginalized groups, government has began addressing extreme poverty by increasing the budget allocated for social protection programmes. In 2014 K1.18 billion was assigned to these programmes and the social cash transfer scheme that has been successfully piloted in several districts, and benefited the most vulnerable members of Zambian society received an increased allocation from K72.1 million in 2013 to K199.2 million this year. Government recognizes that past efforts at social protection were centered on poorly targeted subsidy programmes where the beneficiaries were not the intended poor. The pilot cash transfer programmes that have been upscaled by over 700 percent confirmed that giving money is one of the most direct ways to tackle extreme poverty and hunger, as it empowers the poor to buy more and better food, to send their children to school and clinics, and allows them to make small investments. Ministry Community Development Mother, Child Health, deputy minister Hon Ingrid Mpande, MP says her Ministry is tasked to implement social protection programmes and is managing the cash transfer programme in 50 districts and reaching 145,000 households.
Of these households there was a reduction on extreme poverty by 5.4 percent with another 10.5 percent reduction on the number of people having an outstanding loan. She says improved living conditions by way of more people owning latrines, mosquito nets and purchasing lighting and installing cement floors also increased. The productivity and economic growth among cash transfer recipients further improved as they increased the size of land cultivated allowing them to reap a high value harvest on their maize and rice production, while others increased the number of livestock they owned. The number of children aged between 6 and 24 months who fell sick reduced as well as those receiving minimum feeding assistance. Older children under the programme are able to afford shoes, a second set of clothing and a blanket and the number attending primary school also increased. Mpande says the social cash transfer programme provides people with the fall-back securities they need until they can access decent work or find skills to sustain their living. ‘It is very clear that this scheme is making tremendous difference in the lives of our poor,’ she says.
Commerce Gazette 11 SME Special Jubilee Edition 2014
Because of this broad client portfolio, EFC Zambia has grown to service over 23,000 saving accounts and more than 3,300 entrepreneurs have accessed loans. According to EFC Zambia 2013 annual report, of the loans accessed by its clients in 2013, 61% were loans to micro-small medium enterprises, 34% were housing loans. Ratté adds that women access 40% of the institution’s total loan portfolio. ‘We are trying to give our clients a more variable banking platform instead of the traditional bank branch. We find innovative ways for clients to transact,’ Chipungu says. ‘One concept is through inter-branch connectivity that lets clients streamline their transaction from any EFC Zambia branch. We have also partnered with Zoona who are able to provide all our services at their depots. This is a low-cost solution to increase the penetration of our services.’ Last year EFC Zambia ran a savings promotion entitled ‘Naine ni sungepo’ from November to February 2014, the results were remarkable Chipungu says. ‘We saw a lot of entrepreneurs open saving accounts. It boosted participation by over 2000 people and netted K26 million in savings. Following the success of the first promotion EFC Zambia is launching a second similar savings campaign in September.’ ‘We’ve got a number of international shareholders and partners who lend us money to play a role in providing access to finance for micro, small-to medium-sized enterprise operations that have to be sustainable.’ Ratté explains.
When we approve loans to entrepreneurs the decision is ‘based on their repayment capacity. We are able to provide them with financial services in an efficient manner, without over indebting them. EFC is not just about selling products or providing loans, we provide our clients with a comprehensive financial services that helps them develop. - Ratté.
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This has kept EFC Zambia loan default rate at 3% over 30 days, with interest charges at 50% from August 1st.
EFC edges up entrepreneurs T
here can be little doubt that Zambia’s growth and development over the last decade or so has been impressive.
Yet this impressive growth has not translated in to large-scale job or wealth creation for Zambians. The 2012 Central Statically Report says ‘of all the employed persons in the country, 88.7 percent had informal jobs and 11.3 percent had formal jobs’. This would suggest that a large portion of Zambia’s population is involved in some sort of enterprise. For many Zambians, self-employment is often the only path available for generating income. Entrepreneurship among Zambians has taken route but it still has a long way to go in building competitive businesses. Micro, small and medium-sized entrepreneurship allows people to feed their families, educate their children and sustain their daily needs. This kind of entrepreneurship, based on necessity, generally results in micro, small and medium enterprises (MSME) that are unlikely to create jobs and generate substantial economic growth. However, World Bank and UN statistics show that enterprise can contribute greatly to an economy. The US and now China are nations that have shown that private business can drive economic growth. China’s Entrepreneurship website states that private business is the fastest-growing sector of its economy, expanding at an annual rate of 20 percent. Cardinal to this growth are small and medium-sized enterprises (SMEs) who are responsible for about 60 percent of the nation’s industrial output and employ about 75 percent of the workforce in China’s cities and towns making it the world’s largest and fastest-growing center of entrepreneurial startups.
When asked if their lending rate of 50% isn’t too high, both CEO and COO dispute this and attribute the high interest rate to the huge demand for money in the economy that has increased the cost of borrowing. They explain that with the Bank of Zambia capping the lending rate at 64.4% as of date, the cost of borrowing has gone up. In addition, the central banks’ recent policies intended to stop currency speculation that saw the kwacha exchange rate fluctuate to unprecedented high levels at the start of the year together with the inflation fight have increased lending costs. The executives say their interest rate is based on a number of considerations including administrative and operational costs, as well as employee wages, training and benefits that have increased in costs recently. The executives suggest looking at ‘a measure of customer satisfaction’, saying few small business owners are delinquent on loans and many are showing greater demand for loans. They say the high renewal rates show the loans are serving borrowers needs as many of them come back for additional loans, indicating a high-level of satisfaction. Beyond its banking services, the EFC Zambia executives say the company is empowering its borrowers to become shareholders through an incentivized loan repayment scheme, the Client Share Ownership Programme (CSOP). The programme allows all EFC Zambia borrowers a minimum 10% rebate on the total interest paid on their loan. Through this incentive their clients can convert their entire rebate or a minimum of 25% into company shares purchased through the Pulse Finance Cooperative Society Limited. A 20% shareholder option in EFC Zambia is available not only to borrowers but its employees who can purchase through the ‘Employee Share Ownership Programme, Chipungu explains.
It therefore stands to reason that with the type of economic environment that exists in Zambia where informal employment creates financial opportunity for most people, government needs to ensure that entrepreneurs have the resources to start viable businesses that can grow past the micro level, if the nation and its people are to make any meaningful development. But most micro, small and medium-sized entrepreneurs still face many challenges and find it very difficult to expand to that next level. Often when looking at the Zambian financial landscape, entrepreneurs can’t get credit. In fact the majority of Zambians are nearly non-existent financially because they’re ‘unbanked,’ ‘underbanked’ or ‘credit invisible’. This affects their chances of establishing credit and building businesses that create wealth. Small business owners report that credit is harder to get now. Moreover, commercial banks continue to turn away from small business borrowers. The banking system in Zambia typically bases lending criteria for small businesses on collateral, rather than cash flow, which makes it difficult for low-income entrepreneurs to secure financing. These issues are worsened in rural areas where entrepreneurs face the additional challenges of limited education and vocational training along with minimal infrastructure and a lack of overall resources. But there are some changes afoot. The void in bank lending has spurred the growth of alternative lending which can be costly but gets money to entrepreneurs quickly and without a lot of hassle. Entrepreneurs find that perhaps a more realistic option for getting financing is connecting with a microfinance lender. Commerce Gazette talks to Andréanne Ratté, CEO and Chembe J. Chipungu, COO of Entrepreneurs Financial Centre (EFC), a microfinance institution, on offering services to MSMEs and how their financial institution is competing in this sphere. EFC is making several times as many loans as it did five years ago and lends between K2,000 with a maximum of K400,000 to individuals that want to borrow. With a growth rate of around 60% per year for new accounts EFC Zambia is experiencing tremendous expansion and is among the largest micro financing institutions in Zambia. It began 2014 with a loan portfolio of K86 million and expects its end of year target to reach K110 million as the sum total borrowed has already surpassed K100 million, Ratté, says. Named ‘Best SME Organisation for the year 2013’ by the Zambia Institute of Marketing, EFC Zambia has 5 branches in Lusaka and a branch in Kitwe with another in Chipata. The company will open a new branch in Ndola next year. ‘Our focus is to reach out to more clients in rural areas and across the country. We plan to open a minimum of one branch each year for the next 5 years,’ she adds. Chipungu says EFC Zambia’s unique business model specifically target the micro small and medium entrepreneurs whom it assists access loans in their individual capacity. Because of this model EFC Zambia does not offer group or salary-based loans. ‘Our main client base are entrepreneurs and our target is all the very small and micro, medium size businesses. We have clients who run small shops, hardware stores, and butcheries. Other clients trade in clothes, run restaurants, are taxi or bus drivers or own the buses and trucks that provide transport or haul goods across the country. We also have clients that are in real estates. In fact, everyone in Lusaka who is trading by the roadside right now, who is an entrepreneur that’s our client base,’ Chipungu explains.
12 Commerce Gazette SME Special Jubilee Edition 2014
Ratté says in celebration of the company’s 5th anniversary of operations in Zambia to sweeten the reward to clients that repay their loans to specifications, EFC Zambia will match the share investment bought by clients and employees this year. Its share equity currently stands at K33 million. Chipungu adds that the 10% rebate on total loan interest paid differentiates EFC Zambia from all other financial institutions because it not only empowers its clients with cash but offers them a stake in the company which is a long term investment option. In addition, he says EFC Zambia has a management-training program that exposed new employees to all facets of the institution’s operations to determine their area of specialization. Chipungu gives himself as an example of an employee that has benefited from the program, working his way up from managing EFC Zambia Chawama branch to becoming chief operations officer of the company. He urges government to assist micro, small and medium entrepreneurs with vocational skills and training that includes financial education to raise and deepen their trading and manufacturing endeavours. ‘The export market for Zambian entrepreneurs is something that we’ve seen is a non-existing market. We want to see more Zambians exporting as it’s the only way the country and entrepreneurs will become more self-sustaining and competitive. If there is a policy to upscale MSME, we as financers stand ready to finance them but we need to see policies that government will assist these young entrepreneurs to export in the SADC region.’ Giving a small insight of the banks future plans, Ratté says EFC ‘Zambia is finalizing its next fiveyear business plan with shareholders and the board and among its aspirations is to provide mobile financial services as a means of helping the unbanked population. Currently banking penetration stands at only 37.3% of Zambia’s population.
Budget policy aims
to make development
legally binding
Hon Alexandra Chikwanda, Finance minister
Hon Alexander Chikwanda, minister of Finance
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ast march cabinet took a landmark decision to approve the first ever National Planning and Budget policy for Zambia.
This policy streamlines government’s processes and procedures relating to national planning, budgeting and their implementation and monitoring. Finance minister Hon Alexander Chikwanda said the policy was produced through a thorough and meticulous consultative process. The policy spells out ways that the national planning and budget programmes and projects will be assessed. It is a comprehensive appraisal system that will determine likely returns on investment and the impact they will have on beneficiaries. Government wants to have a systematic and effective monitoring and evaluation mechanism that incorporates all state institutions that informs decision makers at all levels. It is expected that the policy will become law and give parliament’s oversight role real authority. This will enhance transparency and accountability in the budget making process. Beyond parliament’s contribution the policy will give citizens an opportunity to participate in the planning of the economy. It provides for a more enhanced system of engagement with the people and also simplifies their participation at all levels. Other institutional mechanisms such as provincial and district development coordination committees as well as sector advisory groups through which state and non-state actors participate in planning, monitoring of programme implementation and making proposals to the budget will also be strengthened. This Chikwanda said is in line with the national decentralization policy. The National Planning and Budgeting policy also recognises the right of districts to plan budget and implement development strategies and programmes, and for functions to be devolved to the rural community. Addressing the principals of the policy Chikwanda said they are rooted on key tenets of public financial management with a view to further reinforce transparency, in the allocation, execution and accounting for development results. After the policy becomes law it will legally bind programmes in the national development plans and national budgets to be firmly interlinked, and also make the process an effective operational tool for implementing and accomplishing national development plans. The major reason for the policy Chikwanda said is to stop fragmentation of the key facets of the planning processes in government. By passing this policy government wants to cut down on resource waste, increase development impact and momentum and help to reduce the high levels of poverty ‘which is not only morally unacceptable’ Chikwanda said, ‘but is also a big hindrance to accelerated and sustained development’. ‘Past experience has taught us that over the years there have not been adequate comprehensive and coherent guidelines to anchor national planning that is firmly linked to the budget process. As a consequence, development programmes and projects have not reflected elaborate appraisals. There have been slippages in the outputs and outcomes with minimal impacts for beneficiaries.’ As a consequence of this policy change Chikwanda said national budgets will now be prepared and presented in a results oriented manner to accord an opportunity to oversight institutions like parliament, auditor general’s office, including non-state actors to effectively track performance and hold implementing institutions accountable. In addition, government will come up with systems and tools to reinforce attainment of results and accountability and these will include promoting the development of service delivery charters and enhancing labour productivity and other management systems. ‘It is the Patriotic Front government’s desire to ensure that national plans and programmes reflect people’s aspirations. Government will carry out a national-wide sensitisation campaign that will educate people of the National Planning and Budgeting policy so that they are aware of their duties and responsibilities, and the obligations of government in this regard.
LS-MFEZ
The Industry hub of tomorrow Dr Fortune Kamusaki, LS-MFEZ CEO
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ecently, a report by Coface, an international credit insurer, placed Zambia among the ‘ten new emerging countries’ worth investing in. It is among four African nations to make the top ten list of fastest growing economies that included Kenya, Tanzania, and Ethiopia.
‘Development of infrastructure is progressing well and gaining momentum, nearby NRB Pharma Limited, the first investor to sign the lease agreement with the Zone, has made significant progress on the construction of their pharmaceutical plant which is expected to be completed early next year.
As a way of accelerating Zambia’s massive economic growth potential, government is developing multi-facility economic zones to attract more foreign direct investment in key priority areas of agriculture, infrastructure, manufacturing, tourism, science and technology.
‘The lease agreements that we have signed have increased to seven from five and the number of expressions of interest to invest has gone up from 94 in November 2013 to 105 as of June 2014.
Government wants foreign investment to become the tool that unlocks production, increases the country’s exports from just copper and create additional jobs for Zambia’s young population. Situated just 10 kilometres from the capital’s city centre, the Lusaka South Multi-Facility Economic Zone (LS-MFEZ) is a mixed-use business development park that will essentially be a self-contained town within the greater city of Lusaka with a designated area of 2,100 hectares of land. This Zone is expected to effect government’s vision to act as a catalyst for industrial development and contribute towards the diversification of Zambia’s economy away from the copper mining sector that accounts for approximately 85 percent the country’s exports. Consumer goods, raw materials and capital goods categories collectively account for about 15.6 percent of total exports according to the Central Statistical Office’s June report.
‘The response has been overwhelming and is coming from both local and foreign prospective investors. ‘We don’t want this to be a speculative development and put anything up and hope for the best,’ Dr Kamusaki says. ‘All the development in the Zone has to follow government’s master plan. We want to be prudent in our approach and ensure that all laid down procedures are followed including relevant approvals from the Zambia Environmental Management Agency (ZEMA) and the Lusaka Province Planning Authority.’
Investors developing their sites
Construction will soon start on Zambian Breweries Plc and Zambian Fertilizers Limited’s plots, says Dr Kamusaki, as both proposed projects have received environment impact assessment clearance from ZEMA. Giant Plastics Limited, Roland Imperial Tobacco Company and Superior Milling Company are the other companies that have signed lease agreements. They are at various stages of fulfilling environment and city planning ordinances.
Since its formation on June 28, 2010 a lot of progress has been made to bring the Lusaka South Multi Facility Economic Zone to fruition in accordance with the approved master plan.
The latest company, Yanza Amansa Agri-Grain Limited has had its expression of interest cleared by the Zone’s Technical and Project committee and is waiting approval by the board of directors, before it too can proceed to get the clearances required to develop its site, Dr Kamusaki says.
Already changes at the Zone are visible, access roads leading to it look complete. It was a surprise to learn that in fact only 20km out of a total of 120km of asphalt concrete road has been laid at a cost of US$20 million.
He expects six more lease agreements to be signed before the year ends and says the Zone will also begin selling high, medium and low residential land for single family homes once the prices are determined.
This is because driving into the Zone using the Leopard Hill and Chifwema road connection the fresh asphalt gives the impression that road network is extensively completed. Yet this is not so, the development at the Zone is taking place in five phases and the road development that looks so impressive is part of the first phase of road construction with another 100km still to be built.
In addition to the large corporate investment proposals, small businesses and entrepreneurs will be accommodated at the Zone. Beyond the businesses activities, the Zone will have amenities such as an international convention center, five-star hotel, shopping mall, restaurants, expo center, service apartment, medical center, gym, banks, gallery and possibly a golf course aimed at making it a sustainable integrated industrial hub for the future.
‘The completion of the Internal Transit roads within the Zone last year, coupled with the soon to be completed Inner Link road has accelerated development options for investors. Access to all five phases of the Zone is now possible and this allows for concurrent development to take place in phases two and five where investors have shown interest to develop the larger plots’ says LSMFEZ CEO Dr Fortune Kamusaki.
To speed up development of infrastructure and utility systems, alternative financing sources are being sought and negotiations with financiers have began.
Speaking to Commerce Gazette from the newly completed LS-MFEZ head offices that were constructed at a cost of K 8,840,350.66, inclusive of the security guard post, Dr Kamusaki says the building was finished within its budget and on schedule. The head offices sit across a quiet stretch of pastoral surroundings not too far off from the main zone entrance. It makes a subtle statement that it is a solid modern office block, built and designed to maximise efficiency with minimal resource wastage and blends in perfectly with it’s natural surrounding. Arriving at the head office you notice the ample surface parking and the beautiful landscaped surrounding that consist of indigenous plants common to the area. ‘The building complies with modern construction and finishing standards. It has been built in accordance to high quality construction technologies requirements,’ explains Dr Kamusaki. The interior finishing complies with demands of a modern property; solid ceilings, porcelain tiled floors, adequate reliable fire alarm systems, fire exits, structure cabling, autonomic air-conditioning and features contemporary boardrooms, spacious office space, corridors and restrooms. It also has a restaurant area that is across from the library. The property is connected to telephone lines, it’s internet ready and has electricity from Zesco supplied through overhead lines. A standby 350 KVA generator has been procured to supply backup power to the head office in the event that electricity is unavailable. Water is supplied by Lusaka Water and Sewerage Company’s two borehole which carry 37 litres of chlorinated water per second servicing all of phase one.
‘Already, there is an influx of people who are visiting the offices to submit their expression of interest as well as to visit the site and to see what the Zone is offering,’ - Dr Kamusaki.
‘The long term plan is for the Zone to construct a 330/132/33KV sub-power station and a 330 KV line to supply electricity.’ Dr Kamusaki adds that a contract was signed to this effect between Zesco and LS-MFEZ Limited which has released K20,919,000 as part of its 20% down payment of the US$6.5 million obligation to commence construction activities. ‘LS-MFEZ will share the costs equally with Zesco and the contractor has cleared the area reserved for the sub-power station construction that should take 12 months.’ The 2 boreholes supplying water to phase one of the Zone were installed at a cost of K1.2 million by Lusaka Water and Sewerage Company. Further installation of 2 additional boreholes in phases two and five is still under tender. Dr Kamusaki says the tender for the construction of water reservoirs, water distribution and sewer networks, including for a mechanical sewer treatment plant in phase one has been awarded to Unik Construction Engineering Zambia Limited at an estimated cost of K36 million and will take 12 month to complete. The cost for these works has been accounted for in the 2014 national budget. About 1,070 people have already gained employment at the Zone with the majority 800 carrying out construction work of the roads. The rest have been building the head office, the pharmaceutical company, and the water and sewer facilities with the exception 45 workers employed to maintain the landscaping. The number of jobs is due to grow by the end of 2014 as the facilities expand and more companies move in. Most of the squatters who were displaced from their makeshift homes and fields in the Zone have been relocated but a few who are claiming to have been left out are being screened by the Disaster Management and Mitigation Unit (DMMU). In future, the Zone hopes to house its own permanent police station for the protection of the investments and people working and living there. Currently, the Zambia Police Service as well as a private external firm carry out the security and access control of the two approaches to the Zone.
Commerce Gazette 13 SME Special Jubilee Edition 2014
Old L Old LS-M
LS-MFEZ The Industry hub of tomorrow Fortune Kamusaki - Managing Director, DrDr Fortune Kamusaki - Managing Director, Lusaka South Multifacility Economic Zone Limited. Lusaka South Multifacility Economic Zone Limited.
Conference centre Conference centre
Boardroom Boardroom
Reception Reception Furnished office space Furnished office space
Corridor leading conference Corridor leading to to conference centre and board room centre and board room
14 Commerce Gazette SME Special Jubilee Edition 2014
Lounge Lounge
Unoccupied office space Unoccupied office space
Security reception Security at at reception
Restaurant Restaurant
Convenient rooms Convenient rooms
Main corridor between offices Main corridor between offices
Reception room Reception room
Front veiw newly biult LS-MFEZ head office Front veiw of of thethe newly biult LS-MFEZ head office
Side view office block Side view of of thethe office block
LS-MFEZ offices MFEZ offices
Main entrance offices Main entrance to to thethe offices
Rear view office block Rear view of of thethe office block
NRB Pharmaceutical plant under contruction NRB Pharmaceutical plant under contruction
Landscaping underway Landscaping underway
Water facility behind new building Water facility behind thethe new building
Construction sewerage system commenced Construction of of sewerage system hashas commenced
Road construction Road construction
Road sign posts Road sign posts
Machinery sewerage system construction base Machinery at at thethe sewerage system construction base
Commerce Gazette 15 SME Special Jubilee Edition 2014
CSO August 2014 updates Inflation increases to 8.0 percent
The Monthly Inflation Rate
Provincial Contribution to Overall Inflation
The annual rate of inflation, as measured by the all items Consumer Price Index (CPI) for August 2014 was recorded at 8.0 percent. This means that on average, prices increased by 8.0 percent between August 2013 and August 2014.
The total monthly inflation rate decreased from 0.8 percent recorded in July 2014 to 0.7 percent recorded in August, 2014. This indicates a decrease of 0.1 percentage points.
Lusaka Province had the highest provincial contribution of 2.7 percentage points to the overall annual inflation rate of 8.0 percent recorded in August, 2014.
The Consumer Price Index (CPI) measures changes over time in the general level of prices of goods and services that households acquire for the purpose of consumption, with reference to the price level in 2009 (i.e. base year 2009 =100).
The monthly food inflation rate for August 2014 was recorded at 0.9 percent compared to -0.1 percent recorded in July, 2014; while the monthly non-food inflation rate for August, 2014 was recorded at 0.4 percent compared to 1.6 percent recorded in July, 2014.
Copperbelt Province had the second highest provincial contribution of 1.4 percentage points while North-Western and Western provinces had the lowest contribution of 0.3 percentage points.
Composite
Source: CSO, Prices Statistics, 2014
Movements in Annual Inflation Rates for CPI Main Groups
Between August 2013 and August 2014, the annual rate of inflation increased for Food and non-alcoholic beverages; Clothing and Footwear; and Recreation and culture.
2014
The annual rate of inflation decreased for Alcoholic beverages and Tobacco; Housing, Water, Electricity, Gas and Other fuels; Health; Transport; Education; Restaurant and Hotel; and Miscellaneous goods and services.
15.2 11.0 12.2 13.9 14.0 14.2 13.7 14.1 14.0
80.8 7.9 6.1 6.1 6.5 6.5 7.4 7.0 7.1
82.4 6.7 5.9 6.2 7.0 7.1 8.0 8.0 8.0
8.2 6.4 6.8 5.3 6.1 5.8 5.8 6.0 5.5
58.1 13.3 11.9 13.8 13.3 12.4 11.5 9.5 9.1
12.9 4.1 3.0 2.8 2.8 3.5 4.0 3.7 3.7
13.8 5.2 5.5 6.4 7.7 7.5 7.8 8.3 8.7
Education
Recreation & Culture
Communication
Transport
Housing, Water, Electricity, Gas & Other fuels Furnishings, Household Equip.., Routine Hse Mtc Health 114.1 9.6 8.4 7.6 7.4 6.4 6.8 12.5 12.3
Miscellaneous Goods & Services
534.9 5.9 7.5 7.6 7.6 8.0 7.8 6.9 7.0
Restaurant & Hotel
Jan ‘14 - Jan ‘13 Feb ‘14 - Feb ‘13 Mar’14-Mar’13 Apr’ 14 - Apr’ 13 May ‘14 - May ‘13 Jun’14 - Jun’13 Jul’14 - Jul’13 Aug’14 - Aug’13
1000 7.3 7.6 7.7 7.8 7.8 7.9 8.0 8.0
Alcoholic beverages & Tobacco Clothing & footwear
All Items Weight
Food & Non-alcoholic beverages
Annual Inflation Rate: CPI Main Groups
Period
3.4 7.0 6.5 8.3 7.6 8.2 8.2 8.5 8.1
49.7 6.2 4.9 4.9 5.3 5.5 6.3 6.1 6.0
26.6 11.8 10.9 10.8 10.8 10.3 10.2 10.2 10.1
Source: CSO, Prices Statistics, 2014
Contributions of different Items to overall inflation Of the total 8.0 percent annual inflation rate recorded in August 2014, Food and Non-alcoholic beverage products accounted for 3.6 percentage points, while non-food products accounted for a total of 4.4 percentage points.
Percentage Points Contributions of different items to Overall Inflation ITEMS Food and Non-alcoholic beverages Alcoholic beverages and Tobacco Clothing and footwear Housing, Water, Electricity, Gas and Other fuels Furnishings, Household Equipment, Routine house maintenance Health Transport Communication Recreation and Culture Education Restaurant and Hotel Miscellaneous Goods and Services All items
July 2014 3.6 0.2 0.6 1.6 0.7
August 2014 3.6 0.2 0.6 1.6 0.7
0.1 0.6 0.0 0.1 0.3 0.0 0.3 8.0
0.0 0.6 0.0 0.1 0.3 0.0 0.3 8.0
Source: CSO, Prices Statistics, 2014
0.8 0.6 1.3 0.7 0.8 0.2 (0.1) 0.9
1.0 0.4 1.2 0.7 1.0 0.7 1.6 0.4
Provincial Changes in Inflation Rates
The annual rate of inflation increased for Lusaka and Southern provinces. The annual rate of inflation decreased for Central, Copper belt, Eastern, Luapula, Northern/Muchinga, North Western and Western provinces. North Western Province recorded the highest annual rate of inflation at 10.3 percent, followed by Lusaka Province at 9.5 percent. Central Province had the lowest annual rate of inflation at 5.8 percent in August 2014.
Provincial Price Indices Province Province Central Copperbelt Eastern Luapula Lusaka Northern/ Muchinga North Western Southern Western
July 2014 137.82 141.14 147.32 141.23 143.67 141.00 144.30 146.07 137.71
August 2014 138.38 141.46 148.34 141.05 144.93 141.55 145.79 147.91 139.28
Provincial Price inflation Rates % over month Province Province Central Copperbelt Eastern Luapula Lusaka Northern/ Muchinga North Western Southern Western
July 2014 0.4 0.6 0.7 0.1 1.3 0.7 0.9 0.6 0.5
1.5
0.8
0.4
2.5
0.5
0.3
0.9
0.4
8.0
0.6
1.6
0.9
0.4
2.2
0.6
0.3
0.9
0.4
7.9
0.7
1.7
0.8
0.3
2.1
0.6
0.3
0.9
0.4
7.8
0.7
1.7
0.8
0.4
2.1
0.6
0.3
0.9
0.4
7.8
0.7
1.7
0.7
0.3
2.1
0.6
0.3
0.9
0.4
7.7
0.7
1.6
0.7
0.3
2.1
0.6
0.6
0.3
0.8
7.6
0.6
1.6
0.7
0.4
2.1
0.5
0.3
0.8
0.3
7.3
0.7
1.2
0.6
0.3
2.2
0.6
0.4
0.8
0.4
7.1
0.7
1.3
0.6
0.2
2.3
0.5
0.3
0.8
0.3
7.0
0.7
1.4
0.5
0.2
2.3
0.4
0.2
0.9
0.3
6.9
0.6
1.5
0.6
0.3
2.3
0.4
0.2
0.8
0.3
7.0
0.7
1.6
0.6
0.3
2.2
0.3
0.2
0.8
0.3
7.1
August 2014
0.9 0.5 1.3 0.7 0.9 0.4 0.8 0.7
January February March April May June July August
0.6
All items
8.0
8.0
Western
Aug
8.0
0.3
Southern
Jul
7.9
1.0
North Western
Jun
7.8
0.3
Northern /Muchinga
May
7.8
0.5
Lusaka
Apr
7.7
2.7
Luapula
Mar
7.6
0.4
Eastern
Feb
7.3
0.8
Copperbelt
Jan
7.1
1.4
Jan 2014
Dec
7.0
Dec 2013
Nov
6.9
Oct 2013
Oct
7.0
Sep 2013
Sept
7.1
Aug 2013
Aug
Province
Percentage
4.5
Provincial Contribution to overall Inflation 0.6
Central
5.0
January February March April May June July August September October November December
Non-Food 465.2 0.5 1.4 1.1 0.5 1.3 0.3 0.5 0.5 0.5 0.2 0.3 0.6
July 2014
5.5
Food 534.9 1.1 -0.9 1.2 0.7 0.4 0.4 0.8 0.8 0.3 -0.3 0.3 1.2
June 2014
2013
6.0
Total 1000.0 0.8 0.2 1.2 0.6 0.9 0.4 0.7 0.7 0.4 0.0 0.3 0.9
Apr 2014
6.5
7.0
Period
Mar 2014
Weight
Feb 2014
7.5
May 2014
Monthly Inflation Rates: Food and Non Food Items, 2009 (2009 = 100)
Nov 2013
Annual Inflation Rate, May 2013 to May 2014 8.0
August 2014 0.4 0.2 0.7 (0.1) 0.9 0.4 1.0 1.3 0.7
Source: CSO, Prices Statistics, 2014
National Average Prices of Selected Products A comparison of retail prices between July and August 2014 shows that the national average price of a 25kg bag of Breakfast Mealie meal decreased by 1.2 percent from K73.20 to K72.33. The National average price of a 25kg bag of Roller Mealie meal decreased by 7.1 percent from K55.77 to K51.79. The average price of a 20 litre tin of Maize grain increased by 4.1 percent from K24.22 to K25.21.
Source: CSO, Prices Statistics, 2014
JCTR BASIC NEEDS BASKET: LUSAKA - July updates 2014 (A) COST OF BASIC FOOD ITEMS FOR A FAMILY OF FIVE IN LUSAKA
(B) COST OF ESSENTIAL NON-FOOD ITEMS
Commodity Mealie meal (breakfast) Beans Kapenta (dry) Bream (dry) Beef, mixed cut Dark green vegetable Tomatoes Onion, large Cooking oil (2.5 Ltrs) Bread wheat, refined floor, baked Sugar Milk (fresh) Tea, powder (250g) Eggs Salt Sub Total
Charcoal (90 Kg bag) Soap (Lifebouy) Wash soap (Boom) Jelly (e.g. Vaseline) Electricity (med. density - fixed) Water & Sanitation (med. cost - fixed) Housing (med. density - 3 bedroom)
KR Quantity Total 70.28 2 x 25Kgs 140.56 21.42 113.86 55.24 33.21 6.18
3 Kgs 2 Kgs 1Kgs 4 Kgs 4 Kgs
4.56 4 Kgs 7.59 2 Kgs 31.40 3 litres
Kwacha
64.26 227.72 55.24 132.24 24.72 18.24 15.18 37.68
5.07 1 loaf/day 152.10
17.18 6 Kgs 5.90 4x500ml 13.97 1Kg
51.54 23.60 55.88
8.78 2 Unts 4.63 1Kg
17.56 4.63
135.00 180Kgs
3.26 10 Tablets 32.60
June 2013
Amount K
(C) SOME OTHER ADDITIONAL COSTS Item Kwacha Education
K3,684.46
Grades 8-9 (User + PTA/year) Grades 10-12 (User + PTA/year) School Uniform (grades 8-12)
5.57 4x400g
22.28
July 2013
K3,638.42
13.71 1x500ml
13.71
August 2013
K3, 581.13
372.00
372.00
September 2013
K3,536.69
October 2013
K3,575.37
210.00
210.00
November 2013
K3,557,81
December 2013
K3,538.54
January 2014
K3,601.01
February 2014
K3,616.28
March 2014
K3,616.28
April 2014
K3,650.01
May 2014
K3636.46
Jun 2014
K3,681.14
1,750,000
Sub Total Total for Basic Needs Basket 1,021.75
Totals from previous months
270.00
1,750.00
2,670.59 3,692.34
K400.00 – K600.00 K650.00 – K1, 300.00 K90.00 – K200.00
Health (clinic) Registration (book) Self referral (Emergency Fee) Mosquito Net (private)
K3.00 - K5.00 K 5.500 K30.00 – K120.00
Transport (bus fare round trip) Chilenje-Town Chelston -Town
K9.00 K9.60
Fuel (cost at the pump) Petrol (per litre) Diesel (per litre) Paraffin (per litre)
K10.63 K10.01 K7.48
(D) A COMPARISON OF COSTS (in Kwacha) OF BASIC NEEDS ACROSS ZAMBIA IN JULY
Lusaka
Kasama
Mongu
Ndola
Monze
Chipata
Kabwe
3,692.34
2,726.30
1,949.08
3,251.58
2,335.33
2,275.69
2,962.37
This survey was conducted on 29th July, 2014 by the Social & Economic Development Programme of the Jesuit Centre for Theological Reflection. Average prices were calculated on the basis of prices gathered from retail outlets at Northmead, Shoprite (Cairo Road), City Market, Chawama, Chainda, Kabwata, Matero and schools, clinics/hospitals and filling stations around Lusaka. The July Basic Needs Basket is approximately US$601 based upon the exchange rate of K6.1479 per US$ prevailing on the day of data collection. Jesuit Centre for Theological Reflection, P.O. Box 37774, 10101 Lusaka, Zambia Tel: 260-211-290-410 Fax: 260-211-290-759 E-mail: basicjctr@jesuits.org.zm Website: www.jctr.org.zm Location: 3813 Martin Mwamba Road, Olympia Park, Lusaka
16 Commerce Gazette SME Special Jubilee Edition 2014
Bogus doctor sentenced to
Unilateralism
4 years in prison
Labeling the US action as ‘unilateralism’ AFP says since the beginning of July, when a sweeping US law against tax evasion took effect, Washington has the right to demand the data of tens of thousands of accounts held by Americans in foreign banks. ‘It’s not fabulous, unilateralism,’ admitted Pascal Saint-Amans, a staunch supporter of FATCA who heads the unit fighting tax havens at the Organisation for Economic Cooperation and Development. ‘Lex Americana’ also has extended its gavel into Argentina’s crucial legal battle over government debt payments.
US still dictates its economic law:
BNP, tax evasion case illustrate
A
lthough its diplomatic clout is compromised on several fronts, the United States still dictates its economic law around the globe and has even expanded its reach, at the risk of raising hackles.
T
Bonaventure Ng’uni
he Lusaka Magistrate Court convicted Bonaventure Ng’uni of impersonating a medical doctor, obtaining money and goods from the unsuspecting public and sentenced him to four years and six month in prison. Ng’uni was behind a scheme where he pretended to be a doctor working at Levy Mwanawasa General Hospital and the University Teaching Hospital. Ng’uni could hardly deny his wrongdoing as his shenanigans were clearly caught on security camera and he was seen wearing a white gown similar to what doctors wear. His case was further solidified by security officers who caught him red handed at Levy Mwanawasa Hospital after being tipped off by alert patient’s relatives as he once again attempted to perpetrate more crimes. Ng’uni pleaded guilty to four counts of impersonating a medical doctor, a single charge of obtaining money fraudulently
and goods falsely. Among the goods he is accused of stealing are two laptops. The Judge, Magistrate Sheila Mweene, sentenced him to serve his jail time with hard labour as a deterrent to people that might be scheming to commit similar crimes in hospitals.
Ng’uni addressing the court pleaded for a lenient sentence. He apologized for his conduct and asked for forgiveness. Given his repentance and public outrage Ng’uni is unlikely to appeal his sentence.
This order, which is limited to Argentina’s bonds issued in New York, could be extended to bonds issued under British law, denominated in euros and with no link to the US.
And the case of BNP Paribas is the most spectacular evidence of the trend.
Worried about that possibility, investment funds have asked for a clarification from the judge, APF reports.
After lengthy negotiations, France’s largest bank, BNP, agreed to pay $8.9 billion and pleaded guilty to moving billions of dollars through the US financial system on behalf of Cuba, Iran, Myanmar and Sudan, all blacklisted by US economic sanctions.
‘This court should clarify that the injunctions do not apply to the foreign third parties that process payments on the euro bonds,’ they said in a motion to the court.
Dollar leverage – Don’t mess with us
Across these three issues, the Americans are sending a ‘very clear’ message, said George Ugeux former New York Stock Exchange vice president: ‘Don’t mess with us.’
US authorities claim the use of the dollar alone gave them the right to order a criminal guilty plea and the record penalty on a foreign bank, a point that has become source of friction with French officials. AFP reports that Michel Rocard a former French prime minister railed against ‘abuse of power’ in an op-ed article in Le Monde newspaper, accusing the US of a kind of economic ‘occupation’ based on the extraterritoriality of its laws.
His case attracted lots of media and public attention as his crimes to swindle sick people were viewed with ‘disgust’ and are considered ‘a terrible breach of trust’ by the public. The judge expressed similar outrage and told a somber courtroom audience, that his ‘actions were an insult to the medical profession’.
Deciding a case linked to Argentina’s debt default in 2001, a US judge recently ordered Buenos Aires to suspend payment to its creditors unless it pays up on debt held by bond-holders who refused to join others in the 2005-2010 restructuring of the country’s defaulted debt.
AFP also reports that Farhad Alavi, a Washingtonbased lawyer specialized in sanctions, said in an interview, ‘The sanctions regulations have been enforced more and more aggressively in the past 10 years and their use has been broadened from a response to 9/11 to a larger tool of foreign policy’.
‘Not My Boss’s Business Act’ Speaking up Colorado’s Mark Udall said women should never have to ask their bosses for a ‘permission slip’ to access birth control or other critical health services.
According to this expert, the world’s leading economic power still wields ‘considerable leverage’ thanks to the dollar, the world’s reserve currency. Stung by the BNP Paribas affair, French authorities have called on Europe to make progress in advancing the use of the euro. Christophe de Margerie, the head of French oil group Total, backed up that call, publicly declaring: ‘Nothing prevents anyone from paying for oil in euros.’ Full article on AFP
Ghana court orders halt to building work at gas facility
Sen. Tom Harkin, chairman of the Senate Health, Education, Labour, and Pensions (HELP) Committee, said the bill ‘protects the right of all Americans, men and women alike, to make decisions about their medical care in consultation with their doctor, not their boss.’ ‘Bosses should stick to what they know best: the boardroom and the bottom line,’ said Marcia D. Greenberger, co-president of the National Women’s Law Center. ‘Stay out of the bedroom and the exam room.’
W
e are here to ensure that no CEO or corporation can come between people and their guaranteed access to healthcare,’ Democratic senator Patty Murray, of Washington state, said, speaking at the Capitol.
However, the bill failed to pass a vote Wednesday July 16, as expected. The Senate voted 56-43 against invoking closure on the legislation. The bill would have effectively annulled the Supreme Court ruling by making it impossible for employers to claim exemption
‘I hope Republicans will join us to revoke this court-issued license to discriminate and return the right of Americans to make their own decision about their own health care and their own bodies.’
Ghana court orders halt to building work at gas facility: Getty Images
A
high court in Ghana’s western region has ordered the state-run Ghana National Gas Company (Ghana Gas) to stop construction at a gas plant.
This is until the government pays land compensation to local chiefs, the company said. The 650 million US dollars plant is designed to process gas from the offshore Jubilee field but completion has been delayed, curbing oil production capacity in Ghana, a country that also exports gold and cocoa.
Murray’s statement is against the Supreme Court’s Hobby Lobby ruling that held for-profit companies can deny contraceptive coverage under their company health plans if it goes against a sincerely held religious belief.
‘The (traditional) chiefs went to court and obtained a 14-day interim restraining order against Ghana Gas. This means we will have to stop work at the site and resolve this issue quickly,’ Ghana Gas spokesman Alfred Ogbamey said.
Although the court issued a narrow ruling focused on contraception in the Hobby Lobby case, some Democratic leaders fear the decision sets a precedent that could allow employers to deny other health care coverage based on religious beliefs. ‘If bosses can deny birth control, they can deny vaccines, HIV treatment or other basic health services for employees or their dependents,’ Murray said. Murray, joined by fellow Democrats and women’s rights groups had proposed legislation intended to restore the contraceptive coverage requirement under the Affordable Care Act, nicknamed ‘Not My Boss’s Business Act’. The bill, the Protect Women’s Health from Corporate Interference Act, mandated that employers couldn’t disrupt coverage for contraception or other health services that are guaranteed under federal law.
from the Affordable Care Act’s full contraceptive mandate through the Religious Freedom Restoration Act. ‘We cannot allow Congressional Republicans or five men on the Supreme Court to reverse measures that have improved women’s access to affordable health care, including contraception,’ Reid said in a statement after the vote. Democratic Sen. Chuck Schumer also claimed after the failed vote that the Supreme Court’s decision that employers don’t have to buy employees all types of contraception blocked health care for women.
Full article on ABC News
‘We are in talks with the chiefs and we will be going back to court quickly to have the restraining order lifted so that work can continue while we also sort out the compensation issues amicably,’ he said. The company still has to tie deepwater pipes to offshore production to make its September completion target, he said. Ghana Gas in February signed an agreement with Tullow Oil, lead operators of the Jubilee field. The government hopes that the gas project’s completion will boost power supply and help reduce spending on light crude imports for thermal power generation.
Reuters
Commerce Gazette 17 SME Special Jubilee Edition 2014
Successful Entrepreneurs
have Mastered - the Hustle
W
e have all heard of SME that have had great ideas that go nowhere because they lack belief in themselves. We’ve seen others with mediocre ideas that have gotten funding and gone further because they don’t take no for an answer. Talking to SME that have made it we learn that success comes to those who have a level of unwavering belief in their own ability to make it.
These entrepreneurs come in all shapes and forms. Entrepreneurialism can be planned or ventured into out of necessity. With a focus on a couple of startup companies, Commerce Gazette met entrepreneurs during the Agriculture and Commercial Show, spoke to them about their business ideas and heard their exciting stories of their development and sustainability.
We got some direction on what drives the businesses and how they mitigate risk. Interestingly, many times Zambian entrepreneurs don’t have a business model that they follow. They navigate their growth by sheer instinct and take pride in launching an idea and seeing it grow somewhere down the road. Sometimes the SMEs make judgments that pivot their business so that they are hitting their target adequately. Other times they miss the mark altogether. But real hustlers see this failure as a lesson and an indicator of changes they need to make. That’s business.
The idea of working with metal started sometime back. When I thought of making chairs and desks to sell to private schools. One fateful day I woke up, bought the steel and started welding a chair. The following day I was in a lot of pain because light emission and smoke had gotten into my eyes and for 2 days tears dripped from them. That’s when I realized that my lack of metal welding skills was a problem and I stopped pursuing the idea. But my interest of working with steel has always been there. CG: What made you persevere in the metal business? JN: After selling the first bunker bed, we made a swing and it sold, we made another swing it also sold and that was when I said to myself ‘ok, I can make anything’. People would pass by and liked what we were making and that propelled me to start the business. Our major line of business is bunker beds, then swings and now we are making garden chairs. CG: How did you over come your lack of training? JN: I believe in trying thing out for myself first. When I decided to get in to the metal fabrication business I went to South Africa to buy the full workshop of bending machines and I was trained on how to use them. It was important for me to know how to weld the furniture so that I’m not exploited by my workers and with my training am able to teach them on how I want the furniture made. With my education, I’m able to appreciate the concepts of why something is done a certain way that someone without the training may not appreciate although they might have the welding skill. In my metal business I come up with all the concepts and we work together on fabricating the furniture. CG: Where does this entrepreneur spirit come from? JN: Despite being an accountant I ‘ve always been an entrepreneur. I have a smallholding in the Copperbelt where I farm and keep cattle as the main activity. I also grow soya beans and maize. In the rainy season I grow tomatoes, that’s when it fetches a good price and I’m able to make an income of about K15,000 annually as the farm is not very big. CG: How do you manage your profession and farming? JN: I appreciate the training I went through at Copperbelt University when I was studying for my first degree. They taught me multi-tasking. We worked under pressure and sat a lot of exams. We were taught to manage theory and appreciate concepts. Once you understand them, you’re able to work under
pressure. So that helped me. Even at work, I would have a heap of files but I was able to manage all my tasks. As my business grew I quit working because I couldn’t find time for all my entrepreneurial ventures. During weekends I always lacked time to supervise my businesses.
W
hat began as a request from his wife to buy bunker beds for their children, has blossomed into a full-scale production and manufacturing business to make anything out of metal with the exception of clothes, Justine Nkonge says.
His business, Natanko General Dealers, is located in Chilenge, Lusaka although his hails from the Copperbelt. Justin recalls that in an effort to find bunker beds that would be sturdy and last a lifetime, he was reluctant to buy the fancy looking beds that he saw in the shops because they were cheaply made and dismantle in no time.
‘
For about 6 months I withstood my wife’s pressure until one day the pressure was too much. I kept on telling her that I was going to make the bunker beds. I had the plan in my head but what I didn’t have was the skill of cutting and welding. This meant I had to look for a person with those skills. Once I found a welder, I designed the sketch on how to make the bunker bed and he made them.
’
Justin confesses that the first attempt left a lot to be desired but despite the modest attempt his children still used the first bed he ever made. On their second attempt a passerby admired the bed and offered to buy it. ‘We sold it for K2500 and that’s where the business concept took hold. I realized that people might like the beds because they were also looking for strong affordable furniture.’ Encouraged by the public response to the bunker beds and enjoying some success, Justin wants to expand his brand of metal furniture selling. Justin shares his journey with Commerce Gazette – detailing how he hopes Natanko General Dealers can became the brand for future and how he plans to expand his line into a full lifestyle brand. Commerce Gazette: Have you always had the desire to start your own business? Justine Nkonge: I’m an accountant by profession; a taxman. I trained at the Copperbelt University and I graduated with a bachelor’s degree in accounting.
CG: How is the business progressing? JN: The business has been progressing very well and it is self-financing. I haven’t gotten any loan. When I resigned from ZRA I was given my dues that were slightly below K100,000 which I used to buy the different machines we use in the workshop. And as for steel, I’m financing that from the accounting consultancy services I started. I intend to get financing to buy bigger machines so that I can industrialize the business and make products for exports. CG: How many workers do you have and do you have the capacity needed? JN: I have employed 5 people so far, 2 of who are full time. I’m trying to train someone to be in charge, who I can trust to work according to the standard I want. But so far I’m managing. CG: How much is your production worth and how do you get clients? JN: I currently have products worth K60,000. This is not a monthly turnover as the business is new. We started operating this year in March. We have 3 displays of our furniture by the Woodlands Stadium. When customers call and place an order we are able to make the furniture in 2 days. But we have gotten a lot of interest from the Agriculture Show where we are exhibiting. We are slowly perfecting our skills and I aim for quality. If someone complains about anything we sell, I feel bad and I will ask them to return it even if it mean I lose out on costs. I always want to give customers furniture that is of good quality and is affordable. CG: What motivates you? JN: I believe it is only hard work that can turn things around and lead to success these days. I am a law student and this has further trained me to sleep few hours. I have no problem sleeping between 4 or 5 hours a day. I work with my employees until midnight and they get the day off. CG: Do you have any spare time for yourself and family with all your ventures and study? JN: I still have time for my family; I spare time for my wife and children. If anything, after I quit formal employment I have more time for them. I sometimes say ‘today I’m going to be at the office up until 12:00hrs, then in the afternoon I’ll take my children somewhere to play’. At my farm I have a reliable manager who works independently and I can take more than a month without going there but he informs me of the progress, even when we have a new calf. That’s very encouraging. The founder of Natanko General Dealers hopes to open a couple of furniture stores in the near future.
18 Commerce Gazette SME Special Jubilee Edition 2014
Kamwala South designer launches luxury shoe line
I
t is often thought by those who have not started a business that the main reason why someone would become an entrepreneur is to make money. The truth, however, is never that simple.
It was wonderful to see that many people attending the Agriculture show appreciated the quality of his Zambian made products and many more were impressed with the standard of his shoes.
CG: How big is your staff? Chihungu: When I started it was just me but now I have two other people working with me. As the business grows I would like to employ more.
Talking to Chihungu, the overwhelming sense you get is what motivates him most is his passion for his work. He has a talent that compels him to do what he loves the most. He has a vision that he is passionate about.
CG: How long have you been in business? Chihungu: I’ve been in business since 2009. I like to be creative and I chose to start making shoes and leather products because I love working with leather more than anything else.
Chihungu’s handmade shoes business is growing slowly – with demand increasing following the exposure the Agriculture show has given his products.
CG: How has the market received your shoes? Chihungu: The response I’m getting from people during the Agriculture Show is very overwhelming because most of them don’t believe that these products are made in Zambia.
CG: How come your shoes don’t have your trade name? Chihungu: We get soles for the shoes from Zimbabwe and South Africa as we don’t have a company that makes soles in Zambia. This can be a challenge for our business, if the supplier don’t have enough in stock then it means it will take time for us to get the stock.
It’s really beautiful to see his genuine passion as he talks about his shoes. With only four or five pairs of handmade slippers, he opened up for business. To see what he is designing is amazing because often Zambians look at locally produced products as inferior. Chihungu means eagle in Luvale. This name is very appropriate for his business as his creations that are beautifully handcrafted are likely to soar in sells.
Chihungu’s shoe collection seem to be inspired by international men’s brands the likes of Prado, Hugo Boss, Ermenegildo Zegna, Salvatore Ferragamo and Kurt Geiger. His shoe making skills are truly impressive. He has shoes that are made from reptile skins and come in various colour combinations. They have a classic cut that will work with whatever clothes a person wears. The shoes range in price from K200 to K400 and going by the shoes in the malls Chihungu’s creations are definitely worth buying. Chihungu says he uses genuine leather skin which makes the shoe more durable. CG: Where does your passion come from and what inspires you daily? Chihungu: God really inspires me because there are times when I feel low and usually the word of God really inspires me and also when I look at nature it inspires me a lot. The other thing is just a day-to-day thing where you’d want to improve yourself. CG: Have you had any formal training? Chihungu: Yes. I’ve taken some courses and I have a passion for designing.
CG: What support has your business received from government if any? Chihungu: The support we receive comes from Ministry of Commerce through the UN and ZDA initiatives. Government is supporting us by giving us the opportunity to showcase our goods on their stands at trade shows such as here and at the Ndola Trade Fair. Government facilitated our travel and accommodation as well as the exhibition space. Government is assisting us a lot. Exhibiting at the Agriculture show has been like my market research. I get to measure the market demand and appreciate the feedback I get from customers. CG: What are your plans for your business’ future? Chihungu: I want to see myself big. But I understand there are a lot of things involved to get there. You have to be focused and financially disciplined. So in the near future we hope to employ a lot of people and open up our own shops where we can sell our products. Chihungu is motivated to take the lead and follow his dreams, especially that the job market is still not great in Zambia. Entrepreneurs accelerate job creation by following their dreams, taking risks and putting themselves out there. Chihungu is an inspiration for other youths.
A Growing Company –
Sikale Wood Manufacturers
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t takes time to build a successful business. Making the leap from a small player, to become a major consumer-products maker takes more than courage and tenacity.
Sikale Wood Manufacturers Limited is a medium size business by Zambian Standards. It’s named after the place where most of the timber it uses is cut in Western province. As a medium size business its operational and personnel challenges differ from SME’s like Natanko General Dealers and Chihungu Creations largely due to its sales and production volumes, coupled with the initial investment capital. Sikale is owned by a single shareholder who happens to be chinese. It was started in 2006 and was initially involved in the transport business providing commercial trucks to move goods including timber. The founder of Sikale noticed the opportunity in manufacturing timber products and took the leap. Sikale now makes top of the range wood products that include household, commercial and fireproof doors which is their core business. Besides doors they also manufacture furniture, such as bedroom and dining room suites as well as living room and kitchen cabinets. Many small scale companies in Zambia dream of moving up. But expanding to that next level often takes risk. In Sikale’s case it appears the risk is paying off. Commerce Gazette chats to Sikale Wood Manufactures’ technical sales manger George Masvaure of the company’s growth. Commerce Gazette: How many people do you employ? George: Our labour force is in excess of 160 people. We have a saw mill in Kaoma where we employ about 40 people and another 120 people work from our head office in Lusaka. CG: Who is you major market? George: I would say construction companies are our main customers. They buy a lot of our products. Many of the construction companies we work with are working on government projects and are building schools. We also have some Zambian customers that buy our doors. CG: What is the price range of your doors? George: Our standard door is selling at about K1,150 and the doorframes sell at about K550. Most of our doors are made from pure rosewood but we have other species like mukwa and teak. We do not install the doors because our major business is production and we make between 30- 40 doors daily. We do refer carpenters who we know have the competency to carry out the installation service and we also supervise the fitting on large projects. CG: In terms of the investment that you’ve made what is the capacity and your long-term goal for producing this type of furniture? George: In future we hope to ultimately produce 70 doors a day. We still have a lot of guys who are learning the skills needed in our
industry so we don’t want to overcommit. We are just trying to move the business forward gradually. We imported equipment in excess of US$250, 000. There is a variety of equipment because we have different departments that are specializing in the different furniture we make. The departments include one for doors, another for furniture and yet another for parquet floors. Our company is still growing and we are not yet where we want to be. CG: Has the ban on cutting timber affected your business operations and do you export your goods? George: Most of our products are just sold locally. We haven’t started exporting our products but in the near future we are looking forward to that. At the moment we are concentrating on capacity building before we get to that stage. Obviously we have to satisfy the local market before we start spreading our wings. There has been a series of timber bans in the recent past, I think those are government policies and for government to come up with such a policy it means that they have observed some irregularities in the industry. But I believe there are some other drivers that are causing deforestation. CG: What are the factors causing deforestation? George: It seems Zambia does not have any control on tree cutting. In this country I think by and large, a lot of people don’t use electricity as the source of cooking or for other activities. The most dominant source of energy for most Zambians especially those in rural areas is charcoal. This is evident and can be seen by how charcoal is being sold in Lusaka and in markets countrywide. It’s a source of livelihood. A company like Sikale will not start cutting down trees in discriminately. We have specialist foresters who really know how to handle forests and they also know the does and don’ts of the industry. But of course the industry is quite big. The fact that timber comes from the rural areas where the majority of the people live, I don’t know how deforestation can be controlled and I don’t have much information on that. But speaking on behalf of our company, I don’t think we’ve contributed at all to any kind of deforestation, we don’t work like that. CG: Since Sikale Wood Manufacturers is cutting down rosewood trees that are a thousand years old, do you have any policy within your company to re-plant these species? George: Well, we have that in mind but I would say probably it’s the implementation part that might be a challenge. You don’t just wake up and say I’m going to go there and start planting trees. I think there are a lot of procedures that need to be put in place. Tree planting is not a one-man activity. Government needs to be involved including all the other stakeholders. We need to put our heads together and address areas where deforestation is dominant. We should say ‘what can we do as a country, what can we do as an industry?’ We need to work collectively and it’s not a responsibility that can rest upon an individual company.
Wood furniture produced by Sikale wood manufactures
CG: Do you find that your workers have adequate carpentry training or do you provide them with skill training? George: From my personal observation Zambia does not have many institutions in skills training. We have got very few and these just teach the basic carpentry skills. I think this is one area that the government needs to look at. But we try to train people from scratch. I have the competency to work with any person and I can train them the complete carpentry skills. I’m a wood machinist by profession. I only have a diploma but it took me 5 years to go through the training in Zimbabwe. In those 5 years we had a 2-year industrial attachment component. By the time you leave the attachment you are almost a seasoned carpenter, you now know the basic principals of the industry, which is not taught in Zambia. A person attends a vocational training center for 6 months and then they graduate. The students are trained just to go into an informal setup where they can actually wake up and start making chairs just to earn a living but not beyond that. I feel we need to take it to another level. The government needs to setup some proper training institutions like technical colleges, which even offers up to bachelor of technology degrees.
Commerce Gazette 19 SME Special Jubilee Edition 2014
African Business News South Africa signs deals
Botswana introduces medium-term
expenditure framework
The plan also intends to help the country in running budget surpluses in order to rebuild government reserves that have fallen significantly in recent years.
worth 5 billion rand
with Germany
To support the commitment to the resource allocations approved under the MTEF, a number of prioritisation, control, and accountability arrangements need to be put in place. ‘These arrangements form a key part of the MTEF and are required to increase the legitimacy of expenditure allocations; ensure that once the allocations are decided upon, they can be executed effectively,’ otswana has committed to introduce a Medium- said the International Monetary Fund. Term Expenditure Framework that will provide an aggregate revenue and fiscal projections. Some of the arrangements state that the government must demonstrate that it is meeting its previously stated commitments, The Medium-Term Expenditure Framework (MTEF) and if not, state reasons for any deviations. will also provide a more explicit linkage between the National Development Plan (NDP) priorities and According to the African Economic Outlook report, Botswana’s budget allocations by adopting a medium-term economic performance improved in 2013, with real GDP growth budgeting horizon. estimated to have increased to 5.4 per cent from 4.2 per cent in 2012. Botswana’s short-term forecasts to remain sound, premised on improvement in the diamond industry. PHOTO: Diamond Vault
Germany ambassador Horst Freitag says his country will help South Africa meet its challenges.
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outh Africa and Germany have signed five agreements worth approximately six billion rand, cementing their existing relationship.
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South Africa’s finance minister, Nhlanhla Nene, welcomed the support from the German government saying he was looking forward to the successful implementation of the cooperation which is aligned to the priorities of South Africa’s National Development Plan.
The proposed MTEF is aimed at maintaining expenditure discipline to meet government’s objective of reducing spending to 30 per cent of Gross Domestic Product (GDP) from the current 36 per cent of the GDP.
Germany has been giving financial and technical assistance to South Africa over the past 20 years. It is estimated that during the past two decades, South Africa has received over 14 billion rand in technical and financial assistance.
Namibia records total debt growth ‘The annual growth rate for total debt has moderated to about 13 per cent over the past few months. The growth is mainly on the back of increased debt uptake in the private sector sphere. We note that government debt has increased to 30.53 billion Namibian dollars,’ the Bank of Namibia said.
This amount has gone towards empowerment, transfer of skills and building of institutional capabilities. ‘The partnership is focused on the areas of energy and climate change, HIV/Aids prevention and good governance, which includes violence prevention and trilateral cooperation,’ a joint statement issued by the two countries explained.
‘During the same period, household debt increased from 32.89 billion Namibian dollars to 38.10 billion Namibian dollars, with the year-on-year growth rate as high as 15.81 per cent as recorded in April.’
Namibia’s total debt is comprised of domestic and foreign government, corporate and household debt. PHOTO: Getty Images
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otal Namibian debt grew by 1.54 per cent to 92.5 billion Namibian dollars during April 2014, according to the Bank of Namibia.
The country’s total debt, which is comprised of domestic and foreign government, corporate and household debt, represents an annual3qised growth rate of 14.41 per cent.
Côte D’Ivoire
Private sector credit extension growth (PSCE) stood at 15.88 percent year-on-year and the total debt to GDP ratio is expected to stand at 73.63 per cent. ‘The growth in PSCE is mainly attributed to both household and corporate debt which grew by 15.81 per cent and 15.99 per cent respectively. The growth is a result of monthly growth rates of 1.92 per cent and 1.72 per cent in the category of other loans and advances and mortgage loans respectively,’ the bank said. It added that foreign reserves edged higher to 17.48 billion Namibian dollars from 14.59 billion Namibian dollars and that the reserves are still sufficient to cover three months’ worth of imports. The labour relations environment was one reason why the South Africa Reserve Bank had downgraded growth prospects for the economy.
climbs recovery ladder
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The country’s short-term forecasts through to 2015 remain sound, premised on improved prospects in the predominant diamond industry and the economy is set to remain stable due to the proposed MTEF.
‘The strikes are very concerning and the spill over from one industry to another is also concerning. It’s encouraging to see that the government is now involved in trying to get the parties to start negotiating,’ he said.
ôte d’Ivoire is on the path to economic recovery, boasting high economic growth rate projections and investment into local structures.
‘The first thing that the country needs to achieve is to get their inaugural sovereign rating. They’ve enlisted the help of Fitch and Moody’s, and that’s imminent. Once that can happen, then the stage is set for them to go to international markets,’ Ronak Gopaldas, country risk analyst at Rand Merchant Bank, told CNBC Africa.
South Africa
However, South Africa’s weakening is not in isolation especially [for] those countries directly depending on the southern African country.
‘It will be their first foray into international capital markets since the conflict, and the default on their existing 2032 Eurobond. It’s going to be an interesting gauge of investor appetite towards the country that has made substantial strides in the past few years.’
economic
outlook
‘Growth in Sub-Saharan Africa is expected to remain flat at around 4.7 per cent in 2014 mainly due to weakness in South Africa and oil-infrastructure bottlenecks in Angola, two of the region’s largest economies,’ read the World Bank Projected Outlook report.
According to analysts, Côte d’Ivoire’s prospects are significantly positive, and its economic recovery through major public works projects produced had an estimated growth of roughly 8.8 per cent in 2013. Gopaldas added that given the fact that the country lost roughly a decade of infrastructure and reconstruction efforts, this setback might slow the country’s prospects going forward. President Alassane Ouattara is however a former deputy managing director of the International Monetary Fund and a well-known technocrat who, according to Gopaldas, which could prioritise investment as a major priority. ‘Generally, if you look at the economic prospects and what’s been achieved under the Ouattara administration, you’ve got substantial improvements in the business environment, you can set up a business within 48 hours, you’ve got a one-stop shop for investment and investment volumes in the past year increased by 131 per cent,’ Gopaldas explained. ‘In addition to that, you’ve got a court of arbitration for legal disputes, a new mining code was passed, a new investment code was passed, and private capital and investment has been prioritised as key to unlocking the economic potential.’ Last year, the country’s economy expanded by around 8.7 per cent and 8.8 per cent, and Gopaldas anticipates that economic growth will be driven across sectors. Côte d’Ivoire is also the world’s largest cocoa producer, will be an additional growth driver. ‘All of that, when you’re driving infrastructure investment and underpinned by a national development plan, aims to turn the country into an emerging market by 2020. I expect growth to be broad-based across sectors as the country continues with its economic recovery,’ said Gopaldas.
20 Commerce Gazette SME Special Jubilee Edition 2014
could see gloomy Gill Marcus South African governor,
On sub-Saharan Africa, the Bank noted that the risks to the he South African economic outlook is gloomy, region’s outlook were significant and stem from both external and Old Mutual Wealth’s investment strategist, Izak domestic factors. Odendaal told CNBC Africa. ‘External factors include lower commodity prices brought on Odendaal posited that it was interesting that the South by weaker growth in emerging markets, and increased market African governor, Gill Marcus said the challenges facing volatility accompanying the tightening of global monetary the economy were self-inflicted leaving no room to keep conditions. Political instability, conflicts, and inflation are among the major domestic risks.’ blaming external players.
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China’s manufacturing shift into Africa
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ew Chinese factories in Africa will test whether In addition, manufacturing-heavy provinces in China now count low-cost manufacturing can be as successful in for the bulk of China’s manufactured export products. Real the continent as it has been in China. wage inflation of 15 odd percent per year every year, however, means that the cost of production has begun to outstrip gains in ‘For the last decade or so, the speed [and] the rapidity productivity. of China’s very pervasive engagement in the continent has taken everybody by surprise, particularly African This, according to Davies, has been the key factor ratcheting economies and governments,’ Martyn Davies, Frontier Chinese manufacturing costs in their country. The industry Advisory CEO, said. is however hollowing out, with China starting to redirect manufacturing costs to other countries. Davies added that of China’s 70 odd Fortune 500 companies, arguably 50 of those are present in Africa or ‘It’s starting to move to neighbouring countries in Southeast state-financed. Asia: the Philippines, Indonesia, Vietnam, until recently perhaps Thailand. The questions for us in Africa [are] which African China’s state capital approach is however beginning economy or countries will start to attract this hollowing out to change, and market forces are instead becoming industry,’ said Davies. key drivers for Chinese companies to filter into African economies.
International Business News Bharti Airtel slumps on Credit Suisse downgrade
China Q2
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hares of Bharti Airtel slump 3.5% after Credit Suisse downgrades the stock to ‘underperform’ from ‘neutral’ and reduces the target price to rands 265 from R275, citing competition from rival Rel Jio’s, a unit of Reliance Industries.
growth mired at
‘Given its large spectrum holding and ongoing large-scale investments, we believe Rel Jio’s network at launch can add significant capacity to the sector 60-80% of Bharti’s current installed capacity,’ Credit Suisse said in a report.
7.4% on-year:
The stock was 32 ‘buys’, 9 ‘holds’ and 2 ‘sell’ ratings, Thomson Reuters data showed.
UK, Ireland offer joint visa to
Xi Jinping, Chinese President
Indian, Chinese tourists
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AFP survey
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hinese growth failed to accelerate in the second quarter despite government stimulus measures, an AFP survey predicts, with the world’s second-largest economy forecast to record its worst annual performance in 24 years.
ndian and Chinese tourists will soon be able to travel to the UK and Ireland on a single visa under a ‘ground-breaking’ scheme jointly announced by both countries to boost tourism. Under a new British-Irish visa scheme announced by Ireland’s minister for Justice, Frances Fitzgerald, tourists and business visitors from India and China will be allowed to travel freely in the ‘common travel area’ of Britain and Ireland with either an Irish or a British visa.
visitors from outside the EU need separate Irish and UK visas.
The scheme is expected to boost tourism and business visits as tourism to Ireland had increased from the two Asian countries by 68 per cent between 2010 and 2013. The British-Irish visa scheme was initiated by the Irish Naturalisation and Immigration Service of the Department of Justice alongside the UK Home Office.
A new fast-track application service, piloted last year for tour operators, is to be extended to all Chinese nationals applying to come to the UK. The change means Chinese visitors to the European Union will not have to submit separate visa applications for Britain.
Beijing introduced a series of policies in April in response to concerns over slowing growth, including tax breaks for small enterprises, targeted infrastructure spending and the encouragement of lending in rural areas and to small companies.
The move coincided with a visit to Britain by the Chinese prime minister Li Keqiang for a summit at which 17-billion pounds of trade deals were expected to be signed. In addition, a new 24-hour visa service will be available to Chinese nationals from August.
We’ve seen the introduction of some proactive fiscal policies and signs of targeted easing in monetary policy,
The scheme will operate through reciprocal visa arrangements whereby Ireland and the UK will recognise short-stay visas issued by each other for travel to their jurisdiction, allowing free travel between the countries for the duration of the visa. Currently international tourists and business
The new scheme, effective in a few weeks’ time, replaces Ireland’s short-stay waiver introduced in July 2011 which allowed visitors on a UK visa to enter Ireland for a short stay. The latest changes coincide with new visa rules for all Chinese visitors to the UK, as part of efforts to smooth ties between the two countries.
China’s gross domestic product (GDP) expanded 7.4 percent in the three months to June from the same period last year, according to the median forecast in AFP’s survey of 17 economists. The National Bureau of Statistics is scheduled to release the GDP data. Growth of 7.4 percent would match the result for the January-March period, which was a slowdown from October-December’s 7.7 percent and the worst since another 7.4 percent expansion in the third quarter of 2012.
Recent indicators - including growth in exports, retail sales and improvements in private and official manufacturing surveys -have helped allay worries over a possible destabilising drop-off in expansion.
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Liu Li-Gang, Hong Kong based economist with ANZ Bank, told AFP.
But he added: ‘Whether these mini-stimulus policies can be effective will depend on whether China will further relax its monetary policy.’
Indian premier Modi
Economists use the term ‘mini-stimulus’ to highlight differences with the massive pump-priming that took place in the aftermath of the 2008-2009 global financial crisis, measures authorities say they are not contemplating now.
pins hope on new BRICS bank
(L-R) Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Brazilian President Dilma Rousseff, Chinese President Xi Jinping and South African President Jacob Zuma join their hands at a group photo session during the 6th BRICS summit
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he leaders of the five BRICS countries, Brazil, Russia, India, China and South Africa, have finally committed to establish the long-discussed development bank with an initial authorised capital of $ 100 billion. The founding members will share the initial subscribed capital equally and the bank is expected to guide the group’s development endeavours as well as support projects that meet the growth priorities of BRICS nations. The bank is also expected to increase the amount of money loaned to developing countries to help with infrastructure projects as well as be a reserve fund to fend off currency and balance of payments crises.
BRICS countries have criticized Western-dominated financial organisations for having too much power in institutions like the World Bank and the International Monetary Fund (IMF) and for not giving developing nations enough voting rights within them. ‘The BRICS are gaining political weight and demonstrating their role in the international arena,’ Brazilian President Dilma Rousseff said after a signing ceremony. The bank will have a headquarters in Shanghai, China and the first president will come from India, Russia will nominate first chairperson of the Board of governors, while the first chairperson of the Board of directors will be Brazilian. A African regional center for the bank will be established in South Africa within the next two years. The bank is expected to compete with the World Bank, IMF and other similar regional funds. It would help reconfigure international economic governance.
Record tonne of ivory sold at auction in France drop in the price of ivory in recent months. A previous sale of a smaller volume raised 625,000 euros.
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China’s economy grew 7.7 percent in 2013, the same as 2012, which was the worst pace since 7.6 percent in 1999. For full-year 2014, the median forecast in the AFP survey is for an expansion of 7.3 percent - down from 7.4 percent in the last quarterly poll three months ago. If realised, 7.3 percent growth would be the weakest annual performance since the 3.8 percent of 1990 - the year after the Tiananmen Square crackdown. China in March set its annual growth target for this year at about 7.5 percent, the same as last year. The objective is usually set conservatively so as to ensure being met. The last time China missed the target was in 1998 during the turmoil of the Asian financial crisis. Officials including Premier Li Keqiang earlier this year emphasised that the goal was flexible - widely seen as a hint it may not be realised. In June, Li called achieving it the ‘inescapable responsibility’ of local governments and urged ‘no delay’ in action, an indication of concern. China’s leaders consistently say that slower growth is good for the country as they try to wean it off decades of over-reliance on the huge yet often inefficient investment projects that have underpinned expansion. The ultimate payoff would be a model where the country’s increasingly affluent consumers drive activity, generating more sustainable growth in the long run.
The fall in price is due to uncertainties in the ivory trade, notably Chinese buyers’ difficulty in obtaining export licenses from the European authorities.
Shen Minggao, a Hong Kong-based economist with Citigroup, said the ‘mini-stimulus’ seen this year shows ‘to some extent the government’s unwillingness to take the old approach seen in the past’.
Confiscated ivory tusks in Hong Kong on May 15, 2014 (AFP Photo)
‘Tonnes of ivory are languishing in French people’s attics, and we get requests all the time for it to be shifted,’ Debussy said.
ice (France) (AFP) - An auction house in Cannes, France, sold around 50 elephant tusks, or one tonne of ivory breaking its previous record in terms of volume.
Economists broadly see refinements to the limited stimulatory efforts continuing in the form of ‘targeted’ steps, though they differ on whether authorities will go so far as cutting interest rates or reserve requirement ratios for all banks.
The easing of export rules would ‘help the fight against poaching and save thousands of elephants’, according to Debussy.
Despite the short-term stabilising effect of the government efforts, some are pessimistic on the fullyear outlook given nagging concerns over China’s troubled property sector.
The entire haul was acquired by buyers from China, the world’s biggest ivory market.
Earlier this year, the French government destroyed three tonnes of illegal ivory in a public event.
‘In terms of volume, this is a new record for us,’ said Alexandre Debussy, the director of Cannes Encheres, which facilitated the sale. ‘Our previous record in the spring was 920 pounds (420 kilogrammes),’ he added.
Although a global ban on the trade of ivory was introduced in 1989, limited legal sales are allowed.
However, the 480,000 euros ($650,000) raised from the auction was lower than usual, due to a 30 percent
The auction house will donate a percentage of the proceeds nearly 5,000 euros, to an antipoaching organisation.
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‘Dark cloud’
Citigroup’s Shen says the sector, when dependent industries are included, accounts for about 40 percent of GDP, and sees ‘significantly’ slowing growth in property investment this year. Housing prices in major Chinese cities fell for a second consecutive month in June, an independent survey showed in May, further evidence of a deflating property bubble. Societe Generale economist Yao Wei calls China’s housing downturn the ‘dark cloud’ stalking the economy and expects it to linger awhile. ‘In such a scenario, we hardly expect any sustained or sizable growth acceleration,’ she wrote in a report.
Commerce Gazette 21 SME Special Jubilee Edition 2014
MCA – A Change of Culture
Part Two
Continued from page 6
of the project. Failing to comply risks the project going off track, as it delays the disbursement of funds, she says. Therefore, MCA Zambia which is the key link between MCC and the Zambian government, mandates Pamela to make evidence-based investment decisions, anchored on very rigorous monitoring and evaluation systems that will ensure that the project results are be achieved. To reduce incidents that might lead to the abuse of the funds, none of the US $354.8 million is deposited or administrated by MCA Zambia. The US government transfers payments directly to the vendors and only funds MCA Zambia’s administrative costs that are specified in the agreement when they are due. Currently MCC has released payment for project development costs. She adds that her office simply tracks the sum total payments made. In addition, Pamela says MCA Zambia must follow the MCC procurement guidelines when getting goods and services from vendors and when awarding contracts for the project. An external consulting firm is responsible for this process and they carried out internal audits to make sure everything is done in an open, fair, and transparent manner. With the emphasis by MCC on transparency and good governance, this means that even the recruitment of all staff working at MCA-Zambia is carried out through an open competitive process using external recruitment agents. The recruitment process was very competitive Pamela recalls, ‘I obviously had a comparative advantage since I worked on the projects and had an insight to its long term goals’. Pamela is not weighed down by the responsibilities of her job. ‘I feel that sky is the limit,’ she says Recalling her tenure at the Ministry of Finance where her work was centred more towards macroeconomics Pamela remembers the experience as positive. ‘As a macroeconomist I was dealing with numbers; GDP, inflation and employment. I also worked on the external side dealing with exports and imports. In addition, the budget was done from the department I was heading. The work was interesting and I enjoyed it. I felt good knowing we contributed to the budget statement. ‘But working for MCA Zambia, it is a different environment all together with a different skills set. We identified poor infrastructure in water supply and sanitation as a binding constraint to economic growth.’
‘What gives me joy is the fact that I can contribute to improving the lives of so many people in Lusaka especially the poor and vulnerable, and women in particular since the issues of water and sanitation affects them the most, particularly those living in peri urban areas. ‘I am confident that we are well on our way to sustainable, life-changing development that will make a difference in the lives of Zambia’s poor.’ Overseeing a staff of about 41 people at MCA Zambia, Pamela admits that there are times she finds her work challenging. ‘But I love challenges. Challenges just give me the passion to do more and learn more. I’ve seen the work culture of the Americans. They work hard. We have to give them credit for their work ethics. They don’t play around. And their systems are there to enforce this and make sure that people are accountable for their time at work. It an ethos that Zambian can learn from,’ Pamela says. Pamela attributes her parents as having had a huge impact on her life. ‘I grew up in a family where my mother and father were always there for us. They have taught me values of hard work. You have to work for it. I’m the first born so you can imagine that. I used to think they were very stricked but I don’t think so anymore and I’m so grateful that they raised me this way. They taught me hard work, integrity and honesty. ‘I remember people teasing me when I was working in the public sector, ‘Why are you working so hard, you want to become a permanent secretary or is there money involved?’ but it’s not even about that. I just know that I’m supposed to do my work, that’s why am employed, I must do my job. So it’s a big thing in Zambia, but I hope somebody can come up with some way of just changing this culture. ‘I would like to encourage the young people to choose a profession that they have a passion for. I was just passionate about studying economics.’ Pamela says money should not be the only motivating people to do things. ‘There are people I admire who carry themselves with a lot of integrity and I really do appreciate them because it is not easy in our environment and I look up to these people. And in my life I always put God first in everything that I do.’
By working towards addressing this problem, Pamela says, she is becoming a development economist evolving her professional skill and is extremely happy that her report ‘Constraints to economic growth in Zambia’ contributed to the project being selected by MCC.
Jokes Drunk Driving?
Drunk husband
Note: This isn’t funny, from one point of view, but then, from another...
A Highway Patrolman waited outside a popular bar, hoping for a bust. At closing time everyone come out and he spotted his potential quarry. The man was so obviously inebriated that he could barely walk. He stumbled around the parking lot for a few minutes, looking for his car. After trying his keys on five other cars, he finally found his own vehicle. He sat in the car a good ten minutes, as the other patrons left. He turned his lights on, then off, wipers on, then off. He started to pull forward into the grass, then stopped. Finally, when he was the last car, he pulled out onto the road and started to drive away. The patrolman, waiting for this, turned on his lights and pulled the man over. He administered the Breathalyzer test, and to his great surprise, the man blew a 0.00. The patrolman was dumbfounded. ‘This equipment must be broken!’ he exclaimed. ‘I doubt it,’ said the man, ‘tonight I am the designated decoy!’
A wife was in bed with her lover when she heard her husband’s key in the door. ‘Stay where you are,’ she said. ‘He’s so drunk he won’t even notice you’re in bed with me.’ Sure enough, the husband lurched into bed none the wiser, but a few minutes later, through a drunken haze, he saw six feet sticking out at the end of the bed. He turned to his wife: ‘Hey, there are six feet in this bed. There should only be four. What’s going on?’ ‘Nonsense,’ said the wife. ‘You’re so drunk you miscounted. Get out of bed and try again. You can see better from over there.’ The husband climbed out of bed and counted. ‘One, two, three, four. You’re right, you know.’
Drunken charity
First day job test On the first day his son joined the family firm, the founder took him on to the roof of the factory building and said, ‘I am going to give you your very first lesson in business. Stand on the edge of the roof.’ Reluctantly, the boy went to stand on the edge of the roof. ‘Now,’ said his father, ‘when I say, ‘Jump,’ I want you to jump off the roof.’ But, Dad,’ said the boy, ‘there’s a huge drop!’ ‘Do you want to succeed in business?’ ‘Yes, Dad. ‘And you trust me, don’t you?’ ‘Yes, Dad.’ ‘So do as I say and jump.’ The boy jumped. He crashed to the ground and lay there, winded and bruised. His father went racing down the stairs and ran up to him. That was your first lesson in business, son. Never trust anyone.’
‘Those MPs who want to make money from parliament should realise that it is a platform to serve people, they are in a wrong business if they want to make money at the expense of serving people.’
Miles Sampa
Patriotic Front Matero MP Commenting on MPs that insist on having their allowances increased Zambia Daily Mail | 30 June, 2014
One night, a drunk comes stumbling into a bar and says to the bartender: ‘Drinks for all on me including you, bartender.’ So the bartender follows the drunks orders and says: ‘That will be K7.00 please.’ The drunk says he has no money so the bartender slaps him around and throws him out. The next night the same drunk comes in again and orders a drink for everyone in the bar including the bartender. Again the bartender follows instructions and again the drunk says he has no money. So the bartender slaps him around and throws him out. On the third night he comes in, the drunk orders drinks for all except the bartender. ‘What, no drink for me?’ replies the bartender. ‘Oh, no. You get violent when you drink.’
‘It must also be noted that as a public servant, and as people who came into office to serve the masses, we must serve the masses diligently, in good faith and deliver that which we promised to the Zambian people and ensure that we live above board .’
Chungu Bwalya
African Parliamentarian Network Against Corruption secretary general Commenting that it is gratifying that serving ministers can be subject to investigations which is why the PF government reinstated the abuse of office clause. His comments were directed to Hon. Chishimba Kambwili whom he advised to remain calm and allow the law to take its course. The Post | 10 April, 2014
22 Commerce Gazette May-June Edition 2014 SME Special Jubilee Edition 2014