Blog

View posts by country or region

When Zambia last week approached the International Monetary Fund for financial help, another cash-strapped African country was surely watching: Ghana.

Lusaka and Accra face similar problems: runaway fiscal deficits – the result of electorally-driven increases in public sector salaries – and a swelling current account deficit that is pressuring the exchange rate.

The market response to Zambia’s request should convince Ghana to seek help, too. Continue reading »

To see how China is managing its growing clout over trade and investment around the world, it might help to take a look at how an economic hegemon evolved in the past – Britain’s colonists in eighteenth and nineteenth-century India.

In reality, China is still in the East India Company stage of global economic strategy – opportunistic and pragmatic rather than ideological and intellectually coherent. (It is something of an irony that the one-party autocracy of China is proving itself eclectic while the open-market democracy of the US has been doctrinaire.) And while there are some signs that China’s economic statecraft is moving towards the transparent and plurilateral, most of its policies towards other emerging markets are opaque and self-interested. Continue reading »

The Zambian kwacha has been one of the weakest currencies against the US dollar this year, losing more than 8 per cent of its value against the world’s reserve currency during the past month alone.

Source: Thomson Reuters

 Continue reading »

Mining may get a bad press in Africa, but there’s no denying the potential – and it’s importance. Nearly one quarter of the continent’s GDP is now based on extractive resources, the highest ratio among all regions, and between 2000 and 2008 alone, the value created from natural resources in Africa rose from $39.2bn to $240bn.

Yet this is all achieved despite a huge deficit in infrastructure, especially in rail. So a new Grindrod rail network deal in Zambia should be good news – if it can be delivered. Continue reading »

What do you do when you get downgraded by a major credit rating agency, citing deteriorating government finances and macroeconomic policies that “could deter investment”?

Issue more debt! Or at least that’s the possible plan from Zambia, once a credit darling issuing a eurobond at 5.75 per cent (cheaper than Spain, as everyone noted at the time), but now rated just ‘B’ by Fitch after a downgrade on Monday. That’s the same level as on-the-brink Ukraine, and just one notch above Greece, Egypt and Argentina. Continue reading »

Sometimes you get lucky – the International Finance Corporation certainly did when it picked Thursday to launch its first local currency bond in Zambia.

As the US Federal Reserve confounded analysts by announcing that it will keep its quantitative easing programme steady at $85bn a month, prompting a rally in emerging market assets, the private sector arm of the World Bank issued a $150m ($28.5m) kwacha-denominated note at 15 per cent. The four-year “Zambezi” bond is the first issued by a foreign organisation in Zambia’s domestic market, and will raise money for IFC’s local operations, officials told beyondbrics. Continue reading »

Zambia’s plans to make companies repatriate foreign currency export earnings back to Lusaka are part of an effort to crack down on tax avoidance, particularly in the mining sector.

But are they going to be enough? Perhaps not, according to the country’s vice president Guy Scott. Continue reading »

Checking prices

When Ethiopia set up its commodity exchange in 2008, few observers foresaw the demand it would generate. But five years on, the ECX has shown that a bourse can help tackle food insecurity in poor nations, and countries are now falling over themselves to replicate its successes. Continue reading »

Zambia’s second bourse is hoping to kick off trading “in weeks”, giving investors a chance to trade derivative products alongside the bonds and equities available on the main Lusaka Stock Exchange (LuSE).

Peter Sitamulaho, deputy chief executive of the Bonds and Derivatives Exchange Zambia, or BaDEx, said the bourse is just waiting on getting its first clearing member, which would guarantee trades: “When the first bank signs, we will be able to trade.” Continue reading »

The China-Africa debate is never far away. Lamido Sanusi, governor of Nigeria’s central bank, recently wrote in the FT of a whiff of colonialism. Much has been said about the two countries’ unequal relationship, based on China’s supposedly insatiable desire for African raw materials and for control of its mining assets.

But perhaps a bigger problem is not China’s dominance but China’s slowdown. What happens when the country doesn’t want so many of Africa’s exports? That moment may be coming sooner than you think. Continue reading »

Zambia’s government is the latest in sub-Saharan Africa to propose measures to claw back a bit more of the wealth extracted by foreign mining companies. But this time it’s not the proceeds of a major commodity like copper that are in the spotlight, but the rather more niche trade in emeralds.

Zambia is the third largest producer of the gemstone after Colombia and Brazil, and last Friday Yamfwa Mukanga, mining minister, gave mining companies a jolt when he said that any emeralds dug up in Zambia will have to be auctioned there from now on, too. Continue reading »

It began 20 years ago, carting meat around Lusaka in the back of an ageing Land Rover. Since then, Zambeef has grown into one of the largest companies in Zambia’s booming economy. Now it hopes to replicate its success in west Africa.

The FTSE AIM traded company, whose primary listing is on the Lusaka Stock Exchange, is a curious entity in the modern food industry: a near fully vertically-integrated operation which produces, processes, distributes and retails, all in-house. Continue reading »

Zambia announced on Wednesday that it had revoked the licences for a controversial Chinese-owned coal mine in the south of the country in response to violations of safety and environmental laws and a failure to pay mineral royalties.

Mining minister Yamfwa Mukanga said the government had taken over the mines and would operate them “until a suitable investor is found”. The decision highlights the sometimes troubled relationship between China and Zambia. Continue reading »

Announcements of new bond issues have been coming thick and fast out of Zambia this year, and the government’s Road Development Agency is the latest to get in on the act.

According to Bloomberg it plans to issue $1.5bn of debt to international investors later this year. Ambitious, certainly – will it work? Continue reading »

Zambia seems determined to keep itself in the frontier debt market headlines. Following its heavily over-subscribed 10-year $750m debut eurobond issue in September, other organisations want in.

December saw state energy company, Zesco, announce plans to tap international markets for up to $2bn. Lusaka city council followed with plans for a $500m municipal bond issue to fund new housing, and this week deputy finance minister Miles Sampa told Bloomberg that the towns of Solwezi and Livingstone would be next. Continue reading »