Maravi

Zambia’s dependence on foreign markets could reverse gains - LuSE

COMMENT - This is pretty obvious. Most of GDP is driven by the $10,000 per tonne copper prices. Without heavy taxation, there is no economic diversification which means that when copper prices go down, so does whatever minor spillover effects these historic prices have created. It is a crime.

Zambia’s dependence on foreign markets could reverse gains - LuSE
By Chiwoyu Sinyangwe
Wed 16 Mar. 2011, 04:00 CAT

ZAMBIA’S high dependence on foreign markets for investments and high copper proceeds forms risks that could reverse macroeconomic gains, says the head of LuSE audit committee.

Timothy Mushibwe, director and chairman of Lusaka Stock Exchange (LuSE), said the current robust performance of the mining sector, buoyed by record international prices was key in the current strong macroeconomic performance.

Mushibwe told company officials on Monday during the Institute of Directors (IoD) and International Finance Corporation (IFC) sponsored seminar of risk management that copper contributed 81 per cent of the export revenues and 76 per cent of all foreign exchange revenues, a huge source of risk for the country.

“This level of dependenceon one source for revenues is risky to say the least,” Mushibwe said.
“Dependence on foreign markets for investment as well as sale of copper proceeds is also risky. As these days no man is an island and so, equally our governments has put in measures to mitigate these risks by embarking on an economic diversification programme.”

Mushibwe said the current robust performance of the local economy was anchored on high metal prices, supported by good weather and donor inflows, among others.

“Currently, Zambia is enjoying rave reviews about our economy because of a combination of weather, fiscal, monetary and base metals and other factors are all working well together,” Mushibwe said. “The performance of copper prices and production is at all time high. The Treasury is relatively well resourced with increasing revenues from the mining sector, donor support is positive, the weather has been good and we have had two consecutive bumper harvests.”

Mushibwe said the capital market's sole dependence on government as a source of companies to list was risky.

“This focus on one door is fine when the going is good,” said Mushibwe.

“When positions change it becomes very difficult to survive. So, we must find ways to mitigate our risks.”

IoD Zambia president Julu Simuule said risk management was important for every organisation.

Labels: EXPORTS, LUSE

posted by MrK @ 4:13 PM