ZNBC director apologises for poor broadcasting
By Abigail Sitenge
Tue 27 Nov. 2012, 12:00 CAT
ZNBC director general Chibamba Kanyama has apologised for the institution's failure to meet viewer expectations during the Born n Bred Music Video Awards ceremony held at Lusaka's Government Complex on Saturday.
Kanyama, who posted the apology on his Facebook page, stated that a postmortem was being carried out by all departments involved at ZNBC, taking into account its own and viewer submissions.
"We know we cannot reach the CNN standard in the short run given they spent nearly K2 billion to host just one event at the same venue (largely to hire half a dozen OB trucks)," he said.
Kanyama noted that the Born and Bred musical awards were heavily followed by many Zambians and thus the number of comments on Saturday's outcome of the show.
"…A key stakeholder postmortem meeting will take place this weekend at a venue to be announced. Members of the public will, in the meantime, be given a chance to continue to make submissions…this effort is being made in order to make good of a noble event. Positive minds always rise from ashes," stated Kanyama on his Facebook page. "I am, therefore, calling upon enterprising Zambians to take this as a huge opportunity for personal or institutional leverage. Once again, I thank you all for showing interest in ZNBC activities even when we do not meet your expectations in many areas."
Kanyama's apology follows complaints from the public on the poor sound system and other technical hitches experienced during the broadcast of the awards.
Labels: CHIBAMBA KANYAMA, ZNBC
Read more...
Government's clarification on ‘nationalisation' timely - Kanyama
By Gift Chanda
Tue 07 Feb. 2012, 13:00 CAT
WYNTER Kabimba's position that the government will not nationalise private property is a positive pronouncement for continued investments, says economist Chibamba Kanyama. Kabimba, who is PF secretary general, on Saturday said the PF had no plans of nationalising private property, adding that the ruling party would govern the country based on the party manifesto.
"What we are going to do in government is all embodied in the party manifesto and nowhere in the manifesto do we say that we are going to nationalise any private property," said Kabimba.
Commenting on Kabimba's statement, Kanyama said the clarification was timely and positive for continued investment in Zambia.
He said earlier sentiments supporting nationalisation, although made with reference to the reversal of the Zamtel sale to Libya's Lap Green Networks and the current investigation on the sale of 49 per cent of Zanaco shares to RABObank, unsettled both local and foreign investors.
Since assuming office last September, President Michael Sata has reversed the sale of Zamtel's 75 per cent stake to LAP GreenN. The government is currently probing the 2007 sale of Zanaco to Rabobank of the Netherlands.
"The clarification by Kabimba that the party has no plans to nationalise industry is timely and positive news for continued investment in Zambia…a number of players interpreted the earlier comments as government position on the future protection of private property," Kanyama said.
"It is further advised that this position by Kabimba be endorsed by Cabinet owing to negative pronouncements by senior government officials and other patriots that implied the state was on a road to re-introducing parastatals."
Kanyama said it should be clearly understood that the path of privatisation and economic liberalisation has now been fully entrenched in the national economy so that any reversal to this policy would have dire consequences to investment.
He said since the privatisation of loss making companies in Zambia in the 1990s, the country has attracted several billions of dollars in investments in all sectors of the economy.
Kanyama further said the policy of protecting private property has further re-invigorated local participation in private enterprise through business activities and participation on the stock market.
Labels: CHIBAMBA KANYAMA, NATIONALISATION, PF, WYNTER KABIMBA
Read more...
Government removes three zeros from currency
By Bright Mukwasa and Kabanda Chulu
Tue 24 Jan. 2012, 13:00 CAT
THE government has knocked out three zeros from the kwacha, a move that is aimed at strengthening the local currency against major convertible currencies. And analyst Chibamba Kanyama has supported government's move to rebase the kwacha, saying economic stability should be anchored on strong production, exports and fiscal discipline so that the zeros do not resurface.
Meanwhile, finance minister Alexander Chikwanda says the government has reversed the sale of Zamtel because it was sold corruptly.
Announcing the government's key policy decisions during a media briefing in Lusaka yesterday, Chikwanda said the move to rebase the currency was necessitated by the government's effort to address the costs associated with an accumulated loss in the value of the kwacha, experienced during episodes of high inflation that undermined the kwacha's basic function as a store of value, medium of exchange and standard of value.
He said the move, which was approved by Cabinet yesterday, would result in the removal of three zeros from the denominations of the K1,000 kwacha notes and above.
"For example, K1, 000 will be K1, K5,000 will become K5, K10,000 will become K10, K20,000 will become K20 and K50,000 will become K50," Chikwanda announced at a media briefing in Lusaka yesterday. "In addition, the Bank of Zambia will also reintroduce coins for lower value denominations. In the accounting sphere, re-denomination of the kwacha will reduce time taken to input financial data and time spent by management to review it."
He said the decision would also reduce costs often incurred in customizing standard accounting packages that are purchased by businesses.
"The present situation in Zambia, where some organisations, especially banks, record values of trillions of kwacha and hence require further customization of such packages to widen data needs fields. Therefore rebasing the kwacha will be of great importance to businesses and will reduce inputting errors. This is further expected to reduce transaction costs for businesses and the general public, and will tone down on inflationary spirals," Chikwanda said.
And the government has raised the minimum capital requirement for commercial banks from the current K12 billion to K104 billion for local commercial banks and K520 billion for foreign banks.
Chikwanda said the government also agreed in line with section 83 of the banking and financial services Act to revise the minimum capital requirement for the commercial banks.
"The measure to raise minimum capital requirement for banks is intended to mobilise additional resources to enable banks participate more effectively in growing the economy by increasing credit available to the private sector. Further, the increase in the minimum capital requirement will make the banks more resilient to economic shocks," he said.
Chikwanda explained that the rebasing of the currency was not being done as a gimmick as those kinds of tricks had a tendency of backfiring.
"It must not be done as a gimmick I must assure because if it is being done as a gimmick, gimmicks backfire. If you have a very weak economy and you want to upgrade the economy by just removing the zeros from the kwacha when the goods and services are not available, the growth is not taking place then you are just taking yourself for a ride…we made reference to the fundamentals, the inflation is low, the economy is growing at a modest figure of seven per cent but there is no reason why, if we get the ministries and everybody working, our country cannot be growing at eight or 10 per cent per annum," Chikwanda said.
He said that was what made the Chinese economy to grow faster to even outstrip its neighbours like Japan to become the second largest economy in the world.
And Kanyama said the government should be credited for the decision as that was a pointer to the economy's stability.
"First, it is important to know that the debasing of the currency will not actually translate into an improvement in the purchasing power. However, the move will reduce transaction costs for many institutions. The process of change will be quite tedious, expensive and cumbersome for businesses and households, but will most likely have net benefits in the long run. The critical challenge will be acceptance among citizens as many will see this as a downgrading of their economic status; such as billionaires who will no longer be considered as billionaires; and for workers who will see a perceptive reduction in incomes," he said.
"The decision should be credited to many years of focus towards the stabilization of the Zambian economy. The government has simply signalled the economy is stable and what is needed now is to ensure this economic stability is anchored on strong production, exports, fiscal discipline so that the zeros do not come back again.
"It is a very strong challenge to the government to continue to attract investment, growth of the GDP above seven percent per annum, maintain the healthy reserves, stabilise debt-GDP ratios, maintain inflation at below 10 per cent. These are the actual and more realistic fundamentals that will support the debased currency and create an improvement in the lives of people. There will be another benefit of recalling money that has been kept away from the formal financial systems. Many individuals in the habit of storing money in mattresses will for a while be compelled to bring this cash into circulation. This activity will, however, have some temporary inflationary pressures."
But Ng'andu Magande has cautioned that the removal of zeros off the kwacha, if not properly handled, will send signals that the PF government has failed to manage monetary policies.
Magande, who is former finance minister, said rebasing or removing of zeros from a currency is usually done when the note is affected by external factors beyond government control.
"If they are external factors beyond government's control to appreciate its currency the way they did it in Zimbabwe because government could not control people who were bringing US dollars into the country, then you can pursue this path," Magande said, who is president for National Movement for Progress (NMP)
"And this is the impression that will be built in the market that the Zambian government has failed to manage its monetary regime to an extent where all they can do only is removing zeros thus creating a situation that the kwacha is very much valued, for example, from K5,000 to K5 per US dollar so this will create a psychology that the currency has appreciated but in fact it means it has failed to appreciate even to K3,000 because government has failed to take certain monetary measures."
And University of Namibia senior lecturer Dr Kazhila Chinsembu says the move to rebase the kwacha should signal a quick break from the previous regime of Rupiah Banda.
Dr Chinsembu said governments often re-denominate their currencies in order to reassert their credibility and commitment to low-inflation economic policies.
"As a matter of urgency, the Patriotic Front government of Michael Sata now wants to signal to voters in the post-election period that times in Zambia have changed, that the previous government of Rupiah Banda lamentably failed to manage our fiat currency, and that this move to rebase the Kwacha should signal a quick break from the past," said Dr Chinsembi.
Meanwhile, Chikwanda said only apostles of kleptocracy and high priests of theft who are not morally constrained to steal from the public were crying the loudest over government's decision to repossess Zamtel.
"We made a decision to restore Zamtel back to the people of Zambia.
Zamtel is a very viable company to be sold corruptly," he said.
Chikwanda said the PF government had irrevocable commitment to the public and would do everything possible to ensure the company continued to operate in the interest of Zambia.
Meanwhile, Bank of Zambia governor Michael Gondwe said the process of rebasing the currency was likely to be done within six months.
Labels: CHIBAMBA KANYAMA, KWACHA, ZAMTEL
Read more...
Lunda chief sees no use having ties with MMD
By Correspondent
Wed 04 Jan. 2012, 13:30 CAT
CHIEF Kanyama Makandakanda of the Lunda people of Mwinilunga says it is no longer necessary to associate with MMD because the party was in the opposition and would not bring development. Chief Kanyama stated that working with the ruling Patriotic Front would be more viable because it had the mandate of the people to deliver development.
He said when North Western minister Josephine Mwiya Limata visited him at his palace in Mwinilunga on Friday that the PF had made a promising start and that he was hopeful it would perform better than the MMD.
Chief Kanyama said he was not interested in satisfying his ego with government gifts but always wanted development for people in his area.
Government is constructing the Kanyama High School which is expected to be completed in July 2012 besides Kanyama camp livestock service centre, which has already received K800,000 million government funding.
Chief Kanyama, however, appealed to Limata, who was accompanied by provincial permanent secretary Dr David Shamulenge, to facilitate completion of the projects in time for fear of them being abandoned.
He called on Limata to help his people with a better water reticulation system as a borehole project had failed in the area because of low water table.
He said that Lunga and Muzhila river bridges were in a deplorable state and hindered the quick development of the area as transporters of materials shunned using them for fear of collapsing.
The traditional leader also advised government not to drag its feet in starting the construction of Muzhila Hydro power point which is expected to boost the area's access to power for emerging facilities in the area.
And Limata acknowledged the area's challenges and said the government would prioritise rehabilitation of feeder roads as well as bridges in the area.
She said the government would not engage in politicking over projects but shall find money to engage in development works even if the treasury had not specifically allocated funding for them.
Labels: CHIBAMBA KANYAMA, CHIEFS, MMD
Read more...
‘Statutory reserve ratios cut may not benefit SMEs'
By Chiwoyu Sinyangwe
Tue 08 Nov. 2011, 10:50 CAT
THERE is no guarantee that the reduction in the statutory reserve ratio for cash deposit will translate into lower cost of borrowing for small entrepreneurs, says economic commentator Chibamba Kanyama.
Kanyama said contrary to the government's intention of empowering Small and Medium Entrepreneurs (SMEs) through reduced cost of borrowing, the reduction in the statutory reserve ratios for cash deposits from nine per cent to six per cent might just benefit commercial banks and big companies.
The Bank of Zambia (BoZ) last week slashed its reserve ratios to cut the cost of borrowing for commercial banks and consumers in a bid to stimulate economic growth among SMEs.
BoZ also reduced the reserve ratio for both local and foreign currency deposits to five per cent from eight per cent previously.
In an interview, Kanyama described the slashing of the statutory reserve ratio as a "bold step" that was likely to translate into a dramatic downward shift in interest rates charged by commercial banks.
Some commercial banks in the country have announced a reduction in base lending rates in response to the government's recent monetary policy adjustments.
"The base rates are the minimum interest rates charged while giving out loans before other charges are computed," Kanyama said.
"In Zambia, base rates are generally benchmarked against treasury bills, but banks will charge as high as five percentage points above the TB rate. The real winners in this case are the large corporate entities with a long borrowing history whereas the SMEs, who are the focus of government in this initiative, will still have to bear with high interest rates. Worse still, Zambian banks have the tendency to craft loan agreements to favour them in the event that market conditions governing interest rates move."
Kanyama regretted that companies already on the loan book would still have to service the loans based on old rates and any efforts to refinance their loans to take advantage of the current reductions would yield very little in view of charges to be levied on them in management fees.
And Kanyama cautioned that pumping over K800 billion about two per cent of the value of the national budget might pose inflationary pressures, resulting in some marginal erosion of investor confidence.
The BoZ said the cut in reserve limits should inject K700 billion into the domestic banking system.
"As we release the clutch plate of cash injection, one hand should be on the handbrake to manage potential repercussions and this will require an effective use of open market operations, by issuing treasury bills," Kanyama said.
Last week, Bankers Association of Zambia chairperson Mizinga Melu said increased liquidity in the market would in the short term result in commercial banks scrambling for limited treasury bills or government securities on offer, but played down the likely inflationary pressures from the huge liquidity expected to be injected in this week.
And Kanyama said the government was likely to double the deficit financing from 1.7 per cent of gross domestic product to 3.5 per cent of gross domestic product for its budget likely to be around K25 trillion.
Labels: BANKING, BOZ, CHIBAMBA KANYAMA, INTEREST RATES, SMEs
Read more...
Chibamba cites Govt’s weakness in controlling mines
Wednesday, February 16, 2011, 13:16
Renowned economic consultant Chibamba Kanyama has called for the dismissal of all defaulting controlling officers cited in the latest Auditor General’s report.
Mr. Kanyama says it is unfortunate that despite the auditor general’s report revealing gross misapplication of public funds amounting to over K318 billion, culprits are still serving in public institutions.
He says what matters most at this stage is for government to ensure that people are answerable to all the queries and that a response from prosecuting agencies should be made public.
Mr. Kanyama adds that misapplication of public funds has a negative effect on the country’s economy stating that relevant authorities must see to it that the money is recovered.
And Mr. Kanyama has observed that Zambia’s threshold of shareholding in mining companies is very weak adding that this trend has weakened government’s control on the mining sector.
He says if the government is to maximize value for the mining sector; it has to increase its threshold in order to have a stronger voice to claim for dividend pay outs from the mining companies.
The economist has also blamed the mining companies for the ongoing debate on the reintroduction of the windfall taxes.
He says mine owners have been negotiating in secret on the matter and has challenged them to out in the open and explain the logistical problems that make it difficult for them to accept windfalltaxes.
Mr Kanyama was speaking on QFM’s morning breakfast show this morning.
Labels: CHIBAMBA KANYAMA, WINDFALL TAX
Read more...
Tonga’s will not produce a President without networking with others – Kanyama
By George Zulu in Monze
Sat 25 Sep. 2010, 04:01 CAT
CHIBAMBA Kanyama has said the Tonga speaking people will not produce a Republican president for as long as they do not see opportunities in networking with others.
During a workshop for youths organised by Matantala Rural Integrated Development Enterprise (M-RIDE) in Monze on Wednesday, Kanyama, a Lusaka economist, told the youths that he wanted to whisper something although he did not want to be misunderstood as a tribalist.
Kanyama, a Tonga from Chikankata, said politics among Tongas of not wanting to network with others had killed their opportunity of becoming presidents.
“The politics in the UPND that is what ‘killed’ Anderson Mazoka’s dream, because of not wanting to network with others, no strategy,” Kanyama said just before his presentation.
“We talk anyhow with hatred for others. When Mazoka died some people just spoke anyhow and injured many people in the process.
[Like Ackson Sejani's brainless statement that "It is time for a Tongan president". What was even more unforgivable, is that HH didn't not immediately distance himself from Ackson Sejani. That is what fed the tribalism rumours. - MrK]
Some of those who were injured could have been their supporters. You have to climb on the back of others for you to succeed even the ones you don’t like as long as they are useful to your success.
”If that is the strategy then no Tonga will ever become president of this country. So start networking, for our friends from other parts have done that before and have succeeded.”
Kanyama advised the youths to start networking in order to achieve their goals in leadership and business.
“Start networking because it is an important tool. You see opportunities in networking and use them wisely. We live in a changing world where there is demand for anything with value. Change requires discipline,” said Kanyama.
Over 400 youths from chiefs Hanjalika, Chona and Mwaanza areas gathered at Kasaka Basic School, 50 kilometers east of Monze, to get tips on how to become successive entrepreneurs.
Labels: CHIBAMBA KANYAMA, M-RIDE, POLITICS, TRIBALISM, UPND
Read more...
Expert condemns excessive blame on global crunch
By Kabanda Chulu
Wed 28 Oct. 2009, 04:00 CAT
FINANCIAL market analyst Miles Sampa has said it is now evident that Zambia should stop blaming her shortcomings on the global financial and economic crisis.
And former Economics Association of Zambia (EAZ) national secretary Chibamba Kanyama has said the world recession had negative impacts on Zambia through reduced copper earnings that contributed to the depreciation of the kwacha.
On Monday in Lusaka, the International Monetary Fund (IMF) African department deputy director Saul Lizondo and chief-regional studies division Abebe Salassie jointly released the economic outlook for sub-Saharan Africa (SSA) titled ‘Weathering the storm’ which stated that oil exporters and middle income countries were severely hit while low income countries such as Zambia recorded less impacts of the recession.
The IMF stated that while financial sectors in many SSA have come under strain, they have largely escaped the huge contractions and losses witnessed in many other countries and foreign exchange reserve levels were still close to historical highs.
Commenting on the report yesterday, Sampa said the misfortune of oil exporters was supposed to be Zambia’s gain through reduced prices though it did not happen this way.
“It is evident that we cannot blame all our shortcomings on the global crisis and some current economic challenges are not entirely due to the recession as evidenced by the IMF report hence the negative growth by oil exporters should have been more beneficial to us through oil prices that were reduced,” said Sampa.
“But we did not see more growth and this shows that we have several challenges to address if we have to benefit economically from any shifts in the global economy.”
And Kanyama said the IMF report should have focused more on the impact of the recession on Zambia’s financial sector which recorded severe impacts resulting in many banks failing to lend out money.
“The impact of the recession was huge in Zambia and it affected us on many fronts. Firstly, its impact on copper industry resulted in significant reduction of earnings and we also felt the depreciation of the kwacha resulting in reduced imports into the country that resulted in reduced government revenue. So all these developments had a direct link to the recession whose impact is severe not less,” said Kanyama.
“And we have not even felt the impact of government borrowing since reduced imports are feeding into government’s increased borrowing and also the exchange rate was badly affected resulting in many banks failing to lend out money.”
The IMF has recommended that wherever debt sustainability or already high inflation rates were not a binding constraint, fiscal and monetary policies should remain supportive until there were clear indications that recovery is gaining momentum.
“In countries where financing is a problem, the focus should remain on containing macroeconomic imbalances in case these further undermine economic growth. For these countries, concessional financing is the most viable way to mitigate the impact of the slowdown on vulnerable groups,” it stated.
The IMF stated that macroeconomic aggregates in the low income countries and fragile state groupings appear on average to have been less affected, although the picture varies.
It stated that some countries seem poised to escape the crisis with relatively modest decelerations in growth while others, particularly those that had significant macroeconomic imbalances at the start of the global slowdown were faring poorly.
For the case of Zambia, IMF has projected economic growth as percentage of GDP to stand at 4.5 per cent in 2009 and five per cent in 2010.
Labels: CHIBAMBA KANYAMA, GREAT DEPRESSION II, IMF, MILES SAMPA, NEOLIBERALISM
Read more...
HH accuses Rupiah of scheming food crisis
By Staff Reporters
Wed 21 Oct. 2009, 15:31 CAT
UPND leader Hakainde Hichilema yesterday said President Rupiah Banda wants the current fuel crisis to cause food shortages so that his sons can supply GMO maize to the government.
And Economics Association of Zambia (EAZ) immediate past national secretary Chibamba Kanyama has observed that the current situation in the energy sector has clearly shown that Minister of Energy Kenneth Konga does not know what is going on.
Hichilema said the current fuel shortage was a huge cost to the country’s economy and on ordinary life of Zambians. Commenting on the current fuel shortage, Hichilema warned that if not checked, the fuel crisis would result in food shortages.
“Rupiah is directly responsible because of his meddling in the awarding of the fuel tenders. Things are now coming out so he is just deceiving himself,” Hichilema said.
“Fuel is the engine of the economy. When fuel runs out itís going to cause shortages in food including job losses. He (Rupiah) is directly responsible because of meddling in the awarding of tenders. They want to give tenders to their sons so that they bring in Genetically Modified Organisms (GMO) maize when there are food shortages as a result of the fuel crisis.”
He said President Banda’s irresponsibility and corruption was beginning to negatively affect the lives of Zambians.
“Rupiah’s corruption and incompetence has come here to roast. Initially the minister of energy (Kenneth Konga) said there was enough fuel. He must come out and apologise,” he said.
He insisted that President Banda was behind the current fuel crisis.
“Because of his desire to favour certain persons he is causing this fuel crisis. The fuel situation has been going on well until he started to meddle in this sector. Just look at the queues around town, look at the lost production hours. All this is caused by an incompetent head of state,” Hichilema said.
“Then he is coming out to say nobody should be blamed. He is basically saying he is not the President of Zambia. If somebody did a calculation of the cost arising from the fuel shortage, loss of production, loss of man hours, it’s a huge cost to the economy of the nation and on ordinary life.”
Hichilema said President Banda was guilty over the current fuel crisis.
“The guilty are always afraid, he is guilty. Rupiah Banda thinks he is very clever,” said Hichilema.
“He is now worried and saying nobody should be blamed because he knows where this thing is going. It’s pointing and directing a finger to his corruption.”
And Zambians for Empowerment and Development (ZED) president Dr Fred Mutesa yesterday stated that the stance by the government on the on-going fuel shortages, which have caused chaos in the nation, reveals serious confusion and lack of truthfulness on their part.
“It is irresponsible for the Head of State to say that nobody is to blame for the paralysis in this vital sector of the economy. Does he know how many man-hours have been lost by sleeping on queues at filling stations which could have been spent on more productive things?” Dr Mutesa asked.
And Kanyama regretted that the country lacked institutional mechanisms to respond to serious crises like the one witnessed in the energy sector.
Since the start of the energy crisis about two weeks ago, Konga has been issuing statements assuring the nation that the energy crisis was under control.
But on Monday, Konga told the nation that the country had enough fuel stocks and urged motorists not to panic despite the deteriorating situation which is characterised by long queues both during day and night.
“In oil there are politics involved, key players. Within the political structures, we have who is answerable to who? What are the penalties involved, what are reporting processes? They are not in control of the chain and that is where the problem is,” he said.
Kanyama said the risk profile emanating from the shock in the energy sector was too high to be left to chance and that accountability was paramount.
“It is very important to have a power-risk profile in any given country. Energy has a higher impact on the economy, then copper,” Kanyama said.
“The question is how prepared are we as country to manage that risk? What kind of risk management processes have we put in and you want to look at what is that you cannot control and of course, there should be a process of strong accountability.”
Kanyama also supported Bank of Zambia governor Dr Caleb Fundanga who warned that the current fuel crisis was a threat to the domestic economy and economic fundamentals such as inflation were going to be negatively impacted.
He said without clear signals to solutions, the danger to economic harm was higher than the danger to the reduction of copper prices.
“If the solution is there, it is not communicated to the key stakeholders. It has come out clearly that the minister doesn’t know what is going but all he was told is the fuel is on its way. If it there, it is just lying with one of the players,” said Chibamba.
And the Energy Regulation Board said the strategic reserves of the Oil Marketing Companies (OMCs) have depleted owing to the current acute shortages. ERB acting executive director Lukonde Mfula stated that most OMCs had continued to comply with the regulation requiring them to stock 15 days fuel at any one time to respond to crises like the current one.
Mfula also defended ERB, saying the regulator had been implementing its oversight role, contrary to public perception that the current crisis could have been averted if the OMCs kept the statutory regulated quantity of fuel.
He claimed that most OMCs generally complied with the statutorily requirement on storage reserves and were up to date as at end of August 2009.
Mfula stated that all OMCs were expected to re-establish the 15 days working stock and be fully compliant by end of November 2009. And a check in Livingstone yesterday revealed that only Vuma service station had petrol.
Engen and Kobil only had diesel while Gawula, formerly Caltex Service Station and BP Zambia had completely run out of both diesel and petrol.
On the Copperbelt, the shortage of petrol has continued with long queues forming at service stations where the commodity was being rationed.
On Monday evening, taxi ranks were deserted and many vehicles had camped at different service stations that were either expecting petrol or were rumoured to have petrol.
The few taxis that had petrol and were operating had a field day charging twice the normal fares.
Taxi fares between the city centre and Riverside which were normally between K20,000 and K25,000 had shot up to K40,000 and K50,000 on Monday evening.
Labels: CHIBAMBA KANYAMA, EAZ, ERB, FOOD, HAKAINDE HICHILEMA, RUPIAH BANDA
Read more...
Mucheleka urges more funding to agriculture
Written by Kabanda Chulu
Friday, October 02, 2009 8:34:57 AM
CIVIL Society for Poverty Reduction (CSPR) executive director Patrick Mucheleka has advised the government to match its rhetoric on agriculture potential with political will through increased budgetary allocation.
And economic analyst Chibamba Kanyama has urged finance minister Situmbeko Musokotwane to announce a budget that will
ignore immediate short term needs of government administrative structures but should address
investments, social sectors and capital projects such as road networks.
According to the 2010 to 2012 green paper (budget estimates expenditure), government has proposed to reduce allocations to the Ministry of Agriculture from K919.3 billion in 2009 to K708.6 billion in 2010 while Ministry of Health would get K1.262 trillion from the 2009 allocation of K1.333 trillion.
On the other hand, the government is projecting to give the Ministry of Defence K1.334 trillion from the 2009 figure of K 1.067 trillion and the Zambia Police under the Ministry of Home Affairs would get K535.8 billion compared with the 2009 figure of K446.3 billion.
Government is also projecting to give the Zambia Security Intelligence Services under the Office of the President K227.2 billion compared with K213.1 billion that was allocated in 2009.
But Mucheleka, in an interview yesterday, said the government should match its words with actions by realigning poverty issues with economic growth.
“You cannot reduce poverty by leaving out the majority poor and agriculture is the only sector that can help alleviate poverty and the major intervention we see is through fertiliser support but without addressing structural rigidities that should move side by side with agriculture development, the FSP does not work and farmers fail to graduate,” said Mucheleka.
“So why should government continue talking about agriculture potential which is not matched with political will through budgetary allocations? And this is against the Maputo declaration which Zambia signed to be allocating 10 per cent of its budget to agriculture.”
And Kanyama said the National Budget was not only about fiscal and monetary policy but should create opportunities for business and household prosperity.
“Unfortunately, for many years now, the national budget, on account of its size and expenditure priorities, has not performed to the expectation of many people. Many are disillusioned when seemingly pro-investment, pro-worker and pro-poor budgets are announced but with little impact,” said Kanyama.
“Government priorities do not yet appear to be in line with realities on the ground. For the 2010 budget, we expect Dr. Musokotwane to announce a budget that ignores the immediate short term needs of government administrative structures by allocating huge resources that go towards important social investments primarily in education and capital projects such as road networks.”
On October 9, 2009, Dr Musokotwane is expected to present an expected K15.12 trillion 2010 budget, (about 21 per cent of total GDP), as compared to the 2009 figure of K13.41 trillion. Government is making projections to have a total revenue of K12.25 trillion while gross domestic product (GDP) is projected at K70.82 trillion.
Labels: BUDGET, CHIBAMBA KANYAMA, CSPR, PATRICK MUCHELEKA, SITUMBEKO MUSOKOTWANE
Read more...
Kanyama calls for tight risk management processes
Written by Kabanda Chulu
Monday, May 18, 2009 4:05:23 PM
LUSAKA economist Chibamba Kanyama has challenged the government to quickly institute tight risk management processes, saying the continued misuse of public funds by government workers will affect donor funding for most national projects.
"Tight risk management processes are needed in public finance management since the internal audit departments have proved inadequate to handle this high level corruption because the current systems are not systematic and have not adequately identified new sources of financial risk," Kanyama said.
"It is also a signal of failure by public officials to fully account for their actions in the management of public resources and the danger is that this potential failure to manage fraud will in the long run affect donor support for most national projects."
Kanyama said the existing processes in public finance management had proved inadequate as they placed too much emphasis on ex-post structures of accountability and not on the ex-ante process, which are about the prevention is better than cure' approach.
"The offices of the Office of Auditor General, the Public Accounts Committee of Parliament and the Anti-Corruption Commission cannot adequately combat fraud because they only come in after the event has happened. As a result, these institutions can do very little in reducing exposure to corruption and theft," Kanyama said.
"It is important that emphasis should equally be placed into processes of risk management because as we have witnessed in the past few years, arrests and convictions of corrupt officials have done little to reduce incidences of corruption and fraud in public offices."
He said the Office of the Auditor General has a consolidated report on such incidences and areas of exposure to risk.
"However, without formal structures, processes, culture and strategies in risk management, the country will continue to lose colossal amounts of money through theft by public servant and some sources of risk in the management of public finance have surfaced in the procurement systems, diversion of project funds as well as unretired imprest," said Kanyama.
"My advice to public officials, controlling officers and ministers is to thoroughly orient themselves in risk management processes by engaging the Institute of Directors of Zambia and any other competent professional bodies to come up with broad and ministry-specific risk management and governance manuals that were aligned to new challenges of financial management and accountability."
Labels: CHIBAMBA KANYAMA, GOVERNANCE, INSTITUTE OF DIRECTORS OF ZAMBIA
Read more...
MECOZ is highly compromised – Kanyama
Written by Ernest Chanda
Thursday, May 14, 2009 4:12:57 PM
The administration of Media Council of Zambia (MECOZ) is highly compromised because there are no salaries for secretariat staff, MECOZ board member Chibamba Kanyama had said. Appearing before a parliamentary committee on information and broadcasting services yesterday, Kanyama submitted that MECOZ’s performance was below par.
“In relation to the performance of MECOZ, I would say it’s below par. I think we must admit that we haven’t done as much as expected. One, we have had financial difficulties that have affected our operations. We haven’t been meeting as members of the board and that has posed a weakness in terms of administration.
The secretariat is very weak; we’ve got no salaries for the secretariat,” submitted Kanyama. “In other words, the administration is highly compromised. And that affects governance. We haven’t been able to call for an AGM [Annual General Meeting] to report back to our members. We are not even able to account for our actions or our inactions before our members. And this has impacted on the attainment of the mission, the vision and the objectives of MECOZ.”
And Zambia National Broadcasting Corporation (ZNBC) acting director general Juliana Mwila called for a law that will compel journalists to join MECOZ.
Mwila said compelling journalists to join MECOZ would instill professionalism in the media industry.
“The media council needs adequate funding that will enable it carry out more sensitisation campaigns and run an effective secretariat to coordinate its activities. There is need to ensure that journalists and institutions pay their membership fees. There is also need to make it mandatory for journalists practicing in Zambia to belong to MECOZ. This will be done in the interest that journalism is a profession like other professions such as lawyers who have (LAZ) and doctors who belong to the Medical Association of Zambia. There is need to institute a law to compel all journalists to belong to MECOZ while those refusing to subscribe should not be allowed to practice,” Mwila submitted.
But Lusaka Central member of parliament Dr Guy Scott advised Mwila to be more concerned with ZNBC-related issues rather than MECOZ.
“Why not address what is relevant to you? Your reporting is not balanced and we have examples to give. Can you please tell us how you are going to improve yourselves rather than talk about MECOZ?” he asked.
In response, Mwila maintained that ZNBC had provided fair coverage in most instances.
“We have tried our best to give fair coverage and records are there to show. We have evidence to prove our fairness and our popularity. Just last week when an item was run on the news that I had been appointed ZNBC acting director general, people were calling me to ask about that. To me this shows that ZNBC is popular,” she said.
Mwila said before, during and after elections, the posture of the media had been divided.
“Elections are a very emotional subject because of what is at stake. The posture of the media has been divided with each institution being perceived to have a preferred party or candidate(s). What has been most damaging is the tone and language used by some media during the elections. This has tended to generate toxic politics and antagonise one group against another,” Mwila submitted. “Generally, the media did not follow the electoral code of conduct. Some sections of the media deliberately ignored the electoral code of conduct which lays the ground rules for coverage of elections. There was unequal coverage of candidates in the election. What is important for the media is to follow the code of conduct without exception.”
And MECOZ chairperson Sr Rose Nyondo submitted that MECOZ was tightening up its constitution to compel all journalists to join.
“The old MECOZ is weak and members have realised that this needs to change as soon as possible. A new constitution is already in draft form. Members of MECOZ looked through the draft and made further amendments…”
She said what should be done to ensure all media organisations join MECOZ was to ensure that the MECOZ constitution was tightened to compel all media practitioners join the organisation and that MECOZ needs to be linked to a donor organisation who could fund it for a minimum of three years. This will help the organisation to stabilise in terms of administration and publicity programmes. She said such support would assist MECOZ to visit all rural-based media organisations and expand on its number of offices.
Sr Nyondo submitted that MECOZ had discussed with the Ministry of Information on possibilities of giving the mandate to MECOZ to accredit all journalists in the country.
“As discussed with the former minister [of Information] Hon [Mike] Mulongoti and the current minister Hon Shikapwasha at the formal meetings where MECOZ made curtsey visits, it was suggested that we give MECOZ the mandate of media journalist accreditation. In this way, no journalist or media house can practice without being a member of MECOZ,” she submitted.
And Sr Nyondo submitted that the media in Zambia did not provide balanced coverage in last year’s presidential election.
“From the last special elections of 2008, there is no Zambian media house that can boast that they did a clean, honest and professional coverage of the events before, during and after elections. The state-owned media tried their best to be fair, but in most instances they supported the MMD. The private media, in particular The Post, supported the opposition. The sacrificial lamb was the general public or the electorate that was starved of free, fair and unbiased information.”
Sr Nyondo said as a result, MECOZ had drawn up a programme to conduct workshops in order to train journalists on election reporting.
“In preparation for the 2011elections, MECOZ has lined up a series of workshops for all stakeholders, including local authorities who are part of the audience of the community media houses who were the majority in abrogating media ethics and election procedures. These preparatory election workshops will be run in conjunction with the Electoral Commission of Zambia. A sponsor has [is] yet to be found.” she submitted.
Asked by Dr Scott on how MECOZ board members appointed themselves and where they drew their mandate from, Sr Nyondo said they were appointed by the member organisations, and that is where they drew power from.
But Itezhi-Tezhi member of parliament Godfrey Beene insisted that MECOZ should dissolve itself because of the numerous problems it faced as admitted by the board members.
And committee chairperson Moses Muteteka asked Sr Nyondo to admit that because of their poor performance, MECOZ had in fact contributed to the instability in the media industry.
In response, Sr Nyondo said MECOZ could not be blamed for failures of individual media houses.
“Yes, there are problems in the industry. But we cannot be blamed entirely for that. The constitution had a big weakness. According to our constitution, when we adjudicate, we don’t punish. So we sent it back to our lawyers so that we can have teeth to deal with members who are found wanting,” submitted Sr. Nyondo.
Labels: CHIBAMBA KANYAMA, MECOZ
Read more...
COMMENT - Joyce Nonde for Finance Minister. She has my vote. :)
“Investors believe they are safer engaging casual labour as pensionable jobs may prove costly when the businesses no longer remain profitable and many parastatal companies are failing to restructure operations due to the huge compensation packages associated with downsising,” said Kanyama.
It is time the Zambian government became serious about governing. Pensions should be universal, and have nothing to do with employment - and the way to do that is to let all companies pay their pension to the state - through taxes. There are few enough old people around, so that is more than economically feasible.
FFTUZ condemns Kanyama on laws to impress investors
Written by Kabanda Chulu
Wednesday, May 06, 2009 3:06:11 PM
THE Federation of Free Trade Unions in Zambia (FFTUZ) yesterday condemned Lusaka economist Chibamba Kanyama for calling for laws that will impress investors.
On Monday,
Kanyama said the government should urgently revise the Act governing redundancy packages to reflect investor challenges.
But FFTUZ president
Joyce Nonde-Simukoko said in Lusaka that it was shocking and annoying to see Kanyama thinking along those lines.
“Our members are annoyed and shocked and Zambia should not be compared to other economies that are doing well since workers already are getting low packages and they have no opportunity to enhance their livelihoods under the current pensions Act,î Nonde-Simukoko said. ìIt is shocking to see our brother (Kanyama) thinking in those lines by calling for laws that will impress greedy investors.”
She said pension schemes and redundancy packages had been abused and even those who got benefits were thrown into abject poverty.
“Any redundancy package in this country has been abused even at Presidential level this is why the benefits are pegged at the incumbentís (sitting President) salary and conditions of service because these issues have been abused in Zambia and why are we enemies of ourselves by calling for laws to impress investors who are involved in capital flight and even when the environment is good and incentives given, they do not employ people on full-time,” Nonde-Simukoko said.
“So the issue of the economic crisis does not arise because investors are greedy and exploitative in nature, for example, when copper prices reached higher levels, they never considered Zambians as full time workers.”
She said the failure by mining companies to pay good redundancy packages was corporate greed and fraud that should not be allowed to continue.
“Investors are businessmen with a motive for profit, hence looking for loopholes like what our brother is proposing, these investors are greedy and are involved in corporate fraud, for instance, if there is no money to pay workers why are they spending so much to appease politicians by making donations at the expense of hard-working employees?” asked Nonde-Simukoko.
In his weekly commentary, Kanyama said the current redundancy packages Act had many challenges and had rendered the country uncompetitive for investments in the region.
He said many companies preferred to hire casual workers even when they had the capacity to engage pensionable jobs due to the high level of uncertainty in the investment climate.
“Investors believe they are safer engaging casual labour as pensionable jobs may prove costly when the businesses no longer remain profitable and many parastatal companies are failing to restructure operations due to the huge compensation packages associated with downsising,” said Kanyama.
Labels: CHIBAMBA KANYAMA, FFTUZ, JOYCE NONDE
Read more...
Kanyama urges govt to reduce PAYE, sales tax
Written by Speedwell Mupuchi
Monday, April 27, 2009 2:52:16 PM
ECONOMIST Chibamba Kanyama yesterday challenged the government to sacrifice some of its resource bases in view of the global credit crunch.
In his presentation entitled 'Understanding the global credit crunch’ during a one-day business seminar organised by the Men of Honour of Maranatha Pentecostal Assemblies of God Church in Kitwe on Saturday, Kanyama said recovery from the credit crunch would depend on, among other things, proper management of fiscal and monetary policy.
He said according to his conviction, although there was an argument that it was impossible for the government to cut costs knowing there was money to be spent, it was time the government sacrificed its resource base.
Kanyama called for responsibility in management of fiscal and monetary policy of the country.
“Government must forgo some taxes now,” he said.
Kanyama also urged the government to reduce Pay As You Earn (PAYE) in order to make the demand side more effective and also reduce the sales tax.
He also said recovery from the credit crunch would depend on global responses to the financial bailout, people’s resilience and timely responses to opportunities.
Kanyama told the more than 200 participants in the workshop that the credit crunch has had telling effects on Zambia; including the mining industry with dire consequences of closures and job losses.
He explained that lenders have had to recall their money to avoid massive losses.
Kanyama noted that due to the global credit crunch, the industrial umbilical cord - linking companies - had weakened.
And permanent secretary in the Ministry of Commerce Trade and Industry, Dr James Mulungushi, challenged Zambians to share knowledge in order to be competitive.
“It’s critical that knowledge is shared quickly in order to help us position ourselves in the global credit crunch issues,” Dr Mulungushi said.
He said economic development was not an issue of a single entity like the government but called for involvement of many stakeholders.
Dr Mulungushi expressed satisfaction that the Church was taking leadership in information sharing.
He also challenged participants to take advantage of government initiatives through the Citizens Economic Empowerment Commission (CEEC) and opportunities in the Zambia Development Agency (ZDA) to engage in businesses.
Dr Mulungushi said the funds made available through the CEEC were meant for Zambians.
He told the people that the government, through the ZDA, had mobilised a total of US $250 million in projects investment pledges and that his ministry was vigorously pursuing such pledges.
He also challenged people to take advantage of Zambia’s ‘land-linkedness’ and not ‘land-lockedness’ to become competitive in business.
Dr Mulungushi said the government on its part was committed to create infrastructure to help create competitiveness but warned: “infrastructure will not produce the wealth; you may walk on that road for 20 years and nothing will grow on that road, unless we produce it ourselves.”
And chairperson of the organising committee Johnstone Chikwanda said the theme of the conference was timely.
Chikwanda said the global credit crunch had brought pain and also posed opportunities for change.
“For when the pain of maintaining the status quo becomes more than the pain of change, change becomes inevitable,” said Chikwanda.
“Despite the agonising situation on the Copperbelt, we, the Men of Honour of Maranatha Church have decided to choose hope and courage instead of fear and desperation. A Zambian solution is what we seek.”
Labels: CHIBAMBA KANYAMA, PAYE
Read more...
Unstable copper prices will delay Zambia’s economic recovery-Chibamba Kanyama
Wednesday, April 15, 2009
A local economist has observed that the Zambian economy will not recover quickly from the prevailing global economic meltdown because of the unstable and lower price of copper on international market.
Mr. Chibamba Kanyama said unless Zambia focuses on its internally generated recovery efforts such as local manufacturers, which can exploit the current Kwacha depreciation to compete against foreign imports.
Mr. Kanyama, who is also Zambian Breweries Corporate Affairs Director, told ZANIS in Lusaka today Zambian Breweries is one such company that has targeted the regional market, whose demand is still reasonably high.
He said the other avenues that could help the Zambian economy to recover would be depending on the performance of the motor industry that considerably consumes copper products, which is one of the major earners of foreign money for Zambia.
He predicted that the Zambian economy will recover after government has worked on its own economy with targets that are identified through increased investments which could attract Zambian consumers.
Mr. Kanyama however said companies such as general motors are under-going intensive restructuring programmes owing to challenges of bankruptcy.
He further explained that economic recovery may not be done in one year because the price of copper on the global market is still dampened by speculators believed to be from china.
He said the recovery of the Zambian economy cannot be compared to developed nations because the appearance of marginal economic recovery in countries such as the United States was only a signal that the current global recession will be contained in the near future.
Mr. Kanyama however said the reverse of a turn around takes several years to positively affect poor economies.
He pointed out that the seemingly glimmer of hope of recovery in the US is too minimal to translate into global economic recovery, adding that this is only seen in some price rises for certain stocks.
ZANIS/VP/KSH/ENDS
Labels: CHIBAMBA KANYAMA, COPPER
Read more...
Global crunch has affected profits for pension funds, says Kanyama
Written by Fridah Zinyama
Tuesday, March 31, 2009 4:53:02 PM
LUSAKA economist Chibamba Kanyama has said the global credit crunch has affected profits and growth prospects for most pension funds in the country.
According to Kanyama, some of the recently released financial statements from some leading pension funds showed significant losses for the year 2008 and that the poor performance may already be reflecting in the first quarter of 2009.
“It is important that authorities take a keen interest on the likely impact of this decline mostly on investments,” he said.
Kanyama observed that it was unfortunate that the government had not fully captured the role of pension funds in the economy.
“Though the total contribution of local pension funds and institutional investors is marginally lower than capital inflows through foreign direct and portfolio investments, their impact has a much more direct impact towards economic stability than foreign investments,” he said.
Kanyama added that for more than ten years, pension funds and institutional investors had supported the domestic borrowings of the government that went towards the national budget.
“The same pension funds have been the primary drivers of the equity market through the Lusaka Stock Exchange. And much more recently the pension funds and institutional investors have supported the private sector through private equity and bond finance at an annual sum of more than US $30 million per annum,” he added.
Kanyama said direct investments by the pension funds in various projects were hugely responsible for the recent expansion in domestic investments in the economy.
“This is why the negative performance by most pension funds in the past few months should not only worry the various employer schemes that have investment money in the pension funds but the government as well,” he said. “Some pension funds have been impacted by unanticipated claims from mining companies that seek to fully compensate retrenched employees.”
Kanyama said the poor performance in stocks on both the local and international markets as well as the poor performance of private companies that accessed these funds had also led to the fund deficits.
“The investment exposure for the pension funds in Zambia is towards public and private equities, government securities, the corporate bond market, real estate, money market and offshore investments,” he said. “All these vehicles on average performed poorly in 2008 owing to the economic global crunch.”
Kanyama said while this would have an immediate impact on available funds for investments and support of the government deficit in 2009, the performance should not worry employers and employees who would experience negative bonuses for the year.
“However, it is likely the trend will improve in the medium and long term,” observed Kanyama.
Labels: CHIBAMBA KANYAMA, GREAT DEPRESSION II, PENSIONERS
Read more...
Kanyama bemoans low investment in youth programmes
Written by Florence Bupe
Tuesday, March 17, 2009 2:38:45 PM
ECONOMIST Chibamba Kanyama has bemoaned the country’s low investment levels in promoting youth entrepreneurship through infrastructure development.
Kanyama observed that while the country was grappling with low employment levels, there was little effort to ensure economic independence among the youth.
“There is need to harmonise the efforts of government and the private sector that are aimed at developing the socioeconomic infrastructure for the development of young people in Zambia. The economic turmoil being experienced by the country has had its worst impact on young people,” Kanyama said.
“An estimated two million youths are eligible for employment but cannot be taken up by industry due to limited prospects in economic growth and low investment.”
Kanyama advised that the framework that supports youth development in Zambia should accommodate key economic players such as the government and the private sector.
He said the government should also consider providing industrial incentives for youth employment, as well as support programmes aimed at encouraging youth initiatives.
“The lending institutions for example can directly lend money to young people owing to their ability to innovate and create value. The government’s socioeconomic priority in its development plans as well as the national budget should focus on laying a strong economic foundation that will empower the youths in future,” he said.
Kanyama further called on the government to address the problem of income inequalities, which he noted impacted more on the youth.
“The national leaders at every level should have a long-term perspective and always seek for policies that strengthen the structures favourable for youth development. The country’s investments by both the public and private sector should be in long term projects,” he said.
Kanyama said the prevailing economic challenges in the country should not be left unattended, and emphasised that there should be increased investments to cushion the country’s economy against future setbacks.
“We are celebrating the Youth Day for 2009 against a backdrop of reduced government spending, low growth rate and reduction in employment levels by the mining sector. This should not stop the government, the private sector and the public from investing in the future so that even if we have a temporary setback as a nation, the future is well-secured,” said Kanyama.
Labels: CHIBAMBA KANYAMA, YOUTHS
Read more...
COMMENT - The key to curbing inflation is not higher interest rates (they are already prohibitive to most commerce), but increased production, starting with the agricultural sector. And production in a way that puts money in the pockets of especially rural people, which creates demand.
‘Monetary policy alone won’t curb high inflation rates’
Written by Florence Bupe
Friday, January 09, 2009 5:39:40 AM
ECONOMIC advisor Chibamba Kanyama has warned against implementing monetary policy in isolation as a solution to high inflation rates.
Commenting on the increase in the country’s inflation rate which currently stands at 16.6 per cent, Kanyama said although the Central Bank could use monetary policy to reduce the supply of money in a bid to address the increase in the rate of inflation, the measure, if used in isolation, could adversely affect the economy in the long run.
“The temporary measure [to curb high inflation rates] would be for the government to institute austerity measures. This would mean the Bank of Zambia would use monetary policy to reduce money supply,” Kanyama said. “However, monetary policy alone never solves inflationary problems. On the contrary, if implemented alone, it can hurt the economy in the long run as credit squeeze would reduce both consumption and supply.”
He advised that monetary policy should be coupled with deliberate government interventions to ensure that credit went to the private sector.
Kanyama further advised that there should be effective measures in place to stabilise the exchange rate.
And Kanyama noted that lending rates were likely to increase if the government implemented its plans to increase borrowing this year.
“The government plans to increase borrowing in the 2009 financial year from both the domestic and local markets. This is because the government anticipates a deficit in its revenues,” said Kanyama. “If the government goes ahead to increase borrowing, we expect very high interest rates in 2009. The high inflation levels to be triggered by food deficits by mid 2009 plus increased government borrowing will cause overall interest rates to hit the 33 to35 per cent margins.”
Labels: CHIBAMBA KANYAMA, INFLATION, INTEREST RATES
Read more...
Kanyama calls for refocus of CEEF strategy
Written by Kabanda Chulu
Sunday, December 28, 2008 12:41:30 PM
ECONIMICS Association of Zambia (EAZ) immediate past national secretary Chibamba Kanyama has said there is need to refocus the strategy of the Citizen Economic Empowerment Fund (CEEF) because many Zambians feel the initiative is a non-starter.
Commenting on the Citizen Economic Empowerment Commission (CEEC)’s decision to address obstacles that have resulted in reduced applications for money under the empowerment funds, Kanyama said it had become evident that a number of applicants to those funds felt the whole initiative was futile.
“Several hundreds of citizens have in the past one year made many enquiries and applications for the Citizens Economic Empowerment Fund but it is becoming increasingly evident a number of applicants to these funds feel the whole initiative is futile, hence the need to refocus the strategy of the empowerment funds,” he said.
Kanyama observed that the communication criteria for accessing the money had not been very clear.
“In other words, we are not sure whether it is the commercial banks or provincial development committees responsible for disbursements and approval of applications. On the other hand, the secretariat has been under increasing pressure to disburse these funds before the end of the 2008 financial year, having lost an entire year in setting up administrative structures,” Kanyama said.
“And the demand for collateral before accessing these funds has contributed to growing disillusionment among the citizens and those with collateral are equally frustrated by the demand that such funds be disbursed to groups or cooperatives.”
He said it was unlikely that the CEEF would receive any more funds from the treasury in the near future.
“I do not think the critical stakeholders such as taxpayers will support it. Under the current disbursement arrangement, a number of potential borrowers will not access the funds and this will raise a lot of questions soon,” Kanyama said.
“And those that will access it are likely to fail under the current economic climate because it is very difficult to run a successful business operation in Zambia even under the circumstances of low interest rates as given by the CEEC.”
Kanyama said if the government truly intended to empower a cross section of Zambians through cheap and easy to access capital, the current approach was wrong and would not succeed.
“The moral hazard factor will come into play. As long as it is perceived to be government money, many beneficiaries will hardly pay back and I advise government to immediately restructure the loan-mode of these funds. No one should access hard cash. The money can be used to build industrial hives across the country where economic or production facilities can benefit all those with capacity to do. What Zambian entrepreneurs lack is production facilities that can help them produce goods and services,” said Kanyama.
Labels: CEEF, CHIBAMBA KANYAMA, EAZ
Read more...
Kwacha depreciation to continue, warns Expert
Written by Joan Chirwa and Kabanda Chulu
Thursday, December 04, 2008 5:14:55 AM
ZAMBIA will continue to witness huge swings in the exchange rate as long as it remains porous in terms of foreign currency regulation, a local economist has warned.
But Central Bank governor Caleb Fundanga has said the government will not introduce exchange controls to prevent the outflow of funds since that was not the solution to the current global economic crisis.
Meanwhile, the Databank Group, a Ghanaian institution that monitors and assesses the performance of selected African stocks, has observed that the drying up of foreign investments on some African stock markets may persist until next year.
The local currency has significantly depreciated against major foreign currencies within a short period, following an increased demand for foreign currency by some market players. Foreign exchange experts had earlier predicted that the kwacha would gain its ground against the US dollar around this time. The local currency has however, depreciated to trading levels of around K4,500 against the US dollar last week from around K3,700 a few weeks ago, with some experts blaming the situation on falling copper prices on the international market.
Foreign exchange experts last week indicated that declining commodity prices globally remain a concern among economies in general and Zambia was no exception to his. They explained that volatility in the local currency would thus be a consequence of movements in copper prices 'by and large'.
Copper fell nearly three per cent last Thursday, shrugging off a softer dollar, as the persistent weak demand outlook dragged down prices. Copper for March 2009 delivery edged down to US $1.52 per pound while copper for three month delivery on the London Metal Exchange dipped to US $3,685 per tonne on Thursday.
Metals analysts say until there is a turnaround in the physical demand picture, it seems unlikely that these rallies will be sustained for any significant period of time. Others say by looking at historical data, the copper price could fall as far as US $2,000 per tonne in the near future.
“The kwacha’s depreciation is attributed to short term portfolio investors’ decision to withdraw their money’ should never take away our responsibility to regulate the economy against speculative behaviour. As long as we remain porous in terms of foreign currency regulation and liberal in the treasury bill transactions, we will witness huge swings in the exchange rate,” said local economist Chibamba Kanyama, who is also the immediate past national secretary of the Economics Association of Zambia (EAZ).
“For the past four years, the Zambian economy has been the target for international financial speculators who took advantage of the under-priced stocks on the stock market; high interest rates for the government securities and no regulation governing the foreign exchange remittances. The same speculators are watching the market for the kwacha to depreciate to higher margins and then dump the dollar to cause another artificial appreciation of the local currency.”
Kanyama disagreed with earlier explanations that swings in the exchange rate have sorely been caused by falling investments in government securities.
“Investors are largely targeting the kwacha itself for speculative gain. They buy off the dollar, squeeze it from the market to create an artificial depreciation and then offload it as happened during the election time. Once they have made huge margins, they start the process again,” Kanyama observed. “This current trend is highly artificial, not backed by fundamental economic movements but by local and international speculators taking advantage of weak regulation on the foreign exchange regime. This is inadvertently hurting the real sector that requires a stable predictable currency for long-term investments.”
Kanyama indicated that the investment and economic climate of a country was threatened by a foreign exchange regime which was dictated by portfolio investors penetrating the economy through the stock market and banking systems.
“Latin America ten years ago was initially excited by huge inflows of foreign capital but did not realise that initial appreciation of the currency was not backed by economic growth but by short-term portfolio investment of which 90 per cent was merely speculative,” Kanyama said. “The banking system collapsed and the governments experienced deteriorating foreign currency reserves. Zambia has suddenly become an attractive haven for these local and international speculators.
“We should not look at the depreciation of the kwacha as an issue associated with the global financial crisis. While this remains true, countries with a weak and porous foreign exchange regulation mechanism and poor monitoring systems of hard currency inflows will experience a financial crisis.
“It is high time we monitored the true sources of these inflows; who are the speculators and which local institutions are accommodating these transactions.”
It has been observed that much of the capital fleeing some developing countries, including Zambia, was heading towards the banking systems of the rich countries since their governments have created a subsidy by guaranteeing large parts of their financial system.
But Dr Fundanga said the outflow of foreign currency from Zambia was not as widespread as portrayed by some people.
“It is true there is an outflow of funds going out of the country because various investors are hedging their investments and this is a normal business phenomenon but the outflow is not massive and widespread and this situation does not call for exchange controls whatsoever and we are also in a position to monitor all outflows,” Dr Fundanga said. “And I can’t see any reason why we should put stringent measures like exchange controls because there are no solutions at all and this is a free market economy and soon the market will stabilise itself.”
And an official at the Ministry of Finance who preferred anonymity said there was no control over what private companies, including those in the mining sector, did with their profits.
The official said the government's responsibility was to ensure a stable economy that would result in establishing Zambia as the most preferred investment destination in Africa.
“The government through the revenue authority collects taxes and what remains is net profit which is basically salaries for shareholders and we have no control over what a company can do with its profits and normally externalisation becomes prominent when the economic outlook is bleak but in Zambia things are looking positive and if investors are making profits, they will be inclined to stay and reinvest because of the prevailing favourable policies,” said the official. “Also government through the Bank of Zambia is able to monitor funds taken out or brought into the country since all financial flows are documented but any system is prone to loopholes hence the need to tighten monitoring controls and points of entry.”
And the Databank Group stated that Zambia’s stock market was among the worst decliners during the previous week, with index levels down between 10 and 20 per cent.
Other worst decliners were markets in Mauritius, South Africa and Egypt.
“Bearish investor sentiments seem to be arriving late on African markets as investors have decided to cut their losses, thereby deepening the already sour performances on the various markets,” stated Databank. “This is attributable to both local and foreign investors, with foreign investments also drying up on some markets. Every indication points to the fact that this trend will persist for the rest of the year.”
Labels: CALEB FUNDANGA, CHIBAMBA KANYAMA, EAZ, GLOBALISATION, KWACHA, RECESSION
Read more...
