Story of the Day
Last week a tweet asking the ‘Zed Twitter’ community to explain bonds “like i’m 5” resulted in widespread conversation on government bonds led by financial educator Chanozya Kabaghe. As the demand for financial literacy coincides with an increase in incomes across the country, the appeal of making stable investments to secure the future for one’s family has become a priority. Bonds represent ownership of an instrument signifying a debt owed by a government or company for a fixed term with specific interest payments. Like bank loans, governments and institutions must pay interest on the bonds issued to members of the public and international. Unlike traditional debt which is paid in part over time, bonds are often paid in full at once in addition to interest earned over time. However, it is not as simple as it sounds, as investors often lose out on more lucrative industries and are locked into long term investments. In this article we explain bonds and give a summary of the current bond market in Zambia. Read more
Local Business and Finance Sponsored By Liquid Intelligent Technologies
The Government has proposed to spend 167.3-Billion Kwacha in 2023 representing 31.4 percent of the Gross Domestic Product (GDP) of the country. This represents a six-billion kwacha reduction from the 2022 budget which stands at 173 Billion Kwacha. Finance Minister Situmbeko Musokotwane presented the proposed 2023 National Assembly in the National Assembly this afternoon. Dr. Musokotwane said the Budget will be funded from both external and internal sources such as grants, loans and revenue through tax collections. Read more: ZNBC
Zambia plans to reduce its budget deficit next year, even as it makes further cuts to copper mining royalties, Finance Minister Situmbeko Musokotwane said. The spending shortfall will shrink to 7.7% of gross domestic product in 2023, from a revised 9.8% forecast for this year, Musokotwane told lawmakers Friday in Lusaka, the capital. Restructuring the royalty system in Africa’s second-biggest copper producer will cost the government 2.8 billion kwacha ($178 million) in lost revenue next year, he said. First Quantum Minerals Ltd., which accounts for more than half of Zambia’s copper production, stands to benefit the most. Its shares gained as much as 4.9% in Toronto. President Hakainde Hichilema’s government has taken a more business-friendly approach than his predecessors since coming to power last year, and trying to incentivise mining output has been central to its plans. Read more: Mining
The Energy Regulation Board (ERB) has increased the prices of petroleum products by K1.20 Petrol and K3.04 for Diesel. ERB has, however, reduced the price of Kerosene by 65 ngwee for the month of October. Read more: News Diggers
The Road Development Agency Board Director and Chief Executive Officer George Manyele has been relieved of his duties following a board meeting held on September 29, 2022. In a statement, Thursday, RDA Chairperson Board of Directors Eng Mulchanda Kuntawala said the agency had since appointed Eng Grace Mutembo to act as Director and Chief Executive Officer until further notice. Read more: News Diggers
The fourth annual edition of the Digital Quality of Life Index (DQL) reports that Zambia ranks 105th in the world regarding digital wellbeing. That is out of 117 countries, or 92% of the global population. Out of the five fundamental digital life pillars, Zambia’s worst score is for internet quality, ranking 116th globally. While the best is for e-security (64th). Zambia’s internet affordability comes 104th, as well as e-infrastructure, and e-government 114th. In the face of waging inflation, fixed broadband internet has become less affordable worldwide for the second year in a row, prying the global digital divide even further. Read more: Lusaka Times
International Business and Finance
Developing countries in Africa are losing a champion that for years allowed them to borrow at cheaper rates than they could find in capital markets. China, Africa’s largest bilateral creditor, has been scaling back lending in the region amid its worsening growth woes. That comes at a time of rising interest rates globally and shrinking liquidity, factors that have already sent bonds of the riskiest African borrowers such as Ghana and Zambia crashing, and currencies including South Africa’s rand to near pandemic lows. The evolving debt dynamics with Beijing — whose lending is focused toward long-term infrastructure projects — threaten to push reluctant governments into the arms of the International Monetary Fund and World Bank for balance of payments support. Economic programs from the fund often restrict commercial borrowing, and require Chinese lenders to sit around the restructuring table with Western lenders. Read more: Bloomberg
Stock futures were mixed on Monday morning after Wall Street wrapped up another negative quarter and both the S&P 500 and Dow Jones Industrial Average finished their worst month since March 2020. Dow Jones Industrial Average futures rose 0.17%, while futures tied to the S&P 500 fell marginally. Nasdaq 100 futures fell 0.37% . Friday capped off a negative month and quarter for all the major averages, with the Dow falling 500.10 points, or 1.71%, to close below 29,000 for the first time since November 2020. Read more: CNBC
The government has U-turned on plans to scrap the 45p rate of income tax for higher earners. Chancellor Kwasi Kwarteng told the BBC the proposals, announced just 10 days ago, had become “a massive distraction on what was a strong package”. “We just talked to people, we listened to people, I get it,” he added. The decision, which marks a humiliating climbdown for Prime Minister Liz Truss, comes after several Tory MPs criticised the plan. Read more: BBC News
EU country leaders will discuss how to step up support for Ukraine and their joint next steps to tame soaring energy prices when they meet on Friday. In a meeting invitation letter to EU leaders published on Sunday, European Council President Charles Michel called for a firm EU response to recent developments, including Russia declaring the annexation of four regions of Ukraine on Friday. “At our meeting we will discuss how to continue providing strong economic, military, political and financial support to Ukraine for as long as it takes,” said Michel, who chairs meetings of EU country leaders. Read more: Reuters
Capital Markets Report
In 86 trades recorded on Friday, 16,922 shares were transacted resulting in a turnover of K33,449. A share price gain was recorded in Investrust of K2.00. A share price loss was recorded in Zanaco of K0.02. Trading activity was also recorded in Bata, Copperbelt Energy Corporation, Chilanga Cement, PUMA, Standard Chartered Zambia, Zambeef and CEC Africa on the quoted tier. The LuSE All Share Index (LASI) closed at 7,342.44 points, 0.04% down from its previous close of 7,345.33 points. The market closed on a capitalization of K72,892,024,035 including Shoprite Holdings and K38,109,338,595 excluding Shoprite Holdings.