Good morning. Here’s what you need to know to start your day.
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Inflation hits double digits
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Debt ceiling: Janet Yellen warns US could run out of cash by 1 June
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ZANACO first quarter earnings sprint 55%
Story of the Day
Exciting times for SMEs in Zambia as Pangaea ADD Capital, a leading SME financier in the region, and the Trade and Development Bank through its subsidiary the Trade and Development Fund announced a $2 million facility to improve SME financing. Pangaea ADD Capital is a financial institution that specializes in supply chain finance with the core offering of invoice discounting, order finance and SME loans and have a proven track record as a supply chain finance specialist says this facility will see the firm reach an additional 50 to 100 SMEs in the first year. Read more
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The annual inflation rate for April 2023 has increased to 10.2 percent from the 9.9 percent recorded in March 2023. Zambia’s inflation rate dropped below 10 percent for the first time in almost three years in June last year. Meanwhile, Finance and National Planning Minister Dr Situmbeko Musokotwane said last month that he did not think the inflation rate would revert to a double-digit. This was after ZAMSTATS disclosed that the annual inflation rate for the month of March 2023 had increased to 9.9 percent from the 9.6 percent recorded in February 2023. Read more: News Diggers
Bond yields in Zambia, remain sticky as market players continue to seek clues around debt restructure prospect. Zambia, the first dollar bond defaulter in pandemic times has rekindled hopes after China eased its stance on the need for multilateral development banks to share in haircut losses, a very contentious matter in the ongoing creditor negotiations. The uncertainty in the debt reorganization space has continued to fatigue money and foreign exchange markets breeding delays in curve compression and has fueled currency volatility. In the fourth Kwacha bond sale held on Thursday April 27, with K2.6 billion of assets on offer, the Bank of Zambia was able to absorb only K636 million of purchasing power skewed in the 5 and 10 year tenors paying 24.00% and 27.75% respectively. Read more: The Business Telegraph
Construction of the US$600 million urea fertiliser and ammonia plant has been launched in Lusaka by the United Capital Fertilizer Zambia Company Limited. The launch was witnessed by President Hakainde Hichilema on Friday who stressed that producing local fertiliser ensured predictability for the farmers that used the product. During the ceremony, Hichilema stated that government resolved to ensure that Zambia was food secure and that investment in areas such as this were most welcome. Read more: Zambia Monitor
More than 11,000 new businesses have been registered in the first quarter of 2023, exceeding its target of 8,081. This is according to the Patents and Companies Registration Agency (PACRA) in a statement issued in Lusaka on Friday. Communications and Marketing Officer, Mubanga Chitabo, indicated the Agency exceeded its quarterly registration target of 8,081 by registering 11,333 businesses in the first quarter of 2023. This, she explained, reflected a 40.2 percent increase as compared to 9,026 businesses registered during the first quarter of 2022. Chitabo mentioned that the 11,333 registrations in 2023 included 6,994 business names, 4,321 limited companies and 18 foreign companies. Read more: Zambia Monitor
The Energy Regulation Board (ERB) has lowered the price of diesel to K24.64 from K26.28 due to the appreciation of the Kwacha and a reduction in the cost of fuel on the international market. The Board has further maintained the price of petrol for the month of May at K27.59 per litre. They attributed the development to reduced oil prices on the international market, as well as the stronger Kwacha in the period under review. Read more: ZNBC
Bank of Zambia Exchange Rates
Currency | Buying | Selling |
---|---|---|
USD | 17.7114 | 17.7556 |
GBP | 22.0471 | 22.1093 |
EUR | 19.4931 | 19.5436 |
ZAR | 0.9696 | 0.9723 |
In International Business News
US Treasury Secretary Janet Yellen has warned that the US may run out of cash by 1 June if Congress fails to raise or suspend the debt ceiling. Reaching the debt ceiling would mean that the government is unable to borrow any more money. On Monday, Ms Yellen urged Congress to act “as soon as possible” to address the $31.4tr limit. President Joe Biden has called a meeting of congressional leaders on the issue on 9 May. The debt ceiling has been raised, extended or revised 78 times since 1960. Read more: BBC News
Banking giant HSBC says its profits got a $1.5bn boost from the purchase of collapsed Silicon Valley Bank’s British business (SVB UK). Europe’s biggest bank posted a pre-tax profit of $12.9bn for the three months to the end of March. That is more than three times the amount it made for the same time last year. In March, HSBC bought SVB UK for a nominal £1 ($1.25), in a deal led by the government and the Bank of England. The London-headquartered lender said the profit included a “provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK Limited”. Read more: BBC News
The inflation rate in the euro zone rose in April, according to preliminary data released Tuesday, remaining significantly above levels targeted by the European Central Bank. Headline inflation came in at 7% for last month, according to Eurostat, after it dropped to 6.9% in March. Core inflation, which excludes food and energy prices, stood at 5.6% in April — from 5.7% in March. The latest figures come just days before the ECB is due to announce a new monetary policy decision. Market players have been debating whether the central bank will raise rates by 50 or 25 basis points. The central bank embarked on its current hiking path in July 2022, when it brought its main rate from -0.5% to zero. The ECB’s main rate is currently at 3%. Despite the consistent rate increases, inflation remains above the ECB’s target of 2%. Read more: CNBC
The International Monetary Fund raised its forecast for Asia-Pacific, saying the region’s growth will be primarily driven by China’s recovery and “resilient” growth in India. This comes as the rest of the world braces for slower growth from tightened monetary policy and Russia’s invasion of Ukraine. The organization predicts Asia-Pacific’s gross domestic product to expand 4.6% this year, which is 0.3 percentage points higher than its forecast in October, according to its May regional economic outlook released Tuesday. The IMF’s upgraded outlook would mean the region would contribute around 70% of global growth, it said. The region expanded 3.8% in 2022. “Asia and Pacific will be the most dynamic of the world’s major regions in 2023, predominantly driven by the buoyant outlook for China and India,” the IMF said in its report. Read more: CNBC
In the year ending in December 2022, infrastructure investments in low- and middle-income countries resumed, according to the World Bank’s most recent data projection on investments, which was published very recently. According to the study, commitments for Private Participation in Infrastructure (PPI) across 263 projects were $91.7 billion, a 23% increase from 2021. “The total number of projects, however, is still below pre-pandemic levels,” World Bank says. Despite the fact that the trends point to an overall recovery, the lender claims that investments were unevenly distributed and concentrated in certain areas. For instance, investments in Sub-Saharan Africa fell by 15% from the average over the previous five years. Nevertheless, the region had the most PPI transactions per country and project over the previous ten years. Read more: Business Insider
Amidst country-wide macroeconomic headwinds, Dangote Cement, Africa’s largest cement manufacturer, has reported its 2023 first-quarter results, which show a decline in volumes. In comparison to the same period in 2022, when revenues were N321.9 billion, the company reported a decline to N280.3 billion in the first three months of 2023. The cement giant’s quarter-over-quarter sales decrease is the first in five years, illustrative of the negative impact poor government policies can have on firms. Read more: Business Insider
Zambia National Commercial Bank Plc reported a 55% rise in its first quarter after tax earnings to K403 million on higher revenues propelled by higher interest from lending activities, healthy trading margins and transaction fees. This was according to prudential financial results in the local press on Thursday April 27, 2023. The head start gives Zambia’s largest bank by asset size a stellar boost to a new quarterly high positioning the institution for a stronger 2023. The lender recorded a net profit of K1.2 billion in 2022 being the first bank in Africa’s second largest red metal hotspot to exceed a yard in two years consecutively. Supporting the performance was a 22% rally in net interest income to K808 million from credit extension and lengthened duration while non-interest income widened 67% year on year to K448 million. Read more
In 29 trades recorded on Thursday, 42,836 shares were transacted resulting in a turnover of K119,927.85. Trading activity was also recorded in AECI, British American Tobacco Zambia, CEC Zambia, PUMA and Zambeef. The LuSE All Share Index (LASI) maintained its close at 8,018.80 points. The market closed on a capitalization of K75,836,077,305.26 including Shoprite Holdings and K41,053,391,865.26 excluding Shoprite Holdings
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