Good afternoon. Here’s what you need to know
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Zambia secures 218 megawatts power from South Africa, Zimbabwe to address energy deficit
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Ruto’s revenue plan suffers as court declares his first tax law unconstitutional
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Bank of England cuts interest rate for first time in four years, but it was the closest call
In Local Business and Finance News
For a great many years, I have dreaded the possibility of our nation plunging into a debilitating crisis because of energy shortages. The energy crisis that Zambia is currently grappling with has touched every corner of the country, affecting family life and business across the board. Our complacency with hydro-power, stretching back decades, has led us here, and now Zambia is in an actual state of emergency. At the heart of our challenges lie two critical and interlocking themes: the need for a comprehensive energy market framework that welcomes cost pass-through mechanisms, and the consequential need for Zambia to migrate to truly cost-reflective tariffs through accelerated tariff reforms. Now, ‘cost pass-through,’ ‘cost-reflective tariffs’ and ‘tariff reform’ may sound like dry, technical concepts, but they hold the key to unlocking Zambia’s energy potential and attracting the investment we desperately need. So, let us start by examining what these terms mean before we move on to how we can implement the underlying principles. Read more on Financial Insight
President Hakainde Hichilema says there is need to establish embassies in both Burundi and Zambia in order to accelerate economic trade and investments in the two countries. President Hichilema underscores the significance of having embassies in both countries in a bid to do business directly aimed at fostering social and economic development that will uplift people’s livelihoods. The Head of State reiterates his government’s commitment to continue partnering with Burundi in accelerating economic development in order to better people’s livelihoods in the two countries. Speaking during the State Banquet in honour of the visiting President of Burundi Evariste Ndayishimiye at Intercontinental Hotel in Lusaka this evening, President Hichilema called for the speedy establishment of the project by finding space to construct the embassy in Zambia. Read more: Lusaka Times
The government has announced that ZESCO Limited had negotiated the procurement of 218 megawatts of power from Eskom, South Africa and the Zimbabwe Power Company (ZPC). Energy Minister, Makozo Chikote, stated that this move was intended to cushion the anticipated power deficit, which currently stood at 1,360 megawatts, leading to loadshedding. Sharing updates on the energy status in Lusaka on Thursday, Chikote highlighted that as of July 31, 2024, the national peak demand was 2,400 megawatts, while the available power generation was only 1,040 megawatts. To address this deficit, ZESCO Limited and other traders are currently importing a total of 410 megawatts of power from the Southern Region, leaving a net deficit of 950 megawatts. Chikote stated that this deficit had resulted in continued power rationing throughout the country. Read more: Zambia Monitor
Zambia’s state-owned power utility warned it may cease generating electricity at the Kariba dam by October because the nation’s worst drought yet is depleting water levels at the world’s largest artificial reservoir. Zesco Ltd. is “working frantically” to avoid a shutdown at the Kariba complex, Managing Director Victor Mapani said Thursday. Hydropower makes up about 85% of Zambia’s generation capacity, and consumers already endure power cuts lasting more than 12 hours daily. “We are not sleeping,” Mapani said at a briefing broadcast on state-owned ZNBC TV. But “running into October, we’re going to get the Kariba outage.” Mining companies in Zambia, Africa’s second-biggest copper producer, have resorted to importing power from neighbors to cover a shortfall after Zesco in June asked them to reduce their normal use by about 40%. That’s increased production costs, as they try maintain output levels. The Zambezi River Authority, an entity co-owned by the governments of Zambia and Zimbabwe, which manages the Kariba dam, allocated the two countries 16 billion cubic meters of water for power generation to be shared equally this year. That’s the lowest amount ever apportioned for electricity generation. Read more: BNN Bloomberg
In International News
The Bank of England cut interest rates Thursday for the first time since the start of the pandemic, providing some relief to households squeezed by the highest borrowing costs in 16 years. The decision takes the benchmark interest rate in the United Kingdom to 5% from 5.25%, where it had stood since September following the longest-running series of successive rate hikes in at least a century. The knife-edge decision saw five members of the Bank of England’s monetary policy committee vote to reduce the rate, while four wanted to keep it on hold. Bank of England governor Andrew Bailey told reporters the decision to cut rates was “finely balanced,” suggesting that the bank will proceed cautiously. Read more: CNN
Sales of rough diamonds in Botswana have dropped significantly in the first half of 2024 as demand for gems slowed in the wake of global economic uncertainty. According to Botswana’s central bank data, sales of rough diamonds at Debswana Diamond Company fell by 49.2%, amounting to $1.29 billion compared to $2.54 billion in the same period last year.In local currency, sales of rough diamonds decreased by 47.3% to 17.555 billion pula compared to the same period last year. This decline in sales is a major blow to the South African nation, which derives 30%-40% of its revenue, 75% of its foreign exchange earnings, and a third of its national output from sales of rough diamonds. Read more: Business Insider
A Kenyan appeals court has ruled that a series of taxes introduced in 2023 are unconstitutional, putting a vital revenue source for the government at risk. A Kenyan appeals court has ruled that a series of taxes introduced in 2023 are unconstitutional, putting a vital revenue source for the government at risk, Reuters reported. This decision comes after the government withdrew this year’s finance bill following deadly protests. The finance bills, introduced to Parliament at the beginning of each financial year, serve as the primary tool for the government to outline its revenue-raising strategies. This includes implementing tax increases and introducing new levies. Read more: Business Insider
Toyota Motor posted a 17% increase in first-quarter profit on Thursday, as cost-cutting and a weaker yen helped offset lower sales and a decline in production at home. The world’s top-selling automaker said operating profit for the three months through June totalled 1.3 trillion yen ($8.70 billion), matching the average of six analyst estimates compiled by LSEG. But with that growth being the weakest in seven quarters, the results disappointed investors who had been betting the automaker would knock the lights out. Shares in Toyota, which declined more than 5% before earnings were released, extended losses and were down 8% at 2,712 yen as of 0529 GMT. Read more: Reuters
Finally, Capital Markets News
In 75 trades recorded yesterday, 31,231 shares were transacted resulting in a turnover of K319,025.72. A -K0.01 price change was recorded in Standard Chartered Bank Limited yesterday. Trading activity was also recorded in Airtel, CEC Zambia, Madison Financial Services, National Breweries, Real Estate Investments Zambia, ZAFFICO, Zambeef, ZANACO, Zambia Sugar and CEC Africa on the quoted tier. The LuSE All Share Index (LASI) closed at 14,475.21 points, 0.03% lower than its previous day close at 14,478.94 points. The market closed on a capitalization of K118,542,134,010.24 including Shoprite Holdings and K75,063,777,210.24 excluding Shoprite Holdings.
A total of 6 Govt Bond trades with quantity K153,581,000 and turnover K103,702,630 were processed yesterday.
