Good afternoon. Here’s what you need to know
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IMF downgrades Zambia’s economic growth forecast to 2.3 percent
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UK exits recession with fastest growth in two years
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Rio Tinto had considered a bid for BHP-target Anglo American, AFR reports
In Local Business and Finance News
International Monetary Fund (IMF) has downgraded Zambia’s economic growth projection for 2024 to 2.3 percent against the 4.7 percent forecast, amid drought which has adversely affected agriculture and energy sectors. In a statement, IMF Mission team lead to Zambia Vera Martin, said other factors include the continued inflation pressures driven by external supply factors and the depreciation of the exchange rate. Ms. Martin stated that during the IMF team’s visit to Lusaka, the Zambian authorities and IMF staff advanced the technical work as part of their discussions for the Third Review under the Extended Credit Facility (ECF) as discussions focused on analyzing recent economic developments and assessing the economic impact of the drought. “The team had productive discussions with the authorities. Discussions will continue virtually in the coming weeks, including to better assess the economic impact of the drought and agree on policies to support the completion of the ECF review. She observed that Zambia has made commendable progress in implementing crucial reforms under the Fund-supported program, including significant fiscal efforts in 2023 despite lower mining revenues, adding that authorities have also upscaled social spending to support the most vulnerable and continue to provide free primary education. Read more: Money FM
Tertiary Minerals, an AIM (Alternative Investment Market)-traded mineral exploration and development company, has announced the approval of the environmental project brief (EPB) for its Mupala Copper Project in Zambia. The approval allows Tertiary Minerals to initiate mineral exploration activities at the Mupala project. The Zambia Environmental Management Agency granted the EPB approval, following the letter of consent from the Sailunga Chiefdom obtained earlier this year. The company is preparing to start work programmes next month, which will include soil sampling to verify identified anomalies and assist with surface regolith mapping. Read more: Mining Technology
Minister of Transport and Logistics, Hon. Museba Frank Tayali , MP is elated with the move by Cabinet to approve the Beira Development Corridor Agreement. This came to light following the sitting of the 8th Cabinet Meeting chaired by His Excellency President Hakainde Hichilema on Monday, May 6th 2024 in Lusaka which approved that Zambia signs and ratifies the Beira Development Corridor Agreement. On Monday, Cabinet approved that Zambia should sign and ratify the Beira Development Corridor Agreement (BDCA) amongst the Democratic Republic of Congo (DRC), the Republic of Malawi, the Republic of Mozambique, the Republic of Zimbabwe and the Republic of Zambia. This will promote and facilitate infrastructure development, transit-transport cooperation and cross border trade among the five-member States and ensure that they benefit from the various initiatives and development projects to be undertaken by the various stakeholders and Cooperating Partners within the Corridor. Read more: Lusaka Times
Centre for Trade Policy and Development (CTPD) has urged Government to imploy the debt-equity swap mechanism in resolving its debt crisis. Zambia’s external debt was estimated at US$14.6 billion in 2023, while domestic debt stood at US$1.9 billion. According CTPD, debt equity swap is a mechanism in which a bank exchanges foreign sovereign external debt of a country for an equity stake in a company in that country, through privatisation, stock market investments or direct investment. In a paper released last week, titled ‘A Review of the Challenges and Social-economic Implications of Zambia’s Protracted Debt Restructuring Process’, CTPD suggests Zambia can use its mineral resources to engage in a debt equity swap with its creditors. Read more: Zambia Daily Mail
Zambia is currently grappling with increased soil degradation and a decline in soil quality, particularly affecting agricultural production, according to authorities. Speaking at the Africa Fertiliser and Soil Health Summit of the African Union in Nairobi, Kenya, Acting Foreign Affairs and International Cooperation Minister, Mulambo Haimbe, highlighted the adverse impact of soil degradation on production, leading to persistently low yields despite increased fertiliser use. Haimbe stated Zambia’s recognition of the importance of sustaining healthy soils for food production and expressed support for initiatives like the Africa Fertiliser and Soil Health Summit. He noted that the Summit aimed to develop a coordinated approach to enhance Africa’s soils for sustained agricultural productivity. Read more: Zambia Monitor
In International News
Stronger than expected growth at the start of the year saw the UK’s economy emerge from recession. The economy grew by 0.6% between January and March, the fastest rate for two years, official figures showed. The UK had fallen into recession last year after the economy contracted for two three-month periods in a row. The chancellor said the economy was “returning to full health”, but Labour said this was no time for a “victory lap”. On Thursday, the governor of the Bank of England, Andrew Bailey, told the BBC that the economy had turned a corner, but that it was not yet a strong recovery. Yael Selfin, chief economist at KPMG UK. said “the worst is behind the UK economy”. “We expect to see continued growth for the rest of this year,” she added, with falling inflation and rising wages helping “to repair some of the damage to household incomes and support households’ consumption”. Read more: BBC News
Mining giant Rio Tinto had considered an offer for British miner Anglo American, which is now BHP Group’s $39 billion takeover target, the Australian Financial Review reported on Friday. Rio “management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation”, the AFR reported, citing sources close to Rio. The report did not mention why Rio did not make a proposal but said there is no suggestion that Rio is about to make an alternative bid. Rio declined to comment on the report. BHP shares were down 0.4%, while Rio Tinto was trading flat. The Australian mining index was also flat as of 0438 GMT. Anglo has turned down BHP’s proposal, saying it was opportunistic and significantly undervalues the British company. BHP has until May 22 to make a formal offer under the UK’s takeover rules. Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war. Read more: Reuters
Japan’s economy likely contracted an annualised 1.5% in the January-March quarter as all key drivers of growth slumped due to an uncertain outlook, a Reuters poll showed, which will probably set back Bank of Japan efforts to raise interest rates. Cabinet Office data due out at 8:50 a.m. on May 16 (2350 GMT on May 15) is expected to show the economy’s contraction would be equivalent to monthly decline of 0.4%, according to the poll of 17 economists. The decline followed growth of 0.4% annualised in the last three months of 2023, with the main pillars of GDP collapsing and leaving no growth engine for the January-March quarter. Read more: Reuters
The International Monetary Fund has reaffirmed its growth projection of 3.3% for Nigeria’s economy in 2024, compared to 2.9% last year. This forecast reflects improvements in the services and trade sectors. However, the IMF noted that the growth outlook remains challenging for Africa’s most populous nation and leading oil producer. In March, food price inflation reached 40%, prompting concerns about food security. According to the IMF mission chief for Nigeria, Axel Schimmelpfenning “If Nigeria grows at 3.3% that is just above the population dynamics, which is a big challenge.” The Fund projected that fuel subsidies could be up to 3% of GDP this year due to the disparity between pump prices and their dollar cost, according to Schimmelpfennig. He further stated that officials are dedicated to gradually phasing out these subsidies within the next one or two years. Read more: Business Insider
Finally, Capital Markets News
In 128 trades recorded yesterday, shares amounting to 117,941 were transacted resulting in a turnover of K869,529.80. The following share price changes were recorded yesterday: +K0.12 in PUMA and +K0.11 in Chilanga Cement. Trading activity was recorded in CEC Zambia, Real Estate Investments Zambia, Standard Chartered Bank Limited, ZCCM, Zameef, Zambia Sugar and ZAFFICO. The LuSE All Share Index (LASI) closed at 12,862.47 points, 0.14% higher than its previous day close at 12,844.19 points. The market closed on a capitalization of K100,169,885,010.20 including Shoprite Holdings and 65,387,199,570.20 excluding Shoprite Holdings.
A total of 2 Govt Bond trades with total face value of 1,321,000 and turnover 1,181,350 were processed yesterday.
