Good afternoon. Here’s what you need to know
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Debt servicing gulps K4.3 billion, as govt injects K16.8 billion into economy for public service delivery
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DRC says it is in talks with Zambia to quickly reopen closed border
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Rio Tinto open to major acquisitions to meet copper goals
In Local Business and Finance News
Zambia’s ongoing load shedding crisis has reached a critical point, severely hampering economic activities and the daily lives of its citizens. This systemic issue stems from a combination of inadequate generation capacity, over-reliance on hydropower, and outdated infrastructure. Load shedding, the intentional shutdown of electrical power in parts of a system to prevent a total system failure, is not unique to Zambia. However, its impact here has been profound, disrupting businesses, affecting healthcare services, and reducing the overall quality of life. Tackling these complex issues requires a multifaceted and well-coordinated approach. Such an approach could be enhanced by careful study of how other nations that faced similar power shortages emerged from their crises. Zambia should consider taking lessons from the successes of countries like Ghana, Yemen, and India, which have implemented innovative solutions to their energy challenges. Read more on Financial Insight
The government has announced the injection of K16.8 billion into the economy to support developmental programs and public service delivery. Of this total, K4.1 billion was allocated to the public service wage bill, K4.3 billion was used for debt service and arrears, and K5.6 billion was directed towards transfers, subsidies, and social benefits. An additional K1.8 billion was allocated for various programs and general operations, while K968.1 million was spent on capital expenditure. In its commitment to debt reduction, the government allocated K4.3 billion to service debts, with K3.1 billion going towards domestic debt, K321.1 million for external debt, and K883.8 million for clearing arrears. The Treasury released K5.6 billion for transfers and subsidies, with key expenditures including K494.4 million for grants to schools supporting free education, K358.9 million for hospital operations and Grant-Aided Institutions, and K241.5 million to the Local Government Equalization Fund. Read more: Zambia Monitor
The International Monetary Fund (IMF) has advised the Zambian government to recalibrate its copper-based and public investment-driven economic growth model in favor of a more diversified, private investment-led approach. IMF Resident Representative, Eric Lautier, made this recommendation during a public lecture at the University of Zambia (UNZA) on Thursday evening. The lecture, titled “Debt Restructuring Underway: What Else Is Needed to Achieve Inclusive and Sustainable Economic Growth for Zambia,” highlighted the need for strategic shifts to reduce Zambia’s economic vulnerability to global commodity price fluctuations. Lautier said that diversifying the economy and stimulating growth through sectors such as agriculture, energy and tourism was crucial for creating a more sustainable and resilient economy. “Zambia can leverage its potential to diversify the economy by utilizing sectors such as agriculture, energy, and tourism, among others,” he stated. Read more: Zambia Monitor
Democratic Republic of Congo said on Sunday it had begun talks with Zambia a day after its southern African neighbour sealed their common border, blocking a key export route for Congo, the world’s second largest copper producer. Zambian Trade Minister Chipoka Mulenga announced a temporary border closure on Saturday after a Congolese ban on imported soft drinks and beer led to demonstrations by Congolese transporters in the town of Kasumbalesa on the Zambian border. “Talks between the Congolese and Zambian governments have started since this Sunday via videoconference to lead to the rapid reopening of the borders,” the Congolese trade ministry said in a statement. “In the hours that follow, the two parties will meet in Lubumbashi in Haut-Katanga to find a lasting solution regarding trade.” Congo’s Trade Minister Julien Paluku Kahongya said in a statement earlier on Sunday that his ministry had received no formal notice of a trade dispute from Zambia before it announced the closure. In the statement, he detailed the two countries’ trade agreement and its dispute settlement mechanisms. Read more: CNBC
The Zambian government has announced a comprehensive initiative to upgrade all provincial airports across the country, marking a significant boost for the nation’s aviation sector. This ambitious project aims to modernise infrastructure, enhance safety standards, and improve connectivity between Zambia’s diverse regions. The upgrades will encompass a range of improvements, including the modernisation of existing facilities, expansion of runway capacities, and installation of cutting-edge navigation and security systems. These enhancements are expected to streamline operations and increase the airports’ capacity to handle growing passenger and cargo traffic more efficiently. This initiative is part of a broader strategy to stimulate economic growth, bolster tourism, and strengthen regional integration by making air travel more accessible and reliable throughout Zambia. By improving provincial airports, the government aims to promote balanced regional development and invigorate local economies. Read more: ATTA Travel
In International News
Rio Tinto said on Wednesday it would contemplate a significant copper acquisition if it added exceptional value, but noted that buying quality assets in the current “hot market” would be “seriously” expensive. The world’s second largest miner has been concentrating on expanding its copper business based on anticipated strong demand surpassing available supply of the energy transition metal. Rio Tinto, which has long said building mines is a better option for growth than buying assets, seems to be changing its tone as main rival BHP moves to consolidate the sector. Chief executive Jakob Stausholm said he is not ruling out looking at large takeovers in the copper sector now that Rio has reached an “inflection point”. “Our ambition is to deliver around 3% of compound annual growth [in copper output] from 2024 to 2028 from existing operations and projects,” he noted during the first-half results call. Read more: Mining
Barrick Gold Corporation reported increased earnings and production for its second quarter, in line with guidance, and said the Company was on track for a strong second half of the year. Net earnings1 were up 25% and the attributable EBITDA margin2 was up 17% quarter on quarter to 48% with strong operating cash flows of $1.16 billion and a material increase in free cash flow3 to $340 million. Net earnings per share were up 24% to $0.21, adjusted net earnings per share3 increased by 68% to $0.32, and the quarterly dividend was maintained at $0.10 per share. President and chief executive Mark Bristow said while steering the Company towards the achievement of its 2024 guidance, management was also maintaining its focus on value creation and growth. “On the copper side of the business, two world-class projects are set to deliver into a rising price and demand market. In Zambia, the Lumwana super pit expansion will increase the mine’s production from 130,000 tonnes to 240,000 tonnes per annum19 while the Reko Diq project in Pakistan is targeting 400,000 tonnes of copper and 500,000 ounces of gold per annum20,” Bristow said. Read more: Mining
A decade-long dispute between Coca-Cola and the US tax authorities has escalated to the point that the company could owe $16bn in back taxes, enough to wipe out a year and a half of profits, with the figure rising by more than $1bn a year. The soft-drink maker has been hiding “astronomical levels” of profit in low-tax countries including Ireland to shield it from the US Internal Revenue Service, according to a withering court judgment, which the company is planning to appeal against later this year. The mounting stakes have been visible only in the fine print of Coke’s regulatory filings in recent years, thanks to a quirk of accounting rules. After the last in a four-year string of tax court decisions last week, Coke will shortly have to fork out an initial $6bn in cash to cover unpaid taxes and interest for the years 2007 to 2009. But neither that sum, nor the $10bn it could owe for the subsequent 15 years, will show up as a hit to its earnings any time soon. Read more: Financial Times
Saudi oil giant Aramco reported half-year profits Tuesday of $56.3 billion, down from the year before amid worries about a slowing global economy. Aramco, formally known as the Saudi Arabian Oil Co., said its overall revenue for the half-year was $220.7 billion, up from $218.6 billion the year before. Profits in 2023 were $61.9 billion, nearly $5 billion higher. Despite the turmoil in the global economy, Aramco remains bullish on the future with a projected increase in demand from the aviation industry and from China. “Growth in global oil demand is strong, reaching a record 103.2 million barrels a day in the first half of 2024, despite some headwinds,” Aramco CEO and President Amin H. Nasser told analysts on a conference call. “We expect further demand growth in the second half of the year.” Read more: AP News
Finally, Capital Markets News
In 90 trades recorded on Friday, 20,318 shares were transacted resulting in a turnover of K477,004.88. The following price changes were recorded on Friday: -K2.02 Airtel, +K0.35 in Standard Chartered Bank Limited and +K0.02 in Zambeef. Trading activity was also recorded in Airtel, CEC Zambia, Real Estate Investments Zambia, ZAMEFA, ZANACO and Zambia Sugar. The LuSE All Share Index (LASI) closed at 14,461.72 points, 0.91% higher than its previous day close at 14,331.53 points. The market closed on a capitalization of K118,481,828,073.28 including Shoprite Holdings and K75,003,471,273.28 excluding Shoprite Holdings.
7 Govt Bond trades with total quantity K68,257,000 and turnover K55,218,020 were processed on Friday.
