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Zambia sent bondholders debt restructuring proposal, finance ministry says
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IMF calls for help in Sub-saharan Africa to manage a severe financial shortage
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In the first week of April the bond market recorded a score of 98% to 2% on the equity market
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As we enter the second quarter of the year we take a look at how the capital market performed in the first week of April 2023. The bond market recorded a score of Nearly 300 payment leaders from 45 countries agree that a financial system utilizing crypto for payments has strong potential to be faster, more affordable and more transparent than existing money movement systems. So why isn’t it being used more readily? A new whitepaper from the US Faster Payments Council and Ripple finds 97% of industry leaders across multiple sectors believe in the power of blockchain and crypto to speed up payments within the next three years, yet they need more clarity on regulatory issues and improved sustainability before making big bets on the technology. Despite having a relatively low volume of usage relative to overall payments today, crypto payments are growing fast. Mature use cases like remittances have helped drive a 350% increase in crypto payment users over the last three years in the US alone, while infrastructure providers like Stripe, Worldpay and Checkout.com all support stablecoin payment settlement. Read more
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Zambia last week gave its bondholders a “concrete proposal” for the restructuring of some $3 billion in eurobonds, the ministry of finance and national planning said on Friday. “We continue to engage actively with our bondholders and proposals are being exchanged,” the ministry told Reuters in a statement. The proposal “represents our commitment to finding a resolution that is acceptable to all parties and within the parameters set out by the IMF debt sustainability analysis.” Details of the proposal were not shared. Read more: Reuters
World Bank President David Malpass on Thursday said he hoped Zambia’s creditors, including China, would sign a memorandum of understanding on its debt restructuring this week or next. He said it was incumbent on China and other creditors to come forward with actual commitments to allow Zambia, which requested debt treatment under a Group of 20 framework nearly two years ago, to return to sustainable debt levels. Malpass said a new sovereign debt roundtable aimed at resolving bigger issues around debt restructuring had made progress. China was more receptive to arguments that multilateral development banks could participate in debt treatment via highly concessional loans and grants. Read more: Reuters
United States Ambassador to Zambia Michael Gonzales says China’s anti-corruption fight must be extended to its companies outside China. And Ambassador Gonzales says the US has no problem with the intense competition between itself and China, describing it as healthy and one which makes both countries nimble and stronger. Asked about his recent meeting with his Chinese counterpart Du Xiaohui at a media briefing, Thursday, Gonzales said he had commended China’s fight against corruption but challenged it to extend that to its companies outside its borders. Gonzales also said “The United States strongly believes in – and is investing in – Zambia’s democratic and economic renaissance. If you need proof of this, just take a look at the many senior-level U.S. government officials who have recently visited Zambia. In the past year alone, two Cabinet-level officials, a 22-member delegation of Congressional leaders, the head of the U.S. Agency for International Development (USAID), the head of the Millennium Challenge Corporation (MCC), myriad other high-level U.S. government officials, and the Vice President have all traveled to Zambia to promote Zambia and show the United States’ continued investment in Zambia’s success. In my 20+ year career, I have never seen such sustained, senior-level U.S. government engagement in any country I have served in compared to what I am seeing now in Zambia. the United States and Zambia signed a Commercial MOU to expand trade and investment between our two countries leveraging the entire U.S. government. This was only the sixth MOU of its kind to be signed in Africa, and we know it will lead to further reforms to attract international trade and investment with Zambia – not just with American firms, but firms from Zambia and around the world – that will drive job creation and a stronger, more inclusive, and diversified Zambian economy.” Read more: News Diggers and US Embassy
Zambia’s hopes of striking a long-awaited debt restructuring deal with bilateral creditors at a meeting scheduled for next week might be a stretch, according to the nation’s central bank governor. “Maybe that’s pushing it a bit too much,” Denny Kalyalya said in an interview, when asked if he thought signing a memorandum of understanding with an official lenders committee is likely. “But at the very least, I think a heads of agreement or key clear indication of what are the issues that should form the final kind of understanding would be very helpful.” Read more: Bloomberg
A Tanzanian firm, Mayzuh Company has entered into an agreement with five Zambian companies in need of financing using alternative financing instruments called ‘Sukuk’ bonds. The alternative financing ‘Sukuk’ bonds agreement has been signed with Trans Africa Road Infrastructure Development, Housing Units Project, Renewable Energy Innovation Project, ARMTRACK Agriculture Project, among others. According to the Chief Executive Officer, Sheik ISSA Mohamed Hemed, the alternative financing Sukuk bond instruments have a total value of US$4.229 billion. Read more: Zambia Monitor
The Anti-Corruption Commission says investigations into the Ministry of Finance corruption scandal have revealed that government lost over K300 million when officials paid themselves fictitious allowances between 2020 and 2021. And the ACC has also restricted over 100 bank accounts and Treasury Bills and Bonds, held by the 18 officials arrested so far from the ministry and Auditor General’s Office, held at the Bank of Zambia valued at K31,876,000. Last month, the ACC arrested 18 officials in connection with payments made for fictitious activities and theft of public funds at Ministry of Finance, among them Auditor General Dick Sichembe, former Secretary to the Treasury Fredson Yamba and Accountant General Kennedy Musonda. Read more: News Diggers
Bank of Zambia Exchange Rates
Currency | Buying | Selling |
---|---|---|
USD | 18.2082 | 18.2582 |
GBP | 22.7166 | 22.7863 |
EUR | 20.0782 | 20.1370 |
ZAR | 1.0069 | 1.0105 |
In International Business News
Growth in sub-Saharan Africa is expected to slow to 3.6 percent in 2023, as a “big funding squeeze”, tied to the drying up of aid and access to private finance, hits the region, announced the IMF April 13, 2023 in a press briefing. If no measures are taken, this shortage of funding may force countries to reduce fiscal resources for critical development like health, education, and infrastructure, holding the region back from developing its true potential. “I wish I was bearing better news, but unfortunately, we’re expecting growth to decelerate from 3.9 percent to 3.6 percent in 2023. And this to a large extent reflects the big funding squeeze tied to drying up of aid and access to private finance” said Abebe Aemro Selassie, Director of the IMF’s African Department. Sub-Saharan African countries lag significantly in revenue collections, with a median tax ratio of only 13 percent of GDP in 2022, compared with 18 percent in other emerging economies and developing countries and 27 percent in advanced economies. Read more: African News
African Air travel has made a robust recovery, nearly reaching pre-pandemic levels, an association of African carriers has said in a new report. The African Airlines Association (AFRAA) said traffic in March reached 94.8 per cent of 2019 levels as more international routes and tourism reopened. It noted that domestic flights accounted for 37 per cent of the March traffic, with intra-Africa flights at 31 per cent and intercontinental travel at 32 per cent. Data also shows that the total number of intercontinental routes operated by African airlines have exceeded pre-Covid levels since October 2022. The association said that African airlines are on course to narrow their revenue gap in 2023. Read more: Africa News
Christine Lagarde, president of the European Central Bank, said she has “huge confidence” the US will not allow the country to default on its own debt during an interview on CBS’ “Face the Nation” Sunday. “I just cannot believe that they would let such a major, major disaster happen,” Lagarde said, adding if a debt default did happen, it would have a “very, very negative impact” both in the US and around the world. “(The US is) a major leader in economic growth around the world. It cannot let that happen,” Lagarde said. Read more: CNN
Finance ministers from various Commonwealth countries have called for a systemic reform of the global financial architecture to enhance access to development financing for vulnerable countries. Their collective call for reform came at the Commonwealth Finance Ministers High-Level Working Group Meeting in Washington D.C. on 14 April 2023. At the inaugural Commonwealth Finance Ministers High-Level Working Group Meeting held on the margins of the 2023 World Bank Group and International Monetary Fund (IMF) Spring Meetings, finance ministers discussed national fiscal policies, measures for financial sustainability, eligibility criteria for development finance and potential reforms required for a more equitable financial architecture. In their call, ministers stressed that any reforms must increase funding and consider the realities of vulnerability when allocating support to help vulnerable countries invest in resilience and achieve sustainable development. Read more: Commonwealth Secretariat
U.S. Treasury Secretary Janet Yellen said banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures, possibly negating the need for further Federal Reserve interest rate hikes. Yellen said in a CNN “Fareed Zakaria GPS” interview that policy actions to stem the systemic threat caused by last month’s failures of Silicon Valley Bank and Signature Bank had caused deposit outflows to stabilize, “and things have been calm,” according to a transcript released on Saturday. “Banks are likely to become somewhat more cautious in this environment,” Yellen said in the interview, which is scheduled to air on Sunday. “We already saw some tightening of lending standards in the banking system prior to that episode, and there may be some more to come.” She said that would lead to a restriction in credit in the economy that “could be a substitute for further interest rate hikes that the Fed needs to make.” Read more: CNBC
Google and Alphabet CEO Sundar Pichai said “every product of every company” will be impacted by the quick development of AI, warning that society needs to prepare for technologies like the ones it’s already launched. In an interview with CBS’ “60 Minutes” aired on Sunday that struck a concerned tone, interviewer Scott Pelley tried several of Google’s AI projects and said he was “speechless” and felt it was “unsettling,” referring to the human-like capabilities of products like Google’s chatbot Bard. “We need to adapt as a society for it,” Pichai told Pelley, adding that jobs that would be disrupted by AI would include “knowledge workers,” including writers, accountants, architects and, ironically, even software engineers. Read more: CNBC
IMF predicts Kenya’s GDP will be larger than Angola’s in 2023, moving up to fourth place in sub-Saharan Africa. Ethiopia is anticipated to become the third-largest economy in the region, surpassing both Angola and Kenya. According to the IMF’s most recent World Economic Outlook, Angola’s gross domestic product (GDP) would decline throughout the time, allowing Kenya to pass it and move up to fourth place behind Ethiopia thanks to its anticipated 5.3% economic growth. Ethiopia, however, is now anticipated to surpass both Angola and Kenya to become the third biggest economy in sub-Saharan Africa, although the IMF had previously predicted that it would surpass Kenya to become Eastern Africa’s largest economy in its October 2022 forecast. Ethiopia’s advantage over Kenya grew when the IMF increased its prior estimate of the country’s GDP in 2023 from $126 billion to $156.1 billion. With a GDP of $506.6 billion in current prices, Nigeria continues to have the largest economy in the area, followed by South Africa ($399 billion) and Ethiopia ($156.1 billion). Read more: Business Insider
As the World Bank Group, WBG, prepares to welcome the new leadership of the Federal Government, it has listed a series of challenges that need immediate attention in Nigeria. David Malpass, the WBG President, disclosed that the country’s economic growth rate would be 2.8 per cent, lower than the earlier forecast of 2.9 per cent and significantly lower than its estimates for 2022 at 3.3 per cent. Nigeria, being an oil-dependent economy, has a large proportion of its GDP coming from the oil sector. This has resulted in poverty and economic difficulties for the country due to global challenges in the sector and Nigeria’s peculiar challenges. Insecurity is also a significant issue in the northern regions of the country, posing a severe threat to the citizens’ well-being. To tackle these challenges, the World Bank is working tirelessly within Nigeria to create a more productive economic system. According to the global lender, the country needs to diversify its economy to make sufficient progress, and trade protection that blocks market development needs to be addressed. The dual exchange rate that is costly for the people of Nigeria needs to be tackled. Inflation is also high, making it challenging to achieve sustainable economic growth. Read more: Business Insider
Chancellor Jeremy Hunt says Britain’s economy is “back”, and that his strategy for growth has been welcomed at the International Monetary Fund meeting in Washington. His predecessor, Kwasi Kwarteng, left the previous IMF meeting in October early, amid a barrage of criticism. Mr Hunt said the international lending body saw he was “putting the British economy back on the right track”. However, the latest figures show the UK economy failed to grow in February. On Wednesday, the IMF said it expected the UK economy to shrink by 0.3% in 2023, which would make it one of the worst performing of the world’s major economies. When challenged over whether the UK’s current performance undermined his positive message, Mr Hunt said: “It’s other finance ministers who are telling me Britain is back”. Read more: BBC News
Confidence among finance chiefs at the UK’s biggest companies has seen its sharpest rise since 2020. The Deloitte survey of chief financial officers showed sentiment rebounded as their concerns about energy prices and Brexit problems eased. There were 25% more chief financial officers feeling better about the future than worse, compared to 17% more feeling the opposite three months ago. Not since the Covid vaccine rollout has there been such a swing in confidence. Read more: BBC News
As we enter the second quarter of the year we take a look at how the capital market performed in the first week of April 2023. The bond market recorded a score of 98% to 2% on the equity market which is a come back from its performance of 32% last week. In comparison to week one of April 2022, which recorded a 81% to 19% on the equity market. Read more
In 15 trades recorded on Friday, 8,544 shares were transacted resulting in a turnover of K50,677. A share price gain of K1 was recorded in Chilanga Cement. Trading activity was also recorded in AECI, CEC Zambia, PUMA, Zambia Reinsurance and ZAMEFA. The LuSE All Share Index (LASI) closed at 7,985.36 points,0.58% points higher than its previous close at 7,939.40 points. The market closed on a capitalization of K75,690,493,122.77 including Shoprite Holdings and K40,907,807,682.77 excluding Shoprite Holdings.
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