Good afternoon. Here’s what you need to know
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Bank of Zambia maintains 13.5% lending rate to curb inflation amid economic headwinds
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Zambia Gold approves K42m budget for Kasenseli reopening
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Economic reforms are tempting finance back to Ethiopia and Zambia
In Local Business and Finance News
Zambia Gold Company- ZGC- has approved a 42 million Kwacha budget towards remedial works ahead of the reopening of Kasenseli Gold in Mwinilunga District of North Western Province. This is after the government in 2021 suspended operations at Kasenseli Gold Mine following an increased number of deaths owing to illegal mining activities. Zambia Gold Company Board of Directors Chairperson Guy Phiri says the mine is expected to be fully operational by next month. Mr. Phiri says about 500 jobs will be created once the mine is fully operational adding that ZGC will prioritise local employment. Read more: ZNBC
The Bank of Zambia has kept its benchmark lending rate steady at 13.5 percent, Governor Dr. Denny Kalyalya announced during a Monetary Policy Committee (MPC) briefing in Lusaka on Wednesday. The central bank’s decision aims to steer inflation back within the target band of 6 to 8 percent, thereby promoting macroeconomic stability. Kalyalya explained that the MPC considered the effects of the ongoing drought, the impact of previous rate hikes, adjustments to the statutory reserve ratio, and recent reforms in the foreign exchange market when making their decision. “While actual and projected inflation remains elevated relative to the 6 to 8 percent target band, the Committee judged that the current monetary policy stance is appropriate,” Kalyalya said. He added that the decision to maintain the rate, rather than increase it, also took into account the need to support financial system stability and economic growth, particularly in 2024, given the challenges posed by the drought. Read more: Zambia Monitor
Zambia is reportedly set to undergo a Mutual Evaluation by the Financial Action Task Force (FATF) in 2027 to assess its compliance with international anti-money laundering standards. Non-compliance with FATF requirements could significantly hinder capital inflows and limit Zambia’s access to development funds and international banking networks. This information is detailed in the Financial Intelligence Centre (FIC) Bulletin for the first quarter of 2024. As part of its preparations, Zambia is currently conducting its second National Risk Assessment (NRA) on Money Laundering, Terrorist Financing, and Proliferation Financing (ML/TF/PF). This assessment aimed to update the 2016 risk evaluation and aligned Zambia’s anti-money laundering and counter-terrorism financing systems with FATF standards. Read more: Zambia Monitor
Zambia has allocated K22 million (US$839 000) to fund innovators and inventors to actualise their prototypes aimed at addressing prevailing national challenges. Projects aiming to address the energy deficit and climate change and drought are on top of the list and those run by youth will also be prioritised. “There is a lot of creativity and expertise which can be utilised to address many pressing issues in the country,” Felix Mutati, the Science and Technology Minister, said. He was speaking in the capital Lusaka, where he presided over the Consultative Workshop on the Development of a Generic Commercialisation and Technology Transfer Framework. Read more: IT Web
As the west has diverted aid to Ukraine and Gaza, Africa faces neglect. A few countries on the continent have panicked and turned to Russia, while the prudent are embracing economic reforms to attract foreign direct investment. Among the latter, financial markets are most familiar with South Africa, Kenya and Nigeria. In each, reform of the real economy is under way but has hit the constraints of patronage politics. The people don’t trust their governments with the higher taxes without which the state remains dependent upon rising indebtedness. Meanwhile, unnoticed by the markets, Ethiopia and Zambia are embracing sustainable reforms, in each case big enough to warrant investor interest. Fifty years ago, Zambia was by far the most prosperous society in liberated black Africa, neck-and-neck with Chile, the other major copper exporter. But unlike Ethiopia, until recently its economic management was poor. Decisions were made by a corrupt political class in Lusaka, where political power alternated between the two largest ethnic parties. Meanwhile, the real economy in the Copperbelt and agriculture were woefully neglected. Read more: Financial Times
In International News
The UK’s economy grew by 0.6% between April and June as it continued its recovery from the recession at the end of last year. The latest figure was in line with forecasts and follows a 0.7% increase in the first three months of this year. Growth was led by the services sector, in particular the IT industry, legal services and scientific research. Services are the biggest contributor to the UK’s economy, far outstripping manufacturing and construction, both of which saw output fall between April and June. “The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year,” said Liz McKeown, director of economic statistics at the Office for National Statistics, which released the figures. Last year, the UK economy fell into a shallow and short-lived recession. Read more: BBC News
The USA’s year-on-year inflation has reached its lowest level in more than three years in July, the latest sign that the worst price spike in four decades is fading and setting up the United States Federal Reserve for an interest rate cut in September. Wednesday’s report from the US Department of Labor showed that consumer prices rose just 0.2 percent from June to July after dropping slightly the previous month for the first time in four years. Measured from a year earlier, prices rose 2.9 percent, down from 3 percent in June. It was the mildest year-over-year inflation figure since March 2021. Read more: Al Jazeera
Japan’s second-quarter gross domestic product beat analysts’ expectations on Thursday, both on a quarter-on-quarter as well as an annualized basis. GDP rose 0.8% quarter on quarter compared to Reuters poll estimates of a 0.5% rise. This was also a reversal from the revised 0.6% fall seen in the first quarter. It expanded 3.1% on an annualized basis, also beating estimates of a 2.1% growth. On a year-on-year basis, however, the country’s GDP fell for a second straight quarter, down 0.8% after have declined 0.9% in the first quarter. Following the GDP data release, the benchmark Nikkei 225 rose 0.16%, while the broad-based Topix climbed 0.44%. The Japanese yen strengthened marginally against the U.S. dollar, trading at 147.18. Read more: CNBC
Nigeria’s headline inflation rate dropped in July for the first time in over a year, easing to 33.40% annually from 34.19% in June. Nigeria’s headline inflation rate dropped in July for the first time in over a year, easing to 33.40% annually from 34.19% in June, according to the National Bureau of Statistics. Last month, some analysts suggested that inflation in Africa’s populous country may have peaked as the currency devaluation effects are expected to start fading. The last time annual inflation declined was in December 2022. On a year-on-year basis, the headline inflation rate was 9.32 per cent points higher compared to the rate recorded in July 2023, which was 24.08 per cent. Read more: Business Insider
For the fourth month in a row, Ghana’s inflation has slowed down. Inflation rate for the West African country for July, declined to 20.9% year on year from 22.8% in June. Ghana’s inflation drop is a result of a fall in both food and non-food inflation, Ghanaian government statistician Samuel Kobina Annim revealed to members of the press on Wednesday. The inflation rate fell to a 28-month low in July, allowing for more monetary policy easing this year. After an unexpected interest rate drop at the start of the year, Ghana’s central bank decided on maintaining the benchmark rate of 29%, as the country’s weak currency obscured the potential of rising consumer prices, as reported by Bloomberg. Read more: Business Insider
Finally, Capital Markets News
In 28 trades recorded yesterday, 7,531 shares were transacted resulting in a turnover of K47,934.62. The following price changes were recorded yesterday: -K0.01 in Standard Chartered Bank Limited. Trading activity was also recorded in CEC Zambia, National Breweries, ZAMEFA and ZANACO. The LuSE All Share Index (LASI) closed at 14,358.96 points, 0.03% lower than its previous day close at 14,362.69 points. The market closed on a capitalization of K118,022,275,014.17 including Shoprite Holdings and K74,543,918,214.17 excluding Shoprite Holdings.
13 Govt Bond trades with total quantity K39,451,000 and turnover K25,006,520 were processed yesterday.
