Good afternoon. Here’s what you need to know
-
June food basket declines by K258.68
-
Govt suspends duty on wheat imports
-
Kenya’s president warns of major fallout after $80 billion debt relief effort fails
In Local Business and Finance News
Government has suspended customs and excise duty on the importation of wheat affective 1st April 2024 until 30 August 2024. Wheat and bread product prices have been on a steep rise with the Bakeries Association of Zambia calling for action from authorities to arrest the trend. According to a statutory instrument – SI signed by Finance Minister Dr. Situmbeko Musokotwane and made available to the Zambian Business Times – ZBT, a total of 21 companies have been allocated specified quantities and will require an import permit to bring in the wheat. The 21 companies have been allocated a total of 100,000 tons to import within the five months period. Read more: Zambian Business Times
Jesuit Centre for Theological Reflection (JCTR) says the Basic Needs and Nutrition Basket for a family of five in Lusaka declined by K258.68 in June 2024. JCTR Social & Economic Development Programme Officer, Lukwesa Musonda, revealed in a statement that the food basket now stands at K10, 442.45 compared to K10,701.13 in May 2024. Ms. Musonda attributed the the decrease in the basket to the observed reduction in prices of commodities such as tomatoes and fruits such as oranges as well as apples which cost K30.76 per kg from K37.21 per kg. She further said due to the seasonal availability of sweet potatoes as an affordable alternative to Irish potatoes, it was observed that sweet potatoes cost K10.08 per kg compared to Irish potatoes which cost K25.37 per kg. Read more: MoneyFM
Transparency International Zambia (TI-Z) has cautioned government against overreliance on domestic and external borrowing, which constitutes 39.6% of the K41.9 billion supplementary budget recently presented to Parliament by Finance Minister Dr. Situmbeko Musokotwane. In a statement, TI-Z Public Resource Management Coordinator Tommy Singongi, noted that such practices risk worsen the strain on the private sector and jeopardizing sustainable public debt management goals. Mr. Singongi hailed efforts to generate 41% of the supplementary budget from operational savings, but urged Government to adopt a sustainable approach to debt repayment, by avoiding excessive borrowing and adhering to the timelines outlined in the Public Debt Management Act for amending annual borrowing plans. “TI-Z acknowledges the transparency demonstrated by the Government in announcing the supplementary budget amounting to K41.9 billion. This announcement reflects a proactive approach in reallocating resources, in response to current challenges and potentially in response to the utilization patterns observed by Ministries, Provinces and Spending Agencies (MPSAs).” “Government should enhance budget credibility, transparency, and accountability in public finance management, with increased opportunities for public participation in supplementary budget development processes,” Mr. Singongi suggested. Read more: MoneyFM
Airtel Zambia and Zambia Industrial Commercial Bank Limited (ZICB) have signed a Memorandum of Understanding (MoU) and partnership to improve the business environment for Zambia’s Small and Medium Enterprises (SMEs). Under the provisions of the MoU, Airtel will deliver free cutting-edge 4G and 5G Internet service devices (routers) to ZICB’s SME customers. However, these users must register for the Bank’s Internet banking platform and commit to monthly bundles on these devices. This move, targeted at ZICB SME clients, seeks to deliver dependable and high-speed Internet connectivity using Airtel devices. This comes at a time when the country’s Internet penetration rate is 31.2% of the overall population as of early 2024, with a projected increase to 43.44% by year-end. To expand the country’s Internet access, the Zambian government and private sector are building 520 communication towers across the country to achieve 96% phone and Internet coverage by the end of 2025 or early 2026. In February 2024, the government announced plans to build 60 4G mobile towers to increase Internet coverage in rural areas, as well as digital centres for free Internet services. Read more: TechPoint Africa
In International News
The ballooning debt in East Africa’s economic hub of Kenya is expected to grow even more after deadly protests forced the rejection of a finance bill that President William Ruto said was needed to raise revenue. He now warns “It will have huge consequences.” Facing public calls to resign, Ruto has said the government will turn to slashing a $2.7 billion budget deficit by half and borrowing the rest, without saying from where. After anger over bloated bureaucracy and luxurious lives of senior officials helped to fuel the protests, Ruto also has promised funding cuts in his own office and said funding would stop for the offices of the first lady, the “second lady” — the wife of the vice president — and the wife of the prime Cabinet secretary. Almost four dozen state enterprises with overlapping roles will be closed. Ruto has become deeply unpopular in his two years in office over his quest to introduce taxes meant to enable Kenya to repay its $80 billion public debt to lenders including the World Bank, the International Monetary Fund and China. The public debt makes up about 70% of Kenya’s gross domestic product, the highest in 20 years. Read more: Africa News
Kenya’s credit rating was recently downgraded by the data intelligence firm: Moody. This slash is a result of the recent Kenyan protest that coerced its government into halting its plans to raise more than $2 billion in new taxes. The protest which turned deadly saw the loss of Kenyan lives and immense social tension within the East African country. This denotes that the government would probably not be suggesting any bold fiscal policies soon. Facing public calls to resign, Ruto has said the government will turn to slashing a $2.7 billion budget deficit by half and borrowing the rest, without saying from where. Ruto has become deeply unpopular in his two years in office over his quest to introduce taxes meant to enable Kenya to repay its $80 billion public debt to lenders including the World Bank, the International Monetary Fund and China. Read more: Business Insider
China’s consumer price inflation rose by 0.2% in June from a year ago, missing expectations, while producer prices fell in-line with forecasts, data from the National Bureau of Statistics on Wednesday showed. China’s consumer price index was expected to rise by 0.4% year-on-year in June, according to a poll by Reuters. The producer price index, which measures factory-gate prices, dropped by 0.8% from a year ago — in line with expectations. Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year-on-year in June, slightly slower than the 0.7% increase for the first six months of the year. Pork prices surged by 18.1% in June from a year ago, while beef prices fell by 13.4%. Tourism prices rose by 3.7% year-on-year in June, down by 0.8% from May. Read more: CNBC
The United States Federal Reserve faces a cooling job market as well as persistently high prices, Chairman Jerome Powell has said in testimony to the US Congress, a shift in emphasis away from the Fed’s single-minded fight against inflation of the past two years that suggests it is moving closer to cutting interest rates. The Fed has made “considerable progress” toward its goal of defeating the worst inflation spike in four decades, Powell told the Senate Banking Committee on Tuesday. “Inflation has eased notably” in the past two years, he added, though it still remains above the central bank’s 2 percent target. Powell pointedly noted that “elevated inflation is not the only risk we face”. Cutting interest rates “too late or too little could unduly weaken economic activity and employment”, he said. The Fed chair addressed the Senate panel on the first of two days of semiannual testimony to Congress. On Wednesday, he will testify to the House Financial Services Committee. Read more: Al Jazeera
Finally, Capital Markets News
In 117 trades recorded yesterday, 82,480 shares were transacted resulting in a turnover of K2,402,530.55. The following price changes were recorded yesterday: K0.20 in PUMA, -K0.34 in Standard Chartered Bank Limited and -K0.03 in ZANACO. Trading activity also was recorded in Airtel, CEC Zambia, Chilanga Cement, FARM, Real Estate Investments Zambia, Zambeef, and Zambia Sugar. The LuSE All Share Index (LASI) closed at 13,815.23 points, 0.82% lower than its previous day close at 13,928.94 points. The market closed on a capitalization of K114,176,658,577.58 including Shoprite Holdings and K70,698,301,777.58 excluding Shoprite Holdings.
A total number of 2 Govt Bond trades with quantity 53,220,000 and turnover 32,092,670 were processed yesterday.
