Good afternoon. Here’s what you need to know
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China launches initiative to inject $5bn in Zambian mines
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CNMC to invest $1.5bn in Luanshya Copper Mine
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Multichoice profits decline by 99% as subscriptions fall by 15%
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Zambia Lifts Key Rate to 14% to Cool Prices, Support Kwacha
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Republican Win Signals Higher Rates, Implications for Zambia’s Bond Market
In Local Business and Finance News
Zambia’s central bank raised its key interest rate to the highest level since 2017 to contain price pressures and prop up its bruised currency. The monetary policy committee lifted the rate to 14% from 13.5%, Governor Denny Kalyalya told reporters in the capital, Lusaka, on Wednesday. “The decision to raise the policy rate is aimed at steering inflation back towards the target band and anchoring inflation expectations,” he said, adding “we took account of what was happening in the foreign exchange market.” Annual inflation has been above the central bank’s 6%-8% target since April, 2019. The kwacha has shed almost 3% of its value since Oct. 24, fanning inflation that’s already near a three-year high of 15.7% because of a severe drought. Price pressures have been stoked by the low supply of corn, fish and vegetables, and increased demand for fuel to make up for the shortage of electricity, Kalyalya said. Zambia gets most of its power from hydroelectricity, which has been badly hurt by low water levels. Annual inflation is now forecast to average around 15% in 2024, but the MPC raised its outer year forecasts and projects inflation at 13.9% in 2025 compared with 12.7% reported in August. Read more: Bloomberg
Zambia economic growth projection has been downgraded following latest review by the International Monetary Fund (IMF). According to an official statement by the fund, the lingering effects of the drought have hit Zambia’s economic landscape harder than anticipated, with reduced agricultural output and electricity shortages impacting economic activity widely. The country’s real gross domestic product (GDP) growth is now forecasted at 1.2 percent for 2024, from 2.3% due to negative impacts of developments in the economic environment. IMF Mercedes Vera Martin said, “The outlook for 2024 has deteriorated; Real GDP growth is now projected at 1.2 percent, from 2.3 percent projected in June, as extensive electricity shortfalls have impacted economic activity significantly”. Martins noted a 20.6% year on year contractions in agriculture while electricity dropped by 9.6 percent. IMF said deceleration in non-mining non-agriculture activity from 7.7 percent in 2023H1 to 3.5 percent in 2024H1 amid intensifying power shortages dragged growth to 1.9 percent year on year in the first half of 2024. Read more: Market Forces Africa
China has launched the Chinese Mining Enterprise Association in Zambia -CMEAZ- an initiative which is set to inject five billion dollars in the mining industry by 2031. Speaking during the launch in Lusaka today, Mines and Minerals Development Minister Paul Kabuswe said the association will contribute to Zambia’s three million tonnes copper production strategy. Mr. Kabuswe is pleased that the Association will also serve as a platform for Chinese mining companies operating in Zambia to put their efforts to enhance cooperation with the government. He said this in a speech read on his behalf by Director Planning and Communication Tobias Musonda during the launch of the Chinese Mining Enterprise Association in Lusaka. And Chinese Ambassador to Zambia Han Jing said companies from China have made significant investments of over 3.5 billion dollars over the past 25 years. Read more: ZNBC
China Nonferrous Mining Corporation Limited -CNMC- says it will complete the dewatering of Luanshya Copper Mines by the end of 2025. And CNMC says it plans to invest close to 1.5 billion dollars to rehabilitate and expand production at Luanshya Copper Mines. CNMC Chairperson Wen Gang said his company also wants to invest in developing a new Mine called Samba Mines. Mr. Wen disclosed this when he called on President Hakainde Hichilema at State House in Lusaka today. And President Hichilema has welcomed the developments at Luanshya Copper Mines and has expressed happiness over the investments in the Mine in the form of Technology and capital. Read more: ZNBC
Following a “Republican Clean Sweep” in the 2024 U.S. elections, securing the White House and both chambers of Congress, U.S. bond yields surged from 3.6% to 4.45% on election night, later stabilising around 4.35%. Investors expect this Republican-led government to foster policies contributing to a higher interest rate climate. As JP Morgan notes, U.S. deficit concerns are a primary driver behind recent rate hikes. Republican-led plans for tax cuts may compel the U.S. Treasury to expand bond issuance to fund the deficit, projected at $1.8 trillion in 2024, exerting upward pressure on rates. Zambia’s bond yields have been falling amid recent Fed rate cuts, which previously spurred emerging-market investments. However, rising U.S. rates could dampen this trend. In a “higher for longer” environment, international investors might opt for U.S. assets with a stronger dollar and attractive returns, reducing demand for emerging-market bonds, including Zambia’s. The 364-day Treasury bill auction on November 14, 2024, and the central bank’s policy rate decisions will be crucial. As yields in Zambia trend downward, the auction results may reveal whether local rates will adapt to global pressures. Zambia’s economy faces similar pressures with currency depreciation, inflation, and external debt costs likely to rise if U.S. rates remain elevated, impacting fiscal and monetary stability. The Business Telegraph
Access Bank Zambia has reportedly commenced integrating its core banking systems following their successful merger with Atlas Mara Zambia. Access Bank Zambia Managing Director, Lishala Situmbeko, stated that the integration, set for completion by November aimed to unify bank operations, enhance operational efficiency, and provide a seamless banking experience for customers. “Consolidating the two banks onto a single, robust platform is a significant milestone as we work to set a new standard in digital banking and customer service,” Situmbeko said. He added that the bank had begun engaging stakeholders on the expected impact of the integration. Key changes included updated branch names and the replacement of former Atlas Mara sort codes and SWIFT Code with Access Bank’s SWIFT Code. Situmbeko assured that Access Bank had implemented robust risk mitigation measures to ensure a smooth transition and will provide regular updates to keep stakeholders informed. Read more: Zambia Monitor
The Zimbabwe-Zambia (Zim-Zam) Energy Projects Summit, scheduled for November 18-20, 2024, in Victoria Falls, Zimbabwe, arrives at a critical juncture for regional energy development. With both governments enacting structural reforms to increase the bankability of energy initiatives, investor interest is at an all-time high. The summit presents a unique chance to advance sustainable energy solutions for both Zimbabwe and Zambia. Held bi-annually and alternating between Zimbabwe and Zambia, this year’s summit is themed Powering Zimbabwe and Zambia’s Sustainable Energy Future: Unlocking Opportunities in Renewables, Grid Modernization, and Energy Access. Under the official patronage of Zimbabwe’s Ministry of Energy and Power Development, the event will spotlight strategic energy projects designed to boost private investment in solar, geothermal, and wind energy while supporting traditional hydropower sources amidst ongoing drought concerns. Read more: The Zimbabwe Mail
In International News
In its financial statement released on Tuesday, Multichoice Group has reported a huge financial decline. The South African pay television company recorded a 99% decline in its half-year profit. The satellite TV provider has tagged the operating environment as “extremely hostile.“ The DStv, SuperSport, and Showmax owner, whose Pay TV business operates across 50 countries in sub-Saharan Africa, said its performance was majorly affected by weaker local currencies. It also pointed out that constrained consumer spending particularly in Nigeria and extreme power disruptions in Zambia marred its headline loss. Last week, we reported that Multichoice announced it would release a negative value financial report this week.“The first half of the 2024 financial year was negatively impacted by severe pressure in the macroeconomic, foreign exchange rate, and consumer environment in key markets, most notably Nigeria and Zambia,” the company said. Multichoice expressed that its adjusted core headline earnings per share fell to 2 cents per share for the six months ended Sept. 30. This is from 356 cents per share last year. It added that subscriptions fell by 5% in South Africa and 15% across other parts of Africa where it operates. On revenue, the group’s earnings fell by 10% to 25.4 billion rand ($1.41 billion) on a reported basis. MultiChoice’s subscribers reduced by 800 000, while profits dwindled by close to R7 billion, the company reveals. The results come as French-based media giant Canal+ is looking to take over the South African firm in a R30 billion deal. However, it grew by 4% on an organic basis, which excludes the impact of foreign exchange effects, mergers, and acquisitions. Read more: TechNext24 and IT Web
The World Bank and other financial institutions are engaged in discussions about funding a mega hydro-power project in the Democratic Republic of Congo that has the potential of supplying electricity across the entire African continent. The Grand Inga Dam is capable of producing 44,000 Megawatts of power and is estimated to cost 80 billion US dollars. Africanews correspondent Chris Ocamringa visited the dam. The raging waters of the Congo River are raising hopes of ending the energy shortages in the Democratic Republic of Congo. The government plans to construct 6 hydropower stations near a waterfall in western DRC to add to the two that are already operational. The Grand Inga Dam will be the world’s largest hydropower dam once its completed. The construction has stalled for over a decade because of disagreements between the former DRC government and the World Bank over issues of transparency. But the current government has revived talks with the World Bank to fund the project. Read more: Africa News
Tanzania has allocated a budget of Sh25 trillion ($9 billion) for a series of infrastructural projects. The Tanzanian Public-Private Partnership Center has set its sights on at least 25 trillion Tanzanian shillings ($9 billion) to fund important infrastructure and development projects across many sectors, with over 84 projects already ongoing. This was made known by the PPPC Executive Director David Kafulila at a seminar for the Parliamentary Standing Committee on Regional Administration and Local Government in Dar es Salaam on Monday. He emphasized the importance of such initiatives, highlighting the progress the country has enjoyed as a result of Public-Private Partnerships, the Citizen reported. Read more: Business Insider
COP29 negotiators welcomed a pledge by major development banks to lift funding to poor and middle-income countries struggling with global warming as an early boost to the two-week summit. A group of lenders, including the World Bank, announced on Tuesday a joint goal of increasing this finance to $120 billion by 2030, a roughly 60% increase on the amount in 2023. “I think it’s a very good sign,” Irish Climate Minister Eamon Ryan told Reuters on Wednesday. “It’s very helpful. But that on its own won’t be enough”, Ryan said, adding countries and companies must also contribute. China’s Vice Premier Ding Xuexiang said on Tuesday that Beijing has already mobilized around $24.5 billion to help developing countries address climate change. Read more: Reuters
Protectionist policies from the incoming U.S. administration will hamper global growth and Europe must be better prepared than in 2018, European Central Bank policymakers warned on Tuesday. U.S. President-elect Donald Trump has promised a big increase in trade barriers, including a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, with the aim of reducing the U.S. trade deficit. “What we do know is that the significant import duties spoken of could have detrimental ramifications for the world economy,” Finnish central bank chief Olli Rehn said in London. “A new trade war is the last thing we need amid today’s geopolitical rivalries – especially among allies.” Austrian central bank chief Robert Holzmann warned that these policies, if implemented, will keep U.S. interest rates and inflation higher, also putting upward pressure on prices elsewhere. “He means what he has said and he will probably implement it faster than we expect. If so, what do markets expect? … That interest rates will stay higher and that inflation will also be higher,” Holzmann said in Vienna, adding that would put upward pressure on the dollar and euro zone inflation. Holzmann argued that if the dollar firms and approaches parity against the euro, that would have a measurable impact on import costs, especially for energy, making it harder for the ECB to get to its 2% inflation target and potentially delaying the process. Read more: Reuters
Finally, Capital Markets News
In 153 trades recorded yesterday 697,359 shares were transacted resulting in a turnover of K9,617,933.46. The following price changes were recorded yesterday: -K0.03 in CEC Zambia, -K0.08 in National Breweries, +K0.02 in Zambeef, -K0.01 in ZANACO and +K1.02 in Zambia Sugar. Trading activity was also recorded in Airtel, Bata, Chilanga Cement, FARM, PUMA, Standard Chartered Bank Limited, Zambia Breweries, ZCCM, a well as CEC Africa on the quoted tier. The LuSE All Share Index (LASI) closed at 16,036.30 points 0.30% higher than the previous trading day close. The market closed on a capitalization of K188,812,736,146.98 including Shoprite Holdings and K81,747,282,526.98 excluding Shoprite Holdings.
A total of 13 Govt Bond trades with a total quantity of K33,846,950 and turnover K25,314,280 were processed yesterday.
