Zambia - Afrikan Heroes

Zambia Takes on $1.5 billion Debt to Buy Glencore Copper Mine

February 20, 2021

Cash strapped Zambia through the country’s mining investment arm ZCCM-IH has agreed to buy Glencore’s majority stake in Mopani Copper Mines in a $1.5 billion deal funded by debt and will seek a new investor. The sale follows Glencore’s attempt to suspend operations at Mopani last year because of low copper prices and COVID-19 disruptions, prompting a government threat to revoke the company’s mining licences. It could be remembered that Zambia defaulted on a debt payment in November, becoming Africa’s first pandemic-era sovereign default, but will take on more debt to finance the Mopani deal. The takeover coincides with Zambia’s preparations for elections in August, with courting voters in the copper belt. More than 15,000 workers would have lost their jobs if the mine was closed, Mines Minister Richard Musukwa said.

Glencore said that ZCCM-IH will borrow the $1.5 billion from Carlisa Investments Corp, a British Virgin Islands-based company through which Glencore holds its stake, and other unspecified members of the Glencore group. Under the deal, ZCCM-IH will acquire the remaining 90% of Mopani from Carlisa, giving it full control of the company for an indicative $1.

Glencore will retain buying rights for Mopani’s copper output until the transaction debt has been repaid. ZCCM-IH will repay the loan principal by giving Glencore creditors 3% of Mopani’s gross revenue from 2021-2023 and 10-17.5% of Mopani’s gross revenue from then on. ZCCM-IH will also owe quarterly interest of LIBOR plus 3%.

At a ceremony in Lusaka, Musukwa said ZCCM-IH will repay the loan in 10-17 years depending on copper prices, which are currently near their highest in eight years at about $8,000 a tonne. Asked how Zambia can afford to take on more debt, a mines ministry official said: “It’s not sitting on the ministry of finance. The company is able to pay on its own.”

Musukwa said the country will try to attract a new investor in Mopani, adding that companies from Britain, Canada, China, South Africa, Turkey and Qatar have expressed interest. ZCCM-IH needs about $300 million to complete expansion projects started by Glencore, he added. “Zambia is not the easiest place to do business at the moment and that has probably stymied a lot of investor interest,” said Liberum mining analyst Ben Davis.

“At these commodity prices, all assets are good assets, but it hasn’t been that great for Glencore over the past few years.”

Mopani produced 34,479 tonnes of copper last year, up 14.6% from 2019, and the expansion projects will boost output beyond 150,000 tonnes a year, Musukwa said without specifying a timeline. Glencore said it holds 73% of Mopani through an 81.2% stake in Carlisa. First Quantum Minerals, which previously held 16.9% of Mopani, did not immediately respond to a request for comment.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Zambia Looks to Honey for Economic Salvation

November 10, 2019

As the Zambian economy goes through a very rough patch, the country has expressed her commitment towards ensuring that rising debt is contained within sustainable levels even as the austerity measures introduced by the President kicks in. The fluctuation in commodities prices has had a very negative impact on the economy which has led to high debt levels and shrinking foreign currency reserves with no expectations of substantial growth. Zambia’s external debt rose to $10.05 billion at the end of 2018, compared with $8.74 billion a year earlier, raising fears that the country is headed for a debt crisis. Zambia has delayed the receipt of loans totaling $2.6 billion contracted last year in order to rein in its soaring debt.

This has led the country to look inwards for ways of addressing the situation, and one of the most practical options available is honey export. Zambia hopes to use honey export as a cushion for falling Copper prices. This follows spates of economic adjustment measures launched by the government recently which has seen to the reduction in the cost of running the government via the medium-term debt strategy.

Though the country has made progress in its energy sector reforms, intended to leave fuel imports to the private sector and to increase electricity tariffs to cover the cost of producing the power, the President said that Zambia could generate adequate resources internally to meet its development needs but this was being compromised by low tax compliance levels.

As the second largest copper producer on the African continent, Zambia has been trying to expand exports beyond the metal while diversifying its economy and lifting thousands out of poverty, for instance, developing honey export. Tons of raw honey used to be sold cheap or to brew alcohol in the country, but now it is processed to be unique products and then exported to the rest of the world, which has become a driving force for the country to fight against poverty.

Currently, the country’s honey production sitting at 2,000 tons per year is set to grow to over 10,000 tons because of increased exports, whose value has already jumped from 1.6 million U.S. dollars in 2015 to 3.1 million U.S. dollars in 2018. According to the acting director of Export Promotion agency Jessica Chombo, ‘’we have been known to be copper producers for centuries, now we want to diversify and go into other industries. Honey exports can be a key component in the growth of the economy and fight against poverty in Zambia through job and wealth creation”. More than 30,000 rural bee-keepers are expected to propel the industry – which has radically changed their way of life. A Bee farmer in Zambia was quoted as saying that Bee keeping can really help people out there where there is nothing. “Like where we are getting this honey, there is literally nothing, there’s just dense forest, a couple of mud huts, this and that. So that way we feel proud in a sense,” he added.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Zambian President Nurses Dictatorship, Reforms Constitution

September 30, 2019

Zambia, well known as Africa’s oasis of democracy as it is one of the very few African countries that has never experienced a military rule, not dictatorship with Keneth Kaunda being its longest ruling president, has been embroiled in a constitutional controversy. This is because the ongoing efforts by the President of Zambia Edgar Lungu to make adjustments to several parts of the country’s Constitution in what observers allege as a quest for dictatorial powers has drawn criticisms within and outside the country. The Constitution reforms will among other things strengthens the powers of President Edgar Lungu with less than two years to go before the general elections.

The new law which will soon be tabled before the National Assembly has become a target for criticism from the opposition and civil society fearing that with an absolute majority in the National Assembly held by Mr. Lungu’s Patriotic Front (FP) they can tow with the law to favour the president. If voted as it stands, Bill 10 extends the President’s powers to appoint judges and ministers, allows him to change the electoral map alone and transfers the responsibility for monetary policy from the Central Bank to the government.

Speaking on the development Prof. Sishuwa Sishuwa Sishuwa, one of Zambia’s most respected academic and critic, and professor of political science at the University of Zambia said that this text (Bill 10) will dig the grave of democracy in Zambia, warning that “it is designed first and foremost to consolidate the FP’s hold on the country and make it impossible to dismiss President Edgar Lungu.”

Political observers note that the political climate in Zambia has deteriorated considerably since the disputed re-election in 2016 of Mr. Lungu, who was accused of authoritarian drift, and has so far been rather calm. Coming in second place, his main opponent, the leader of the United Party for National Development (UPND), Hakainde Hichilema, has always refused to acknowledge the victory of the incumbent, claiming massive fraud. He paid for his insolence of four months’ detention in 2017 for obstructing the presidential convoy, a “crime” qualified by the courts as “treason” and punishable by death.

The charges against him were dropped, but Mr. Hichilema then denounced a “political” imprisonment. Suspicions of authoritarianism against Edgar Lungu were rekindled when he was allowed by the Constitutional Court last year to stand for re-election in 2021. Zambia’s Basic Law stipulates that the Head of State may run for two five-year terms. First elected in 2015 to succeed Michel Sata, who died in the line of duty, Mr. Lungu was re-elected in 2016. As a result, members of the opposition therefore considered that he could no longer be a candidate in 2021, but the country’s highest judicial body ruled that he could. To convince them, Mr. Lungu publicly urged the judges not to “plunge the country into chaos”.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

From January 2020, Businesses in Zambia Will Start Paying Sales Tax On Goods And Services

August 6, 2019

Effective from January 2020, businesses in Zambia would no longer pay tax on goods and services supplied or imported into the country under the old Value Added Tax Act, but will now do so under the new Sales Tax. And this will come at an extra cost.

Here Is What You Need To Know About The New Sales Act

The Sales Tax will replace the current Value Added Tax (VAT) Act.
The Sales Tax Act will apply to the taxable supplies of good and services. Sales Tax will also apply to the taxable importation of goods and services into Zambia.
The rate of tax is 9% for locally supplied goods and services and 16% for imported goods and services. The Minister is empowered to reduce the rate applicable to a taxable supply by Statutory Instrument.
The Act retains most of the principles that applied under the VAT Act with respect to definitions of supplies, goods, and services. It also largely retains the definitions of time of supply and place of supply. As with the current VAT Act, the return filing deadline remains the 18th of each month.

Exemption

Under the Act, the following goods and services are exempted from sales tax:

Capital goods
Inputs
Designated basic and essential goods or services
Designated suppliers to privileged persons
Exports

The Act also empowers the Minister to provide exemptions to Sales Tax by means of Statutory Instrument.

The Significance of The New Sales Tax To Zambian Businesses

This new Act is so significant for Zambian businesses because, under the old VAT system, consumers used to pay 16% regardless of the value chain. Under the Sales tax regime, the longer the value chain, the higher the tax paid.

Here Is An Example

Under the new sales tax regime, if a Zambian manufacturer imports raw materials from South Africa, for instance, he will pay 16% because from the new law, 16% is payable as sales tax on all goods imported into Zambia. However, when he/she sells to a wholesaler, 9% local sales tax will be levied on that sale. Again, when the wholesaler sells to a retailer, 9% will also be levied. Should the retailer also sell to the final consumer, 9% will also be charged as sales tax?

The implication of this is that Zambia’s final consumers — the farmer, villagers, informal sector worker — will be paying 41% tax instead of 16 % VAT previously the case. In the case of certain Zambian workers who are paying under Pay and As You Earn (PAYE) at the top rate of 35%, the total effective tax on their income would now be 76% without taking into account other levies.

The new sales tax has been criticized as being against the social, economic and political good of Zambians.

Zambian government desires to switch over to the new Sales Tax Act because according to the Finance Minister’s budget speech:

“VAT works better when you have an economy that has a strong manufacturing base. But we don’t have it! We are in constant refund and it cannot work now. We have to grow the manufacturing base because that is the sector that needs that support of a VAT refund. Right now, VAT is a subsidy and we are in austerity — we can’t afford subsidies. It is as simple as that.

The VAT system was introduced 23 years ago in 1995 to replace Sales Tax.

For Foreign Investors and Businesses

When the new Zambian Sales Tax Act comes into force in 2020, Zambia will be the only country in Southern African Development Community and possibly in the Common Market for Eastern and Southern Africa region to have a sales tax system and this may influence foreign investors in their decision to locate their companies. The country may likely be less competitive a destination for foreign investors compared to its neighbours.

Why 2020 Is The New Date And The Implication of This For Businesses

The new date for the Sales Tax Act, according to Zambia’s Finance Minister Bwalya Ng’andu is to allow for further refinement of the law.

Addressing parliament, Ng’andu said he was withdrawing the draft law and would re-introduce it in the next session in September, the ministry of finance said in a statement.

“This will allow for sufficient time to address the concerns in the Sales Tax Bill that stakeholders raised,” Ng’andu said.

Since being appointed last month, Ng’andu has sought to mend fences with the miners, with relations deteriorating following tax changes and an ownership dispute over Konkola Copper Mines.

Zambia’s mining industry fiercely opposes the tax.

Zambia is Africa’s second-largest copper producer.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

Facebook: https://web.facebook.com/Afrikanheroes/

AGCO invests towards the expansion of the Future Farm training in Zambia

August 4, 2019

AGCO Group has revealed plans for further development of the Future Farm project in Zambia. This was announced on 31 July 2019, at the 150ha farm outside Lusaka by Gary Collar, AGCO Senior Vice President and General Manager, Asia Pacific and Africa (APA) and the Future Farm Senior Manager, Kalongo Chitengi, during a groundbreaking ceremony attended by Her Royal Highness Senior Chieftainess Nkomeshya Mukamambo II; Chongwe District Commissioner, Mr. Robster Mwanza and Doreen Bailey, Political and Economic Section Chief at the US Embassy in Zambia.

Upgrades for Phase II will include the construction of student and staff accommodation with 24 rooms, communal amenities such as a canteen that sits over 80 people and an Insaka homestead – a traditional complex of grass gazebos with a central courtyard to encourage interactive learning. The second phase of the Future farm will also include upgrades to the existing road and farm infrastructure and digitizing the mechanization and agronomy training material to ensure that this knowledge is accessible even to farmers in remote parts of the continent.

Guests were welcomed by Nuradin Osman AGCO Vice President and General Manager, Africa who emphasized the significance of AGCO’s Africa strategy to empower the continent’s farmers as global Agri-preneurship shifts focus to see Africa as the answer to global agricultural expansion and food security. This is in line with AGCO’s vision for its business operations in Africa to develop and support a sustainable food production system, increase farm productivity by implementing modern farming techniques and develop a range of training courses for farmers, machine operators, and dealers.

“When we conceptualized the Future Farm, our aim was to be a catalyst in the development of a sustainable and prosperous agricultural industry across the continent, with innovative solutions built around the needs of African farmers,” explained Gary Collar. “To achieve this we are designing our solutions with Africa in mind and ensuring that we can support our products and customers, locally.”

While a project such as the Future Farm is committed to advancing African farmers to be owners of profitable agribusinesses, AGCO understands that the private sector cannot achieve a sustainable agricultural sector in Africa alone. There are other constraints slowing the speed of progress in Africa that need to be tackled in parallel with Governments.

“African Governments must look at agriculture beyond the development agenda, but rather as a profitable industry that can boost the region’s economy,” explained Nuradin Osman.

The Government of the Republic of Zambia has identified Agriculture as central to its job creation and poverty alleviation strategy as the sector employs over 70% of the population and contributes 19% of the country’s GDP. The government is engaged in projects aimed at increasing the volume and value of Agricultural outputs produced and sold – particularly by small-hold farmers.

“I am so pleased that this development is happening in my chiefdom, for which agriculture is the main occupation. The AGCO tractor hire service and training piloted in my chiefdom have shown how better crop yields can be achieved and have already been positive for some of the farmers,” noted her Royal Highness Senior Chieftainess Nkomeshya Mukamambo II.

The cutting edge training facility was first launched in 2015 with an initial investment of 9 million US dollars and is designed to demonstrate the value of mechanization and best agronomy practices for both small and large scale commercial farming operations.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Facebook: https://web.facebook.com/Afrikanheroes/

Zambia must use renewable natural resource to revive its economy – World Bank

July 23, 2019

Zambia’s path to economic recovery remains weak, reflecting both exogenous and policy uncertainties say the latest World Bank’s Economic Brief on Zambia, titled: Wealth Beyond Mining: Leveraging Renewable Natural Capital.

Despite the Zambian economy growing by 3.7 percent in 2018 from 3.5 percent in 2017, a stronger recovery was undermined by lower crop harvest and fiscal slippages that led to the accumulation of new public expenditure arrears and high government borrowing that impacted private sector activity.

Under the current policies, growth is forecast to weaken to 2.5 percent in 2019 and remain below 3 percent over the medium-term. While inflation remained within the authorities’ target range of 6-8 percent in 2018, averaging 7.5 percent for the year, pressures are now mounting, leading the central bank to tighten its monetary policy stance in May 2019 for the first time in over two years.

“Zambia needs to undertake bold fiscal and structural policy reforms to preserve macroeconomic stability, boost business and market confidence, and improve its growth prospects for 2019 and beyond in line with the Zambia Plus,” said Samson Kwalingana, World Bank Senior Economist for Zambia.

The brief suggests some policy options including (i) front-loading fiscal consolidation to return to medium risk of debt distress and create fiscal space for inclusive growth; (ii) strengthening debt management to reduce the debt service burden and minimize debt-related vulnerabilities; (iii) rebuilding foreign exchange reserves to buttress external stability, and (iv) implementing plans to improve the financial and operational sustainability of ZESCO and enhance the transparency of State-Owned Enterprises (SOEs).

The report highlights multiple opportunities that Zambia’s abundant renewable natural resources present to support sustainable economic growth. “Zambia’s economy has thus far been dominated by discoveries, expansion, and fluctuations in the minerals sector, but going forward, the country needs to harness its renewable natural resource endowment to promote sustainable growth.

While the contribution of renewable resources like agricultural land, forestry and fishing to GDP has declined in recent years, the sector’s linkages with the rest of the economy remain significant,” said Ina Ruthenberg, World Bank Country Manager for Zambia.

The Brief notes that the Bank’s recent Systematic Country Diagnostic revealed risks in the current use of Zambia’s natural resources, particularly the increased levels of deforestation from increased agriculture expansion and charcoal production.

Investments in non-timber products and tourism related to natural areas could generate high economic returns for the country without contributing to deforestation. Similarly, licensing for forestry products (i.e. timber, honey, wax, and charcoal) can contribute to higher government revenue collection, exports, and foreign exchange reserves.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Facebook: https://web.facebook.com/Afrikanheroes/

Zambia’s Rent To Own Secures USD 1.1 Mn Funding To Increase Portfolio Of Entrepreneurs

July 9, 2019

Zambian startup, Rent to Own (RTO) is determined to achieve its goal of providing productive-use assets to rural SMEs in Zambia. The startup has just raised a EURO 1 Mn (USD 1,121,849) in a new round of funding from the Seed Capital and Business Development facility of the Dutch Good Growth Fund (DGGF).

The Funding At A Glance

The funding was led by the Seed Capital and Business Development facility of the Dutch Good Growth Fund (DGGF)
DGGF, managed by Triple Jump BV is a fund of funds investment initiative from the Dutch Ministry of Foreign Affairs that invests in funds and financial intermediaries that provide capital to SMEs.
Through its seed investment in RTO, DGGF will help support rural SMEs to improve livelihoods and develop sustainable income sources.
According to an official disclosure, Rent To Own engaged Open Capital Advisors, a management consulting and financial advisory firm based in Africa, to provide investment-readiness and transaction advisory support for this deal.
Own To Rent intends to use the funds primarily as working capital to double the company’s portfolio for rural Zambian entrepreneurs.
Building upon convertible notes, Rent To Own provides high-impact assets to rural entrepreneurs and smallholder farmers in Zambia.

Rent To Own At Glance

The startup, founded in 2010, claims to have financed over 7000 high-impact assets in Zambia and has achieved a 96% repayment rate since inception.

Image result for Zambian startup scene — The numbers that show Africa is buzzing with an entrepreneurial spirit – CNN.com

Offering a unique “all-in-one” package of uncollateralized financing, delivery, installation, and equipment training, the startup empowers its clients to grow their businesses and improve their quality of life.
RTO’s flexible, tech-enabled platform also provides a route-to-market for equipment suppliers and supports the rapid adoption of innovative assets, such as solar-powered irrigation pumps.

“We are extremely excited by the opportunity provided by DGGF to continue to focus on this mission and rapidly grow our loan book despite the harsh economic conditions we are currently experiencing in Zambia”, says Jeffrey Scheidegger, CEO.

Rent To Own raised USD 1.05 Mn last year in a seed round led by AHL Venture Partners. Due to a significant increment in the company’s investment, the investors were joined by two other firms – Small Foundation and Jordan Engineering.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

Facebook: https://web.facebook.com/Afrikanheroes/

Zambia: Startup WidEnergy Secures Funding From GreenTec Capital

July 1, 2019

Startups in Zambia don’t have field days raising funds, like their counterparts in Nigeria, South Africa or Kenya. WidEnergy appears, however, ready to break this jinx. The startup has secured an undisclosed amount of funding from the Germany-based GreenTec Capital to expand its operations.

A Look At WidEnergy

WidEnergy is a woman-led for-profit social enterprise which is dedicated to female empowerment and the expansion of affordable energy access. It leverages an innovative pay-as-you-go (PAYG) model to provide solar-powered homes and appliances.
The company’s name is an acronym for “Women in Development,” reflecting its goal of engaging women as active participants in Africa’s energy transition.
WidEnergy works with 80 female sales agents to distribute renewable energy solutions across Zambia, focusing on core competencies in lending and distribution to develop a high-quality lending portfolio with minimized default risks.

Image result for Zambian startup — The numbers that show Africa is buzzing with an entrepreneurial spirit

It has developed partnerships to be the Zambian distributor for d.light, Greenlight Planet, and Little Sun solar appliances and home systems, and expects to connect more than 1,250 households connected by next month.
It has now secured funding from GreenTec Capital to assist it as it develops its approach and model. WidEnergy recently completed an integration with MTN-backed mobile-money payments into its platform.
The investment is GreenTec’s seventh in Africa so far, and its second this year.
The firm invested in Kenyan AI startup SuperFluid Labs in January and has also backed the likes of Nigerian logistics startup Parcel-it, Kenyan insurtech platform Bismart, Namibian CPU producer PEBL, and Kenyan recruitment platform Netwookie.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.