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The Zambian Enterprise is not only the largest producer of copper in Africa; it also has a perfect track record to enable it to vie for a “World Class Credit” rating.

Usually referred to as “first credit” in economic terms, the rating would enable Zambia to issue international bonds and enter the elite class with incentives similar to those in developed nations.

Should this take place, Zambia whose economy currently accounts for only 1 percent of Sub-Saharan Africa’s $544 billion economy, would be the third country on the continent to issue such bonds.

“… if we went for a rating, we’d be able to issue a euro-kwacha bond for example … the country will probably seek its debut rating “shortly,” … there has never been a better time than this … with a buoyant economy and a good track record, I think it’s about the right time to subject ourselves to a rating,”… said the Manchester educated and one time professor of economics at the University of Zambia now Bank of Zambia Governor – Dr. Caleb Fundanga without being date specific.

The European Investment Bank, the finance arm of the European Union, in December 2006 sold 500 million pula of senior unsecured bonds, with settlement and payment in euros, the first-ever international issue in Botswana’s currency, according to Standard & Poor’s Ratings Services.

South Africa, the continent’s largest economy and Botswana, the nation with the highest rated debt in the continent, are the only southern African nations with foreign currency denominated bonds.

Zambia has a lot of support and may need to fully capitalize on that support if reality has to come. Out-going World Bank country manager was one of Zambia’s strongest advocates to the same.

“… Zambia is clearly one of the countries where the impact of debt relief has been massive and could be very clear,” Ohene Nyanin, the former World Bank’s country manager based in Lusaka, said in an interview. “It is a very big fiscal space that has been opened up.”’

The country’s inflation rate dropped to single digits for the first time in 30 years in April 2006 as the government moved to control spending. Zambia has also benefited from a fivefold rise in the price of copper, which accounts for 53% of the enterprise’s income.

International bonds are a certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date and have the ability to increase cash inflows at an accelerated rate thereby increasing a country’s liquidity.

classy-daddy-3.gifTwo to three years ago, I introduced a bond phenomenon on Zambia Online and even suggested the issuance of bonds as a debt instrument necessary for capitalizing the New Zambia Airways as a private enterprise.

It was to be privately driven and ran; some nay sayers rose up to short the idea down but yet even today more experts are vying for a bond rating that would elevate the country’s standing as well as help grow our economy above 7% come next year.

It is highly feasible that some critics were new to the subject and saw no benefit to the Zambian Franchise at all … thanks a trillion.

Brainwave R Mumba, Sr.

CEO & President – Zambian Chronicle

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