Chanda Chisala


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By Shapi Shacinda

LUSAKA (Reuters) – Zambia has enough currency reserves to protect the economy in case the illness of President Levy Mwanawasa prompts some reduction in foreign investment, central bank Governor Caleb Fundanga said on Tuesday.

Fundanga said the only slight worry of the Bank of Zambia (BoZ) was rising oil and food prices, which threatened its single digit inflation target. However, he remained optimistic of achieving 7.0 percent annual inflation in December this year.

Fundanga said it was evident the illness of Mwanawasa, who is in a French hospital after suffering a second stroke, had caused anxiety among some investors but that there was “no need for panic”.

“The investors in the mines will continue exporting copper. It is possible that … some investors may decide to pull out, but we have enough reserves, $1.4 billion held by the Bank of Zambia and another $1 billion by commercial banks,” Fundanga told a news conference, adding Zambia had 5.6 months of import cover.

Mwanawasa impressed the International Monetary Fund and other Western donors by cracking down on government spending and launching an anti-corruption drive.

Fundanga said Zambia had investment pledges totalling $1.8 billion so far this year compared with just $1 billion in the first six months of 2007. The government has previously said a number of these investments have been fulfilled.

“Naturally, as a result of the illness of the captain, as some refer to the president, there are some people who might be feeling uncomfortable. Given this situation, are we vulnerable? Will all forex (foreign exchange) dry up? The answer is ‘no’,” Fundanga added.

He said mining and non-traditional sectors had continued to perform satisfactorily with copper export earnings for the three months to June just 0.1 percent lower than the previous quarter’s earnings, at $967.6 million.

Fundanga said non-traditional exports at $187.6 million at end-June were 12.3 percent above the $167.1 million recorded in the previous quarter ending in March.

“Favourable export earnings have led to the strengthening of the external sector reflected in the appreciation of the kwacha against major currencies and a 10 percent increase in international reserves to $1,338.4 billion in June 2008 from $1,216.3 billion in March 2008,” he said.

There were inflationary pressures from a 15 percent wage increase for civil servants from January and from higher global oil prices, which would put pressure on transport and commodity prices.

“However, these pressures may be mitigated by pass-through effects of the appreciation of the exchange rate of the (Zambian) kwacha against major currencies on account of external sector performance,” Fundanga said.

Fundanga said the kwacha appreciated 11.3 percent against the dollar in the three months to June to trade at an average of 3,259/dollar.

“We cannot give up on 7.0 percent inflation at the end of the year because we have enough food to feed ourselves and we will not necessarily be affected by global food prices,” he added.

(Lusaka newsroom + 260-977843609/260-955779523)

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Intra SADC trade for the fiscal year 2006 was worth $1.3 billion to the Zambian Enterprise meeting and exceeding expectations above and beyond envisioned thresholds. A phenomenal growth of well over 56.15% from the previous year of $730 million.  Intra-SADC trade needs to be even more encouraged especially that it generates such huge export parities for our enterprise; and we did all this without any help from North Korea.

This shows that what we had been talking about for years and since been enacted into law under the Zambia Development Agency (ZDA) Act is workable as can been seen in these results because of focusing on value-addition to locally manufactured products to create jobs and wealth. 

Under the Zambia Development Agency (ZDA) Act, the Government has proposed various incentives to attract investments that include zero per cent tax rate on dividends for companies operating in the priority sector and/or MFEZ under the ZDA Act for a period of five years from the year of first declaration of dividends. 

Even before the Act came into being, we focused on this at the old forums (insaka) provided for by my good friend the virtuous Chanda Chisala; strictly evaluated the pros and cons with the likes of splendid Bwana as well as brainiacs like the famous Pimbilimano. The Act was formed and the results are here for all to see … thanks a trillion.

Brainwave R Mumba, Sr. 

CEO & President – Zambian Chronicle 

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