Minister of Finance Mr. Felix Mutati has said the government is in the process of creating an Entrepreneurial Fund for the private sector to facilitate the creation of a scheme for issuance of long-term credit guarantees to Small and Medium Enterprises [SME’S] in Zambia on low-interest terms.
According to a statement rleased to the media by Ministry of finance, Mr. Mutati said the Entrepreneurial Fund which will be offered at affordable interest rates, is aimed at enhancing the capacity of small-scale private sector players in order to facilitate their participation in accelerating the growth of the economy.
The Minister was speaking in Paris, France, where he recently held a high-level consultative and resource mobilization meeting with Agence France De Developpment [AFD]. Among the targeted enterprises, are those involved in agriculture, aquaculture, value addition, renewable energy, and off-grid power generation projects.
Mr. Mutati appealed to AFD, the international development wing of the French government, to invest in the Credit Guarantee Scheme; completion of the Kenya –Tanzania-Zambia Power Interconnector; Off-grid Power Projects; and aquaculture.
And AFD Operations Director, Maddame Laurence Bretton, has said AFD will consider the proposal to support the credit guarantee scheme alongside the efforts being made in creating a fund for agri-business in Zambia.
AFD is also looking at small hydro power projects in Northwestern Province, among them a 45 Mega Watts Power Project, to be co-financed by the Development Bank of Southern Africa [DBSA].
Meanwhile, Zambian bonds on the African Bond Market are on a favourable performance trajectory.
Market assessment by the Ministry of Finance, indicates that investors have continued to regard Zambian Eurobonds as attractive. Consequently, they, as at 1st February, 2017, were offering a price of US$90.38 for the US$750 million bond, a price of US $99.75 for the US $1 million and a price of US $99.75 for the US $1.25 billion bond, respectively.
This is an improvement from offer prices of US$65.25 for the US$ 750 million, US69.00 for the US$1.0 billion and US$68.75 for US$1.25 billion this period last year . Over the same period, the yield rates also improved to 7.5%, 8.54% and 9.01% for the US$750 million, US$ 1 billion and US$1.25 billion, respectively. Yields for the US $1 billion and US $1.25 billion bonds are now in fact close to the levels at the time of issuance.
The outlook for the performance of Zambia’s sovereign bonds is positive aided by continued relative stability in the exchange rate, a fall in inflation, government commitment to rebalance macroeconomic fundamentals, and significantly, observance of the rule of law and the swift return to business and peaceful way of life of the people of Zambia after the 2016 general elections. Further, the anticipated rise in commodity prices on the international market will aid macroeconomic stability and further boost investor confidence. This is great news for Zambia as it has a positive effect on credit rating.