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Alba Iulia
Tuesday, June 2, 2020

Mutati promises cheap financing for SMEs as Zambia Eurobond continue to perform better

Headlines Mutati promises cheap financing for SMEs as Zambia Eurobond continue to perform...

Finance Minister Felix Mutati
Finance Minister Felix Mutati
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 [2016]. 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.

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    • Mutati fornicated with his neighbour.

      Since I heard this last week I
      Know he can’t be trusted. How do you sleep with your neighbour and expect tk have credence left if at all.

      Any man that doesn’t realise one woman is enough is no man at all and I hope they catch HIV and kick the bucket.



    • Thats good news.

      We hope and trust that as citizens we will take advantage.

      We don’t want people to get that money from government and the go to the show room to purchase the latest Range Rover and Jeep.

    • It seems Felix is hardworking compared to Malume Chikwanda. But I don’t like Felix at all.
      Chikwanda is passive and tired but I like and respect him.

    • Obviously the man is clueless as to what the job of Finance Minister entails.

      Mutati, a scheme for issuance of long-term credit guarantees to SME’S on low-interest terms will only happen when your PF Government stops BORROWING locally, and the interest comes down from 30%! And you PAY SUPPLIERS, SALARIES AND PENSIONS on time! Your incompetence in managing the economy is what has made capital exorbitant and stifled economic growth.

      And rather than an Entrepreneurial Fund you better tell us about the PF SINKING FUND that is supposed to pay of these Eurobonds! Or are you just going to leave our unborn generations to fix that mess PF created?

    • The reported numbers don’t make any sense at all. Do you people know anything about how bond prices and yields work?

      Bond prices are inversely related to the yield.
      In other words, you can never have increasing bond prices giving rise to increasing bond yields.

      Think about it this way, when you trade bonds, you are actually trading financial risk.

      Therefore, the riskier the higher the returns, i.e. which fullish investor wants to take on more risk for less or similar risk?

      Finally, if something is more risky, would you expect people to pay more or less for it?

      Simple – less; therefore cheaper bonds means higher risky bond and higher yields.

      More expensive bonds means less risk and therefore lower yields.

      Suppose that your report that bond prices have gone up is to…

    • Suppose that your report that bond prices have gone up is to be believed, this would entail that the investors see the zambian bond as less risky than it was last year. If this is indeed true then the yields must fall.

      Right now, I am not sure what to make of your reporting.

    • which is which then ba LT because according to @Faustina both yields and prices can not go up at the same time!

      where did you get this report and is someone making this up to full people?

    • @Foustina Kalota, your analysis is correct. When the bond issuer becomes more stable, the price of the bonds will increase and yields decrease. More importantly, this has no impact on the bond issuer because the interest on the bins is fixed at the time of issuing. The yoyo dance on the price and yields of bonds is for the bondholders who can trade those bonds on the open market. Zambia should be worried about where the money to repay those bonds will come from when they mature.

  1. More borrowing by PF.
    when we told you lungu and his PF GRZ only know how to borrow we were called bitter.

    All lungu has opened is shopping malls. Not a single factory. Totally incompetent. In the mean time PF minister enrich them selves with all GRZ contracts and call for PF cader thugs to takeover public places while lungu travels the world.

    • You should count how many people have been employed in these shopping malls before making uninformed comments. Job creation is not only through manufacturing industries. Malls and all the other industries contribute to job creation. Instead of condemning malls encourage the government to open up avenues for establishment of more manufacturing industries so that more jobs are created and we expand our export base. You can’t have a country without shopping malls. I am sure where you are your shopping is in done from a Mall.

    • Simply an excuse to steal through their proxy companies…the likes of Kambwili made a lot of money from CEEC …we dont even know how many even pay back these loans.
      Leave lending to the banks you concentrate on policy creation.

  2. Thats good news.

    We hope and trust that as citizens we will take advantage.

    We don’t want people to get that money from government and the go to the show room to purchase the latest Range Rover and Jeep.

  3. That money will be stolen even before it reaches the bank. These PF thievies and thugs whose main job is theft and crookeness do not mean well for the country.

  4. But why make that pronouncement in France when the intended beneficiaries are Zambians? I hope the Hon Minister is not just using SMEs to get us into more debt.

  5. There is no need to create an entrepreneurial fund when there are already existing public and private sector institutions which can manage the provision of SME financing effectively. Why do we have DBZ for instance? The problem is here, politician are the major borrowers with a 1% repayment rate. Technocrats are somehow to blame, they put in place very stringent conditions making start ups and small scale entrepreneurs to fail to meet. The rate at which we borrow is also too high making goods produced using such funds very expensive thereby being very noncompetitive compared to imports.

  6. An entrepreneurial fund other than CEEC? Just changing names for similar ideas may smack of stasis.Why not channel the same funds through CEEC, that’s if it is still functional?

  7. the metamorphosis called mushota and her idiosyncracies can at times sound very weird. at one point she’s flirting with any white man and at another she has the audacity to lecture us on morals. rather unthinkable!

  8. Zra, Napsa, Pacra and various Council Fees are aready a huge burden on SMEs as a result many SMEs opt to operate off the radar hence the street vending we see. My appeal to you Mr Mutati is to be realistic with some of these initiatives – SMEs would rather operate in a environment where they are not paying for everything. How do you realistically speaking expect an SME which is starting with a working capital of K2000 to put an employee on Napsa and the same operates in the rural area away from an ICT facility where they can go and do their e-returns online- the old manual system was better.

    • @2020vision, I am shocked that there is a working brain behind your PF addled rantings. Your comments on SMEs are 100% correct and prove what is wrong with PF’s handling of the economy. PF are so broke that they are choking the SMEs with fees and regulations and killing Zambian businesses.

  9. Shoprite is South African,the mines are Chinese,kenol petro stations are Kenyan owned,Zambia Airways collapsed and all our clothing is imported.
    Mr Mutati which enterprises do Zambians run coz when i look around we’re totally foreign owned?

  10. Read the last paragraph that is what this is about..LT goes from funds for entrepreneurs to issue of law and order and how govt.is looking after people…..

  11. The borrower shall always be a slave to the lender! Proverbs 22:7 says The rich rules over the poor, and the borrower becomes the lender’s slave. With Trump’s uncertain world economy outlook, any slight shift in monetary policy as small as 2% will make or break some economies like ours. Christians in a Christian nation are required to be debt free. Romans 13:8 says owe no one anything except love! We as a country should be talking about how to get out of debt!

    • Spot on Zonda! When our Economists say the Euro bonds are performing well, in whose favour are the Euro bonds performing? Is it not a situation where Europe is getting richer and Zambia getting deep in debt? Is this something to be excited about? Of course debt can be exciting to the uninformed but it bites like an Adder when monetary policy changes. We have seen how squeezing of monetary policy has squeezed families to the point of failing to service loans and losing their cars and houses and the ultimate winners are the banks! Welcome to neo-colonialism! Woe when it is the Chinese you will be owing in the long term! Get out of the debt trap now! The Perfect Global Storm is coming soon!

  12. You have CEEC to try and do what you are trying to do please minister you are not minister for trade and commerce u are in another persons waters! Yours more ecomomic policy with oversight on fisical and monetary issues sigh!

  13. The performance of the euro-bond which is a loan, on Zambian terms, is how productive that money has become. It being an investment, how are the investment returns, like creating jobs, contribution tho the nation’s tax envelope and other associated benefits. The figures being quoted as performing well , are basically attractive repayments to the creditors; who are having an unbelievable rate of return on the money they lent to Zambia. To pay these principal amounts and interests, Zambians are being taxed to exhaustion as a result. consequently, Industry is suffering. So while creditors will get their money with very good interests, the Zambian economy in real terms will suffer and not benefit from these expensive loans the government accrued.

    That is the sad story of euro-bonds and…

    • That is the sad story of euro-bonds and the austerity measures they have brought along, which is not being narrated, which is sadly being told by the ever increasing levels of poverty.

  14. Mutati is daydreaming and busy enjoying the fruits of Electoral Theft and PF gravy train. These MMD Ministers are reaping where they did not sew. All becoz of RB ,Chulu, Zulu ,Lungu etc who engineered the Election Rigging. Mutati should tell us.Where is IMF,World Bank, EIB,AfDB etc money? That money will not come to Lungu’s illegitimate Regime. Without Hearing the Petition and disposing it off Lungu will remain an illegitimate President. Even AU does not recognize Lungu as a democratically,lawfully and Constitutionally elected President.

  15. Hon Minister, before we start creating more funds. Improve the ones that are there not just with money but expertise, mentorship and assistance from start up to launch. Inflation is still in double digits. Investment for the Kenya, TZ and Zambia solution probably won’t have movement until your government are liquid. Kenya have plenty of off grid solutions ie M-Kopa and are set to have the largest wind power farm Africa. Both Kenya and TZ have seen huge investment in renewables amounting to over $235m. As for the bonds others have done the analysis and are correct. Our credit rating has been given a negative outlook by Moody’s, Fitch, IMF. Until you fix the underlying issues, Zambia’s prospects of achieving 3% growth are unlikely in 2017.

  16. How is the fund going to be funded. More borrowing
    TAZARA wants $700 MILLION write off, world bank has forgiven our debt before. Do we look a good risk for funding.
    Credibility in finance is what lenders look at…… if we cannot pay our eurobonds when theg mature we are a basket case. Projects we borrow must also be income generating. Look around, create projects that give us much need foreign exchange. Zambia be an exporter

  17. At the end of the day the question is what’s better Eurobonds or IMF? IMF lends with conditions. Eurobond allows you to do what you want but…

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