Green Party President Peter Sinkamba has advised the Minister of Finance Margret Mwanakatwe to consider selling toxic assets owned by Government in all mining companies as of the ways to redeem Eurobonds and high-interest Chinese loans.
The Green Party leader said this in Kitwe this morning when asked to comment on the Party’s expectations for the 2019 budget which Ms. Mwanakatwe will soon present to Parliament.
“Government has vehemently denied that Zambia is in debt-stress mode. Let truth be told: Zambia is in debt stress. Government should simply come out of this denial mode,” Mr. Sinkamba said.
He hopes that the Finance Minister will focus more on viable fiscal discipline and asset optimization strategies with primary focus to dismantle pressing debts, especially high interest Chinese loans and Eurobonds.
He cited sale of ZCCM-IH shares in privatized mines as one of the key strategies that Government could adopt to generate sufficient funds to liquidate such loans.
“I have shared with Ms. Mwanakatwe some of the strategies that she could employ to dismantle the debts. I strongly believe that offloading toxic assets in one sure strategy to sustainably dismantle these debts.
“Government is loaded with too many toxic assets. I made this very clear to her in our last meeting. In addition to what I shared with her, I think she should also consider ZCCM-IH toxic assets.
“As you may be aware, mining shares owned by Government are toxic assets. These assets have experienced a significant drop in value and lack an active market where they can be easily sold. In simple terms, these assets are toxic assets because they are troubled assets. In my view, Government is better off selling such toxic assets through a trade-off, say with China, to off-set Chinese or indeed extend to liquidating other loans such as Eurobonds,” Mr. Sinkamba said.
“The case in point is that ZCCM-IH dividends received from all mining assets are worthless. For example, during its 78th Meeting held in March 2018, the ZCCM-IH Board disclosed that in the last five years, it only received dividends worth K251million. In dollars terms, ZCCM-IH received a paltry $25 million from all of its mining assets in five years. On average, this is a paltry $5 million per year. This is like what some footballers get per month. Take for example Messi and Ronaldo, they receive salaries worth over $50 million per annum or roughly $5 million per month” he added.
“My point is that the dividend policy for Government in mining has lamentably failed. It is not worthy to have multi-billion shares in an investment that fails to generate as little profit as $50 million in 18 years. Hopefully Ms. Mwanakatwe will take cognizance of this fact and thereby sell of ZCCM-IH shares in all mining companies apart from the one per cent Golden Share,” Mr. Sinkamba said.
And Mr. Sinkamba said it wrong for Government to give away ZESCO to the Chinese as a way to pay off loans which it got from China. He also said it is morally wrong to refinance the Eurobonds. He argued that refinancing of loans is morally wrong because it is a form of economic enslavement of future generations.
“As The Green Party, we think that ZESCO should be spared from the impending Chinese take-over. We think it is worthy selling off ZCCM-IH shares in all these mining companies than lose ZESCO. We also think that refinancing Eurobonds is morally wrong. We think that it is some form of economic enslavement of future generations. Refinancing is all about shifting liability from oneself to grandchildren. Doing so is immorality of the worst order. Our view on refinancing loans is that we better off generating funds ourselves, to redeem Eurobonds than shift the liability to posterity. It is naivety to keep toxic shares in mining companies and refinance the loans at the expense of future generations,” he added.
“Put simply, we think it is worthwhile to put in place enhanced tax collection systems for the mines than Government retaining shares besides the Golden Share. Empirical evidence shows that Government dividends from mining assets have undoubtedly been as elusive in the Third Republic as they were during the First and Second Republics. So, we better off doing other things,” Mr. Sinkamba said.
Mr. Sinkamba disclosed that setting off Chinese loans with ZCCM-IH shares at this moment when China is hungry for resources could generate in excess of $5 billion additional income.
“Waiting to dispose these shares beyond this point could be as fatal as the Chiluba Government mistake on the Kafue Consortium deal of the 1990s,” he said.
Making sense Sinkamba
Only problem is, they are still borrowing. If all is sold, 10 years down the line there will be nothing else remaining to be sold off to off-set future debts. We will end up handing over this whole country to the Choncholies.
For as long as leadership is as it is, debts are with us for many decades to come and our country remains at risk of being Foreign owned.
I have before advised Sinkamba since he seems to be vested in the belief that Mwanakatwe can implement his well advised suggestions …..I will repeat like I did the other time when you believed this Madam will change things and push reforms in fiscal approach …. Mr Sinkamba, so long Chagwa and the PF (the likes of Freedom Sikazwe) at large don’t buy into any reforms no matter how brilliant they may be it is pointless to engage her. Engage Lungu on this issue first otherwise u are wasting your tine. Look at how he has done a 360 on all austerity measures announced.
If mining was producing renewable resources, it would be wise to gamble and wait for 10 more years. However minerals are finite resources that get get exhausted. Gambling now to liquidate current liability before the nation gets overwhelmed makes lots of sense. A bird in hand is better than millions in the air
What has this chap been smoking? Oh, i forgot, he’s Green weed party president.
From the failed zesco sale to the Chinks, its brought them to ZCCM-IH.
In 2016, Lungu & his drug dealer friend Findlay almost stole ZCCM-IH for a joke of $100m through an Israeli shell company Sapir Capital until Saviour Chishimba exposed them.
Our country”s assets shall not be mortgaged to Chinese over your f00lishly obtained loans. We warned you not to contract any Euro or Chinese debt but you were saying ati even USA has Chinese debt.
Don’t drop the marijuana Toxic investment, it’s a brilliant idea.
ZCCM shares is the HH’s theories.
Imagine if it was HH coming up with these brilliant ideas, PF would gas him in his bunker.
Why ate Zambians worried about inkongole like they are the ones borrowing. We don’t the terms nor ehere the money has gone. Lekeni uwakongola umwine akalipile. Tenkongole shesu
BEWARE OF ONE-MAN PARTIES WHO HAVE ALL THE SOLUTIONS.
WHY WOULD CHINA BUY OUR TOXIC ASSETS?
AND WHAT IS 5 BILLION DOLLARS?
This advice makes sense because it is an internal solution as opposed to the looking outside or going back to despicable institutions like the IMF. I have observed that this Green Party has a number of progressive ideas for our country. They seem to be genuinely concerned about the problems people face.
If those assets are toxic and have been generating low returns how would any right thinking investor pump in billions of dollars.
Imagine selling Ndola lime shares for USD$1.5 billion to pay off the lusaka-Ndola dual carriage way…..can’t never,only in Utopia.
Dangote only invested USD $500million for his brand new Cement Factory which also manufactures its own cement bags.
At least he’s offering solutions. What are you doing? Only looking at the negatives? But every decision only proves effective when it is implemented. If properly managed even toxic assets can increase in value.
I agree with Independent. I think the Green party president is best to push the weed agenda instead of solutions that are temporarily and not practical. Who will invest in a company will soon be depeleted or have no revenues? Furthermore, the interest on these loans are extremely high by the time someone buys these shares the whole capital raised will be used to pay for interest.
Ndola Lime Company Limited (NLC) is a wholly owned subsidiary of ZCCM Investments Holdings Plc.
The company reported total revenues for the financial year ended 31st March 2017 of K89.6 million (2016: K196.6 million) and a loss before tax of K1,163 million (2016: K82.3 million loss).
There were no dividends declared during the year under review (2016: Nil).
Who can invest even $10 million in this company?
Sinkamba who do you think is going to buy your fleas …have you not heard of “due diligence” ..you think investor will come and buy your Ndola Lime when it has not produced a single profit?
Ndola Line is not the only mining company. Zccm-ih has shares in gold producing Kansanshi and uranium producing Lumwana, Kalumbila etc. I thinkl such shares could go like hot cakes especially to Chinese Govtll
OH, somebody who has better business sense can make lemonade out of that lemon. You may recall that our mines were sold for pennies on the dollar because they were not turning a profit. They were offloaded into skilled hands and the tide of future swung in their favor.
Chaos theory reloaded – And you think those companies you have mentioned are what he means by “toxic” shares??
Kansanshi Mine is probably one of the oldest mines in Africa, with direct copper smelting dating back to the 4th Century. It is the largest copper producer by output in Zambia and is 20% owned by ZCCM-IH, with the balance owned by First Quantum Minerals Limited.
The profit for the year 2016 was K1, 248.3 million (US$126.5 million) (2015: loss of K9.11million (US$1.4 million) . 20% of US$126.5 million which is only $25 million per year. No dividends were paid during the year ended 31 December 2016 (2015: K52.04 million (US$ 8 million).
How can any investor put billions into this investment.
Then the government will be a minority shareholder.The majority shareholder will be oppressing the minority in the country.Lastly all the employees will be Chinese.
Being majority shareholder is not preventing all that to happen.
He says Govt will retain a golden share which in effect is norminal but has veto power. A golden shareholder vetoes all shareholders
Chaos theory reloaded – Business does not work like that …you can not come to me to buy your loss making company and expect me to be a minority shareholder…its clear you have no understanding of business, you are simply posting to entertain the docile gullible Zambians…who dont want to told the truth. Carry on!!
@Jay Jay. Do you know why Switzerland is one of Zambia’ major importers? All copper from Mopani is exported to Switzerland. If a Chinese investor buys shares in Mopani, then not all copper from Mopani will continue going to Switzerland. …and pricer pricing will be tricky for Mopani.
Like I stated you think selling copper is like buying Kapenta from Nakonde..carry on!
so the Pf stole and misappropriated millions of dollars of donor funds. And by the way we still do not know the full extent of this theft. Then just other day we are told that PF government has increased the salaries of government officials. It gets worse, we now hear lungu arrogantly defending this theft on the copperbelt.
Now for many years we have advised the PF on serious macro and micro economic solutions. We raised alarms on the theft going on but as usual we were called bitter and bearers of bad news. So my advice to sinkamba is that do not waste your time advising ignorant buffoons. Better concentrate on growing your party and going to the masses to explain what you will do. do not give those thieves your ideas. That is a dumb move mistele
Makes lots of sense. Mining companies have been declaring over 700,000 tons exports yearly. This means in 18 years the mining companies have exported over 10 million tonnes of copper. At USD5000 per ton, this translates into billions. But to get only
USD25 milliom dividend is seriously a joke for investment. It is not worth it especially that minerals are wasting assets which are not renewable.
They declare low profits because you have invested in their Zambian subsidiary companies and they sale copper via transfer pricing …don’t just calculate things on a calculator like counting oranges at the market.
@Jay Jay. So you think that if a choncoli buys shares in these mining companies,they sit idle and watchthe declaration of loses? You think the choncoli will sit idle and watch transfer pricing?
So why would they buy shares in the first place??
Chinese dont do half /half… why do you think they have asked or ordered to remove their colonial agreements they have with their former African colonies regarding natural resources? Ulimate goal is always control….Carry on writing..docile Zambians like to be lied !!
…Ordered France…
meanwhile my swiss wife and I would like to announce that we are trying for a new baby bane. We thought that it is about time we brought in another life. We have managed to send 2 of our children to schools and university abroad and now that they are on their two feet we are thinking of bringing more joy to this world. We have also decided to assist an orphan in lusaka by assisting with all education funding all the way upto university. We thank you all for the support and hope that you will make the right choice in next elecitons. I dont want to bring up a kid under thieves such as lungu. the choice is yours.
Chief strategist of UPND and Irene( spouse)
congratulations you big man! we wish you all de best in yo future. umusungu ni blessing. keep her well and nourish her . I like yo posts ere. u make lots of sense. you should stand as upnd president. i follow u very intelligent man.
I thank you muntu wandi. I just hope that i will be able to convince you to become a decided voter and vote upnd. We need you people.
If return on equity is that low why is the mines not insolvent.Secondly how can the company operate in that situation,unless you tell me that they do manage to breakeven and that they are exempted from paying taxes and other related requirements.
Speculation, bad publicity and volatility in the political climate is turning Zambia’s assets toxic. When the objective of every opposing political party in the country is to get into State House at any cost then the essence of providing checks and balance to the government is thrown out of the window. In fact, we are now seeing calculated sabotage, deliberate destruction to any progress and a new system of trying to force regime change. The government has become the shortest route to riches and rather than correcting this, we are trying to out do each other on who will loot the most. Sad state of affairs.
If those assets are toxic and have been generating low returns how would any right thinking investor pump in billions of dollars.
Imagine selling Ndola lime shares for USD$1.5 billion to pay off the lusaka-Ndola dual carriage way…..can’t never,only in Utopia.
Dangote only invested USD $500million for his brand new Cement Factory which also manufactures its own cement bags.
They think investors are blind foooools, when we tell them that they have contracted loans for infrastructure that will not pay for itself as the figures are grossly inflated and designs are appallingly poor they think its a joke…people will end up paying toll fee three times just to drive from Ndola to Lusaka becuase some greedy people wanted to cream off the extras from the loans. Why should govt be buying land for hotels along the road…who is going to be sleeping in those hotels along Ndola – Lusaka…its very irresponsible reckless thinking.
I totally concur with Sinkamba, instead of borrowing more, can we for once use our brains to think and not our stomachs like PF?. There is absolutely no sense in keeping these toxic assets as it were. These mines have been declaring loses as a way to avoid what belongs to the government. Instead of moving with a begging bow all the times, lets use this initiative and pay some of these loan that these buffoons have been borrowing with impunity. Sinkamba you are a game changer indeed but join a formidable party, you will stand a better chance than going it alone.
@Jay Jay. So you think that if a choncoli buys shares in these mining companies,they sit idle and watchthe declaration of loses? You think the choncoli will sit idle and watch transfer pricing?
Why should Chinks buy shares where they have minority shares…even ZNBC they bought from the dull fooools for 60% and control of licenses and your childrens brains.
Wake up from your docility!!
If someone tells that I have no money and I keeping on feeding my family and dress the with designer clothes ,then he is a liar.Nevertheless,if he sees me going to borrow kaloba because the the bank can not lend me due to my debts that have accumulated then he will be vindicated like some vindicated political parties.If all these are just speculations so that someone can advance his political career,time will tell.If it true,then someone has to form a political party and I will be a member.Right now we have no opposition party which can do the job.Most of the political parties are full of vulture wanting to live like king Solomon
@13 Jays,You are spot on!!
PF and lungu are caught between a rock and a hard place….it’s catch 22 for them.
They have 2 choices , sell Zambias future or be kicked out of power…..we know they will choose the first..
They messed up big time spending on assets like many economically defunct roads when Every one was telling them to invest in manufacturing. Investing in manufacturing requires hard work so they gambled on foreign investores doing it for them, except there are no investores.
The only left options is maximum austerity or more borrowing and selling , but they don’t want to upset Zambians and lungus travelling with max austerity so selling and borrowing it will be…just on this useless trip to the UN , no less than $1 million will be spent by lungu….
Kansanshi Mine is probably one of the oldest mines in Africa, with direct copper smelting dating back to the 4th Century. It is the largest copper producer by output in Zambia and is 20% owned by ZCCM-IH, with the balance owned by First Quantum Minerals Limited.
The profit for the year 2016 was K1, 248.3 million (US$126.5 million) (2015: loss of K9.11million (US$1.4 million) . 20% of US$126.5 million which is only $25 million per year. No dividends were paid during the year ended 31 December 2016 (2015: K52.04 million (US$ 8 million).
How can any investor put billions into this investment.
Sinkamba, you are promoting marijuana on the negative side coz you are smoking it together with those chorusing your hair brained suggestion. Marijuana is only good if all of it is used to manufacture medicine and none leaks for mind damaging use like the smoking you just did.
There is no gain in fire sales coz only leaches like HH and Milupi gain. And who told you money is made in profit? Value of a company to a state is the PAYE from wages of jobs created. Owners gain when they sell shares at their peak value. ZCCM made 200 hundred million pounds from the sale of shares in Lumwana at peak. That was more than the dividends declared for decades.