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Former Minister of Finance & National Planning N'gandu Magande
National Movement for Progressive party leader Nga’ndu Magande said in Lusaka yesterday that the president should have waited for the outcome of results from the commission of inquiry he had tasked to investigate the sale of the bank.
Mr Magande, who is a former Finance minister, said Presidents Sata’s decision on FBZ may raise uncertainty in stakeholders and members of the public. He said the president should have maintained the pronouncement he made when he directed the ministry of Justice to establish a commission of inquiry to probe the sale transactions of FBZ and ZAMTEL.
“I think he should have allowed the process of the law to be followed. The directive he gave the ministry of Justice to establish a commission of inquiry to probe the transaction was a very good move. The commission could have come up with tangible results,” Mr Magande said.
Zambia Empowerment for Economic Development leader Fred Mutesa said President Sata’s decision was done haphazardly. Dr Mutesa said President Sata should have given sufficient time to the ministry of Justice to act according to his directive and get a solid report after investigations. “The setting up of the commission of inquiry was imperative because we all really wanted to know reasons why the MMD government sold Finance Bank and how the transaction was done,” he said.
United Party for National Development president Hakainde Hichilema welcomed the move by the Government to give back Finance Bank Zambia to the original owners.
He said repossessing FBZL was a good move because the bank was taken from Rajan Mahtani for political reasons. He, however, called for orderliness in the handover of FBZL to the original owners.“Finance Bank was taken over wrongly and its handover to the original owners is a very welcome move except that the transition should be done in an orderly way,” Mr Hichilema said.
Meanwhile First Rand National Bank (FNB) has said it has not yet received an official notification on the decision to reverse the sale of Finance Bank Zambia.
FNB South Africa chief executive officer Michael Jordaan said there had been no formal communication on reversal of its transaction to acquire certain assets and liabilities of FBZ.
Mr Jordaan said this in a statement yesterday released by FNB South Africa head of corporate communications, Virginia Magapatona.
“FNB confirms that despite today’s media reports, it has not received any formal notification that its proposed transaction to acquire certain assets and liabilities of FBZ has been reversed.
“Zambia’s central bank, Bank of Zambia approached FNB South Africa to provide experienced managers to assist BoZ in managing the operations of FBZ whilst BoZ undertook a process to secure the long-term future of FBZ,” Mr Jordaan said.
President Michael Sata on Monday reversed the sale of FBZ to FNB and ordered the Ministry of Finance and National Planning to return it to its original owners. Mr Jordaan said BoZ conducted a transparent process which it confirmed was both within its mandate and within the appropriate legal framework to protect depositors, customers and employees of FBZ and that it was systemically important to the banking system of Zambia.
“This process resulted in the proposed sale transaction with BoZ. We strongly believe that the due process was followed and that the agreements reached with BoZ were concluded in accordance with
the Zambian law,” he said.
Mr Jordaan said FNB South Africa was already a significant international investor in Zambia to which it was still committed and would continue to evaluate its options as the situation developed. Meanwhile President Michael Sata’s decision to reverse the sale of Finance Bank Zambia Limited (FBZ) and return it to the original owners has been received with mixed feelings.
The Bank of Zambia (BoZ) last month sold selected assets and liabilities in FBZ to FNB at a net cost of K27 billion. The central bank last year had taken over supervisory action against FBZ and took possession of the bank.
[Times of Zambia]
Minister of Justice Sebastian Zulu at the swearing-in ceremony at State House
JUSTICE Minister Sebastian Zulu has said while constructive criticism of the judiciary is welcome, the media should not insinuate wholesome corruption in the judiciary when it cannot substantiate its claims.
And Information, Broadcasting and Tourism Minister, Given Lubinda has said the Government will not run affairs of the judiciary based on people’s opinions.
Mr Zulu said that the Government had noted with disapproval that some media houses had taken it upon themselves to insinuate that the entire judiciary was corrupt and that they should give reasons behind the acquittal of certain individuals.
He said in a statement yesterday that some media houses had also misled the public that adjudicators acted on instructions from some authorities to decide in a particular way. The minister said it had further been suggested by some media houses that judicial officers could be arrested and prosecuted for what were perceived as wrong judgments.
“The position of the Government is that in terms of the law, no judicial officer can be arrested or prosecuted for delivering what can be perceived as a wrong judgment. “It should be noted that judges do not dialogue with third parties regarding the content or basis of their judgments. The judgments speak for themselves,” he said.
He said the Zambian Government was a signatory to the Commonwealth Bangalore Principles which ensure judicial independence, impartiality, integrity, propriety, equity of all before courts, competence and diligence of judicial officers.
Mr Zulu said the principles alluded to were of critical necessity to constitutional governance and were enshrined in the Zambian Constitution and the Judicial Code of Conduct.
He said it was an undeniable fact that some magistrates had been arrested, prosecuted and convicted for corruption while others had been dealt with administratively and dismissed.
He said in an even that members of the public or other third parties suspected impropriety or misconduct on the part of a judicial officer, they may complain to or present their evidence of such impropriety or misconduct to relevant institutions such as the Judicial Complaints Authority.
Mr Zulu said judicial officers were therefore not immune from criminal sanctions for corruption. “The judiciary is not averse to constructive criticism but it is destructive criticism which is objectionable,” he said. And Mr Lubinda said yesterday that the new Government respected citizens’ freedom of expression.
He said the Patriotic Front administration was eager to listen to various opinions being expressed concerning what needed to be done in sectors such as the judiciary. He, however, said the Government would not act on or respond to every opinion by citizens on any subject.
“We will not react every time someone gives an opinion on anything because we then run the risk of reacting to everything that is expressed,” he said. He said the Government would operate by acting on issues based on thorough analyses of situations.
File: People in Kasama celebrating the election results
By Dr.Charles Ngoma
It is now almost two weeks since the Zambian people changed the government to usher in the promised ‘kingdom of Sata.’ ‘Tembenukani abale, ufumu wa Sata wayandikila! (Repent brothers and sisters, the kingdom of Sata is at hand)! Well, going by the final election results, there were not many changes of mind in the Eastern Province where these words are reported to have been uttered, at a rally in Sinda. The dust has settled and now it is time for business. It has been a very busy period for President Sata and at the rate he is going, I do not doubt that he will deliver on his 90 day promise. It is full steam ahead and I only hope that the result will not be the same as what happened to the legendary RMS Titanic in 1912. This marvel of engineering struck an iceberg on its maiden voyage. The iceberg was sighted right ahead of the ship. When the alarm went out; ‘iceberg, right ahead!’ The response was ‘hard-a-starboard’ which means to turn the ship to the left (port) side. It was too late! In less than a minute, the mighty Titanic crashed into the iceberg on the right side and it wasn’t long before the great ship sank to the bottom of the Atlantic.
The enthusiasm and optimism that greeted the new era in Zambian politics can be compared to that which saw off the Titanic as it sailed from Southampton almost 100 years ago. There were good, bad and ugly things that were associated with the Titanic. Similarly, I see good things, bad things and ugly things associated with the new government of the Patriotic Front as led by the warm and charming President Sata.
THE GOOD.
There is a joyous optimism in the mood of the Zambian people. As I wrote earlier about optimism in a nation, this is good. We have been too pessimistic and too negative in the last few years. There are many good things that have happened in Zambia since 1991, but due to the excessive negativity on the part of some leading media houses, Zambians became suspicious of everything and everyone. Thank God now that the very people who saw nothing good in the country are now urging everyone to support the new government, and to will it to succeed. Indeed, the government succeeding is good for all Zambians, though not for the fortunes of opposition parties. We have a beautiful history, Zambia. I agree with the President that we need to remember where we have come from. The renaming of the three main International Airports is a step in the right direction, though the manner in which it was done is arguably un-orthodox.
The alacrity with which the President has gone about with his reforms warms my heart. Ok, he took a while to choose his cabinet and nominate members of Parliament, but that may be a sign that he is not hasty, but cautious. On the other hand some would argue that it is a sign that he was not ready to govern, since a rumoured PF cabinet list was once circulated through the internet, way before the elections were announced and the PF and UPND went on separation. Apparently, there is no divorce certificate! I digress. Could it be that the President deliberately delayed announcing the Cabinet so that he may act as ‘minister without portfolio’ and make changes before the actual ministers take up their posts? Perhaps he did not want to tell us. ‘Donchi kubeba?’
The fight against corruption is well back on the track too. It is not that there is anyone who has been prosecuted and convicted, or that it was ever off track, but the President’s posture and demeanour just scares the living daylights out of anyone who would want to dip his hands in the public pot from hence forth. Those who have already done so, should be quaking in their boots, for the kingdom of Sata’s reservoir hounds are baying for their blood. It is a good thing when just the presence of a police man in the streets makes people feel secure and crime is diminished. No one yet arrested, but there is peace and quiet.
The removal of all cadre District Commissioners is most welcome. I never accepted that office from the time of its inception. It is one dark blot on the late President Dr Chiluba’s legacy and it is a pity that no one else ever saw the problems associated with the appointments to that office. Political stooges and job seekers were given that position simply to prop up the ruling party. It was devilish to appoint party cadres and pay them from tax-payers coffers. I do not believe that the post needs to exist at all. If those in the know of state-craft believe in it, it is ok to be manned by civil servants.
THE BAD.
The Director General of the Anti-Corruption Commission has been dismissed. I do not think that there are many people who would lose sleep over this because there was an appearance of ineptitude on the part of the man. I say ‘appearance’ because there is no evidence that he failed in the performance of his duties. Now, here is what worries me. The President is so popular that the decisions that he has made have just been accepted hook, line and sinker by the public even when they appear to be illegal. The Anti-Corruption Act says clearly that the Director General of the ACC can only be removed at the recommendation of a Tribunal, appointed by the Chief Justice after the National Assembly passes a resolution by not less than 2/3 majority. The National Assembly is in recession at the moment. There may be some secret powers that the President has, which we do not know about, but if we all sing from the same hymn sheet, we would recognise that ‘the rule of law’ has been at the most upended here or in the least ‘bent.’ The other issue, concerns the appointment to Parliament of a person who is registered bankrupt. Once again, we may not be party to the financial circumstances of the person over the years since this case came into public domain, but there must be a very good reason why our laws and indeed in every part of the progressive world, deny a bankrupt person the right to hold public office. While the President was a leader of the PF in opposition, he lamented the fact that the Republican President has too much power. It is not good to see him now exercising the same powers so arbitrarily.
There is no harm in being strong willed and to get on with the job, but everything must follow due process. The men and women who will lose their jobs for alleged offences must have justice. We may not be happy with many men and women who hold public office right now, but there are a few that enjoy security of tenure under our laws and these must be given a hearing before they can be dismissed, otherwise the offices of Director of Public Prosecutions, Auditor General and Director General of ACC as well as Judge will all work in fear of the President and not for the Zambian people. If the President has a very good reason to get rid of anyone of these persons, there would be no problem to table that before Parliament and follow the law to the letter.
It would have been nice for the President to nominate more women to Parliament. The domination of male folk in the affairs of Zambia is a bad thing. According to the statistics, there are slightly more women in Zambia than there are men, and yet they are so poorly represented. I am not advocating appointment of women for the sake of it, but I believe that there are so many who can do better than men.
THE UGLY.
The reported post-election violence was out right ugly. There is no room for vigilantism in a democracy. The fact that even the police stood by and the head of state did not condemn these things while they were happening sends a chill down one’s spine. We cannot go on like this. The victors can celebrate but the vanquished must be respected. After all we are one nation and yet 13 million people. We cannot all agree on everything and when do disagree, we must do so with due respect for one another. We must allow free debate and our fundamental human right of freedom of association must be upheld. It looks as though it is no longer fashionable to belong to the Movement for Multi-party Democracy. There are rumours that some present MMD members of Parliament are being enticed to resign from their party and re-contest their seats under PF. Now, that is ugly. The country cannot afford to waste money on bye elections. Although the ruling party will not have an outright majority in parliament, this can be very good for democracy if people put the interest of the country first. This is a great opportunity for our parliamentarians to enact laws that will advance the nation and repeal those that are just plain silly, like the ‘ndoshi’ Act. This time round we should have a Constitution, as the cliché goes, ‘that will stand the test of time.’
The President has the right to choose his Cabinet and has the power to nominate to parliament anyone whomsoever he wills. It is sad that in this day and age people are still checking the tribal leaning of any appointed person. We should judge people not by the accent of their English but by their ability to deliver. The issue of tribal balancing in so far as posts are concerned should be banished from our minds. Yes, I agree that members of the family should not be given undue advantage, but there should not be anything that should stop one who is highly capable, from being appointed even if he happens to be a close relative. Nearly half a century after independence, it is ugly to see people through tribal lines. If President Sata did hound his predecessors over this issue, it is not right to continue this wrong.
Former Presidents must be respected. For a long time Zambians have been treated to a diet of anarchy and disrespect for those in authority. The person who is elected into office of the President should be respected and not called names just because one disagrees with them. It is ugly to accuse people of offences that they have not been convicted of let alone tried in a court of law. We all remember how an American Senator publicly apologised to the US President when he shouted abuse at him from the floor. We will not like some of the President’s policies and we will not always agree with him, but we should remain respectful of the person.
CONCLUSION.
President Sata has demonstrated admirable qualities. He has fought to be President over a very long time. It means that he has had a clear agenda as to where exactly he wants to take the country. He has shown perseverance and a tenacity to succeed. Used wisely, these qualities will take Zambia forward and to greater heights. Used unwisely, all that we have achieved so far will vanish in the smoke. He has a fine line to tread. Someone said that he is wiser now than he was before. May God help him not just to be sincere in what he does, but to be sincerely right too. Could he be Dr Dambisa Moyo’s ‘benevolent dictator’ that Zambia needs? Benevolence and dictatorship are not words that go together. Dictatorship is to a country what an iceberg is to a ship. As icebergs go, they just show a small tip above the surface of the water. Can we see one? I hope that there is no iceberg ahead, but if there is, may his benevolence be the rudder that will steer the country clear.
Nkwazi and Zanaco clash on Wednesday in the midst of the 2012 Africa Cup Group C qualifying build-up between Zambia-Libya.
Nkwazi hosts Zanaco in a rescheduled Faz Super Division Week 20 game at Edwin Embolea Stadium in Lusaka.
Both sides come into this match with no international commitments ahead of Zambia’s game against Libya to be played on Saturday at Nchanga Stadium in Chingola.
Victory for Zanaco will see them return to third place after falling to 5th on Sunday following their 3-2 home loss to Roan United.
Zanaco are currently on 40 points, five less rha leaders Red Arrows.
Nkwazi on the other hand will exchange places with Kabwe Warriors should they beat Zanaco.
The Police outfit is third from bottom in 14th place on 24 points from 24 matches with a game in hand while warriors are just above them on 26 points.
Wednesdays Faz Football Fixtures
Super Division
Week 20
Nkwazi-Zanaco
Division 1
North
Week24
Nkwiza-Zesco Luapula
Week 25
Mufulira Wanderers- Konkola Mine Police
South
Week 22
Kalomo Jetters-Paramilitary
Week 25
Senanga Leopards-Riflemen
Lusaka Tigers- Lusaka City Council
Jacob Mulenga has finally joined the Zambia national team in camp in Kitwe.
And Libya are expected to arrive tomorrow ahead of Saturdays 2012 Africa Cup Group C qualifier against Zambia to be played at Nchanga Stadium in Chingola.
Mulenga was the second and final foreign-based player expected to join camp on Tuesday.
Swiss based striker Emmanuel Mayuka join camp earlier on Tuesday morning.
Meanwhile, Libya are due to fly in on Wednesday.
The Libya’s have chartered a flight from their Tunisia training base where they have been in camp for the last 18 days.
However, Faz said they have not been furnished with the Libyans arrival time.
The National Pension Scheme Authority (NAPSA) has given opposition MMD a seven day ultimatum to settle outstanding rental arrears.
NAPSA Director General, Stanley Phiri has said that failure by the former ruling party to settle the debt will see bailiffs enforce a recovery of the rentals.
Mr. Phiri has disclosed that the MMD owes his organization 461.9 million Kwacha in rental arrears.
The debt is in respect of rentals accrued by the MMD through its National Secretariat housed at NAPSA building in Lusaka.
Meanwhile, Mr. Phiri says his organization has the liquidity to pay all outstanding claims.
The Zambia Federation of Employers has warned that the current wave of workers protests if mishandled can lead to business closures and severe retrenchments.
Federation Executive Director, Harrington Chibanda has observed that business expenses are normally transferred to customers thus increments in salaries will have spiral effect.
Mr. Chibanda has said that the country’s inflation can equally be affected through the anticipated increase in prices of most goods and services.
He said that the federation would instead like to see social dialogue prevail with workers allowed to join unions.
Mr. Chibanda added that the issue of the minimum wage must be handled in a consultative process including members of the tripartite labor council.
Meanwhile, workers at Zambezi Portland Cement Plant in Ndola Monday morning downed tools to demand three point five million kwacha salary increment across the board.
But management has offered five hundred thousand kwacha as cushion while government reviews the minimum wage.
When the workers reported for work at 0800 hours Monday morning, they decided to gather outside the company premises and started chanting slogans against management.
Management and party officials from the ruling Patriotic Front led by Copperbelt Chairman Rebby Chanda and officials from the labour office held a closed door meeting where they resolved to offer the workers the five hundred thousand kwacha.
And a Director at the company Daniel Ventriglia says his company will stick to contract agreements signed by the workers.
Mr Ventriglia says the company has signed contracts which have been attested by the labour office and will not depart.
Copperbelt Principal Labour Officer Eunice Misima has advised the company to allow workers to affiliate to a union of their choice.
Mrs Misima says this will give them an opportunity to have a union which will negotiate for their conditions of service.
The workers were later advised to report back for work on Tuesday and continue working.
The Foundation for Democratic Process (FODEP) has called on President Michael Sata to uphold and defend the constitution jealously as he tries to reorganize government structures and operations.
FODEP Executive Director McDonald Chipenzi says his organisation has observed with concern that new government ministries have been established, merged or dissolved without approval of the national assembly as required by article 44 (2)(e) of the constitution.
Article 44 (2)(e) of the republican constitution states that the president shall have powers among others to establish and dissolve government ministries and departments subject to the approval of the national assembly.
In a statement made available to QFM, Mr. Chipenzi questions which part of the law is being applied by the president to make the ministries and departments functional and dysfunctional, in the absence of the national assembly.
Mr. Chipenzi says his organisation hopes that the decisions made by President Sata which require national assembly approval, will be presented when parliament resumes sitting.
And Mr. Chipenzi says the appointment of Colonel Panji Kaunda as Member of Parliament and deputy defence minister, contravenes article 65 (1)(b) of the constitution because he was declared bankrupt by the courts.
Article 65 (1)(b) states that a person shall not be qualified to be elected as a member of the national assembly if that person is an undischarged bankrupt, having been adjudged or otherwise declared bankrupt under any law in force in Zambia.
The FODEP executive director has since called on republican President Michael Sata to either reconsider Colonel Kaunda’s appointment or disclose to the nation that Colonel Kaunda is no longer a bankrupt person.
Republican President Michael Sata has proposed the candidature of High Court Judge Dr Patrick Matibini as Speaker of the National Assembly.
President Sata has since appealed to Members of Parliament to support the candidature of Judge Matibini State Counsel whom the ruling Patriotic Front (PF) is floating as Speaker of the National Assembly.
The President has also called on MPs to support Lundazi MMD MP Mkhondo Lungu as Deputy Speaker of the National Assembly.
President Sata says the PF has fully endorsed Judge Matibini’s candidature as Speaker, Mr Lungu as Deputy Speaker and any candidate the opposition MMD will propose as Chairperson of Committees.
He says Parliament needs impeccable leadership, and, above all, a person with vast legal knowledge to preside over its affairs.
MPs are this Thursday, October 6, 2011 expected to elect the new Speaker, Deputy Speaker and Chairperson of Committees.
This is contained in a statement released to QFM this afternoon by the President’s special assistant for press and public relations George Chellah.
Good news for this middle aged man with sun glasses in Lumezi
President Michael Sata has directed Justice Minister Sebastian Zulu to amend the Pensions Act to allow civil servants retire at the age of 65 and not 55 years.
The President has also instructed the Minister of Justice to come up with legislation to amend the Judicial Service Commission.
President Sata says it is illogical that people in the civil service are retired when they still have strength to serve the country.
He was speaking at State House when he swore in newly appointed Permanent Secretary in the Ministry of Home Affairs Max Nkole and Deputy Inspector General of Police Stella Libongani.
President Sata says it is sad that senior civil servants such as the Chief Justice continue to serve on contracts despite having retired at the age of 55 years.
On the Judicial Service Commission, President Sata says it is wrong that the Chief Justice who has an interest should serve as the Chairperson of the Commission.
The President observes that the practice is the same with the Central Bank where the Bank of Zambia Governor is the Chairperson of the board.
File: A ZESCO LTD worker working on high voltage power cables
Pupils at Chipepo High School and communities surrounding the institution in Gwembe District are likely to go without power for days following the vandalizing of a ZESCO transformer.
Pupils at the institution are reported to have stoned the ZESCO installation and cut cables after a brief interruption in power supply that had affected the entire district.
It is reported that when power was restored, the vandalized transformer blew off, plunging the whole area into darkness.
Police who rushed to the High School after the incident say the situation is now calm and that no arrests have so far been made.
They also say the school authorities briefed them that pupils ran amok and threw stones at the transformer and vandalized power cables following the brief power cut.
Police in Gwembe have since expressed worry that the disruption of power supply will affect examination preparations among pupils.
They are further worried that the prolonged power shortage will lead to more unrest by pupils.
They have appealed to ZESCO management to quickly look into the matter.
Areas affected include Chipepo High school, Chabbobboma and other surrounding areas.
At press time, ZESCO management and the District Board Secretary’s office had rushed to Chipepo High School to assess the situation.
No arrests have been made yet and police are investigating the matter.
[ZANIS]
President Michael Sata has with immediate effect dissolved the Road Development Agency-RDA.
And the President has directed the new Police command to immediately stop the Zambia Revenue Authority -ZRA- from paying K4billion kwacha to a fake company managing the scanners at Nakonde border post in the Northern Province.
Meanwhile, President Sata has announced reforms in the police service with all Division Commands to be run by personnel with the rank of Commissioner of Police.
The President was speaking Tuesday morning when he swore in New Permanent Secretary in the Ministry of Home Affairs Max Nkole and Deputy Inspector General of Police Stella Libongani.
Mr Nkole once served as Executive Chairman at the Task Force on Corruption before its abolishment.
And Ms Libongani was until her new appointment Central Province police commanding officer.
President Sata also disclosed that -ZRA- was on Tuesday expected to pay K4billion kwacha to a fake company which the President says belongs to someone who occupied his office.
Mr. Sata has directed the new Home Affairs Permanent Secretary and the new Police command to stop the payment and investigate how much has already been paid out to the bogus firm.
And president Sata has directed ZRA to find its own people to manage the scanners at Nakonde border.
In dissolving the RDA, the President said it is surprising that the road agency awarded some contracts without tenders and made payments with unknown source of funding.
[ZNBC]
Rowan Atkinson is back in the role of the accidental secret agent who does not know fear or danger in the action- comedy Johnny English Reborn.
In his latest adventure, the most unlikely intelligence officer in Her Majesty’s Secret Service must stop a group of international assassins before they kill the Chinese Premier. In the years since MI-7’s top spy vanished off the grid after an incident in Mozambique, he has been honing his unique skills in a remote region of Asia. But when his agency superiors learn of an attempt against the Chinese premier’s life, they must hunt down the highly unorthodox agent. Now that the world needs him once again, Johnny English is back in action. With one shot at redemption, he must employ the latest in hi-tech gadgets to unravel a web of conspiracy that runs throughout the KGB, CIA and even MI-7.
PRO’s
Funny from beginning to end.
New charaters were introduced instead of recycling the old ones.
CON’s
It was a bit predictable . Right from the beginning you know who the “bad guy” will be.
Not as funny as the first one.
there is a lot of childish humor.
CONCLUSION
It is a nice funny movie to get your mind off the hustle and bustle of life . Rowan Atkinson is hilarious , he will leave u gasping for air. Story wise ,it is definitely not as good as the first one , but this will still leave you felling good inside.
Reuters reports that Standard & Poor’s Ratings Services today affirmed the foreign- and local-currency long-term ratings on Zambia at ‘B+’. We also affirmed the foreign- and local-currency short-term ratings at ‘B’. The outlook is stable. Our transfer and convertibility assessment for Zambia remains ‘B+’.
Our ratings on Zambia are constrained by our view of its low prosperity, balance-of-payments vulnerabilities to shifts in copper prices, and political risks. The ratings are supported by promising investment and economic growth trends, a strong external balance sheet in the wake of debt relief, and a modest debt burden, which has also benefited from debt relief and bouts of double-digit inflation.
We view Mr. Sata’s victory in the Sept. 20, 2011, presidential elections as an indication of a maturing of democracy in Zambia. International observers declared the election to be well-organized, and the handover of power from President Banda’s MMD party (in government for 20 years) to be smooth and uncontroversial. Although President Sata’s Patriotic Front party did not secure a parliamentary majority, we note that he has promised to implement major reforms during his first 90 days in office, including measures to promote transparency in governance.
In our view, however, President Sata’s victory has increased economic-policy uncertainty in Zambia. A long-standing opposition figure, he has supported changing regulation and taxation of the mining sector, possibly with the reintroduction of a windfall tax. He has also favored more expansionary fiscal policies, and called for higher redistribution and lower taxes.
We are also concerned about increased political interference in monetary policy after the dismissal of the central bank governor on Sept. 29, 2011, particularly as he had just six months left in his second term.
[pullquote]In our view, however, President Sata’s victory has increased economic-policy uncertainty in Zambia. [/pullquote]
Zambia’s economic performance so far in 2011 has been positive, buoyed by an increase in copper production and higher copper prices. We expect this will boost the current account surplus, reserves, and fiscal revenue. And given the exceptional maize harvest, we expect per capita GDP growth will exceed 4% in 2011 while inflation remains just over 8%.
Our local-currency rating is equalized with the foreign-currency rating because monetary policy options, which underpin a sovereign’s greater flexibility in its own currency, are constrained by Zambia’s relatively-less-developed domestic private bond market and high inflation. Our T&C assessment is equalized with the sovereign foreign-currency rating to reflect our opinion that the likelihood of the sovereign restricting access to foreign exchange needed by Zambia-based nonsovereign issuers for debt service is similar to the likelihood of the sovereign defaulting on its foreign-currency obligations. This reflects political uncertainties, and the possibility that, in a severe downside scenario, the government might use restrictions on access to foreign exchange needed for debt servicing as a policy tool.
[pullquote]We are also concerned about increased political interference in monetary policy after the dismissal of the central bank governor on Sept. 29, 2011, particularly as he had just six months left in his second term.[/pullquote]
The stable outlook balances improving economic fundamentals against uncertainty regarding the new administration’s economic policies.
The ratings could be lowered if the new administration’s policies shift macroeconomic policies radically, weakening external, fiscal, and monetary fundamentals, or impairing copper production. The ratings could also be lowered if Zambia’s external liquidity were to deteriorate significantly, for instance, as a result of an extended depression of copper prices.
The ratings could be raised if Zambia’s external liquidity were to become less vulnerable to copper prices and if investment in infrastructure were to raise trend economic growth
Zambian President Michael Sata yesterday scrapped FirstRand Ltd.’s purchase of a local lender and fired the board of the central bank. The Kwacha fell the most against the Dollar.
Sata, who defeated incumbent Rupiah Banda in a Sept. 20 election, dissolved the boards of three state agencies, including power utility Zesco, according to a statement from his office. The board of the Bank of Zambia was removed after Governor Caleb Fundanga was fired on Sept. 29.
The currency of Africa’s biggest copper producer dropped as much as 3.8% to 5,014 per dollar yesterday, the biggest decline since December 2008 and the most of any currency tracked by Bloomberg. It weakened 1% to 5,065 by 8:38 a.m. in Lusaka. Sata’s overhaul may heighten investors’ concerns at a time when copper prices have dropped 27 percent since August, undermining the economy’s outlook.[pullquote]Sata “is sending the message that he is not dependent on external powers. Obviously that is a worrying sign for investors.”[/pullquote]
“When people come into presidential positions they bring their own people,” Yarik Turianskyi, a political researcher at the South African Institute of International Affairs, said in a telephone interview from Johannesburg yesterday. “With more moderate leaders, this is more of a moderate process.” Sata “is sending the message that he is not dependent on external powers. Obviously that is a worrying sign for investors.”
Kwacha Gains
The kwacha gained 20 percent from April 2009 to the end of last year as the economy benefited from debt cancellation in 2006, rising copper prices and inflation easing below 10 percent for the first time in three decades.
Sata, 73, has pledged to extract more money from mining companies to distribute to citizens, create jobs and fight corruption. Companies including Vedanta Resources Plc, First Quantum Minerals Ltd. and Glencore International Plc operate in Zambia.
Sata didn’t give a reason for annulling FirstRand’s 27 billion-kwacha ($5.5 million) takeover of Finance Bank Zambia Ltd.. The central bank seized Finance Bank in December for breaching financial laws and agreed to sell it to Johannesburg- based FirstRand, which had been managing it for eight months.
“We strongly believe that due process was followed and that the agreements reached with the Bank of Zambia were concluded in accordance with Zambian law,” Michael Jordaan, chief executive officer of FirstRand’s First National Bank, said in an e-mailed statement yesterday.
John Sangwa, a lawyer for Finance Bank’s former Chairman Rajan Mahtani, said the central bank’s decision to dispose of Finance Bank’s assets was “flawed” and Mahtani was “very happy” with the decision.[pullquote]This is the risk of doing business in Africa, if certain political parties are not happy there is the chance they can reverse a deal[/pullquote]
Meanwhile Analysts have said Zambia’s decision highlighted the political hazards of investing in an African country, particularly after a change of government. “It is a bit of a shock, as I thought that it was done and dusted,” said Johan Scholtz, banking analyst at Cape Town-based Afrifocus. It was even more surprising since Zambia was a country where South African companies such as retailer Shoprite had experienced great trading success, he said.
“This is the risk of doing business in Africa and if certain political parties are not happy there is the chance they can reverse (a deal),” said Faizal Moolla, a banking analyst at Avior Research. “However, it was a small acquisition so it would have not had a dramatic impact on FirstRand’s African strategy. But it is a bad precedent and leaves a bad taste.”
Mr Moolla said FNB could still expand in Zambia through organic growth, although he warned this could be costly, given the expenditure required for new branches, ATMs and recruiting staff.
Mr Jordaan struck a positive note about FNB’s future in Zambia, saying the bank remained committed to investing in the country and would “continue to evaluate our options as the situation develops”.
FNB had expected to become the fifth-largest retail bank in Zambia after purchasing Finance Bank based on balance sheet size, adding 50 more branches to its five.
