BANK of Zambia (BoZ) governor Caleb Fundanga is optimistic that Zambia’s inflation rate will be reduced by four per cent or less to meet the 10 per cent inflation target set by Government in the 2009 national budget.

Speaking during a media briefing at the BoZ stand at the on-going Zambia Agricultural and Commercial Show, Dr Fundanga said it is possible for Zambia to achieve the 10 per cent annual inflation rate target in the remaining quarter of the year.

He said the reduction in food inflation due to the on-going crop marketing season including the reduction of mealie meal prices, will play a significant role in boosting the national economy.

Dr Fundanga said the high inflation rate was caused by the discontinuation of Government-subsidised maize by the Food Reserve Agency and pass-through effects of depreciation of the Kwacha against foreign currencies.
He said the BoZ hopes to see continued stability in the exchange rate and would continue to employ indirect instruments in monetary operations.

He said the 19.4 per cent rise in copper price to US$4,045. 66 per metric tonnes from US$3,389.42 per metric tonne, the doubling of sugar production by the Zambia Sugar Company and cement production by Lafarge Zambia, and the diversification of the economy would help the country pick up from its current economic woes.

He said it was too early to comment on whether or not Government will borrow from the public to meet its budgetary costs.

“There is still hope that some donors will honour their budgetary pledges before the end of August,” Dr Fundanga said.

Dr Fundanga also said China’s economic recovery will play a significant role in copper export revenue for Zambia because China is one of the major importers of copper.

He said, however, that relying on copper for more revenue would be risky because prices of the commodity are volatile.

Dr Fundanga observed that inflationary pressures are expected to emanate from high production costs due to current power shortages and the recently approved 35 per cent electricity tariffs and higher international crude oil prices.

The local currency is said to have been relatively stable against the US dollar and appreciated by one per cent compared with a depreciation of 9.3 per cent recorded in the first quarter of the year.

“The average inter-bank exchange rate of the Kwacha against the US dollar strengthened to K5, 281.64 against the US dollar as at the end of June from K5,337.18 against the US dollar as at end of March 2009.

Foreign players made net supplies of US$59.8 million in the previous quarter.

Dr Fundanga also said the volume of unpaid cheques declined by 11 per cent to 5,568 bank cheques and has urged the media to educate the public on the consequences of bouncing cheques.

He also said preliminary data shows that Zambia recorded an overall balance of payment surplus of US$24.9 million during the second quarter of 2009 with a deficit of US$147.7 million the previous quarter, due to narrowing of the current deficit to US$107.3 million from US$231.3 million.

He said copper export earnings have recorded about 19.4 per cent rise.

“Similarly, cobalt export earnings recorded a 39.2 per cent increase to US$18.0 million following an increase in the realised price to US$12.97 per pound from US$5.03 per pound,” he said

However, cobalt export volumes declined by 46 per cent to 628.51 tonnes.

He said that investment pledges totaled US$762.7 million compared with US$1.820.7 million during the same period in 2008.

Dr Fundanga also said the importation of vehicles declined by 25 per cent mainly because of the economic crisis the country is facing but acknowledged that the development is good for the economy.

GOVERNMENT says it is in the process of engaging various stakeholders and the international community to build one million houses along the line of rail and some rural parts of the country.

Minister of Local Government and Housing, Benny Tetamashimba, disclosed that Government has so far received offers from China, India and United Sates of America (USA) to build approximately one million houses across the country.

Mr Tetamashimba said in an interview that half of the houses would be sold on cash basis upon completion of construction while one quarter would be offered to Zambians for long-term payment while the other quarter would be rented out by the investor for a period of time before handing over the infrastructure to local authorities.

“We are receiving offers from China, India and USA to build houses. 55 per cent of these will be sold out-rightly while 25 per cent will be sold to people who can pay in 15 to 20 years while the investor will put the other 25 per cent on rent and hand them over to councils after some years. We believe that’s the way we can move out of the accommodation problem,” Mr Tetamashimba said.

He said Government will in the next three months engage residents in Lusaka’s illegal settlements such as Kuku townships in an effort to demolish them to pave way for more modern housing structures.

Mr Tetamashimba said a Chinese investor is willing to erect pre-fabricated houses with a life span of over 60 years. He said that this will alleviate the shortage of accommodation in Lusaka.

He said the investor is able to build hundreds of houses in a short time as five pre-fabricated housing can be erected each day.

H, however, said Government is yet to make concrete agreements with investors to meet the shortage of about one million houses across the country.

He said Solwezi is among towns with a huge accommodation demand triggered by a rapidly growing mining industry.

Meanwhile, Mr Tetamashimba has warned illegal estate agents against exploiting people seeking accommodation.
He has urged the illegal estate agents to register their companies.

[Zambia Daily Mail]

The Centre for Elections and Governance (CEG) Zambia has added its voice in supporting the decision to sale 75 percent shares in the state-owned Zambia Telecommunications Company (ZAMTEL).

CEG Trustee Gershom Musonda says the move is the only way to save the ailing firm from total collapse.

He has observed that most parastatals and other statutory bodies in the country are riddled with financial mismanagement, corruption and lack of innovation.

Mr. Musonda, in a statement released to ZANIS in Lusaka today, said this has led to perpetual losses and loss of government grants.

He noted that parastatals only served the public well in the first few years following the nationalization of private companies in the early 1970s during the One Party State.

Mr. Musonda said this is because they created more jobs and industries, especially in the rural areas and helped address social problems like unemployment, poverty and rural-urban migration.

Mr. Musonda however observed that parastatals had their own problems as inefficiency and corruption crept-in.

He said this resulted in loss of state funds as government continued to fund a chain of loss-making parastatals.

Mr. Musonda said in this modern era, partnerships are helping attract additional resources to improve infrastructure, technology and skills of employees, thereby turning companies round and making them competitive.

He stressed that governments can no longer afford to continue subsidizing these companies and other non-profit making Statutory Bodies.

Mr. Musonda said the role of government is to facilitate economic activity by creating a conducive environment for business to flourish leading to more jobs and wealth being created, reduction in poverty and widening of the tax base.

“Like a surgical doctor, government needs to carry out and extensive operation on the sick company of ZAMTEL, cut it open and allow private capital and initiative to go in. Later, ZAMTEL’s wounds from this operation will heal and get the company back on track and in better shape,” he said

Mr. Musonda said those opposing the sale of ZAMTEL should instead be demanding for proper use of the funds to be realized from this transaction and ensuring the affected ZAMTEL workers are not left in the cold.

He maintained that government should remain a facilitator of economic development and let the private sector drive the national economy forward.

ZANIS

OPPOSITION members of Parliament (MPs) yesterday opposed the Tazama Bill, which seeks to protect Tazama assets from execution of any judgment saying only core assets should be protected.

Presenting the Bill for second reading, Energy and Water Development Minister Kenneth Konga said that Tazama was important to Zambians and that its benefits to the country overrode those of any person who may obtain judgment against the company.

Mr Konga said that the pipeline was the fastest, safest and most cost effective way of transporting feedstock to Zambia.

He said that Government wanted to protect the company’s assets from any seizures just as it had done to hospitals, universities and councils.

He said Government wanted to protect the company from people who had connived with lawyers to rob the people of Zambia.

But Mazabuka MP Garry Nkombo (UPND) said that although the committee that scrutinised the Bill that supported the protection of Tazama assets, it was against the idea of protecting all the assets.

Mr Nkombo said that some witnesses who opposed the Bill said it would give a comparative advantage to the company since it was a commercial entity and felt that only core assets should be protected.

Kankoyo MP Percy Chanda (PF) said the Bill that would protect Tazama was biased because parastatals such as Zamtel and Zesco also needed the same immunity to their assets.

Monze MP Jack Mwiimbu (UPND) said that only core Tazama assets should be protected because Tazama was a commercial entity which should be left to operate on the market.

Mr Mwiimbu said that protecting all the assets would promote inefficiency, as it was the case with councils and the universities because they could not be compelled to pay their debts.

Lusaka Central MP Guy Scott (PF) said that protecting Tazama assets would affect Zambia’s credit rating especially that the minister had not stated the reasons for the decision.

He said Parliament needed to be informed if Tazama was found in default by any court or if there were any reasons for the move otherwise the Bill should be withdrawn in the interest of the national credit rating.

Works and Supply Minister Mike Mulongoti said that the Government was just trying to protect the national property because replacing it was costly.

Local Government and Housing Minister Benny Tetamashimba said that Government was not protecting the assets alone because Tanzania, which was also a co-owner of the company was alive to the decision.

[Times of Zambia]