Identifier
Created
Classification
Origin
06LUSAKA1721
2006-12-28 12:44:00
UNCLASSIFIED
Embassy Lusaka
Cable title:  

ZAMBIA-DECEMBER ECONOMIC NEWS ROUNDUP

Tags:  ECON EFIN EINV SENV PGOV ZA 
pdf how-to read a cable
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UNCLAS SECTION 01 OF 02 LUSAKA 001721 

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E.O. 12958: N/A
TAGS: ECON EFIN EINV SENV PGOV ZA
SUBJECT: ZAMBIA-DECEMBER ECONOMIC NEWS ROUNDUP

REFS: LUSAKA 1591

UNCLAS SECTION 01 OF 02 LUSAKA 001721

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN EINV SENV PGOV ZA
SUBJECT: ZAMBIA-DECEMBER ECONOMIC NEWS ROUNDUP

REFS: LUSAKA 1591


1. SUMMARY OF TOPICS

-- Legacy Holdings project proposal gets partial OK
-- SME market on Lusaka Stock Exchange?
-- MOFNP releases Medium Term Expenditure Framework
-- Lilayi Housing construction to begin in early 2007
-- Credit reference agency to open in 2007
-- ECZ finds KCM liable for pollution, orders cleanup
-- ZNCB reduces base lending rate

Legacy Holdings project proposal gets partial OK


2. The Environment Council of Zambia (ECZ) announced on December 13
that it approved only part of the massive tourism project in
Mosi-oa-Tunya, the country's smallest national park, near
Livingstone and Victoria Falls, proposed by the South Africa-based
Legacy Hotels group (Reftel). The ECZ approved the construction of
two five-star hotels on the northern--rather than the proposed
southern--part of the Maramba River. The ECZ noted that the
southern part of the Maramba River is an ecologically sensitive area
and a major animal corridor, and it rejected outright the proposed
construction of an 18-hole golf course and 450 golf villas, because
of the national park's small size and the anticipated ecological
disruption. The Chairman of Legacy Holdings Zambia (LHZ) later told
local media that the project was being redesigned in line with the
ECZ approval, and that LHZ would proceed with the construction of
the two hotels.

Source: The Post, December 14 and December 26

SME market on Lusaka Stock Exchange?


3. Acting Managing Director of the Lusaka Stock Exchange (LuSE)
Francis Kakinga told participants in a December 8 USAID-supported
workshop on access to agricultural credit that the LuSE is
considering establishment of an alternative market to list Small and
Medium Enterprises (SMEs). By offering lower listing and
registration fees, such a market will offer SMEs a way to raise
financing at competitive rates. Kakinga also noted that the LuSE is
looking into establishing a commodities trading market.

Source: Kakinga's presentation on December 8, and the Post, December
13

Ministry of Finance and National Planning releases Medium Term

Expenditure Framework


4. Secretary to the Treasury Evans Chibiliti released the GRZ's
2007-2009 Medium Term Expenditure Framework (MTEF) in the run-up to
the President's presentation of the full budget in early 2007. The
MTEF provides a context and framework for the budget and puts total
2007 spending at 11 trillion Kwachas (USD 2.75 billion). Its stated
macroeconomic objectives are to: accelerate pro-poor economic
growth; stabilize inflation at the single-digit level; achieve
financial and exchange rate stability; and sustain a viable balance
of payments and external and domestic debt position. The MTEF also
spells out the GRZ's intention to generate more revenues through tax
policy and administration reforms, but it provides no detailed plan.
It notes anticipated increases in tax collection from Kw 6.6
trillion in 2006 to Kw 7.7 billion in 2007.

Source: Medium Term Expenditure Framework document

Lilayi Housing construction to begin in early 2007


5. Construction of 5,000 housing units by Lilayi Development
Holdings in a southern Lusaka location will begin in early 2007.
The Lilayi Housing project consists of seven phases to be carried
out over about five years. Stanbic Bank is providing 15 year
mortgages for buyers, and USAID and OPIC are providing technical
support, credit guarantees and financing for the project.

Source: The Post, December 18

Credit reference agency to open in 2007


6. Sherry Thole, president of the Bankers Association of Zambia,
announced that Zambia's first credit reference bureau would open in
January 2007, and would be run by the Credit Reference Bureau of
Kenya. Banks and other financial institutions will share
information on clients' borrowing and repayment records. Such data
will be of value to lenders as they evaluate creditworthiness of
potential borrowers.

Source: The Post, December 20

ECZ finds KCM liable for pollution, orders cleanup


7. The Environmental Council of Zambia (ECZ) ordered Konkola Copper
Mines (KCM) to carry out clean-up and other measures to address the

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pollution caused by a broken pipe and an acid spill from KCM's
tailings leach plant (Ref B). The ECZ found KCM liable for
polluting the Kafue River in November 2006, and opted to order KCM
to take remedial measures rather than to pursue criminal charges
against KCM.

Source: Daily Mail, December 23

ZNCB reduces base lending rate


8. The Zambian National Commercial Bank announced in a press release
that it would reduce its base lending rate from 20 to 15 percent,
effective January 1, 2007, making its base rate "the lowest on the
market," and demonstrating the bank's "commitment to national
development by providing affordable finance to productive sectors of
the economy. In a media briefing on December 27, Bank of Zambia
Governor Caleb Fundanga noted that "interest rates are still high."
He commended the ZNCB decision and said "I hope all the commercial
banks will look at revising their interest rates in the coming
year."

Source: The Post, December 27 and 28.

MARTINEZ