Identifier
Created
Classification
Origin
07LUSAKA1246
2007-11-06 06:48:00
UNCLASSIFIED
Embassy Lusaka
Cable title:
ZAMBIA OCTOBER 2007 ECONOMIC ROUNDUP
how-toVZCZCXRO8745 PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN DE RUEHLS #1246/01 3100648 ZNR UUUUU ZZH P 060648Z NOV 07 FM AMEMBASSY LUSAKA TO RUEHC/SECSTATE WASHDC PRIORITY 5124 RUCPDOC/DEPT OF COMMERCE WASHDC INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
UNCLAS SECTION 01 OF 02 LUSAKA 001246
SIPDIS
DEPARTMENT FOR AF/S AND EB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV BEXP EAIR ZA
SUBJECT: ZAMBIA OCTOBER 2007 ECONOMIC ROUNDUP
UNCLAS SECTION 01 OF 02 LUSAKA 001246
SIPDIS
DEPARTMENT FOR AF/S AND EB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV BEXP EAIR ZA
SUBJECT: ZAMBIA OCTOBER 2007 ECONOMIC ROUNDUP
1. SUMMARY
-- MWANAWASA HEADS TRADE DELEGATION TO SEATTLE
-- CRITICAL FUEL SHORTAGE HITS ZAMBIA
-- DIAMOND PROSPECTING VENTURE DOES NOT PAN OUT
-- TRADING LICENSING ACT AMENDED
-- THE ZAMBIA DEVELOPMENT ACT 2006 UNDERGOES REVISION
-- NORTHERN PROVINCIAL AIRPORT CONSTRUCTION ON CARDS
-- GRZ SUBMITS DRAFT TENDER BILL
-- ZAMBIA TO PARTICIPATE IN THE KATANGA MINING EXPO
--------------
Mwanawasa heads trade delegation to Seattle
--------------
2. President Mwanawasa led a delegation of senior government
officials and business leaders to Seattle after attending and
addressing the 62nd United Nations General Assembly. He was in
Seattle at the invitation of the Initiative for Global Development,
a network of business leaders that promotes policies to end poverty.
Mwanawasa also delivered a speech at the University of Washington,
organized by the World Affairs Council. Noting Zambia's economic
reforms, plentiful natural resources, and his government's fight
against corruption, he appealed for additional U.S. investment in
Zambia. The delegation also met with the Bill & Melinda Gates
Foundation, PATH, Microsoft, Boeing, and Starbucks.
--------------
Critical fuel shortage hits Zambia
--------------
3. Zambia experienced a severe fuel shortage in the first two weeks
of October when its only oil refinery unexpectedly remained shut
down for repairs. This was not the first time that Indeni Oil
Refinery, a joint venture between the GRZ and the French-owned oil
giant Total, experienced closures due to obsolete infrastructure and
lax maintenance. Finance Minister Ng'andu Magande commented that
the fuel shortage was "compounded by the refusal by an American bank
to finance the GRZ's purchase of 60,000 tons of crude oil, because
it came from Iran." According to press reports, President Mwanawasa
intervened, securing funds from the Zambia-based Finance Bank. By
month's end, the shortages have been resolved.
--------------
Diamond prospecting venture does not pan out
--------------
4. Spirit of the River, a Canadian firm that had announced in
January 2007 that it had discovered diamonds in Zambia's Western
Province and would invest USD 3.5 million to develop diamond mining,
allegedly has closed its offices after failing to settle debts with
banks, local businesses, and residents. According to media reports,
court bailiffs have seized the company's office equipment in the
provincial capital, Mongu, and Spirit of the River has terminated
its mining activities.
--------------
Trading Licensing Act amended
--------------
5. The GRZ has amended the Trade and Licensing Act, following
Parliament's recommendation to repeal the law. Trade Minister Felix
Mutati said that the new Act will clarify the types of business that
can be conducted by Zambians and foreigners and also prescribe the
fees for each business entity. Comment: In recent years, GRZ
officials often stated--without legal foundation--that only Zambians
could participate in the retail sector. The amendment may impact
Chinese nationals who run many of the small retail outlets in
Kamwala, a lower-end commercial area in Lusaka. End comment.
--------------
The Zambia Development Act undergoes revision
--------------
6. The GRZ will revise the Zambia Development Agency Act of 2006, in
response to stakeholder concerns on such issues as the minimum
investment amounts to qualify for investment licenses, incentives,
and work permits. Comment: The revision of the ZDA Act should
facilitate more small-scale investment, and help larger investors
with skilled employment issues. The Act has been deemed vague and
open to misinterpretation by government agencies, mostly notably the
Immigration Department. The issuance of work permits has been
cumbersome and a disincentive to serious investors. The revision
will most likely be done in the first quarter of 2008. End comment.
-------------- --------------
Northern provincial airport construction on cards
-------------- --------------
LUSAKA 00001246 002 OF 002
7. The GRZ has allocated K1.1 billion (approximately USD 250
million) for the construction of a modern terminal at Kasama Airport
in Zambia's Northern Province. Built during the Second World War,
Kasama Airport is in disrepair and is unsuitable for commercial
flights. The construction of the Kasama terminal is part of the
GRZ's "Visit Zambia Tourism Campaign."
--------------
GRZ submits draft Tender Bill
--------------
8. The Zambia National Tender Board (ZNTB),a statutory body that
regulates and controls public procurement, submitted a draft bill to
Cabinet that will enhance its independence. The bill proposes that
authority to appoint the organization's board members and Director
General be removed from the President. ZNTB has also made
recommendations on the composition of the Central Tender Committee,
which requests tenders and awards contracts. The proposal--if
accepted--could mean greater inclusion of the private sector and
non-governmental institutions in tender decision-making.
--------------
New rural financing programs launched
--------------
9. The GRZ launched a K542.2 billion (approximately USD 134 million)
five-year revolving Irrigation Development Fund. The Fund will help
local farmers increase their productivity using improved irrigation
technologies and services. In a separate development, the
International Fund for Agricultural Development (IFAD) launched the
Rural Finance Program, a USD 13.8 million concessionary loan
facility for entrepreneurs in rural areas where access to financial
services is almost non-existent. Comment: Financing for irrigation
is a big improvement on the standard GRZ support for agriculture,
which has traditionally involved provision of seeds and fertilizer.
Also, financing for rural entrepreneurs will fill a critical market
gap. End comment.
-------------- ---
Zambia to participate in the Katanga Mining Expo
-------------- ---
10. The Zambia Development Agency, in conjunction with the USAID
funded Market Access Trade and Enabling Policies (MATEP) program and
the Mining Suppliers and Contractors Association, is organizing a
trade mission to the Katanga Mining Expo, Congo DR, from November
26-28, 2007. The expo will offer opportunities to showcase Zambian
mining and processing equipment, protective clothing, food products,
and building materials. Over 50 Zambian companies have registered
to participate in this mission. Comment: The mining sector in
Katanga province poses a great opportunity for Zambian companies who
are working with U.S.-based and foreign suppliers to grow in this
market. Congo DR also offers Zambian suppliers a huge market for
consumer goods. End comment.
MARTINEZ
SIPDIS
DEPARTMENT FOR AF/S AND EB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV BEXP EAIR ZA
SUBJECT: ZAMBIA OCTOBER 2007 ECONOMIC ROUNDUP
1. SUMMARY
-- MWANAWASA HEADS TRADE DELEGATION TO SEATTLE
-- CRITICAL FUEL SHORTAGE HITS ZAMBIA
-- DIAMOND PROSPECTING VENTURE DOES NOT PAN OUT
-- TRADING LICENSING ACT AMENDED
-- THE ZAMBIA DEVELOPMENT ACT 2006 UNDERGOES REVISION
-- NORTHERN PROVINCIAL AIRPORT CONSTRUCTION ON CARDS
-- GRZ SUBMITS DRAFT TENDER BILL
-- ZAMBIA TO PARTICIPATE IN THE KATANGA MINING EXPO
--------------
Mwanawasa heads trade delegation to Seattle
--------------
2. President Mwanawasa led a delegation of senior government
officials and business leaders to Seattle after attending and
addressing the 62nd United Nations General Assembly. He was in
Seattle at the invitation of the Initiative for Global Development,
a network of business leaders that promotes policies to end poverty.
Mwanawasa also delivered a speech at the University of Washington,
organized by the World Affairs Council. Noting Zambia's economic
reforms, plentiful natural resources, and his government's fight
against corruption, he appealed for additional U.S. investment in
Zambia. The delegation also met with the Bill & Melinda Gates
Foundation, PATH, Microsoft, Boeing, and Starbucks.
--------------
Critical fuel shortage hits Zambia
--------------
3. Zambia experienced a severe fuel shortage in the first two weeks
of October when its only oil refinery unexpectedly remained shut
down for repairs. This was not the first time that Indeni Oil
Refinery, a joint venture between the GRZ and the French-owned oil
giant Total, experienced closures due to obsolete infrastructure and
lax maintenance. Finance Minister Ng'andu Magande commented that
the fuel shortage was "compounded by the refusal by an American bank
to finance the GRZ's purchase of 60,000 tons of crude oil, because
it came from Iran." According to press reports, President Mwanawasa
intervened, securing funds from the Zambia-based Finance Bank. By
month's end, the shortages have been resolved.
--------------
Diamond prospecting venture does not pan out
--------------
4. Spirit of the River, a Canadian firm that had announced in
January 2007 that it had discovered diamonds in Zambia's Western
Province and would invest USD 3.5 million to develop diamond mining,
allegedly has closed its offices after failing to settle debts with
banks, local businesses, and residents. According to media reports,
court bailiffs have seized the company's office equipment in the
provincial capital, Mongu, and Spirit of the River has terminated
its mining activities.
--------------
Trading Licensing Act amended
--------------
5. The GRZ has amended the Trade and Licensing Act, following
Parliament's recommendation to repeal the law. Trade Minister Felix
Mutati said that the new Act will clarify the types of business that
can be conducted by Zambians and foreigners and also prescribe the
fees for each business entity. Comment: In recent years, GRZ
officials often stated--without legal foundation--that only Zambians
could participate in the retail sector. The amendment may impact
Chinese nationals who run many of the small retail outlets in
Kamwala, a lower-end commercial area in Lusaka. End comment.
--------------
The Zambia Development Act undergoes revision
--------------
6. The GRZ will revise the Zambia Development Agency Act of 2006, in
response to stakeholder concerns on such issues as the minimum
investment amounts to qualify for investment licenses, incentives,
and work permits. Comment: The revision of the ZDA Act should
facilitate more small-scale investment, and help larger investors
with skilled employment issues. The Act has been deemed vague and
open to misinterpretation by government agencies, mostly notably the
Immigration Department. The issuance of work permits has been
cumbersome and a disincentive to serious investors. The revision
will most likely be done in the first quarter of 2008. End comment.
-------------- --------------
Northern provincial airport construction on cards
-------------- --------------
LUSAKA 00001246 002 OF 002
7. The GRZ has allocated K1.1 billion (approximately USD 250
million) for the construction of a modern terminal at Kasama Airport
in Zambia's Northern Province. Built during the Second World War,
Kasama Airport is in disrepair and is unsuitable for commercial
flights. The construction of the Kasama terminal is part of the
GRZ's "Visit Zambia Tourism Campaign."
--------------
GRZ submits draft Tender Bill
--------------
8. The Zambia National Tender Board (ZNTB),a statutory body that
regulates and controls public procurement, submitted a draft bill to
Cabinet that will enhance its independence. The bill proposes that
authority to appoint the organization's board members and Director
General be removed from the President. ZNTB has also made
recommendations on the composition of the Central Tender Committee,
which requests tenders and awards contracts. The proposal--if
accepted--could mean greater inclusion of the private sector and
non-governmental institutions in tender decision-making.
--------------
New rural financing programs launched
--------------
9. The GRZ launched a K542.2 billion (approximately USD 134 million)
five-year revolving Irrigation Development Fund. The Fund will help
local farmers increase their productivity using improved irrigation
technologies and services. In a separate development, the
International Fund for Agricultural Development (IFAD) launched the
Rural Finance Program, a USD 13.8 million concessionary loan
facility for entrepreneurs in rural areas where access to financial
services is almost non-existent. Comment: Financing for irrigation
is a big improvement on the standard GRZ support for agriculture,
which has traditionally involved provision of seeds and fertilizer.
Also, financing for rural entrepreneurs will fill a critical market
gap. End comment.
-------------- ---
Zambia to participate in the Katanga Mining Expo
-------------- ---
10. The Zambia Development Agency, in conjunction with the USAID
funded Market Access Trade and Enabling Policies (MATEP) program and
the Mining Suppliers and Contractors Association, is organizing a
trade mission to the Katanga Mining Expo, Congo DR, from November
26-28, 2007. The expo will offer opportunities to showcase Zambian
mining and processing equipment, protective clothing, food products,
and building materials. Over 50 Zambian companies have registered
to participate in this mission. Comment: The mining sector in
Katanga province poses a great opportunity for Zambian companies who
are working with U.S.-based and foreign suppliers to grow in this
market. Congo DR also offers Zambian suppliers a huge market for
consumer goods. End comment.
MARTINEZ