Identifier
Created
Classification
Origin
09LUSAKA493
2009-07-14 12:46:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Lusaka
Cable title:
ECONOMIC ROUNDUP
how-toVZCZCXRO6857 RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN DE RUEHLS #0493/01 1951246 ZNR UUUUU ZZH R 141246Z JUL 09 FM AMEMBASSY LUSAKA TO RUEHC/SECSTATE WASHDC 7146 INFO RUCPDOC/DEPT OF COMMERCE WASHDC RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE RUEATRS/DEPT OF TREASURY WASHDC RHMFISS/HQ USAFRICOM STUTTGART GE RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
UNCLAS SECTION 01 OF 02 LUSAKA 000493
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENRG ETRD EMIN EINV ELAB ECON ZA
SUBJECT: ECONOMIC ROUNDUP
REF: A) LUSAKA 73
B) 08 LUSAKA 302
LUSAKA 00000493 001.2 OF 002
UNCLAS SECTION 01 OF 02 LUSAKA 000493
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENRG ETRD EMIN EINV ELAB ECON ZA
SUBJECT: ECONOMIC ROUNDUP
REF: A) LUSAKA 73
B) 08 LUSAKA 302
LUSAKA 00000493 001.2 OF 002
1. SUMMARY
-- June Inflation Rate Declines Marginally
-- GRZ Invites Bids For Oil and Gas Exploration
-- Munali Nickel Mine Resumes Operations
-- Zambezi Airlines Acquires Two Boeing Aircraft
-- Horticultural Sector Performance Falls
-- GRZ Reviews First National Development Plan
June Inflation Rate Declines Marginally
2. The year-on-year inflation rate declined marginally from 14.7
percent in May 2009 to 14.4 percent in June 2009. The Central
Statistical office attributed the decline to reduced prices of some
food products such as the staple corn meal. The Minister of Finance
asserted on July 13 that year-on-year inflation by end 2009 would be
10 percent.
GRZ Invites Bids For Oil And Gas Exploration
3. The GRZ has invited bids for 23 oil and gas exploration licenses
in Northwestern, Western, and Eastern Provinces. Bidders are
required to pay a non-refundable fee of USD 10,000 (Kwacha
equivalent) in advance of the August 7 closing date. Separate from
the application fee is the mandatory information packages, which can
be purchased for USD 10,000 each from the Zambian Geological Survey
Department or Ministry of Mines headquarters. The Director of
Geological Surveys Kenneth Liyungu told Emboff that the response is
positive from local and international firms.
Closed Munali Nickel Mine Resumes Operations
4. Munali nickel mine, which owner Albidon put under care and
maintenance in January, will resume operations immediately following
a seven million dollar recapitalization and restructuring payment
from Chinese Jinchuan Group, China's largest nickel producer, which
has a life-of-mine off-take agreement with Albidon. Munali nickel
mine was commissioned in 2008 and is important to the GRZ's efforts
to diversify the mining sector from over-reliance on copper.
Zambezi Airlines Acquires Two Boeing Aircraft
5. Zambezi Airlines, which started operations in May 2008, leased
two Boeing 737-500 planes from General Electric for its regional
flights to Johannesburg and Dar es Salaam. The airline will operate
daily flights between Lusaka and Johannesburg and four flights
weekly between Ndola and Johannesburg. The company chairman,
Maurice Jangulo, announced in Lusaka during the launch of regional
flights that the airline intends to list shares on the Lusaka Stock
Exchange (LuSE) within the next three years.
6. (SBU) Zambezi Airlines has formed an alliance with Proflight
Commuter Services Limited, a local flight company offering charter
and domestic flights. Under the agreement, Proflight will run all
domestic flights under the branding of Zambezi Airlines, while the
latter will only operate regional flights. The deal is a blow to
competition in the already overpriced domestic market.
7. (SBU) According to Embassy contacts, Maurice Chaaba Jangulo has a
majority sharehold in Zambezi Airlines, together with airline chief
executive officer Cornwell Muleya (who is married to the niece of
prominent politician and chief government whip Vernon Johnson
Mwaanga) and President Rupiah Banda (who is using his eldest son
James Banda as a front). Maurice Jangulo was previously managing
director of Omnia Fertilizer and moved on to establish Nyiombo
Investment Limited. Nyiombo and Omnia are the main suppliers and
distributors of fertilizer and other farming inputs under the
Ministry of Agriculture Fertilizer Support Program through single
sourcing, a position that has continued to raise concerns amongst
other players in the market and donor community.
Horticultural Sector Performance Falls
8. Zambia Export Growers Association (ZEGA) Chief Executive Officer
Luke Mbewe announced at the African Caribbean and Pacific - European
Union conference that the horticultural industry in Zambia has
fallen by 50 percent due in part to high air freight costs,
inadequate electricity supply, and the global economic crisis. He
pointed out that jet fuel in Zambia is about 40 percent higher than
the regional average. According to Mbewe, these constraints have
led to a drop in employment from 12,000 in 2005 to 6,000 in the
commercial horticultural industry.
LUSAKA 00000493 002.2 OF 002
GRZ Reviews Fifth National Development Plan (FNDP)
9. The GRZ held a mid-term review of the FNDP, which covers the
years 2006-2010, to evaluate the performance of the plan, identify
challenges, and determine a way forward. A review of the economic
sector showed a decline in agricultural growth for three consecutive
years (from 2.2 percent in 2006 to 0.4 percent in 2007 and 0.2
percent in 2008) due to unfavorable weather conditions, late
distribution of inputs especially fertilizer under the GRZ's
"Fertilizer Support Program", and livestock diseases. However,
crops such as rice, sunflower, groundnuts, and mixed beans
registered a favorable growth during this same period.
10. Former Ministry of Agriculture and Cooperatives (MACO)
Permanent Secretary Bernard Namachila revealed that 76 percent of
the MACO budget goes to support the Food Reserve Agency (FRA) and
Fertilizer Support Program (FSP). He also mentioned that the
agriculture sector suffers from policy reversal by Government.
Namachila cited as an example the Ministry of Finance's transfer of
MACO's contract to manage the irrigation fund from Finance Bank to
the Citizens Economic Empowerment Commission. (Over the course of
the FNDP review, the GRZ determined to move the fund back to Finance
Bank.) The overall performance of the agriculture sector was deemed
unsatisfactory and therefore unlikely to meet the FNDP targets.
11. The overall performance of the energy sector from 2005-2008 was
considered unsatisfactory with growth registered at negative 1.2
percent at the end of 2008. Ministry of Energy and Water
Development Permanent Secretary Peter Mumba blamed controlling
officers for the GRZ's overall poor performance due what he termed
misplaced priorities such as spending monthly allocations on fuel
allowance, buying office furniture and hosting workshops instead of
priority sectors of the ministry.
BOOTH
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENRG ETRD EMIN EINV ELAB ECON ZA
SUBJECT: ECONOMIC ROUNDUP
REF: A) LUSAKA 73
B) 08 LUSAKA 302
LUSAKA 00000493 001.2 OF 002
1. SUMMARY
-- June Inflation Rate Declines Marginally
-- GRZ Invites Bids For Oil and Gas Exploration
-- Munali Nickel Mine Resumes Operations
-- Zambezi Airlines Acquires Two Boeing Aircraft
-- Horticultural Sector Performance Falls
-- GRZ Reviews First National Development Plan
June Inflation Rate Declines Marginally
2. The year-on-year inflation rate declined marginally from 14.7
percent in May 2009 to 14.4 percent in June 2009. The Central
Statistical office attributed the decline to reduced prices of some
food products such as the staple corn meal. The Minister of Finance
asserted on July 13 that year-on-year inflation by end 2009 would be
10 percent.
GRZ Invites Bids For Oil And Gas Exploration
3. The GRZ has invited bids for 23 oil and gas exploration licenses
in Northwestern, Western, and Eastern Provinces. Bidders are
required to pay a non-refundable fee of USD 10,000 (Kwacha
equivalent) in advance of the August 7 closing date. Separate from
the application fee is the mandatory information packages, which can
be purchased for USD 10,000 each from the Zambian Geological Survey
Department or Ministry of Mines headquarters. The Director of
Geological Surveys Kenneth Liyungu told Emboff that the response is
positive from local and international firms.
Closed Munali Nickel Mine Resumes Operations
4. Munali nickel mine, which owner Albidon put under care and
maintenance in January, will resume operations immediately following
a seven million dollar recapitalization and restructuring payment
from Chinese Jinchuan Group, China's largest nickel producer, which
has a life-of-mine off-take agreement with Albidon. Munali nickel
mine was commissioned in 2008 and is important to the GRZ's efforts
to diversify the mining sector from over-reliance on copper.
Zambezi Airlines Acquires Two Boeing Aircraft
5. Zambezi Airlines, which started operations in May 2008, leased
two Boeing 737-500 planes from General Electric for its regional
flights to Johannesburg and Dar es Salaam. The airline will operate
daily flights between Lusaka and Johannesburg and four flights
weekly between Ndola and Johannesburg. The company chairman,
Maurice Jangulo, announced in Lusaka during the launch of regional
flights that the airline intends to list shares on the Lusaka Stock
Exchange (LuSE) within the next three years.
6. (SBU) Zambezi Airlines has formed an alliance with Proflight
Commuter Services Limited, a local flight company offering charter
and domestic flights. Under the agreement, Proflight will run all
domestic flights under the branding of Zambezi Airlines, while the
latter will only operate regional flights. The deal is a blow to
competition in the already overpriced domestic market.
7. (SBU) According to Embassy contacts, Maurice Chaaba Jangulo has a
majority sharehold in Zambezi Airlines, together with airline chief
executive officer Cornwell Muleya (who is married to the niece of
prominent politician and chief government whip Vernon Johnson
Mwaanga) and President Rupiah Banda (who is using his eldest son
James Banda as a front). Maurice Jangulo was previously managing
director of Omnia Fertilizer and moved on to establish Nyiombo
Investment Limited. Nyiombo and Omnia are the main suppliers and
distributors of fertilizer and other farming inputs under the
Ministry of Agriculture Fertilizer Support Program through single
sourcing, a position that has continued to raise concerns amongst
other players in the market and donor community.
Horticultural Sector Performance Falls
8. Zambia Export Growers Association (ZEGA) Chief Executive Officer
Luke Mbewe announced at the African Caribbean and Pacific - European
Union conference that the horticultural industry in Zambia has
fallen by 50 percent due in part to high air freight costs,
inadequate electricity supply, and the global economic crisis. He
pointed out that jet fuel in Zambia is about 40 percent higher than
the regional average. According to Mbewe, these constraints have
led to a drop in employment from 12,000 in 2005 to 6,000 in the
commercial horticultural industry.
LUSAKA 00000493 002.2 OF 002
GRZ Reviews Fifth National Development Plan (FNDP)
9. The GRZ held a mid-term review of the FNDP, which covers the
years 2006-2010, to evaluate the performance of the plan, identify
challenges, and determine a way forward. A review of the economic
sector showed a decline in agricultural growth for three consecutive
years (from 2.2 percent in 2006 to 0.4 percent in 2007 and 0.2
percent in 2008) due to unfavorable weather conditions, late
distribution of inputs especially fertilizer under the GRZ's
"Fertilizer Support Program", and livestock diseases. However,
crops such as rice, sunflower, groundnuts, and mixed beans
registered a favorable growth during this same period.
10. Former Ministry of Agriculture and Cooperatives (MACO)
Permanent Secretary Bernard Namachila revealed that 76 percent of
the MACO budget goes to support the Food Reserve Agency (FRA) and
Fertilizer Support Program (FSP). He also mentioned that the
agriculture sector suffers from policy reversal by Government.
Namachila cited as an example the Ministry of Finance's transfer of
MACO's contract to manage the irrigation fund from Finance Bank to
the Citizens Economic Empowerment Commission. (Over the course of
the FNDP review, the GRZ determined to move the fund back to Finance
Bank.) The overall performance of the agriculture sector was deemed
unsatisfactory and therefore unlikely to meet the FNDP targets.
11. The overall performance of the energy sector from 2005-2008 was
considered unsatisfactory with growth registered at negative 1.2
percent at the end of 2008. Ministry of Energy and Water
Development Permanent Secretary Peter Mumba blamed controlling
officers for the GRZ's overall poor performance due what he termed
misplaced priorities such as spending monthly allocations on fuel
allowance, buying office furniture and hosting workshops instead of
priority sectors of the ministry.
BOOTH