Vice President Guy Scott has cited the high lending rates in the country as a hindrance to the revival of the manufacturing industry.
Speaking when officiated at the first ever tripartite employment national conference in Lusaka today, Dr. Scott described the rate which stood at 25 per cent before the Patriotic Front (PF) party formed government as ‘total insanity’ and the major reason for a weak manufacturing base.
The Vice President noted that the situation, coupled with other factors was responsible for low employment opportunities for the youth despite the country posting massive economic growth which he, however, said did not translate to poverty reduction.
Dr. Scott said government decided to reduce the leading rate to 8 per cent after realizing that even if the country had all economic fundamentals being favourable, the economic growth could not produce tangible results.
He said government was working towards reducing the cost of doing business in the country so as to stimulate private sector growth.
Dr. Scott further recalled a conversation his delegation had with a Zambian entrepreneur in China who has a big manufacturing company and employs 5,000 Chinese on why he had not invested in the country.
He said the Zambian entrepreneur explained to him that the cost of borrowing from Zambian banks was too high.
And speaking at the same function, Zambia Federation of Employers (ZFE) president Alfred Masupha said the federation has formulated an ambitious model that seeks to create between 200 000 to 300 000 jobs within 3 years of implementation.
Mr. Masupha explained that the model dubbed: Zambia New Era in Information, Technology and Communications (ICT) sector will create jobs for unemployed youths provided government gives policy direction and infrastructure.
Earlier, Information, Broadcasting and Labour Minister, Fackson Shamenda assured international organisations and investors that the PF government will be consistent in its policy directions.
Mr. Shamenda, who is also Chief Government spokesperson, also explained that recent isolated pronouncements by some ministers were not reflective of government’s policy direction on a number of issues.
Meanwhile, ILO representative to Zambia, Malawi and Mozambique, Martin Clemensson pledged continued support to the full implementation of the Sixth National Development Plan (SNDP).
Mr. Clemensson said ILO stands ready to support the PF party manifesto of promoting decent work that seeks to put more money in people’s pockets.
He called for enhanced social dialogue that will promote broad based efforts in creating jobs and wealth for Zambians.
The conference has been organized by the Zambian government, International Monetary Fund (IMF) and the International Labour Organisation (ILO) under the theme: “Towards a new growth strategy for employment, decent work and development in Zambia”.
QFM
Reduce corporation tax as well
Corporate Tax :)>-
The zambian in china is enock mundia from senanga
Al you are already making billions of kwacha net profit every year (when European and US banks are closing) why should govt reduce corporate tax for banks?
well said ba guy
CapEx (capital expenditure) is a direct derivative of interest rates, without it (CapEx) there is no manufacturing. You collateralize your assets in either start-up(s) or expansion(s). So, without a BOZ policy on interest rates and national private property/intellectual rights, manufacturing is doomed. That’s why some of us keep investing in other parts of the world despite being very patriotic because it makes business sense to do so. We are capitalists first and nationalists second no matter how you would like to look at it. Now you take care of interest rates and property rights then you add in a bonus of dual citizenship, miracles begin to happen, it is the best thing PF can do to help reach sustainable unemployment levels. Glad to note that VP can see what we see, I rest my case.
good point bro..
Iwe te Corporation Tax ni Corporate Tax ala.
Revive the Manufacturing Industry ba Pa Fwaka! E development! Well said ba guy, now we need action!
Where there’s a will there’s a way.The biggest stumbling block for zambians in manufacturing or setting up any type of firm is lack of knowhow and not funding or interest rates.Zambians lack self belief.If it were interests only then why do we have foreign firms like kenol,shoprite and successful zambians like Mahtani? How do firms like zambeef cope?
Koma viantu vina nivindeledi ati! How can anybody be holding up Mahtani  as a ‘successful Zambian’ that we should be emulating?
Ba Enka Rasha: Knowhow could be a contributing factor yes, but new manufacturing has to do with CapEx. All the companies you mentioned Shoprite/Kenol for example took over already capitalized assets from ZCBC, OK and Mwaiseni/BP on the other hand. Zambeef is old INDECO infrastructure, when it comes to new manufacturing you need acquisition of capital assets and these don’t come in cheap. Without the ability to finance assets at low interest rates and/or collateralizing them, you are forced to use cash meant for operations on capital expenditures. This increases the cost of doing business in that particular environment. Back to Mahtani, he owns a bank and a bank can always overdraw itself for CapEx reasons, as former EVP for a world renowned bank, I can speak to that with authority.
I meant to say AVP (Assistant Vice-President) not EVP (Executive Vice-President) … I would not want to misrepresent myself, I don’t know where the EVP thing came from … sorry about that.
I meant to say AVP (Assistant Vice-President) not EVP (Executive Vice-President) … I would not want to misrepresent myself, I don’t know where the EVP thing came from … sorry about that.
Imwe Ba Mumba, Sr when someone tells me on a bog spot such as this one that they are an authority in a particular matter, they are effectively saying “I know better, so shut the F%#k up”. That is not just old school, but very rude given that no one can verify your qualifications or your identity. If you want to really have the last word about an issue with someone, try “thank you for the information – I am the wiser for meeting you”.
You are a hater. Stay there where all niggas of your kind are! I am proud of brothers like BR Mumba who are doing it out there.
Mushota Reloaded: thank you for the information – I am the wiser for meeting you. Hhhhmmmm meeting you, seriously. I don’t think people meet in Cyberspace!!! They may excogitate but meeting? Old school learnt something new. And what stops you from verifying my qualifications if you wanted to, just check with my former universities if that is a concern of yours? God bless!!!
But honestly, why would you turn personal, this blog is about ideas not personalities I am made to understand. Now if I am mistaken, please let me know and I will stop patronizing it. Thanks, Â anything else I should be aware of?
Wow,Bwana Mumba,you wrongly sound like a takeover comes “free” and only new setups come with CapEx concerns.The new owner has to deal with CapEx too and Zambia doesn’t even have the highest interest rates.There are regional firms in Zed with higher rates at home and have partly financed expansion thru internally generated revenue.Those have higher costs of business than Zambian firms so why have Zambian firms floundered?Lets not put up interest rates as “the end all and be all” as to why Zambian firms have floundered.
Ba Enka Rasha: Please refer to my first comment in #3 and partially I quote, “You collateralize your assets in either start-up(s) or expansion(s). So, without a BOZ policy on interest rates and national private property/intellectual rights, manufacturing is doomed.” You will see that I addressed both “start-ups and expansions”. Within “expansions” you have leveraged buy-outs (takeovers to use your terminology), you have economies of scale (scalabilities), new product lines (innovations) and hybrids of all kinds in between. So, I actually addressed all areas not in an expansive but inclusive way and despite your hint at demographics, all manufacturing jobs depend on CapEx. I was being nice by going along with the companies you presented but none except Zambeef are even manufacturers.
#5. THE VP IS TALKING AS AN VERY EXPERIENCED BUSINESS MAN. AND WHAT HE HAS SAID CANNOT BE FAR FROM THE TRUTH. NOW, ALL WE NEED IS ACTION ROM THE GOVT.
#9MUSHOTA TAWAISHIBA FYE UKU CITA DEBATE, UNLESS UKUTUKANA. Mr MUMBA HAS GOT A POINT. JUST LEARN FROM HIM IF YOU FELL INADEQUATE IN THE AREA HE HAS AUTHORITY. THERE’S NO HARM MY BROTHER. Mr MUMBA THANKS FOR YOUR CONTRIBUTION, SIR.
Ba Peter:
I am blushing blue … you are the best, sir.
I wonder who this Zambian entrepreneur is who is in China who has a big manufacturing company and employing 5,000 Chinese? I bet you he also mentioned no dual citizenship as another reason putting off investors and VP deliberately omitted it out.
End of the day though what matters is  what he is manufacturing, I see no point him manufacturing in landlocked Zambia when his major clients are on Chinnese mainland or he has to do with the unreliable inefficient dilapidated  TAZARA trains to shift his products.
Thanks Bwana Mumba,you seem to be well learned.Nevertheless,we still come down to why Zambian firms don’t flourish despite paying somewhat lower rates than their foreign competitors?Zambians (and i dearly love & respect ’em) still don’t have the zeal,managerial knowhow and business acumen required to conquer the home market and venture into regional economies .I rest my case.
# 13 and 14, Peter. Thank you for reminding me of my gift. There is always one sick mathafaka (namely you) who thinks their peni$ is made of gold and that the sun shines out of their arses. I made a very reasonable suggestion to a gentleman who unlike you has a measure of civic decency. Now be a good little boy and go and get your pacifier instead of sucking your dick all the time.
I have been following BR Mumba’s blogs and Enka Rasha’s responses with keen interest. You brothers are so right. Our very own indeginous manucturing sector will always be doomed as preference is always given to foreign investors, who are given all these tax rebates and easily takeover capital infrastructure. Perhaps the only blueprint first could be Costain Chilala who has taken over Kapiri Glass, no wonder he had to borrow from an offshore investment institution. DBZ could not finance him, as he is obviously percieved UPND and yet some have borrowed and luandered the funds and are now refusing to pay; the ruling elite are thus protecting them for some favours. It all boils down to politics which have entangled our society so at the expense of sensible economics.
Enka Rasha and BR Mumba thanks for the flow of your sensible debate. At one point Ndola and Kabwe became “ghost towns”. Many industries died due to MMD’s privatization. Govt then declared them “tax free zones” to attract manufacturers there. Any change today? Just a bit. Easier to destroy than to build. Anyway, foreign firms rarely borrow locally. Why? Interest rates and short repayment period
When I mention “privatization”. This word carried a connotation of “giving” what was local to a foreigner. Especially where there was a bit of technological application. The Zambian was being confirmed “inferior” so to say. I bet many should not have been closed but recapitalised with changes in mission, mgt (e.g partnerships) and other changes for a whole modus operandi.
I could not have said it better … you are the best. We should have done the way Boris Yetsin did it in Russia and created the Russian Oligarchy. Restructure all parastatals under Management Buy-outs as with every employer given a vesting interest in the companies they worked for. Miracles could have happened and Zambians would have produced the first African billionaires just like Russia did.
Ndola had Reckitt and Colman, Colgate Palmolive, Johnsons § Johnsons, Dunlop etc. The industrial area was noisy. Not now. Thanks to MMD. Kabwe had Zambia Railways, ZCCM, KIFCO for manufacturing sacks etc. Mines died and so followed the railway systems. Take IT industries to Kabwe and Ndola even Mansa. New universities should be teaching, researching in ICTs.
The Namibian leader was short of also saying ‘we’ve also got an open door policy for your highly skilled and educated Zambians who you fail to employ’.
Businessmen are smart, that is why they are called businessmen. As for banks they have to be smarter than everyone else, after all their business uses other people’s money. So what am I saying? Well, one of the criteria banks use to protect their clients’ money is to incorporate in their lending rates a market risk factor to mitigate against debt defaults. Debt default is surprisingly quite high in our country and this is A major if not THE major contributor to banks’ high lending rates and the cost of borrowing. If you want an illustration of the market risk factor in Zambia, you just have to look at the K14Billion debt to DBZ which Mmembe & Co have been lobbying the State machinery to default. Surely Vice President Guy Scott understands this even as he is playing politics?
Silly VP. Why do politicians like hoondwinking people by twisting facts? Although the interest rates have come down, by the way, starting from the MMD era, there is no way the PF would have reduced the EFFECTIVE lending rate from 25% to 8%; that is bullshit. Who has borrowed at 8%, other than Mmember and Nchito (at 0%)? Put facts as they are, don’t compare and confuse base rates with actual lending rates – compare apples with apples as it were. Why do learned people sit to listen to such, and not correct the errors when it is time for them to speak? Borrowing at 8%??????????????????
@KBM, yes at 8%…kekekeke. Try it mwana and you shall be delighted. Oh yes, you are right man about the default rate. But just thinking, is it not possible that high lending rates can cause a high default rate? What about repayment periods? Or does it just work in the manner you explained?
#28, good point, of course it’s a vicious circle, but are you trying to say that K14B debtors have failed to pay because of high interest rates? No, they have refused to pay even the principal amount or even acknowledge borrowing it!!
@Jury and Justice I don’t know what to say about the K14bn. Let them pay in 1 year.
Lilume textile company ltd run and owned by Enock Mundia. Lilume is the name of his village in senanga. He plans to make textile investments in senanga in 2015.
Ba Watchman over Watchdog-Galileo Galilei is back!
I could not have said it better … you are the best. We should have done the way Boris Yetsin did it in Russia and created the Russian Oligarchy. Restructure all parastatals under Management Buy-outs as with every employer given a vesting interest in the companies they worked for. Miracles could have happened and Zambians would have produced the first African billionaires just like Russia did.