GOVERNMENT has appointed two global rating agencies, Fitch Ratings Limited and Standard and Poors (S&P) to provide an independent and prospective credit opinion on Zambia.
The Fitch Ratings and S&P are widely recognised by investors, issuers, and bankers for their credible, transparent and timely coverage.
Fitch Ratings is headquartered in New York and London and is part of the Fitch Group while S&P is a United States of America based institution.
Bank of Zambia (BoZ) Governor Caleb Fundanga in an interview said J P Morgan is still on board as the transaction advisers.
“We are waiting for the rating agencies to do their jobs. The process is being driven by the Ministry of Finance and National Planning,” he said.
Dr Fundanga said the economic fundamentals are now in place with reduced inflation and high gross domestic product growth.
He said Zambia is one of the countries that were adversely affected by the global financial crisis and has managed to recover quickly while other nations have not.
[pullquote]“The time is now for Zambia to be rated. The economy generally is diversifying; tourism is growing and construction is also growing. The only sector where more needs to be done is manufacturing,” he said.[/pullquote]
He said Zambia’s recovery from the global crisis was fast, adding that the price of copper is now at its highest with the country also having the highest food harvest.
“The time is now for Zambia to be rated. The economy generally is diversifying; tourism is growing and construction is also growing. The only sector where more needs to be done is manufacturing,” he said.
Dr Fundanga also pointed out that there is a lot of interest from portfolio investors in Government securities.
He said the global investors who were shunning the country during the global financial crisis are now coming back.
Meanwhile, the central bank is working towards the introduction of inflation targeting framework.
Dr Fundanga said there are a lot of things that need to be done such as improving research capacity, adding that when the monetary policy committee meets, it will need to have well researched data on which to base decisions.
He said BoZ already has a research division, which is looking at what is needed for Zambia to migrate towards inflation targeting framework.
“It requires a lot of work. Even appointing people to be in the committee, we need to choose people that are well informed that can understand the complicated formulas and other things the researchers will be providing,” he said.
BoZ has been working on the matter for a long time in co-operation with the Bank of England officials who have been visiting Zambia from time to time to hold workshops.
[Zambia Daily Mail]
Good move. Even Harvard and Oxford educated economist Dr. Dambisa Moyo advised this in her times best selling book “Dead Aid“.
This is a move in the right direction.
Whatever. But will this move assist improve economic performance? It could be a waste of money. Dont we have rating agencies in the region? These people could not foresee the last recession why should we continue to believe in them? Who will be on the board????
The simple question is what procedure was used to appoint them and at what cost? Then please give us a full detailed report on the benefits.
# 2. The rating agencies will say whether Zambia is worth giving credit or not. i.e. on the international money markets. It is assumed that since the funds will be borrowed, government will be responsible enough to apply and account for these funds correctly and hence assist improve economic performance. Greed, in part by the rating agencies, did play a role in the credit crisis that led to the recession. I dont think rating agencies in the region (i.e. if there are any) can attract the sums of money that a country can borrow – several millions/billions of US dollars in bonds over say 10 years. Financiers would rather rely on advice from their “own” institutions.
So what will be the gains from being rated? Is poverty in Zambia going to reduce or are the Zambians now going to have a biger share in the national economy. Are mines going to be paying taxes?
Please what we want is that the economic gains reach the poor people. Not just numbers and few people enjoying.
Ratings are a necessary cost to securing funding. It is a supporting document when making funding applications. However as with everything in life it is how you use the rating that makes the difference. It is a positive move.
Okay I have no issues with getting the ratings but my question is where is the road map for the money that this rating will make Zambia borrow? Or is this rating just about making it possible for Zambian companies to borrow on the International market? Can somebody unpack this for some of us please. Borrowing money without a clear plan that has been sold to the masses, with the benefits of how the money will be used and how it will be repaid is just another recipe for abuse of funds by our politicians in a system without check and balances.
This is so refreshing and absolutely encouraging to see that other than myself , Senior Citizen and Mr capitalist, there are other Zambians like #4 and #6 who understand these economic issues and can take time out to blog and educate these PF Kaponyas who think that they can go on the International Market with a rating from Kulima Tower Agency and borrow millions of dollars. Very Shocking!!
Thanks #4 & #6, let keep up the good work of education some of these fellow country men, at the end of the day they are also Zambians like us and represent a piece of us in a way. We need to help root out UBUTUTU in our society.
There is no tender in appointing. You dream and in the morning you appoint. Whatever the case its a positive move by the GRZ to appoint the two agencies.
There is no tender in appointing. You dream and in the morning you appoint. Whatever the case its a positive move by the GRZ to appoint the two agencies.
MMD Chief Bootlicker,Thanks #4 & #6, let keep up the good work of education some of these fellow country men, at the end of the day they are also Zambians like us and represent a piece of us in a way. We need to help root out UBUTUTU in our society. Just like he miners recently shot at.You like your MMD are so full of shit and the developed world will simply take advantage of this.whats the roadmap or is it simply to steal yet more money.Bootlicker and your fellow MMDs are like a blind man,looking for black cat,in a dark room, thats no there.your reckoning will come soon.
yes
There is no tender in appointing. You dream and in the morning you appoint. Whatever the case its a positive move by the GRZ to appoint the two agencies.
How fo.olish can these people be? There is a recession in the West because of these rating agencies who at the moment can’t get any work because they now luck credibility. And what do the id.iots in Zambia do? Give them work and this chi Ben Kangwa is talking about Kulima Tower. This is not something to joke about!! The Triple A rating that contributed to the market crush was because of these people!
Let me get this straight from BOOTLICKER and SENIOR CITIZEN,sata won in most urban areas so u are saying that those people who live in KABULONGA,AVONDALE,IBEX HILLS,PARKLANDS and the two universities etc where SATA is popular are koponyas and those in SHANGOMBO,lLUANGWA, LUNDAZI etc where MMD won are intellectuals…….
and can u educate me pliz,pipo in urban areas ave got more access to information and in rural areas information is scarce therefore who has the highest probability of makin a right choice.?i believe u guys are educated and u ave read the manifesto of MMD thats why you are licking a.s.se.s.Too much poverty in rural areas thats y u win,coz u go there with a bag of maize cheat those poor pipo and win then forget them,5 years later u go back.Now do u think u can easily cheat urban dwellers like that?If PF is for kaponyas then MMD is for illiterate villagers.Well i jst used 2 hear that some pipo can pass thru education bt education cant pass thru them.So cut the crap.
Do rating agencies have to be appointed to rate a country? I thought the rating agencies are independent institutions that are NOT asked to rate but do the rating on their own!!! Suppose these two rating agencies rated Zambia as D-., is the Zambian govt going to throw them out and instead appoint Moody’s because the latter says Zambia i AAA+ :-?