Power Utility firm Zesco and RNT of Angola have signed an Inter-Utility Memorandum of Understanding for the development of the Zambia-Angola grid interconnecting transmission lines that will facilitate power trading between the two countries and the region.

The signing ceremony took place today, 28th February 2020 at the Ministry of Energy Head Office in Lusaka.

The proposed grid interconnector is aimed at improving the reliability and security of supply between the two countries as it will enhance the sharing of power generation infrastructure resulting in more investments and economic growth.

Zesco Limited Managing Director Victor Mundende said that the signing of the IUMoU marked yet another important milestone in ZESCO’s quest of realizing its vision of becoming the ‘Hub of electricity trading in the region by 2025’.

”If we are going to be the hub of electricity trading in the region by the year 2025, then the need for the development of interlinking transmission lines, which form the network of regional
interconnectivity, cannot be overemphasized”, he said.

Mr Mundende said the scope of the project include the connection of the eastern districts of Angola to the Zambian grid and the extension of the Zambian grid into the Angolan grid thereby promoting mutual social-economic development through enhanced electricity trading between the two countries and in the region.

He assured the ministers of energy for both Angola and Zambia of the two utilities’ resolve to complete the feasibility studies for the interconnection lines and quickly progress into project implementation.

Mr Munded stressed that ZESCO and RNT would set up technical teams to realize the project.

The Federation of Small and Medium-sized Business Association of Germany says it has noted an increased interest in direct investments in Zambia following the Embassy’s participation in the recently held economic forum.

Federation president, Mario Ohoven says the interest was sparked by the information and materials provided during the forum which was attended by hundreds of guests drawn from different sectors of the German economy.

“I hope that you will take part in our economic forum again next year and that you continue to work for a close cooperation between your country and German SMEs”, Mr. Ohoven says in his letter addressed to Zambia’s Ambassador to Germany, His Excellency, Mr. Anthony Mukwita.

During the forum, the Zambian embassy stand attracted scores of German businesses that sought information regarding investment opportunities in Zambia. The interests ranged from information and communication technologies, ICTs, tourism and agriculture.

In line with President Edgar Lungu’s economic diplomacy, the Zambian Embassy in Berlin attended the forum to share information in respect of the various investment opportunities that Zambia has to offer.

The opportunities include the country’s mining and agriculture sectors along with their potential for value addition; the tourism sector in which Zambia offers un-spoilt natural habitats for wildlife, rivers, lakes and historical places of regional, continental and global significance.

Ambassador Mukwita says the Zambian Embassy will take advantage of every available opportunity to share with the German business community the immense treasures that Zambia is endowed with for investment purposes.

“Our natural resources constitute the basic capital God has given us to end poverty, provide employment and improve our living standards”, Ambassador Mukwita says.

The Competition and Consumer Protection Commission working with the Zambia Compulsory Standards Agency, the Ministry of Health, Public Health Departments of Local Councils and other stakeholders has instituted a countrywide exercise which is aimed at removing pilchard products on the Zambia market.

The move follows the warning from the COMESA Competition Commission pursuant to Article 30 (1) (b) of the COMESA Competition Regulations to the CCPC warning the general public against consuming canned pilchards in tomato and chili sauce products from South Africa that are alleged to be unfit for human consumption.

This concern comes after the National Regulator for Compulsory Specifications (NRCS) in South Africa ordered a national recall of all 400 grams pilchard products which were found to have been compromised during the sauce filling process and could thereby affect consumers.

Some of the affected brands which the investigation identified include Deep Catch, Mamas, Ok Housebrand, Prime Ocean, Spar, Sunny, Shoprite Ritebrand, Cape Point, Checkers Housebrand, u brand, Saldanha and West Point all manufactured by West Point Processors in Cape Town, South Africa.

CCPC Public Relations Officer Rainford Mutabi says in view of the foregoing, members of the public should exercise caution by ensuring that they look out for the affected pilchard products and avoid consumption for the good of their health and safety.

Mr. Mutabi said the launched exercise is aimed at ensuring that all such products with the affected batch numbers that may have penetrated the Zambian market are removed from the shelves.

He has directed all wholesalers, supermarkets, distributors, retailers, importers and traders to remove and surrender to the nearest Public Health office of every Council all affected Pilchard products which have can top bearing markings starting with ZST29 and ZSC29 respectively.

The Zambia Association of Manufacturers has noted with concern the enactment of Statutory Instrument Number 90 of 2019 which became effective on 1st January 2020 which will have negative and substantial impact on the private sector as a whole

ZAM Vice President South and Spokesperson Chipego Zulu says whereas the SI aims to address compliance and administrative challenges of the VAT regime, it is notably similar to the proposed Sales Tax of 2019 with regards to its inflationary nature which will and has in the immediate to medium term resulted in higher costs of production and access to services such as transportation.

Ms Zulu says in the medium to long-term, the effects of the statutory instrument will translate into higher commodity prices and the inability of Zambian firms and businesses to compete both in domestic and regional markets.

She said currently Manufacturers are disallowed from claiming VAT on lubricants, spare parts, stationery, office furniture, office equipment, office repair and maintenance, office lighting and air conditioning, office cleaning services and ambiance, repair and maintenance of motor vehicles, accommodation in hotels and similar establishments, subscription for cable television service, hiring of transport, transmission belts, parts of converters, parts of machinery, transmission shafts, parts of transformers; and parts of electrical machines.

Ms Zulu said the list of consumables contains critical inputs to the manufacturing process and the SI therefore effectively negates the positive strides that have arisen from policy interventions in the past that sought to make items such as spare parts more affordable and therefore reduced the cost of production.

She said the implementation of this instrument increases the cost to companies making them uncompetitive and, in some cases, unprofitable.

Ms Zulu added that whereas it is appreciated that the intention of the statutory instrument is to increase Tax Revenue Income to the Treasury amidst the challenging 2020 economic landscape, in the absence of measures to reduce the tax burden on the private sector and stimulate growth through adequate consultation and the adoption of pragmatic and effective solutions, ZAM expects to see constrained growth in the short to medium term.

She said this is arising from Business costs increasing by approximately 20% and it is estimated that on average 20% of previously claimed Input VAT by manufacturers will be unclaimable in 2020 with a significant negative cost impact on businesses.

Ms Zulu said must be underscored that an estimated 80% of Input VAT that will not claimed is made up of Transport and Spares for most manufacturing firms.

She said prices increasing by approximately 10% and this will have significant implications on the already high cost of living in addition to ensuring that the country breaches the 2020 inflation target of 6-8%.

Further, Ms Zulu said Growth of illicit markets, significant price differentials between locally manufactured and imported products arising from measures such as SI 90 will promote the growth of illicit markets as consumers will adjust to source cheaper and/or more affordable products that are likely to be bought from illicit markets.

She said this will reduce the size of legitimate sources of revenue collection owing to the creation of an unlevel playing field, thereby making domestic resource mobilization more challenging.

Ms Zulu lamented that this is contrary to the aspiration of the Ministry of Finance, and indeed the Zambia Revenue Authority.

She said high costs of production and unconducive business environment is likely to lead to the closure of firms resulting in higher levels of unemployment and reduced
contributions to PAYE, NAPSA amongst other taxes contrary to the intention to expand the revenue base by disallowing Input VAT claims on consumables.

Ms Zulu said in the medium to long-term, businesses may change their business models to that of Traders and Distributors as opposed to Value Adders because SI 90 discourages value addition by allowing traders to claim VAT, whilst value adding firms such as manufacturers are unable to do so.

In a statement Ms Zulu added that this contradicts the aspirations of the 7th National Development Plan as well as Vision 2030 which seek to diversify the Zambian economy with growth being underpinned by value addition.

She said stimulating the growth private sector in the current context of the Zambian economy is indeed a significant challenge, but it is not impossible.

Ms Zulu said the Statutory Instrument No. 90 is extremely retrogressive for the manufacturing sector and highly unlikely to stimulate the much-needed growth at a time when the private sector needs to perform.

She has since called for the REVOCATION of SI 90 until such time as the noted challenges above are addressed.

She has also called on the Ministry of Finance to establish effective platforms for dialogue and consultation with the private sector on this and other cross-cutting issues towards the creation of robust and sustainable solutions to the challenges the Zambian economy is currently facing.