Investors jittery of PFpolicy inconsistencies, says Trevor Simumba

ZAMBIA’s foreign direct investment inflows will drop ahead of the 2016 general election because investors are jittery and worried about the PF government’s policy inconsistencies, says international trade and business consultant Trevor Simumba. And Simumba says the US$1.25 billion Eurobond issued last month is the most “scandalous” which is not likely to be accounted for. Pledged investment in Zambia for the six months to June 2015 dropped to US$1.1 billion from US$3.6 billion in the corresponding period last year, according to the Zambia Development Agency (ZDA). The biggest reduction in terms of pledged investment came in the construction sector, which saw investment of US$3 billion between January to June 2014, fell to US$103 million in the same period this year. Simumba said the government’s policy inconsistencies on key areas of the economy, coupled with the economic downgrades by credit rating agencies and a tough economic outlook amid a weak local currency, will see Zambia record lower investor inflows. “I do not see any new investment coming into the country until after the election. The truth of the matter is that apart from the political uncertainties, the biggest problem we have in Zambia economically is the policy inconsistency and uncertainty. First Quantum [Minerals] already withheld a US$1 billion of their investment for Trident,” he said in an interview. “Investors are getting jittery because if our biggest copper mine, First Quantum, says that they are suspending operations, it sends a lot of shivers into the international community because the business community now says if solid investors are having difficulties working in this environment, what makes us think that if we put in a US$1 billion, we are going to be able to operate?” He said energy minister Christopher Yaluma’s admission in Parliament last month of “not wanting to be a part of the PF’s inconsistencies” also raised concerns with international investors on the government’s ability to be coherent. “It is a major source of concern because when a minister speaks like that in Parliament, it is covered by the international media, so that statement he made has sent a lot of shivers in the investor community,” he said. “More importantly, the current load-shedding that we are facing, and even the importation of the bad  crude oil which the minister [Yaluma] has admitted; the international community are getting jittery.” And Simumba said the government’s issuance of the US$1.25 billion Eurobond remains “scandalous” because it is debt contracted at high interest rates, which will not go to its intended use. “If this government was serious about dealing with the fiscal deficit, they should have gone to softer financing sources like the IMF and World Bank. But the only reason why they didn’t go is because they know they will place conditionalities which they would not be able to achieve. Secondly, they would not be able to pay the sort of scandalous fees paid, which are basically going into their personal pockets,” said Simumba.  “It is a corrupt, scandalous deal and is something this country should not accept! This money doesn’t belong to [finance minister] Mr Chikwanda personally. This is money we are borrowing on behalf of the whole country and it is within our rights to demand a proper audit of how this money was paid.”  – See more at: http://www.postzambia.com/news.php?id=10479#sthash.xdID5YvJ.dpuf

Share this post