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AmCham News 2015

July - September

U.S. Ambassador on AGOA

Ernst and Young (EY) 2015 Megatrends PwC Managing Fraud Risk

Q3 Newsletter

Policy Brief: Medium Term Debt Strategy

2015 Golf Tournament & Thanksgiving Dinner

Contents 6

Ambassador’s Message: AGOA


EY: 2015 Megatrends


July - September AmCham Events


CSR Forum


PwC: Taking Steps to Manage Fraud Risk


Thanksgiving Dinner


Medium Term Debt Strategy


AmCham Members AmCham Zambia | 3

message from the president Dear Members of the Chamber: It has been a good third quarter and we are quickly approaching the end of the year. We saw a lot of opportunities for business networking and linkages this quarter. The Chamber did outreach outside Lusaka with participation as exhibitors at the Zambia International Trade Fair in Ndola, Copperbelt. The Chamber hosted a business linkage cocktail, several discussion forums, and our 2nd Annual Golf Tournament, which included attendance from new contacts made throughout the year. While we look forward to continually growing our membership, we also would like to ensure there are member-to-member linkages and business partnerships. All of AmCham’s successful events could not have been possible without the support from our generous sponsors. At every event, we send out appreciation to say thank you, but I would like to reiterate our gratitude. I would like to say a special thank you to all companies who have supported the Chamber in terms of sponsorship; your support is vital to the success of the Chambers activities. The Secretariat has been conducting site visits and this gives input to a good deal of activities the Chamber plans. We would like to thank everyone who has taken time to meet with the Secretariat and I would like to encourage all who have not met with them to schedule a time for a site visit. Help us understand your wishes from the Chamber so that we can make your membership more beneficial. As I mentioned earlier, the year is fast approaching its end, these visits and membership discussions will aid the Chamber to amply plan for the upcoming year. I look forward to seeing you all at our upcoming events, especially the Thanksgiving Dinner on 20th November. Yours sincerely, Jason Kazilimani, Jr. President

4 | AmCham Zambia

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Ambassador’s Corner

AGOA’s Benefits Help Spur Economic Growth in Sub-Saharan Africa Ambassador’s Corner U.S. Embassy Lusaka

United States Ambassador Eric Schultz

6 | AmCham Zambia

First authorized by the U.S. Congress in 2000, AGOA provides for the duty-free treatment of imports to the United States of certain products from eligible sub-Saharan African countries. Under AGOA, these countries can export nearly 6,000 types of products to the United States duty-free, from apparel and automobiles to footwear and fruit. Although more focused on U.S. imports, AGOA spurs dialogue between the United States and sub-Saharan Africa countries on two-way trade and investment issues through the annual AGOA Forum, which was held this year in Libreville, Gabon. By bringing together companies from all over sub-Saharan Africa and the United States, this initiative has bolstered the region’s integration into the global economy. Of 49 sub-Saharan Africa candidate countries, 39 are currently eligible to receive benefits under AGOA. In terms of tariff benefits and general eligibility criteria, AGOA is similar to the Generalized System of Preferences (GSP), a U.S. trade preference program that applies to more than 120 developing countries. AGOA, however, covers more products and includes additional eligibility criteria beyond those in the GSP. Further, AGOA incorporates further trade and development provisions beyond its duty-free preferences. Economic conditions in Africa have changed dramatically since Congress first passed AGOA in 2000. In the decade leading up to the initial passage of AGOA (1990-2000), annual real gross domestic product (GDP) growth in sub-Saharan Africa was a half percentage point lower than global GDP growth (2.7 percent vs. 3.3 percent) Since AGOA’s enactment, however, sub-Saharan Africa’s growth averaged 6.3 percent, more than two points higher than the global average of 3.9 percent. According to United States Trade Representative (USTR) Michael Froman, “AGOA has been the cornerstone of America’s economic engagement with sub-Saharan Africa over the past fourteen years.”

Zambia first became eligible under AGOA in 2000 and today is a valued player, exporting iron, steel, nickel, tobacco, tea, and animal hides to the United States. In 2011, Zambia hosted the 10th Annual AGOA Forum, attended by more than 2,000 business leaders and government officials. In fact, it was during this Forum that the American Chamber of Commerce in Zambia was first launched by former Secretary of State Hillary Clinton and the then-U.S. Trade Representative Ron Kirk. As Zambia’s economy diversifies, we look forward to helping local producers find more markets in the United States for their products. AGOA supports regional economic integration and provides incentives for beneficiary countries to improve their overall investment climates, reduce corruption, improve infrastructure, and harmonize trade standards to enhance their competitiveness in the global marketplace. It also forges stronger commercial ties between Africa and the United States by creating tangible incentives for African countries to implement improved economic and commercial policies. Simply put, AGOA contributes to better market opportunities and stronger commercial partners in Africa for U.S. companies. The partnership created via the AGOA program between the United States and sub-Saharan Africa has spurred significant growth among African businesses. Many major international corporations have opened new offices in African capitals and a number of others are eyeing Africa’s investment potential. Our commitment to AGOA continues. In June 2015, the U.S. Congress reauthorized the AGOA legislation for another 10 years. That’s great news for the United States, Zambia and for sub-Saharan Africa as a whole. The continuation of this valuable legislation will help encourage continued economic growth across the continent, bringing real and positive change to the lives of millions of Africans. More information on AGOA’s programs and benefits, exporter information and toolkits, and trade profiles can be found at And, of course, the American Chamber of Commerce in Zambia is an excellent resource for anyone looking to learn more about AGOA. Visit or send a message to if you have questions about an AGOA related topic.

AmCham Zambia | 7

Ambassador’s Corner

The United States and Zambia enjoy a strong bilateral relationship, built on shared experiences of peaceful elections, and on a desire to enhance mutual commerce and trade. We are proud to be able to work with Zambia – along with a large number of other African countries – through the African Growth and Opportunity Act (AGOA), which we hope will continue to sow tangible benefits for U.S. and Zambian businesses.



Macroeconomic dynamic changes that provide new opportunities including those changes that lead to devastating capital erosion will continue to be a reality over the coming decade. In Zambia for instance, after several years of relative macro stability, there has been recent macro market disruptions that have significantly impacted on a majority of businesses. These disruptions have more often been arising from external global fundamentals rather than arising from our domestic fundamentals. What has been made clear by these recent macro challenges in Zambia is that global trends cannot be ignored if our businesses are to remain successful. The world dynamism is fast changing, and the next decade promises to be an uninhabited expedition. While for the most part, some global trends that are impacting businesses in the West maybe less important to the domestic market now, it is vitally important not to underestimate that the changes in trends may be only a year ahead in another country and therefore could be significant to our domestic market in another year. The economic promise in an increasingly global marketplace will be dependent on major investment in infrastructure and perhaps this speaks positively to the current focus by government on infrastructure investments in Zambia. Recognising the transformative global forces that are defining our businesses and our future, EY has identified six megatrends published in its 56 page thought leadership publication. At EY, we think that each has the present and future capacity to disrupt and reshape the world in which we live in surprising and unexpected ways. We call the six mega trends as: • Digital Future; • Entrepreneurship Rising; • Global Marketplace; • Urban World; • Resourceful Planet; and • Health Reimagined. With each megatrend, the EY publication presents a set of observations and facts designed to cover what is deemed to be the most important and interesting aspects. In total, they provide a “best guess” from where we sit today, to see how these megatrends might unfold in the future. The EY Advisory and Transaction Advisory Service lines are ready to engage on these transformative global forces and how a business can harness its resources to respond to these emerging trends. For more in-depth analysis, visit, to access our 56 page EY Megatrends 2015 publication. Kelvin Chungu is a Senior Manager in the Assurance, Advisory and business development service department of EY Zambia and can be contacted on for a copy of EY Megatrends 2015 publication.

8 | AmCham Zambia

The convergence of social, mobile and cloud is expanding the capability by private enterprise to gather information, enter new markets, transform existing products, and introduce new go to market strategies. This also presents significant challenges, including new competition, changing customer engagement and business models, unprecedented transparency, privacy concerns including cyber security.

ENTREPRENEURSHIP RISING Technology is changing the ways people work, and is increasingly enabling machines and software to substitute for humans. Enterprises and individuals who can seize the opportunities offered by digital advances stand to gain significantly, while those who cannot may lose everything. “High-Impact” entrepreneurship that capitalize on local needs, once largely confined to mature markets, is now an essential driver of economic expansion in rapid-growth markets. The face of entrepreneurship is also changing across the world. The profile is increasingly that of young and/or female and largely digital from birth. The public and private sector each have an important role to play in creating entrepreneurial ecosystems that, in addition to funding, are essential to promoting entrepreneurial success.

GLOBAL MARKETPLACE In the global marketplace, the war for talent will necessitate greater workforce diversity to secure competitive advantage. A new tier of emerging nations, driven by a middle classes, will draw global attention, while nationalist interests will continue to compete with the forces of global integration. It is expected that faster growth rates and favorable demographics in key rapid-growth markets will continue to be a feature of the next decade or so, with Innovation increasingly taking place in rapid-growth markets, while Asia is surfacing as a major hub. The gulf between “mature” and “rapid-growth” countries will continue to shrink, however there will be pushback and opposition to global integration which will manifest itself in various economic, political and cultural forms, including trade and currency protectionism.

URBAN WORLD The number and scale of cities continues to grow across the globe - driven by rapid urbanization in emerging markets and continued urbanization in mature markets. The United Nations reports that 54% of the world’s population currently live in cities, and by 2050, this proportion will increase to 66%. Effective policy responses to the challenges that cities face will therefore be important to making cities of the future competitive, sustainable and resilient. To harness the economic benefits of urbanization, policy-makers and the private sector must do effective planning and attract sustained investment in railroads, highways, bridges, ports, airports, water, power, energy, telecommunications and other types of infrastructure.

RESOURCEFUL PLANET Absolute population growth, economic development and more middle-class consumers will drive increasing global demand for natural resources - both renewable and non-renewable. While the world’s supply of nonrenewable resources is technically finite, new technologies continue to impact the future supply picture by allowing access to formerly hard-to-reach and valuable oil, gas and strategic mineral reserves. At the same time, natural resources must be more effectively managed, particularly from an environmental impact perspective.

HEALTH REIMAGINED Health care which already accounts for 10% of global GDP is embarking on a once-in-a-lifetime transformation. An explosion in big data and mobile health technologies is enabling real-time information creation and analysis. Companies beyond health care as traditionally defined are entering the fray, providing new sources of competition and partnering. These trends are starting to drive a fundamentally different approach moving beyond the delivery of health care to the management of health. Success, in other words, demands that we reimagine our approach to health.

AmCham Zambia | 9



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July - September




Every mid-year in Zambia, businesses convene in Ndola, the industrial and commercial center of the Copperbelt for the Zambia International Trade Fair (ZITF). The trade fair attracts local and international participants, with over 100,000 visitors each year. From food and beverages to government departments to mining, minerals, and beyond, there are various categories for exhibition. The U.S. Embassy Lusaka hosted the AmCham Zambia in their exhibition booth, organized through the business linkages committee. This gave AmCham Zambia members an opportunity to showcase their individual businesses at the expo. This included Zamefa, Radisson Blu Hotel, Monsanto, NAC2000, BUK Truck Parts, and Focus Financial. The members and Secretariat spoke with visitors about their products and services, and collected information for future business. The Chamber also took time to meet with some of its Copperbelt based members and talk with prospective members of the AmCham Zambia.

On 8 August 2015, AmCham Zambia held an Advocacy Committee event with the Bank of Zambia to discuss Zambia’s FY2016 budget and current fiscal and monetary policy.

On 20 August, the AmCham Zambia business linkages committee hosted a cocktail at Roma Sky Bar located inside AmCham member Foxdale Court. The cocktail was open to non-members to bring new faces into the mix and we were fortunate to also be joined by some of contacts made at ZITF in Ndola. Guests had a great time, exchanged business cards, and we look forward to hearing about partnerships created from the event.

AmCham Zambia was pleased to host Dr Emmanuel Pamu, Director of Financial Markets at the Bank of Zambia, who spoke with fifteen select members of the Board of Directors and the Advocacy Committee. Dr Pamu discussed the different but complimentary roles of fiscal and monetary policy in encouraging growth of the Zambian economy and the roles of the Ministry of Finance and Bank of Zambia in implementing them. The event coincided with the publishing of a policy brief in the Zambia Daily Mail regarding Zambia’s medium-term debt strategy. AmCham members encouraged Government to be more transparent in its fiscal and monetary policy plans, specifically in regards to the repayment of $3b in external Eurobond financing. Dr Pamu relayed information regarding the creation of a sinking fund for Eurobond repayment by the Ministry of Finance, with AmCham members requesting further transparency regarding the level of annual contributions to the fund and its cumulative balance. Representatives from the Zambia Institute of Policy Analysis and Research (ZIPAR) and the Policy Monitoring and Research Centre (PMRC) added their policy expertise to the discussion.

30.09 On 30 September, AmCham Zambia hosted a presentation by Harry Kaplan, CEO of Atrafin. Atrafin is a company offering trade finance solutions with a focus on supporting trade between US/Europe and emerging market countries. Kaplan presented about the different financing solutions provided by Atrafin and held private meetings at the AmCham HQ to discuss their financing solutions one-on-one with members.

AmCham Zambia | 11

Membership events

AmCham Zambia Events

Membership events

AmCham Zambia Events Golf Tournament

AmCham Zambia hosted its 2nd Golf Tournament at the Lusaka Golf Club on Thursday, September 10th. The tournament included 17 teams representing a variety of companies across Zambia and was graced by Guest of Honor United States Ambassador to Zambia Eric Schultz. The golf tournament included a sponsors tent with give aways, awards ceremony, raffle drawing, and networking cocktail. AmCham Zambia and all the players are thankful for the all the generous sponsorships and donations contributed toward making the event a success.

Tournament Winners 1st Place

Stanbic Bank: Musenge Komeki, Peter Munyinya, Muchindu Kasongola, and George Chepeshi

2nd Place Tyre King: Sunil Melwani, Henry Melwani, Zlatan Arnatovic, and Juan Richter

3rd Place KPMG: Courtland Sikazwe, Moono Mwila, Sydney Wemba and Derek Mboyunga

4th Place Standard Chartered Bank: Tresphorce Wasa, Ivor Mukwanka, Moses Chewe and Christopher Mulenga Prizes included: round trip to Dubai from Lusaka via Ethiopian Airlines with 3-night stay at Radisson Blu Deira Creek Hotel, 3-night stay at Protea Hotel Safari Lodge, weekend stay at InterContinental Lusaka including dinner at Rosso Restaurant, Callaway Men’s XR 19 Degree Hybrid Golf Club, Callaway Hyper-Lite 5 Stand Bags, Radisson Blu Lusaka vouchers for breakfasts, dinners and night stays, K1,000 Tyre-King vouchers, KPMG lunch boxes, golf lessons, Titleist Pro V1X Golf Balls, gym memberships to Radisson Blu Lusaka and InterContinental Lusaka, and Odyssey Men’s Versa 7 White Hot Putter.

12 | AmCham Zambia





esponsibility Forum

AmCham Zambia hosted its second CSR Forum on Thursday, September 24th at Southern Sun Ridgeway Hotel. The event was attended by members and non-members who to learn about different CSR initiatives and opportunities in Zambia. Presentation were made by Monsanto, USAID, NECOR, Taj Pamodzi Hotel, Up Zambia and Citibank. The event was followed by networking session generously sponsored by Southern Sun.

Donald Mavindidze presented the Monsanto Fund, which manages the CSR funding for Monsanto globally. Between 2013-14, the Fund invested more than $42 million in 24 countries. Its main focus for support is basic education, food and security, and critical needs. The average grant size is $80-100K (min $25K), projects can be 100% grant funded, and do not require community contributions. The application windows are Jan 1-Feb 28 and July 1 – Aug 31. For more information, and contact

14 | AmCham Zambia

Diane Weisz Young of USAID presented two potential mentorship opportunities. The first is to be a mentor for returning Washington Mandela Fellows (WMF). Requirements are 7-10 years of experience, individual interview, commitment to giving back to the community, and 2 hours/month of dedicated mentoring. The second opportunity is to be a mentor or host an intern for the top female applications to the WMF who were not selected. For more info, contact Diane at dwyoung@ and go to

Monica Kamgombe presented on behalf of NECOR. The company’s CSR activities include an internship program for students, free computers for schools that cannot afford them, hemophilia awareness campaigns, support for all the traditional ceremonies, and an intercompany relay. Monica stated NECOR has benefits from is CSR through increase brand awareness and brand differentiation, customer and employee engagement, and long-term thinking to come up with new ideas. To get involved, please contact Monica at


Nyembezi Nkunika-Lopa of Taj Pamodzi Hotel highlighted the CSR activities the hotel promotes. This includes activities, primarily for youths, on Universal Children’s Day, World Environment Day, and International Women’s Day. Taj Pamodzi also partners with Jacaranda School, Fountain of Hope, and St. Laurence Home of Hope to plant trees, take care of the sports fields and ablution blocks, and encourage the children in the community. Please work with Nyembezi at to get involved.

Sara Larios of Up Zambia presented the group’s volunteer work with the youths at Kamwala Remand Prison in Lusaka. Volunteers meet from 10:00-12:00 hours on Saturdays to do different activities with the male youths, ages 12-19, currently being held in remand.

Citibank’s David Makondo presented the bank’s CSR initiatives. Citibank offers job-shadowing opportunities for youths to come and learn more about what bankers do at work and also supports financial literacy programs in the community.

From sports to farming to making origami, Up Zambia is looking for both volunteers and donations to the weekly program. Volunteers can attend regularly or as a once off activity to teach a special hobby. To get involved, please contact Sara at

Citibank celebrates an annual Global Community Day, where Citi staff come with their families to contribute to the communities. Citibank works with Habitat for Humanity both at the global and country-level. The staff helps building houses for under privileged people.

AmCham Zambia | 15

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Taking Steps To Manage Fraud Risk

Malvi Chavda

PwC: Taking Steps to Manage Fraud Risk

Finding a balance between enough flexibility to achieve success and effectively managing the potential risks that could result in the failure of an investment is not an easy task. However, by adopting an approach of constant vigilance and well-timed interventions, organisations can ensure they are protected from the risks of fraud without stifling growth. Constant vigilance may be perceived to be expensive and/or unnecessarily involving. In actual fact, it is not a single activity or a series of activities but rather a frame of mind. One of the key tenets of a Fraud Response Strategy is to always assume a state of compromise, i.e. to assume that your systems have been breached and therefore focus on continuous detection. Adopting this mindset requires a keen eye for unusual activity or behavior. Once an anomaly is identified, it is critical to ensure that the reason for its occurrence is fully understood and dealt with. Members of the Board and management should keep an eye out for “red flags” – these may point to more deep-seated issues that need to be investigated in detail and dealt with outside the “business-asusual” framework. These red flags can occur at an organisational and/or individual level. At an organizational level, they could include high levels of non-routine transactions, unapproved transactions, transactions lacking documentation, manual journal entries, problems or delays in providing requested information, poor IT controls and unusual or abrupt changes in important customers/suppliers or in their behaviour. Other red flags include the override of controls by management or officers, irregular or poorly explained management activities, unexplained write-

offs, cost escalations or operational losses and, most importantly, consistent over/underperformance against objectives regardless of changing business conditions or competition – these particular warning signs may point to misstatement of financial results or management-instigated frauds which are higher in value and can cause both financial and reputational damage to an organization. At an individual level, employees having unusually close relationships with suppliers or spending beyond their means could be a red flag – however, these should not be the sole basis for any investigative action and should be considered together with any other warning signs. The list of potential red flags is endless – forensic specialists are trained to understand and identify the signs of fraudulent conduct. It is crucial to get the input of specialists at an early stage when concerns are first raised, particularly where high ranking or influential employees or managers are involved. Early intervention may ensure evidence is preserved and may limit the damage to the organization. Apart from adopting the “constant vigilance” mindset, management commonly turns to compliance-driven processes like statutory audits and/or tax compliance work to detect any anomalies. While recommendations or reports from statutory audits may point you towards potential issues in your organization, they may just as easily fail to do so because their objectives and approach are not necessarily geared to detection of fraud. The scope and objective of a statutory audit is to provide an opinion on whether the financial statements present a “true and fair” reflection of the company’s financial performance and financial position over the period covered – it is not to necessarily detect fraud. Audit work is carried out on a sample basis, which means auditors will rarely (if ever) have enough time to cover 100% of the transactions a business enters. As a result, the opinion they provide is on whether the financial statements are free from material misstatement whether caused by fraud or error. In the context of a statutory audit, the tendency may be to disregard immaterial errors or frauds. However, “immaterial” misstatements often mask deeper underlying issues and may be a precursor to a larger event of fraud.

AmCham Zambia | 17

PwC: Taking Steps to Manage Fraud Risk

Anyone who has experienced it knows that an event of fraud can be very destabilising – aside from the monetary losses, there is the time spent on investigating, dealing with the perpetrators (if they are known!) and the sleepless nights of wondering where else you may be exposed. Despite this, managers often tend to overlook all but the most obvious fraud risks when designing, setting up and monitoring their systems and processes – perhaps with good reason, the focus of the average person is on processes, not possible exposures to fraud.

PwC: Taking Steps to Manage Fraud Risk

Furthermore, fraud, by its nature, is difficult to detect because deliberate attempts are made to conceal it. It could involve forgery of documents or calculated attempts by the perpetrators to mislead the audit team. As such, the mandate of an audit may not be sufficient to uncover fraud, especially if there is collusion by management to conceal evidence. It is therefore crucial to understand the mandate and limitations of a statutory audit when considering fraud risk in your organization. Internal audits are also often used to measure and mitigate fraud risk. While a well-run internal audit function can be a first line of defence in combatting fraud risk and events of fraud, it too has its own limitations where fraud is concerned. In actual fact, it is not always easy to ensure the independence of an internal audit team – this is particularly true with smaller markets where it is almost impossible to avoid day to day contact with subjects of an internal audit investigation or members of management who are tasked with functions that are the subject of internal audits. Internal auditors are human after all and the potential of being ostracized in a work environment may pose a threat to the independence of even the best internal auditors. Another threat to a robust internal audit function is familiarity – either with colleagues or with the controls being reviewed. We have frequently observed unusual or inappropriate business practices becoming “institutionalized” over time and then manipulated to the advantage of a fraudster. Sometimes all it takes is an independent eye or a fresh perspective to point this out, and you’d rather this happen sooner than later! Internal audit teams that are unable to adapt to changing business circumstances e.g. through a constantly evolving internal audit plan, may deteriorate in their value to an organization, particularly if they are considered a “routine” function. A successful internal audit team should constantly evolve and employ innovative and creative techniques – this will introduce an element of unpredictability into their work and increase the likelihood of both preventing and detecting fraud. Even with a top-notch internal audit team though, there are benefits from investing in a further means to protect your organization against fraud risk. Combining the statutory audit and internal audit functions with an episodic intervention by an independent third-party may improve the organisation’s resilience to fraud risk. Adopting such an approach could provide a long term

18 | AmCham Zambia

solution by combining both a periodic, specialist and independent intervention with more regular reviews and the constant presence of an internal audit function. Reviews to identify fraud risks or investigations conducted by external parties can be of good value to an organization. For one, they are independent – that means they won’t be saddled with the bias or the hierarchical concerns which an internal investigation/review would be subject to. Their work will be impartial and factual. When conducted by specialists who bring together best practice from a variety of industries and backgrounds, independent reviews can result in a value-add of strengthening business processes and of the internal capacity to detect and handle incidents of fraud or to implement the measures necessary to manage fraud risks and thus prevent fraud. Specialist skills such as conducting interviews in an investigation context, evidence collection and handling or compiling documentation to lodge a fidelity insurance claim may also enhance the organisation’s handling of the uncovered matters. Digital forensics and its use in gathering evidence is a prime example of this type of specialist skill. In addition, seeking the involvement of an independent team means they will have the focus and time required to thoroughly query the matters at hand. There is also a lower likelihood of them being fobbed off with an explanation that staff are accustomed to giving an internal team – their recommendations will be on the basis of best practice and industry benchmarks rather than internal policies or inappropriate but established norms – an external perspective could bring about changes to these norms. Many organisations make the mistake of ignoring fraud risk completely or relying on what they perceive to be methods of detection that are not suitable for that purpose (for instance, a statutory audit). Using a programme that combines a statutory audit, an internal audit and independent interventions (or, for smaller organisations, varying combinations of these three) over a period of time will ensure oversight organs fulfil their responsibility to protect their organization against fraud risk and in the instance an event of fraud does arise, ensure it is handled in a controlled manner. Malvi Chavda is a Manager in PwC Zambia’s Advisory Practice.


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On 25 June 2015, Parliament voted to raise the debt ceiling from K35b to K60b. Finance Minister Alexander Chikwanda has indicated Government will borrow externally to fund an “unfinanced” 2015 budget gap of K10.5b. In 2012, 2014 and 2015 Government issued $750m, $1b and $1.25b in external debt, respectively.

Key Points

advocacy CORNER

policy brief | medium term debt strategy

External financing can be used to fund consumption and investment, but comes with certain risks involved with future repayment. The level of debt principal due between the years 2022 and 2027 may be difficult to repay without a transparent debt management strategy and budgetary process. Transparency of Government’s plans to repay external debt will ensure long-term investors remain confident in the future growth of the Zambian economy. This will encourage the expansion of trade and investment.

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economic risks and under different debt burdens. Debt sustainability assessments (DSAs) should be made available to the public. Of specific focus should be the repayment of principal for the three Eurobonds, a total of $3b that would need to be repaid within a period of six years. AmCham encourages transparency in the administration of the sinking fund set up by the Ministry of Finance, including reports on annual allocations to the fund and the fund’s cumulative balance.

On 25 June 2015, Parliament voted to raise the debt ceiling for external loans from K35b to K60b after an announcement by Finance Minister Alexander Chikwanda that Government would fund an “unfinanced” 2015 budget gap of K10.5b through additional external financing. On 26 July 2015, Government announced the successful issuance of an additional $1.25b Eurobond for infrastructure projects, recapitalisation of certain Government-owned entities, the refinancing of domestic debt and to finance Government’s 2015 fiscal deficit.

Key external risks outlined in the IMF’s report include normalisation of monetary policy in the United States (resulting in capital outflows and higher financing costs in Zambia) and continued low copper prices, with key internal risks including inconsistent policy that could discourage production and investment in the mining industry and delayed fiscal consolidation.

External borrowing can lead to enhanced economic growth when invested in priority capital projects and infrastructure. The Government has, in the past, delineated priority projects to which external funding revenues would flow. The American Chamber of Commerce in Zambia (AmCham) encourages continued transparency in the budgetary process, progress made on projects funded through external borrowing, and Government’s plans for debt repayment. Government should continually assess debt sustainability under a variety of

The finalisation of the Medium-Term Debt Management Strategy by the Investment and Debt Management Department of the Ministry of Finance is an important first step to strengthening transparency and debt management. AmCham joins the Zambia Institute of Policy Analysis and Research (ZIPAR) in encouraging the inclusion of provisions in the Access to Information Bill under consideration in Parliament on public dissemination of information on public debt. Policy stability and transparency in Government’s use and repayment of external debt will boost private sector confidence in the future of the Zambian economy and encourage continued investment and growth.

AmCham Zambia | 21

advocacy CORNER

The recently published IMF Article IV Consultation reports Zambia’s debt sustainability is maintained under 2015Q1 levels of borrowing ($1.75b external Eurobond funding at the time of the report) except for debt serviceto-revenue ratio under several external shocks in the years in which the first two Eurobond principal repayments are due (2022 and 2024). Government has indicated that internal modelling has shown similar results.

Elevate Your


sponsor an amcham event

Consider sponsorsing an AmCham event for an opportunity to engage with top executives and businesses in Zambia. Sponsorship levels vary by event and will be customized to best add value to your business and fit your needs. Do you feel AmCham events do not fit your target market? Consider working with the AmCham Secretariat to host an informational forum about the products and services your business offers. AmCham will help you market your event, send invitiation to membership and help connect you with the participants afterwards.

Sponsorship Benefits promotional speeches complimentary business access to ticketed events banner displays promotional materials distribution company logo on presentations newsletter, website and social media advertising complimentary newsletter advertisement Contact the Secretariat to discuss which event sponsorship is best for your business! | 0975.028.026 21 AmChamZambia Zambia 20||AmCham





Action Auto Advantage Insurance AFGRI AGCO Airtel Alendo Travel and Tours AON Aphet Enterprises Astro Holdings Auto World BDO Berone Best Western PLUS Lusaka Grand Better Now Finance Cargill Catholic Relief Services (CRS) Catwalk Boutique and Salon Citibank Copperbelt Energy Corporation (CEC) Corpus Globe Corporate Solutions Corpus Legal Cutting Edge PR Dana Holdings Deloitte DigiPrint EY Fhi360 First National Bank (FNB) Focus Financial Services Fortuna Enterprises Foxdale Court Fresh Springs Investment General Electric International (GE) Gracom Investment Grant Thornton Hollard Insurance

IBM InfoTech Business Solutions InterContinental Hotel Investrust Jewel of Africa Jhpiego KPMG Kukula Capital Lafarge Zambia Love American Style Luwaka Enterprise Marsh Zambia Medlink MFinance Microsoft Monsanto Mwacho Exclusive Boutique NAC2000 NECOR PricewaterhouseCoopers Protea Hotel Radisson Blu Hotel Riverbed Systems Southern Sun Ridgeway Hotel Streetwise Syran Business Systems Taj Pamodzi Hotel Tansi Farm Triblems Triskel Africa Consulting Tyre King Twenty Third Century Systems Universal (Zambia Leaf Tobacco) Visa Yash Pharmaceuticals ZAMEFA

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Interested in joining AmCham?

Contact | +26.0975.028.026

AmCham Zambia | 22

American Chamber of Commerce in Zambia


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MISSION The American Chamber of Commerce in Zambia aims to serve American citizens and American controlled companies doing business in Zambia, as well as Zambian businesses already or seeking to become involved in trade with the United States. AmCham will continue to achieve this by establishing a network of forums for sharing information, exchanging ideas and interacting with relevant American and Zambian policy makers. It is the ultimate goal of the Chamber to increase commerce and trade between the United States and Zambia. OBJECTIVES • Further the development of commerce between the U.S. & Zambia • Promote the interest of its members in trade and investment • Gather and disseminate information on trade and investment MEMBER SERVICES • Access to membership directory, includes key business contacts • Receive business-to-business matching • Information on trade shows and expos in the U.S. and Zambia • Invites to monthly business networking and social events • Invites to presentations with business leaders & high-level officials • Invites to meet with trade missions visiting to and from the U.S. • Access consulting on export-import market and foreign investment • Receive quarterly newsletter, regular e-bulletins and publications • Access business visa application services Interested in joining AmCham?

Contact | +26.0975.028.026

23 | AmCham Zambia

AmCham Zambia 2015 Q3 Newsletter  
AmCham Zambia 2015 Q3 Newsletter