ZAM COMPLAINS OF HINDRANCES IN PERFORMANCE

The manufacturing sector has been greatly contributing to Zambia’s Gross Domestic Product –GDP- but its competitiveness on the international market is a source of concern.

The Zambian manufacturing industry is faced with various challenges hence making it difficult to internationally.

Zambia Association of Manufactures –ZAM- President Chance Kabaghe says huge taxes when importing make it difficult for local products to compete with imported ones.

Mr. Kabaghe adds that only processing of agriculture produce is cheaper because of their easy availability.

He has however expressed optimism by government to make it easy for local manufactures through policy regulation.

Mr. Kabaghe was speaking in an interview with Muvi TV News in Lusaka.

By Brian Mwale

STANCHART RECORDS 13PERCENT GROWTH IN OPERATING PROFIT

2009 seems to have been a good year for Standards Chartered group after scoring record high income and operating profits worth billions of dollars seventh year running.

Standard Chartered PLC has today March 3rd 2010 announced a seventh successive year of record income $15.18 billion and $5.15 billion operating profit before tax during 2009, demonstrating the underlying strength and momentum across its markets and businesses, despite the ongoing adverse global economic conditions. The Bank’s strong liquidity and capital position enables it to continue building out market share across its footprint, generating positive business momentum for 2010.

A News release made available to The DataBank in the Zambian Capita Lusaka by Stanchart Zambia states that 2009 delivered strong and diversified profit and income growth across the bank’s markets in Asia, Africa and the Middle East. It further states that five markets delivered income of over $1 billion, with India and Hong Kong also delivering over $1 billion in operating profit before tax (OPBT). Wholesale Banking continued to demonstrate strong business momentum with significant increases in both client and own account income growth, while Consumer Banking saw a strong upturn in performance during the second half of the year.

The bank’s performance despite the global crisis

Throughout the tough environment, Standard Chartered has continued to provide support for its customers and corporate clients, significantly increasing lending and other forms of support across it’s markets. 2009 total lending climbed 13% per cent ($28 billion) to $250 billion. The bank helped many of its customers buy homes, increase their mortgage lending by nearly 21 per cent to US$58 billion. Stanchart helped small and medium enterprises –SMEs- start up and grow with an extra 14 per cent increase in lending to more than $13 billion. The Group continued to focus on the basics of good banking, keeping a tight grip on costs and risk control and maintaining a liquid and conservative balance sheet. Normalised cost/income ratio fell to 51.3 per cent from 56.1 per cent in 2008, although expenses rose slightly by 4 per cent vs 2008. Strong organic equity growth of over US$3 billion supplemented by a successful capital raising saw core tier 1 capital rise to 8.9 per cent, with total capital at 16.5 per cent. The advances to deposits ratio remains strong at 78.6 per cent, while continued action to de-risk the asset book positions us well to deal with any future economic uncertainty.

A clear strategic focus saw Wholesale Banking deliver another year of strong performance, with income up 24 per cent to US$9.29 billion and OPBT rising 36 per cent to US$4.08 billion. An ‘open for business’ approach to our client base throughout the financial crisis resulted in client income growing 22 per cent to US$6.88 billion, accounting for 74 per cent of all Wholesale Banking revenue. Client income growth was driven by the lending, corporate finance and financial markets businesses, coupled with an expansion in product capability and increased cross-selling opportunities. Own account income climbed 30 per cent, on the back of ALM and leveraging client flows, particularly on the back of intra-day credit and commodity trading.

Consumer Banking continued its repositioning strategy to build longstanding and multi-product relationships with customers. Further investment in the branch network, marketing and relationship management capability helped build a strong foundation for growth. While full year income and OPBT fell due to margin compression, business performance showed positive momentum through the year, delivering progressively stronger performance with income climbing every quarter. Deposits grew 11 per cent, while customer lending climbed 17 per cent as we took market share from competitors. Mortgage lending also rose by 21 per cent, whilst retaining a low average loan-to-value of around 50 per cent. Income and profit climbed strongly during the second half – income rose 10 per cent H209 vs H109, whilst OPBT climbed 49 per cent in the same period. Wealth Management products also delivered strong fee income, climbing 35 per cent from the first quarter of 2009 to the last.

Loan impairments for both Consumer and Wholesale banking showed a significant reduction during second half of the year. Consumer Banking loan impairments fell 13 per cent H2 vs H109, whilst Wholesale Banking loan impairments declined 19 per cent in the same period.

Markets showed strong performance in 2009, reinforcing the underlying strength of our business footprint. Hong Kong, Singapore, Korea, India and the UAE individually delivered income of over US$1 billion. India produced profits in excess of US$1 billion for the first time, supporting our intention to list IDRs during 2010 in this critical market. On the back of increasing Asian inward investment the Africa region produced very strong growth, with income climbing 20 per cent to over $1 billion, and profits climbing 54 per cent.

Africa also recorded an excellent set of numbers in 2009: income growth increased by 20% to $1.09billion and operating profits increased by 54% to $482million. Both our Consumer and Wholesale Banking businesses showed very good momentum, recording double digit, broad based income growth. Wholesale Banking delivered an exceptional performance, growing income by 30 per cent and deepening client relationships across the region. Consumer Banking growth was driven by SME and Wealth Management, whilst liability products have benefitted from the flight to quality in the wake of the financial crisis.

Peter Sands, Group Chief Executive, Standard Chartered says “2009 was the seventh consecutive year when we produced record income and profits. The bank has used its strong capital and liquidity position and its increasingly powerful brand to capture market share from competitors and to deepen relationships with customers and clients. We enter 2010 with real resilience and momentum.”

Commenting on the Africa results, Mike Hart, Regional Chief Executive Officer, Africa, says “Africa recorded extremely strong income and profit growth in 2009, driven by an exceptional performance in our Wholesale Banking business. Across the region we remain in a position of strength- our balance sheet remains in very good shape with liquidity closely managed, whilst the investments we have made in our distribution channels, in our products, our services, our people and our systems are realising immediate value. We continue to differentiate our brand and have confidence in our strategy for long-term, sustainable growth”.

Brian Mwale

“NON REMITTANCE OF DOMESTIC WORKERS’ CONTRIBUTIONS TO ATTRACT PENALTY’ NAPSA MANAGER SAYS.

Domestic workers are now formally recognised through preparation for their retirement packages by remittance of monthly contributions by their employers. Employers failing to do so are likely to face punitive measures.

The National Pension Scheme Authority (NAPSA) has warned of stiff penalties for employers who do not remit contributions to the authority for their domestic workers. NAPSA Lusaka area Manager, Tapeya Phiri says it is a requirement for every worker to contribute to NAPSA. He notes that most people that have employed domestic workers have not registered them with the authority hence not contributing.

Mr. Phiri has also urged domestic workers to demand that they are registered to safeguard their future. He was speaking at a one day employer/employee seminar in Lusaka’s Chongwe District. And NAPSA inspector, Gideon Situmbeko, has urged employees to report employers who do not remit NAPSA contributions. He says the law provides for penalties against employers who do not remit contributions.

Brian Mwale.

HIGH LENDING RATES AFFECT ZAMBIAN SHOEMAKER’S EXPANSION

A local shoe maker can not hire more employees to expand his business because banks have not made it easy for him to access funds. For many Zambian Small and Medium Enterprises –SMEs- interest rates ranging from 25% to 30% on loans by banks are scaring them to borrow money for expansion.

A Zambian Shoe maker has called on the Bank of Zambia –BOZ- to regulate banks so as to enhance access to funds by Small and Medium Enterprises –SMEs-. Kingsley Mwewa who operates his workshop in the Zambian Capital, Lusaka says many local banks do not have a provision for SMEs to borrow money. He says banks’ requirements for one to get a loan are too harsh for businessmen like him. “I have tried to get a loan from the bank but I can not afford the collateral which they are asking for,” says Mwewa. Mr. Mwewa’s story is like that of many business people in the country.

Their operations are going through stagnation because of what they term being sidelined by giants in the financial sector. Meanwhile Bankers Association of Zambia –BAZ- says its members have attached stringent measures toward loans because many SMEs have defaulted in the past. Association Vice Chairperson Mizinga Melu says the core of banks is to make a profit hence defaulters force institutions out of business. “ Statutory measures by government have greatly affected our rates hence many banks still find it difficult to reduce their rates compared to other countries in the region,” she says.

Could Islamic banking aid SMEs?

The Central Bank says the country lacks competition in the banking sector to force the rates downwards. BOZ Governor Caleb Fundanga further adds recovering of loans from borrowers who fail to pay back through the Credit Reference Bureau will help in lowering interest rates. “The introduction of Islamic Banking which does not provide for borrowers to pay interest on loans would work well in Zambia. However the Bank of Zambia can only facilitate for this if an interested firm requests for its registration,” Dr. Fundanga says.

And Private Sector Development Association –PSDA- President Yosouf Dodia says high interest rates are retrogressive on economic development. He says the SMEs are the economic drivers of Zambia hence need to be considered in access to finance. “More than 80% of the employed population in Zambia is in the informal sector which is being run by SMEs.” Brian Mwale