COPPERBELT RESILIENCE IS CRUCIAL, SAYS STANBIC

Stanbic has challenged stakeholders to use the current downturn in mining caused by COVID-19 to envision an economy that is not mineral-dependant

LUSAKA, ZAMBIA – The Copperbelt’s pivotal role as a driver of the nation’s economy holds the key to its resilience and recovery, according to Stanbic Bank Zambia.

The country’s biggest bank by assets focused on the province in this week’s episode of its popular Anakazi Online Conversations webinar, where it applauded the country’s resilience in the face of the economic headwind from a weakening currency and depressed mining sector amid COVID-19.

However, despite the successes achieved across the broader economy, the mining industry remains among one of the worst affected by the pandemic.

When the virus broke out in Zambia in March this year, the mining sector was already plagued by several issues including low copper prices, with some key players going through liquidation and others placing their investments on care and maintenance.

“COVID-19 only compounded the stresses the mining sector was already struggling through,” explained ECB Legal Practitioners Senior Partner Elijah Banda State Counsel.  

“While this may be true for other industries as well, seeing that the country was going through an economic downturn, the key difference lies in the fact that the mining industry anchors the country’s entire economy. It is responsible for 75 percent of Zambia’s total export earnings thus its struggles are more keenly felt.”

Mr Banda, who was speaking on the first Copperbelt-based episode of Stanbic Bank’s Anakazi Online Conversations, noted that the negative impact of the mines’ downturn rode on the sector’s multiplier effect to impact the wider economy.

“Businesses on the Copperbelt have borne the brunt of the extractive sector’s downturn in a kind of reverse multiplier effect.  

“As the mine’s struggle, businesses on their supply chain suffer, with many forced to scale back operations or close entirely – which in turn affects other businesses further down the supply chain and eventually ends up impacting the provincial and national economy, which comes back around to exacerbate stresses being experienced by mines. It really is a vicious cycle.”

Earlier this year, the Zambia Chamber of Mines submitted a three-phase economic plan to government as it scrambled to save the sector. The proposal outlined immediate relief measures that could be implemented to not only prop up the mines but also suggest a fiscal system that would help rebuild the economy.

And Stanbic Bank Zambia, Business Commercial Banking Relationship Manager Nchimunya Namakanda said that while the country had shown commendable adaptability and economic endurance during the outbreak, the hits it has taken in the mining sector are certain to have a significant impact on economic growth.

“The IMF recently forecast a 3.5 percent contraction in the local economy by close of 2020 because of the effects of COVID-19 and a severe power shortage,” he said. 

“To ease some of the pressure off the mines, government suspended import duty on concentrates along with export duty on precious metals. Sadly, these relief measures have hardly made a dent in the sector’s overall outlook as it continues to be afflicted by endless troubles. The focus for now appears to be the need to ensure the mining and the general economy stay above water through the crisis.”

Mr Namakanda noted that despite the negativity that came with the mining sector’s downturn, it presented a unique opportunity for the country to ‘practice’ operating an economy that did not depend so heavily on mineral exports.

He said that the country could use the lessons learned from using innovative solutions to adapt to the new normal to accelerate its diversification agenda. 

“Copper has always been our go-to export commodity – a situation that has left us extremely vulnerable to changes in the metal’s frequent price shifts.

“The current downturn in the sector coupled with disruptions caused by COVID-19 present a great opportunity for Zambia to bring non-traditional sectors to the fore and ease our reliance on the red metal. Since the virus’ outbreak, the country has demonstrated a remarkable knack for innovation to see itself through the new normal.

“We must find a way to build on this momentum of innovation to think outside the box and develop an economy that is not heavily reliant on copper. The current disruptions in the mining sector and COVID-19 are giving us a chance to hone our innovation skills and ability to thrive when pushed outside our comfort zones.

“Let us imagine a Zambia without copper and abundant mineral resources. If the industry collapsed next week, how would we sustain our economy? What industry would we turn to, to replace copper’s revenue? These are the questions we need to be asking ourselves if we are to realise the economic diversification dream.

“If indeed ‘fire is the test of Gold,’ then the adversity the economy is facing could be used as a tempering agent to refine our innovative spirit and bring our true potential as one of Southern Africa’s most important economic hubs to the fore.

“By aiming to thrive despite the pandemic as opposed to after it, we will be all the better for it once the virus is abated and key economic indicators start to improve.”

The full Anakazi Online Conversations webinar is at: https://www.facebook.com/stanbicbankzambia/posts/2634216133573490

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About Stanbic Bank Zambia

Stanbic Bank Zambia is part of the Standard Bank Group, Africa’s largest bank by assets.

Standard Bank Group reported total assets R2.3 trillion (about USD163 billion) at 31 December 2019, while its market capitalisation was R277 billion (USD20 billion).

The group has direct, on-the-ground representation in 20 African countries and in 5 global financial centres. Standard Bank Group has more than 1 100 branches and 9 000 ATMs in Africa, making it one of the largest banking networks on the continent. It provides global connections backed by deep insights into the countries where it operates.

Stanbic Bank Zambia is the largest bank in Zambia by balance sheet and provides the full spectrum of financial services. Its Corporate and Investment Banking (CIB) division serves a wide range of requirements for banking, finance, trading, investment, risk management and advisory services. Corporate and Investment Banking delivers this comprehensive range of products and services relating to: investment banking; global markets; and global transactional products and services.

Standard Bank’s corporate and investment banking expertise is focused on industry sectors that are most relevant to emerging markets. It has strong offerings in mining and metals; oil, gas and renewables; power and infrastructure; agribusiness; telecommunications and media; and financial institutions.

Stanbic Bank Zambia’s Personal and Business Banking unit (PBB) offers banking and other financial services to individuals and small-to-medium enterprises. PBB serves the increasing need among Africa’s small business and individual customers for banking products that can meet their shifting expectations and growing wealth.

For further information, go to http://www.stanbicbank.co.zm/

Gillian Langmead at Langmead & Baker Ltd;

+260 979 060705;

[email protected]