VZCZCXRO5494
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLS #1721/01 3621244
ZNR UUUUU ZZH
R 281244Z DEC 06
FM AMEMBASSY LUSAKA
TO RUEHC/SECSTATE WASHDC 3705
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

UNCLAS SECTION 01 OF 02 LUSAKA 001721 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV SENV PGOV ZA
SUBJECT: ZAMBIA-DECEMBER ECONOMIC NEWS ROUNDUP 
 
REFS: LUSAKA 1591 
 
¶1. SUMMARY OF TOPICS 
 
-- Legacy Holdings project proposal gets partial OK 
-- SME market on Lusaka Stock Exchange? 
-- MOFNP releases Medium Term Expenditure Framework 
-- Lilayi Housing construction to begin in early 2007 
-- Credit reference agency to open in 2007 
-- ECZ finds KCM liable for pollution, orders cleanup 
-- ZNCB reduces base lending rate 
 
Legacy Holdings project proposal gets partial OK 
 
¶2. The Environment Council of Zambia (ECZ) announced on December 13 
that it approved only part of the massive tourism project in 
Mosi-oa-Tunya, the country's smallest national park, near 
Livingstone and Victoria Falls, proposed by the South Africa-based 
Legacy Hotels group (Reftel).  The ECZ approved the construction of 
two five-star hotels on the northern--rather than the proposed 
southern--part of the Maramba River.  The ECZ noted that the 
southern part of the Maramba River is an ecologically sensitive area 
and a major animal corridor, and it rejected outright the proposed 
construction of an 18-hole golf course and 450 golf villas, because 
of the national park's small size and the anticipated ecological 
disruption.  The Chairman of Legacy Holdings Zambia (LHZ) later told 
local media that the project was being redesigned in line with the 
ECZ approval, and that LHZ would proceed with the construction of 
the two hotels. 
 
Source: The Post, December 14 and December 26 
 
SME market on Lusaka Stock Exchange? 
 
¶3. Acting Managing Director of the Lusaka Stock Exchange (LuSE) 
Francis Kakinga told participants in a December 8 USAID-supported 
workshop on access to agricultural credit that the LuSE is 
considering establishment of an alternative market to list Small and 
Medium Enterprises (SMEs).  By offering lower listing and 
registration fees, such a market will offer SMEs a way to raise 
financing at competitive rates.  Kakinga also noted that the LuSE is 
looking into establishing a commodities trading market. 
 
Source: Kakinga's presentation on December 8, and the Post, December 
13 
 
Ministry of Finance and National Planning releases Medium Term 
Expenditure Framework 
 
¶4. Secretary to the Treasury Evans Chibiliti released the GRZ's 
2007-2009 Medium Term Expenditure Framework (MTEF) in the run-up to 
the President's presentation of the full budget in early 2007.  The 
MTEF provides a context and framework for the budget and puts total 
2007 spending at 11 trillion Kwachas (USD 2.75 billion).  Its stated 
macroeconomic objectives are to: accelerate pro-poor economic 
growth; stabilize inflation at the single-digit level; achieve 
financial and exchange rate stability; and sustain a viable balance 
of payments and external and domestic debt position.  The MTEF also 
spells out the GRZ's intention to generate more revenues through tax 
policy and administration reforms, but it provides no detailed plan. 
 It notes anticipated increases in tax collection from Kw 6.6 
trillion in 2006 to Kw 7.7 billion in 2007. 
 
Source: Medium Term Expenditure Framework document 
 
Lilayi Housing construction to begin in early 2007 
 
¶5. Construction of 5,000 housing units by Lilayi Development 
Holdings in a southern Lusaka location will begin in early 2007. 
The Lilayi Housing project consists of seven phases to be carried 
out over about five years.  Stanbic Bank is providing 15 year 
mortgages for buyers, and USAID and OPIC are providing technical 
support, credit guarantees and financing for the project. 
 
Source: The Post, December 18 
 
Credit reference agency to open in 2007 
 
¶6. Sherry Thole, president of the Bankers Association of Zambia, 
announced that Zambia's first credit reference bureau would open in 
January 2007, and would be run by the Credit Reference Bureau of 
Kenya.  Banks and other financial institutions will share 
information on clients' borrowing and repayment records.  Such data 
will be of value to lenders as they evaluate creditworthiness of 
potential borrowers. 
 
Source: The Post, December 20 
 
ECZ finds KCM liable for pollution, orders cleanup 
 
¶7. The Environmental Council of Zambia (ECZ) ordered Konkola Copper 
Mines (KCM) to carry out clean-up and other measures to address the 
 
LUSAKA 00001721  002 OF 002 
 
 
pollution caused by a broken pipe and an acid spill from KCM's 
tailings leach plant (Ref B).  The ECZ found KCM liable for 
polluting the Kafue River in November 2006, and opted to order KCM 
to take remedial measures rather than to pursue criminal charges 
against KCM. 
 
Source: Daily Mail, December 23 
 
ZNCB reduces base lending rate 
 
¶8. The Zambian National Commercial Bank announced in a press release 
that it would reduce its base lending rate from 20 to 15 percent, 
effective January 1, 2007, making its base rate "the lowest on the 
market," and demonstrating the bank's "commitment to national 
development by providing affordable finance to productive sectors of 
the economy.  In a media briefing on December 27, Bank of Zambia 
Governor Caleb Fundanga noted that "interest rates are still high." 
He commended the ZNCB decision and said "I hope all the commercial 
banks will look at revising their interest rates in the coming 
year." 
 
Source: The Post, December 27 and 28. 
 
MARTINEZ