23 DEAD, RUTO STAGGERS BACK, WITHDREW TAX HIKES

 

Kenyan President William Ruto has withdrew planned tax hikes, bowing to pressure from protesters who had launched demonstrations across the country.

This is coming after a week-old, youth-led protest that grew from online condemnation of the proposed taxes on bread and diapers and evolved into a nationwide movement calling for the scrapping of the entire finance bill including the taxes.

Thousands took to the streets of Nairobi and several other cities during two days of protests last week as the online movement gathered momentum.

Ruto announced he would not sign a finance bill including the tax increases, a day after clashes between police and protesters at the assembly and nationwide left at least 23 people dead and scores wounded, according to medics.

The International Monetary Fund who are part of the blamed entities  said on Wednesday that it was closely monitoring the situation and was deeply concerned about the unrest.

 The IMF is urging the Kenyan government to cut deficits to obtain more financing.

According to Reuters,  there were documented protests in at least 35 of Kenya's 47 counties, from big cities to rural areas - even in Ruto's hometown of Eldoret in his ethnic Kalenjin heartland.

Starlink's Affordable Pricing Shakes Up Kenya's Data Market

 Elon Musk's satellite internet venture, Starlink, is making waves in Kenya's data plan landscape with it's new offerings seeking to give competitors a run of nightmares.

The company's aggressive pricing strategy has disrupted the market, offering a 50GB monthly data package at an astonishingly low price of Ksh1,300 ($10.16). 

Starlink's 50GB package at Ksh1,300 directly challenges Airtel's similar offering priced at Ksh3,000, as Airtel, a major player in the Kenyan telecom sector, now faces fierce competition.

Also, Safaricom, the current dominant player in Kenya, has a 45GB package at Ksh2,500, is also feeling the heat as the scale continues to tilt in favour of starlink..

   Presently, the combined market share of Safaricom and Airtel stands at a staggering 95.2%, but pundits says this figure may see a drastic cut down within the next few months.

 However, while Starlink's pricing is enticing, there's a caveat. Subscribers must invest in installation hardware, which comes with an upfront cost of Ksh45,500. This hardware requirement sets Starlink apart from the traditional telcos, where users activate a SIM card without additional expenses.

Volkswagen Reveals Plans to Invest $5bn into TESLA rival RIVIAN

German car making giant Volkswagen (VW) says it has plans to invest up to $5bn in Tesla rival Rivian, to create a joint venture that will allow both companies share expertise.

This news triggered the market, and Rivian shares jumped by almost 50% following the announcement.

 

Under the agreement, VW said it will initially invest $1bn in the electric truck and SUV maker, with another $4bn to be put into the company by 2026.

Founded in 2009, Rivian has not yet posted a quarterly profit. In the first three months of 2024 the company saw a net loss of more than $1.4bn.

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The partnership will give VW immediate access to Rivian's software allowing the German car maker to use it in its cars.

China's Tsingshan $1bn steel plant in Zimbabwe starts production.

In a significant move that underscores China's growing influence in Africa, Tsingshan Holding Group, a titan in the nickel industry, has officially commenced operations at its state-of-the-art $1 billion steel plant in central Zimbabwe. 

The inauguration of the plant, known as Dinson Iron and Steel Company (DISCO), was announced by project director Wilfred Motsi on Thursday. 

The facility is poised to produce an impressive 600,000 metric tons of carbon steel annually  during its initial phase. This ambitious production target is a testament to Tsingshan's commitment to bolstering Zimbabwe's industrial capabilities and contributing to the nation's economic development³.

DISCO has already begun producing pig iron, a crucial raw material for steel manufacturing. By July, the company plans to transition to the production of actual carbon steel, marking a significant milestone in the plant's operational timeline³. While the duration of the first phase has not been disclosed, it is expected to set the stage for future expansions and technological advancements.

Tsingshan's investment in Zimbabwe extends beyond the steel plant. The conglomerate has also established operations in ferrochrome, coking coal, and lithium mining within the country. These ventures are part of Tsingshan's broader strategy to diversify its portfolio and tap into Africa's rich mineral resources¹.

In addition to its industrial pursuits, Tsingshan has demonstrated a commitment to sustainability by constructing a **50 megawatt thermal power plant** at the Dinson site. This facility will not only support the steel plant's energy requirements but also contribute 20% of its electricity needs through gas produced by its furnace³. Moreover, Tsingshan is exploring renewable energy options by planning to build a solar power plant, which will help mitigate the impact of Zimbabwe's frequent electricity shortages on its operations³.

As Tsingshan continues to expand its footprint in Africa, it is set to play a pivotal role in shaping the continent's industrial landscape.

Nigeria Ignites Energy Revolution with $550M Gas Processing Powerhouse"

With a keen vision to enhance its gas export capabilities and bolster domestic supply, Nigeria's NNPC Ltd has joined forces with TotalEnergies to funnel $550 million into the development of a state-of-the-art gas processing hub in Rivers State.

According to insider report,  this ambitious project, which includes the construction of a processing plant and an accompanying pipeline, is set to be erected on the Ubeta onshore gas field—a venture co-owned by Total and NNPC.

The facility promises to be a game-changer for Nigeria, which sits atop the continent's most abundant natural gas reserves, yet has historically flared gas due to infrastructural and financial limitations. 

With the capacity to churn out 350 million standard cubic feet of gas and 10,000 barrels of associated liquids daily, this investment is a beacon of progress for President Bola Tinubu's efforts to draw investors to Nigeria's energy landscape.

Sanlam Secures Strategic Stake in MultiChoice Insurance for $66M

Pursuing it's expansion objectives, South African leading insurer Sanlam has acquired a 60% share in MultiChoice's insurance division,  While MultiChoice retains a 40% stake in the venture.

 According to a Reuters report, the parties have agreed on a deal with an upfront payment of 1.2 billion rand (approximately $66 million), along with a potential performance-based earning up to 1.5 billion rand.

The agreement stipulates a potential earn-out based on the insurance business's performance, specifically the gross written premium by the end of 2026. Additionally, a pre-acquisition dividend of 59 million rand is set to be distributed by MultiChoice's insurance arm.

According to report, the collaboration will leverage on Sanlam's robust African network and proven success in similar partnerships, while paving the way for broader financial service offerings across Africa, facilitated through its SanlamAllianz enterprise. 

According to business Africa analysts 

MultiChoice's vast customer base spanning 21 million households over 50 African nations and Sanlam's operations across 31 countries, will make the deal a strategic win-win for both entities in the continent's burgeoning insurance market.

Following the announcement, Sanlam's shares surged by nearly 5%, with MultiChoice experiencing a modest increase.

Another EV Trailblazer Fisker Hits Financial Snag, Opts for Bankruptcy.

As the EV industry grapples with the realities of s failing market, another giant in the Electric Vehicle landscape, Fisker Inc., has declared bankruptcy amidst a dire cash crunch.

According to a Reuters report,  the company's ambitious "Ocean" SUV delivery efforts in the U.S. and Europe led to its financial downfall.

Despite manufacturing over 10,000 vehicles in 2023, Fisker only managed to deliver around 4,700 units. Henrik Fisker's brainchild signaled distress earlier this year, with failed investment negotiations from a major automaker—identified by Reuters as Nissan—precipitating a strategic pullback.

However, Fisker's Tuesday statement revealed market pressures and economic challenges as culprits for its operational inefficiencies. The firm is now pursuing asset sales under Chapter 11 and seeking debtor-in-possession financing.

With assets and liabilities estimated between $500 million to $1 billion, Fisker Group Inc's bankruptcy filing in Delaware lists 200-999 creditors.

Going forward, The company has paused production and future investments, pending an automotive partnership, alongside a workforce reduction of 15%.

Notably, the EV industry has been marred by bankruptcies, with companies like Proterra and Lordstown succumbing to financial strains and supply chain woes.

 Fisker's regulatory entanglements have further complicated its stability as the current regulatory probes into its vehicles add to the company's uncertain future.

Ethiopia Opens Banking Sector to Global Investors

In a landmark decision poised to reshape its financial landscape, Ethiopia has embarked on a significant economic liberalization effort. The cabinet has greenlit a bill that will permit foreign banks to establish local subsidiaries and enable international investors to hold stakes in Ethiopian financial institutions. This move, as reported by Reuters, marks a pivotal shift for one of Sub-Saharan Africa's largest economies, which has been largely insulated from foreign banking influence for decades.The Ethiopian government's strategy to open its doors to global financial players is a clear signal to the world's investors: Ethiopia is ready for business.

With a population exceeding 100 million, the nation's untapped market potential has long been recognized, and now, the path is set for foreign capital to flow into its burgeoning economy.

Under the new legislation, which awaits parliamentary approval, well-established and financially robust foreign banks may opt to either fully or partially own Ethiopian bank subsidiaries. They may also consider opening branches, representative offices, or acquiring shares in existing banks. A notable aspect of the bill stipulates the inclusion of Ethiopian residents, who are not shareholders, on the boards of these foreign bank subsidiaries.

To maintain a balanced financial ecosystem, the bill introduces caps on foreign ownership. Specifically, the collective foreign stake in any Ethiopian bank is limited to 40%, with direct strategic investments restricted to a 30% shareholding.

The central bank of Ethiopia has lauded these reforms as a foundational step towards fostering growth and reinforcing the pillars of credibility, accountability, transparency, and governance within the National Bank of Ethiopia.

Currently, the Ethiopian banking sector is led by the state-owned Commercial Bank of Ethiopia, with a total of 29 local entities in operation. In a forward-looking move, the central bank announced last May its intention to issue up to five banking licenses to foreign investors over the next five years, signaling a new era of financial inclusivity and international cooperation.

Cocoa Trade Reform: Ivory Coast to Phase Out 80% of Middlemen by 2024/25"

The Ivory Coast is on the verge of a significant transformation in its cocoa market. The nation's cocoa authority is set to introduce a reform that will phase out the role of middlemen within the coming year. This initiative is designed to mitigate risks associated with the current system and to address the issue of overpayments.

The target of this reform is the group of intermediaries who currently operate as scouts and buyers, acquiring cocoa beans from remote farms and selling them to exporters. These middlemen are responsible for a substantial 80% of the cocoa volumes that reach the ports of Abidjan and San Pedro. In contrast, cooperatives handle only about 20% of these volumes.

Central to this reform is the implementation of a new traceability and certification system by the Coffee and Cocoa Council (CCC). This system is scheduled to be fully operational by October, marking the start of the 2024/25 cocoa season. It will introduce a digital payment mechanism that covers all sales and purchases of cocoa beans, directly linking farmers with exporters.

Arsene Dadie, the CCC's director of domestic marketing, has indicated that the new system will render the current intermediaries obsolete, as they will not be integrated into this digital framework. The system will be anchored by farmers' identification cards, which double as payment cards, and will primarily involve cocoa cooperatives as the sole intermediaries between exporters and farmers.

To date, the CCC has registered 1.05 million cocoa farmers and has issued approximately 900,000 identification cards, with around 800,000 already distributed. A pilot program involving 580 cooperatives and 22 exporters is currently testing the new sales system.

Dadie has emphasized that the rollout of the traceability system among cooperatives is happening concurrently with the distribution of the cards. This approach is expected to guarantee direct payments to farmers, eliminating the need for any intermediaries in the next cocoa season.

Moreover, the CCC is determined to reduce the influence of intermediary scouts and buyers by cutting down the number of permits available to them and imposing stricter regulations. Those who have been identified as contributors to the current overpayment issues will be barred from receiving permits. The CCC also plans to enforce stringent measures to better regulate the remaining permit holders.

The CCC has reported that approximately 40,000 metric tons of cocoa beans are currently being stockpiled by independent buyers, who are holding back deliveries to the ports and demanding prices up to 1,800 CFA francs per kilo, significantly higher than the official farmgate price of 1,500 CFA francs.

 This situation has led to a slowdown in the supply chain, compelling the CCC to temporarily suspend cocoa bean exports to ensure that local grinders can secure the volumes they need for production. The upcoming reforms are expected to address these challenges, paving the way for a more efficient and equitable cocoa industry in Ivory Coast.

Afreximbank Shell out $40m to Support Fidelity Bank's Move To Acquire Union Bank UK.

Nneka Onyeali-Ikpe,

Following its commitment to fostering African economic sovereignty, the African Export-Import Bank (Afreximbank) has disbursed a substantial US$40-million Intra-African Investment Facility to Fidelity Bank Nigeria Plc ("Fidelity"). 

This financial endorsement is aimed at bolstering Fidelity Bank's acquisition and subsequent recapitalization of Union Bank UK, a pivotal step in Fidelity's global growth strategy.

The facility, delivered in two US$20 million tranches, has played a crucial role in Fidelity's endeavor. The initial tranche facilitated a partial refinancing of Fidelity's complete acquisition of Union Bank UK's equity. The second tranche served as a capital reinforcement, approved by UK regulators, to bolster the bank's financial foundation.

This acquisition marks the genesis of a new pan-African banking titan, with Fidelity Bank now at the helm of providing comprehensive banking services across Africa and for Africans abroad.

Kanayo Awani

Kanayo Awani, Executive Vice President of Afreximbank, highlighted the significance of this disbursement as a reinforcement of African control over capital and a catalyst for intra-African trade and investment. 

"This transaction is a testament to our dedication to enhancing African trade and economic stability, and it aligns perfectly with our vision for a self-reliant Africa as outlined in Agenda 2063,"

Afreximbank's Bank Acquisition Strategy and Diaspora Strategy are at the core of this initiative, promoting the acquisition of financial assets by African entities and the economic integration of the African diaspora.

Dr. (Mrs.) Nneka Onyeali-Ikpe, MD/CEO of Fidelity Bank, expressed gratitude for Afreximbank's support, which has been instrumental in Fidelity's international growth and the creation of a scalable service franchise that will invigorate trade and diaspora banking.

The acquisition is set to be a boon for Africa's economic landscape, enhancing trade finance, fostering diaspora integration, and empowering small and medium-sized enterprises to scale up their export and manufacturing capabilities.

SOUTH SUDAN, ZIMBABWE AND LIBERIA TOPS GLOBAL FOOD INFLATION RATES, AS WORLD BANK RAISES SUPPORT TO $45BN

Following persistent food price inflation, the World Bank has taken decisive action, committing an unprecedented $45 billion to combat the global food crisis. This move comes as a response to the soaring inflation rates that have hit low- and middle-income countries the hardest, with over half of these nations reporting inflation above the critical 5% threshold.

The latest Commodity Markets Outlook from the World Bank reveals a complex picture: a general decline in food prices, yet marked by significant disparities within the sector. Notably, the food price index dropped by 9% from last year, but staple grains like maize and wheat saw price reductions, while rice prices climbed due to supply chain disruptions.

Compounding the issue are the trade policies enacted post-Russia's invasion of Ukraine, which have seen a spike in food and fertilizer trade restrictions. These measures have intensified the crisis, leading to a slew of export bans and limitations aimed at preserving domestic supplies.

The World Bank's financial infusion is set to bolster food and nutrition security across 90 countries, targeting 335 million individuals. The strategy encompasses immediate measures such as social protection and extends to long-term resilience building through climate-smart agriculture.

Key initiatives spotlighted in the report include projects in Honduras that foster rural entrepreneurship and food security, the Food Systems Resilience Program in Eastern and Southern Africa, and significant investments in Malawi and Madagascar to enhance agricultural commercialization and food system resilience.

With women constituting over half of the beneficiaries, the World Bank's efforts are not only addressing the immediate challenges of food insecurity but are also paving the way for a sustainable agricultural future, ensuring that the most vulnerable populations are not left behind.

By Ruth Macaulay.

AIRTEL KENYA EXPANDS 5G INFRASTRUCTURE, DOUBLES 5G ACCESS IN 12 MONTHS.

Airtel Kenya announced a major leap in its network expansion efforts, unveiling innovative Unlimited Home Broadband 5G Data Plans that promise to revolutionize the digital landscape.

Ashish Malhotra, the Managing Director of Airtel Kenya, highlighted the company’s remarkable growth trajectory since the introduction of its 5G network in mid-2023. Airtel has nearly doubled its 5G presence, a significant increase from the initial 372 sites across 16 counties. The telecom giant now boasts a robust network of over 690 5G sites, extending its reach to 39 counties and covering 285 wards, thereby cementing its commitment to #DigitalInclusion and #ConnectivityForAll.

This expansion not only marks Airtel’s dedication to providing cutting-edge technology but also underscores its role in fostering a digitally inclusive society. The new Unlimited Home Broadband 5G Data Plans are set to provide unparalleled internet access, supporting the growing needs of homes and businesses alike.

With the hashtag #5GNetwork trending, Airtel’s initiative is a testament to its vision of a connected future where unlimited data becomes a catalyst for innovation and growth. The company’s strides in network enhancement align with its mission to deliver seamless connectivity and empower customers with the freedom to explore the vast possibilities of the digital world.

CHINA'S EV GIANT POISE TO TAKE OVER SOUTH AFRICAN MARKET

BYD, China's leading EV manufacturer, is set to electrify South Africa's roads with a lineup of electric and hybrid vehicles. Already outpacing Tesla in sales, BYD's entry into the market has been marked by the affordable Atto 3 SUV and Dolphin hatchback.

With a 152% increase in global car exports, BYD's ambitions are clear. Plans for a local production plant could further boost its presence and economic impact in South Africa.

The company's trademark filings hint at exciting future offerings, including the BYD Seal sedan with a hybrid powertrain promising over 2,000km on a single charge and tank. The high-performance Yangwang U8 SUV and U9 hypercar showcase remarkable capabilities like water buoyancy and rapid acceleration, challenging luxury hypercar norms.

BYD's upcoming models, such as the Dolphin Mini hatchback and Tang SUV, signal a commitment to innovation and affordability. As BYD gears up for these launches, South Africa is on the brink of an automotive transformation.

Prolonged Power Outage: CTPD Demands Action on Zambia's Energy Crisis

(Isaac Mwaipopo, Executive Director of CTPD.)

Lusaka, June 10, 2024 – Amidst the ongoing severe load shedding plaguing Zambia, the Centre for Trade Policy and Development (CTPD) has voiced its concerns over the Ministry of Energy's lack of communication regarding the escalating energy sector challenges. The silence from the Ministry has raised alarms among citizens, businesses, and stakeholders who are facing widespread disruptions.

The erratic power supply has thrown daily life and economic activities into chaos, with many households enduring extended power outages that have significantly diminished their quality of life. Businesses, both small and large, are finding it increasingly difficult to sustain operations, resulting in economic setbacks and a climate of uncertainty.

The economic landscape of Zambia is already under strain, and the current energy crisis only exacerbates the country's unattractiveness for business ventures.

CTPD emphasizes the urgency for the Minister of Energy to step forward and address the public and business sector, providing clarity on the ongoing electricity debacle and outlining sustainable solutions for both the immediate and distant future.

The organization expresses its disappointment in the Minister's choice to remain mute on the matter, especially when the public is eager for updates on the status and efficacy of the numerous Independent Power Purchase Agreements signed by ZESCO in the past three years. Questions linger about the actualization of these agreements and their tangible benefits to the nation.

In a call to action, CTPD urges the Ministry to exhibit decisive leadership and appeals to President Hakainde Hichilema to evaluate the performance of his Cabinet Ministers. During these challenging times, it is crucial for the public to be reassured by leadership that instills confidence and provides clear direction.

By Ruth Macaulay

Nigeria's Power Play: A $1.15 Billion Bid to Electrify the Future

(Minister of Power, Adebayo Adelabu)

 Pursuing a transformative shift in Nigeria's energy landscape, the nation stands on the precipice of a historic transaction—the sale of five pivotal power plants, poised to inject a staggering $1.15 billion into the economy. This strategic sale is not merely a transaction but a cornerstone of the government's ambitious blueprint to revitalize the energy sector, enhance operational efficiency, and magnetize private capital.

The conclusion of the bidding process heralds a pivotal juncture in Nigeria's quest to remedy the persistent power deficits that have long shackled its economic potential. Adebayo Adelabu, the Minister of Power, has confirmed the culmination of the bidding process, with a comprehensive report now resting in the hands of the National Council of Privatisation (NCP). The council, chaired by the astute Kashim Shettima, Nigeria’s Vice President, is poised to unveil the preferred bidders in a forthcoming session.

While speaking at a recent power conference, Minister Adelabu articulated the government's vision thus:

"The forthcoming NCP assembly will be the stage where we unveil the architects of our energized future," he declared."

"These assets are more than mere revenue generators for our governmental tiers; they are the catalysts for heightened efficiency within our power corridors."-Adebayo

The quintet of power plants at the epicenter of this deal includes the 434-megawatt Geregu II gas-fired colossus in Kogi, the 451MW Omotosho II in Ondo, and the 750MW Olorunsogo II in Ogun State. 

Complementing this trio are the 563MW Odukpami powerhouse in Calabar, Cross River State, and the 451MW Benin-Ihovbor plant in Edo State.

The financial contours of the deal sketch a picture of strategic investment: the Benin-Ihovbor plant, boasting five power-generating turbines, commands a price tag of $420 million. The Calabar Odukpami plant is valued at approximately $260 million, while the Geregu plant's four turbines have set the bar at $215 million. the Omotosho plant, with its quartet of turbines, is on the block for an estimated $85 million; the Olorunsogo National Integrated Power Project (NIPP), also housing four turbines, rounds out the offering at $170 million.

Kashim Shettima

As Nigeria stands at the threshold of this monumental energy overhaul, the world watches the nation's commitment to a brighter, electrified future.

By Ruth Macaulay

IFC Unveils $8B Boost for Global MSMEs, Targets Women and Eco-Businesses

(Makhtar Diop, IFC MD)

In a bold move to bridge the financing chasm for micro, small, and medium enterprises (MSMEs), the International Finance Corporation (IFC) has rolled out an ambitious initiative. The MSME Finance Platform, backed by a hefty $4 billion from IFC's coffers, is set to channel funds into the hands of small businesses in developing markets, with a special nod to women entrepreneurs and eco-conscious ventures.

This financial lifeline, open to both new and existing IFC clients, is not just about direct funding. It's a multi-layered strategy that includes credit enhancements and a pioneering **Catalytic First Loss Guarantee** to entice another $4 billion from private financiers. The goal? To amplify lending to these vital yet underserved businesses.

Makhtar Diop, IFC's Managing Director, underscores the critical role MSMEs play in developing economies and the significant hurdles they face. The new platform is IFC's answer to these challenges, offering a much-needed boost, particularly to women-led and environmentally focused enterprises.

Despite MSMEs being the lifeblood of global economies—making up over 90% of all firms and contributing significantly to employment and GDP—they grapple with a staggering $5.7 trillion financing gap. The IFC's initiative is a timely intervention as financial service providers in emerging markets reel from recent crises, struggling with stringent lending norms and a risk-averse climate.

Leveraging its risk capital, IFC is extending first loss protection to financial service providers, encouraging them to tap into local currency liquidity and invest in MSMEs

. The platform also benefits from the support of the International Development Association's Private Sector Window (IDA PSW), which offers up to $100 million to mitigate credit and foreign exchange risks in low-income countries.

The IFC, a World Bank Group pillar, is the largest global development institution focusing on the private sector in emerging markets. With a record $43.7 billion commitment in fiscal year 2023, IFC continues to harness private sector dynamism to eradicate extreme poverty and promote shared prosperity amid ongoing global crises.

For more details on IFC's initiatives and partnerships, including the IDA Private Sector Window, the Global SME Finance Facility, and Goldman Sachs 10,000 Women, visit www.ifc.org.

EU Visa Rejections: A €56.3mn Blow to African Ambition

In a stark reminder of the barriers to global mobility, a staggering 43.1% of African visa applications to the EU were rejected in 2023, resulting in a whopping €56.3mn in fees paid by aspiring travelers, students, and entrepreneurs. This figure is set to balloon with the impending EU visa fee hike from €80 to €90, effective June.

 Algeria tops the list of rejected nations, with a staggering 46% of its 392,053 applications refused. Guinea-Bissau, Nigeria, Ghana, Senegal, and Mali follow closely, with rejection rates ranging from 42% to 45.2%.

This trend spells trouble for African businesses, innovators, and talent seeking to tap into the EU market. The visa bottleneck stifles trade, investment, and knowledge sharing, ultimately hindering economic growth and collaboration.

Industry leaders are now calling for a more inclusive and streamlined visa process, one that acknowledges the vast potential of African nations and facilitates mutually beneficial exchange.

As the EU reconsiders its visa policies, one thing is clear: the future of global business depends on our ability to break down barriers and unlock the flow of ideas, talent, and capital.

IMF Reaches Staff-Level Agreement with Zambia on $1.7 Billion Loan Package

Situmbeko Musokotwane
Zambian Finance Minister

In a move aimed at stabilizing Zambia's economy amid severe drought and macroeconomic challenges, the International Monetary Fund (IMF) has reached a staff-level agreement with the African nation on a $1.7 billion loan package.

The agreement, which is subject to IMF Management approval and Executive Board consideration, will provide Zambia with immediate access to $433 million once approved. The loan is an augmentation of the IMF's existing $1.3 billion support package approved in August 2022.

Zambia's economy has been hit hard by a severe drought, which has led to a contraction in agriculture production, power outages, and a slower recovery in copper production. The 2024 outlook has worsened, with GDP growth now projected at 2.3%, down from 4.6% forecast in December 2023.

To address these challenges, the Zambian authorities have committed to implementing a range of reforms, including:

- Reprioritizing spending to accommodate emergency relief for vulnerable households

- Maintaining fiscal prudence and considering additional domestic revenues

- Tightening monetary policy to curb inflation

- Implementing structural reforms to promote private sector development and economic diversification

The IMF staff team, led by Mercedes Vera Martin, held in-person discussions with Zambian authorities in Lusaka from April 24 to May 7, with virtual discussions continuing subsequently.

The agreement is a significant step towards stabilizing Zambia's economy and restoring sustainability. The IMF staff team praised the authorities for their constructive dialogue and strong cooperation in finalizing the reform package.

A Board meeting is expected by the end of June to finalize the agreement.