Debt and pandemic are a double whammy for Zambia

People await for food distribution in Simumbwe, Zambia. (AFP)
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Updated 31 December 2020
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Debt and pandemic are a double whammy for Zambia

  • In mid-October, Zambia missed the deadline to honor a payment of $42.5 million due on a bond worth $750 million, which matures in 2022

LUSAKA: For days on end, Mildred Mwenya has not seen so much as the shadow of a customer in her pharmacy in the Zambian capital Lusaka.

Today, her stomach was as empty as her premises. She had been unable to afford breakfast before coming to open the store.

She is one of a growing number of victims in Zambia of a double hit — a macro-economic crisis combined with the coronavirus disease (COVID-19) pandemic.

“When we come for work, we have no customers and not even food to eat for the morning,” says Mwenya, from behind her counter.

“When you go to order goods and the following day the prices increase, business is bad,” she explains.

A landlocked country in southern Africa, and the world’s second-largest copper producer, Zambia has been lashed by a plunge in commodity prices.

Starved of income, the government announced in mid-November that the country would no longer pay creditors — and the prices of basic goods began to rise.

The nation of 17 million people has a foreign debt estimated at nearly $12 billion, half of which comes from private creditors. Much is owed to China.

In mid-October, Zambia missed the deadline to honor a payment of $42.5 million due on a bond worth $750 million, which matures in 2022.

The global rating agency Standard & Poor’s relegated the country to the “selective default” category.

Once classified as a defaulter, a country undergoes penalties that further increase the cost of servicing its debts, said economist Mambo Hamaundu.

“You won’t have money to buy medicines in hospitals, chalks for our schools, because more money would have moved away from the treasury,” Hamaundu says. “If there is no money in the treasury the ordinary citizens will suffer.”

“This will mean that sectors like health, agriculture and education will be affected,” said Nalucha Ziba, country director for the charity ActionAid.


Egypt annual inflation rate slows to 26%

Updated 12 sec ago
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Egypt annual inflation rate slows to 26%

RIYADH: Energy price rises led Egypt’s September inflation rate to reach 26 percent, although this is a significant reduction from the 40.3 percent recorded in the same month of 2023. 

According to the nation’s Central Agency for Public Mobilization and Statistics, Egypt’s general consumer price index reached 236.5 points, a 2.3 percent increase from August. 

Electricity, gas, and other fuels saw a substantial increase of 14.9 percent, adding further pressure on household expenses. 

Other contributors to the inflationary pressure included a 0.7 percent rise in cereals and bread and similar surges in meat and poultry. 

The prices of fish and seafood increased by 1.7 percent, while dairy products, cheese, and eggs saw a 2.8 percent rise. 

The vegetable category recorded a significant jump of 12.4 percent, and the cost of fruits rose by 1.7 percent. 

Additionally, sugar and sugary foods edged up by 0.2 percent, and coffee, tea, and cocoa prices grew 0.9 percent. 

Other categories also saw increases, including fabrics, up 1.1 percent, ready-made garments by 0.8 percent, and footwear by 0.3 percent. 

The prices for actual housing rent increased by 0.9 percent, while furniture and furnishings rose by 0.8 percent. 

Home maintenance goods and services grew by 1.4 percent, and household appliances by 1.5 percent. 

Medical products and equipment registered a 3 percent increase, while hospital services rose 1.3 percent. 

Transportation costs, including private carrier expenses, increased by 1 percent, with vehicle purchases up by 2.3 percent. 

Despite these rises, some areas saw a decline. Notably, hotel services prices fell by 0.1 percent. 

However, this decrease was not enough to counterbalance the broader upward trend in other sectors.


Saudi POS transactions surge 2.6% to $3.6 bn, driven by education sector growth

Updated 3 min 11 sec ago
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Saudi POS transactions surge 2.6% to $3.6 bn, driven by education sector growth

  • Telecommunication spending rose 17.4% to SR136.5 million
  • Expenditure on furniture saw the largest decline, dropping 11.7% to SR349.3 million

RIYADH: Saudi Arabia’s point-of-sale transactions climbed 2.6 percent to SR13.7 billion ($3.6 billion) in the week ending Oct. 5, driven by a sharp increase in spending within the education sector, official data showed. 

The latest figures from the Saudi Central Bank, also known as SAMA, showed that the education sector led the growth with a 96.8 percent surge in transactions, totaling SR196.8 million, following weeks of declines since the academic year started in August. 

Telecommunication spending followed, rising 17.4 percent to SR136.5 million. The public utilities sector recorded the third-largest increase, with a 13.9 percent jump to SR61.5 million. 

Expenditure on furniture saw the largest decline, dropping 11.7 percent to SR349.3 million during this period. 

Spending on electronic devices fell 8.4 percent to SR238 million, while clothing and footwear saw a 7.4 percent decrease to SR757.3 million. Recreation and restaurant expenditures also declined by 2.4 percent and 1.9 percent, respectively. 

These five sectors were the only ones to register declines, while the majority of industries experienced growth. 

In terms of transaction value, the food and beverages sector retained the largest share of POS spending, totaling SR2.22 billion, followed by restaurants and cafes at SR1.95 billion, and miscellaneous goods and services at SR1.77 billion. 

Spending in these top three categories accounted for approximately 43.3 percent, or SR5.9 billion, of the week’s total POS value. 

Geographically, Riyadh led POS transactions, representing 34.3 percent of the total, with spending in the capital reaching SR4.71 billion, the second-highest increase at 4.7 percent. 

Jeddah followed with a 2.2 percent rise to SR1.86 billion, accounting for 13.6 percent of the total. Dammam ranked third with SR697 million, recording the highest increase at 5.8 percent. 

Tabuk saw the third-largest spending increase, up 4.2 percent to SR276.2 million. Hail and Abha also experienced growth, with expenditures rising 1.7 percent and 0.5 percent to SR224.6 million and SR168.6 million, respectively. 

In terms of the number of transactions, Dammam saw the highest increase at 6.8 percent, reaching 9,112 transactions. Hail and Buraidah recorded the smallest increases at 2.9 percent each, with 4,046 and 4,964 transactions, respectively. 


Oil Updates – prices edge up after sliding on potential Israel-Hezbollah ceasefire

Updated 09 October 2024
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Oil Updates – prices edge up after sliding on potential Israel-Hezbollah ceasefire

LONDON: Oil prices edged up on Wednesday as developments in the Middle East took center stage against cautious demand expectations and ahead of a government meeting on China’s fiscal policy.

Brent crude futures rose 45 cents, or 0.6 percent, to $77.63 a barrel by 10:03 a.m. Saudi time. US West Texas Intermediate futures rose 33 cents to $73.90 a barrel.

Prices had plunged more than 4 percent in the previous session on a possible Hezbollah-Israel ceasefire, but markets remain wary of a potential Israeli attack on Iran’s oil infrastructure.

“The everyday dilemma of ‘Middle Eastern headlines’ moving like a pendulum between ‘ceasefire talks’ and ‘further escalation in attacks’ has been distracting investors from reality ... Oil markets are twirled in sentiments of ‘buying the rumor’ and sidelining the real fundamentals that should matter,” said Phillip Nova senior market analyst Priyanka Sachdeva in an email.

The sell-off on Tuesday followed a rally that began after Iran launched a missile barrage at Israel on Oct. 1, culminating in an 8 percent gain on the week on Friday, the largest in more than a year.

Hezbollah officials on Tuesday appeared to back off from a truce in Gaza as a condition for a ceasefire in Lebanon. Hezbollah’s deputy leader Naim Qassem said he backed attempts to secure a truce in a televised speech, the first time the end of the war in Gaza was not mentioned as a pre-condition.

Also supportive for prices, China’s finance ministry will detail plans on fiscal stimulus at a highly-anticipated news conference on Saturday, the government’s main information office said on Wednesday.

Markets have been awaiting further news of fiscal support by Beijing to help China’s flagging economy, which in turn can stimulate oil demand. A press conference by the state planner on Tuesday had disappointed investors after it offered no big stimulus to revive economic growth.

OANDA’s senior market analyst, Kelvin Wong, expects a sideways trading pattern for the oil market in the short term, with WTI confined within a range of $73.15 to $78.30 a barrel, pending announcements on China’s new fiscal stimulus measures and developments in the Middle East.

On the demand front, data showed US crude oil stocks rose by nearly 11 million barrels last week, much more than analysts polled by Reuters had expected, according to market sources citing American Petroleum Institute figures on Tuesday. However, fuel stockpiles fell.

Weak demand continued to underpin the fundamental outlook. The US Energy Information Administration on Tuesday downgraded its 2024 forecast for global oil demand growth by 20,000 barrels per day, to 103.1 million bpd, because of weaker industrial production and manufacturing growth in the US and China. 


Herfy: key shareholder Savola requests vote on board member dismissal

Updated 09 October 2024
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Herfy: key shareholder Savola requests vote on board member dismissal

  • On Monday, Herfy announced that it had arranged a general assembly for Nov. 4

RIYADH: Herfy’s biggest shareholder has requested a meeting of stock owners to vote on the dismissal of a board member, the Saudi food services firm announced on Tuesday.
Savola Group requested the meeting so shareholders can vote on removing Mohammed Abdulaziz Alshetwey from his board seat.
Savola owns a 49 percent stake in the Saudi food services company, according to a company profile on the Saudi stock exchange.
Herfy, founded in 1982, owns an extensive set of restaurants and is one of the Kingdom’s first fully integrated food services company with its own bakery factory.
On Monday, Herfy announced that it had arranged a general assembly for Nov. 4 and invited shareholders to participate to decide whether to dismiss Chairman Mutaz Qusai Alazzawi.
The company said Ahmad Hamad Alsaid, a shareholder and a former chairman of Herfy, requested the meeting to vote on the chairman’s removal.
Herfy issued a statement addressing what it called “rumors” against the company, including accusations by Alsaid of “misrepresentation in the financial statements” of the Saudi firm.
The letter to shareholders, outlined a list of 11 statements regarding the conduct of Alsaid, including hiring relatives and supplying products to firms “not affiliated with Herfy outside of Riyadh”.
“The company’s management affirms that it did not intend to engage in these disputes, but in light of what is being circulated on social media regarding the company, it was the company’s duty to clarify the facts and take the necessary measures to move the company forward and strive to achieve everything that is in its best interest and the interest of its shareholders,” the statement said.


Saudi Arabia’s Bahri Chemicals set for 56.9% cargo transportation surge in 2024

Updated 08 October 2024
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Saudi Arabia’s Bahri Chemicals set for 56.9% cargo transportation surge in 2024

  • Fleet expansion and rising demand is fueling the increase, company’s president tells conference

RIYADH: Cargo transported by Bahri Chemicals is set to hit 9.1 million tonnes this year — a 56.9 percent rise from 2022, according to a top official.

During a keynote session at the 19th ICIS Middle Eastern Base Oils and Lubricants Conference in Riyadh, Faisal Al-Husseini, president and board member of the firm, noted fleet expansion and rising demand was fueling the increase.

Bahri Chemicals was launched in 1990 and is a joint venture between Saudi Basic Industries Corp. and Bahri — the national shipping carrier of Saudi Arabia.

Al-Husseini said: “Bahri Chemicals is seeking to continue its growth and expand its fleet, and we intend to focus on the types of vessels that can transit through the Red Sea, because they add the most value to our customers.”

As well as reflecting on Bahri Chemicals’ growth, the official used his address to flag up the challenges to vessels caused by tensions in the Red Sea.

He said the company estimates the total cost of disruption to global shipping through the Bab Al-Mandab Strait since November has reached $323 billion and is “increasing every day.”

Concerns over the using the shipping lane increased dramatically at the end of 2023, when Houthi militants stepped up attacks on vessels in the wake of the escalation of the Israel-Hamas conflict. 

Al-Husseini stated that Bab Al-Mandab Strait — the narrowest entry point to the Red Sea — is a critical choke point for global trade.

“With the attacks on shipping, we’re seeing the majority of ship owners avoiding the Bab Al-Mandab Strait, going a much longer route around the Cape of Good Hope in order to reach their destinations. In so doing, disrupting supply chains in the region,” Al-Husseini said.

The official compared the impact of recent disruptions in the Red Sea to the Ever Given incident that blocked the Suez Canal in March 2021.

While that blockage lasted just six days and cost the global economy $6-$10 billion per day, the Red Sea disruptions have lasted nearly 11 months.

“To date, at the time of preparing this presentation, there were 100 incidents that have been reported of attacks on civilian merchant vessels transiting the Red Sea,” Al-Husseini said.

He continued: “Today, that number is actually higher. It’s 103 incidents ranging in severity from threats or hostile warnings to actual attacks on vessels where there have been civilian casualties and damage to the vessels.”

Al-Husseini ended his address with a warning, saying: “The attacks against shipping in the Red Sea is ongoing, and it remains severe. I wish I could give you some good news and tell you that it’s improving, but with the ongoing geopolitical turmoil that we see, it is actually becoming more severe.”

During the opening remarks of the conference, Majed Hindi Al-Uteibi, deputy minister for oil and gas and regulatory affairs, stated that the Ministry of Energy is looking to secure international investors to help develop local expertise and increase localization.

He said government departments were working with the Royal Commission for Jubail and Yanbu, the National Industrial Development Center, Luberef, and international investors to develop the Lubricants Value Park at Yanbu.

This facility was launched in February 2020 by Saudi Aramco Base Oil Co., also known as Luberef, which is 70 percent owned by Saudi Aramco, while Jadwa Industrial Investment Co. holds the remaining 30 percent stake.

“The Ministry of Energy is working through this special team to localize new technologies in this sector and attract global investors to transform the Kingdom into the largest manufacturer and exporter of these products,” Al-Uteibi said.

Al-Uteibi explained that this will help increase localization rates and meet the growing local and regional demand for these products.

“Saudi Arabia is also positioning itself as a logistical hub for the region, supported by its strategic location, which comes at the crossroads of economic interdependence and trade flows,” Al-Uteibi said.

He continued: “This unique positioning is creating a growing local demand for fit-for-purpose lubricants, reinforcing the Kingdom’s position as a key player in the global lubricants market.”

He further highlighted the potential and growth of the global lubricants market, valued at $140 billion in 2023 and expected to grow at an annual rate of 3.8 percent through 2030.

“Those numbers are more than just figures – they represent the momentum of our industry and the vast opportunities that lie ahead. It is a call for action by all of us to push the boundaries beyond what is possible today and to be at the forefront of innovation,” Al-Uteibi said.

Saudi Arabia’s Vision 2030 aims to position the country as a global leader in industries such as lubricants and base oils.

He stressed that several sectors, including mining and industrial manufacturing, are expected to experience significant growth, helping to enhance the Kingdom’s leadership in the lubricants market.

“The renewable energy sector is also emerging as a key area of focus for us, with the expansion of renewable energy projects in the Kingdom,” Al-Uteibi said.

He continued: “This growth will drive demand for lubricants designed to improve the efficiency and durability of wind turbines, ensuring sustainable and reliable energy production.”

These developments reflect Saudi Arabia’s commitment to energy diversification and industrial advancement.