Tag: Napsa

    The Napsa dilemma

    The Napsa dilemma Featured

    June 1, 2023 by Socialist Party Zambia in

    Recent reports indicate that NAPSA, which traditionally has been a key participant in Government Bonds, has not participated in the last 2 or 3 Bank of Zambia Government Bond auctions. And NAPSA’s has greatly contributed to the recently heavily under subscribed auction.

    How long is a piece of string? NAPSA, according to recent reports, has paid out K5.8 billion as part of Mr Hakainde Hichilema’s policy of partial pension withdrawals – of approximately $300 million using daily average exchange rates since this programme started.

    We are also told that NAPSA expected a total partial pension payout totaling K11 billion to cover all potential partial pension draw downs. In effect, another K5.2 billion remains to be paid which is approximately $290 million. This translates to a cumulative payout of $590 million.

    We are also told that NAPSA will provide debt financing to the tune of $300 million for the Lusaka/Ndola dual carriage.

    In summary, NAPSA cash outflow on these two events in 2023 alone will be $890 million. This is a very huge amount! And we hope it will not create future funding constraints for NAPSA’s future operations.

    As well meaning citizens, we strongly urge the Pensions and Insurance Authority to take keen interest in NAPSA’s future cash flow profiles for any potential risk of failure. We are not saying there will be a failure but just prudently ensuring that NAPSA can sustain these huge commitments.

    Zambia defaulted on its Eurobond payments whose investors are mostly pensioners. And in our debt restructuring quest we are appealing for a haircut on the Eurobond. Meaning the pensioners, whose hard earned money was invested in these Eurobonds will lose out. The same can happen to our pensioners who are contributing to NAPSA on a monthly basis should things go wrong. So NAPSA needs to be extremely cautious on its investment profiling to safeguard the interest of our workers at a point of retiring.

    Fred M’membe
    President of the Socialist Party

    NAPSA partial withdrawals

    NAPSA partial withdrawals Featured

    March 29, 2023 by Socialist Party Zambia in

    I have not so far commented on the NAPSA partial withdrawals. What was published under my name was Fake News.

    Since it seems I am expected to say something let me do so.

    An immediate impact on the government is that NAPSA is an anchor investor in government bonds. Therefore, releasing a projected 20 per cent partial payment of K11 billion will deprive NAPSA of the liquidity required to participate in government securities. Consequently, the government will be starved of the much-needed operational funding required to function. Note that in the April 27, 2023 bond auction of K2.6 billion, the government only raised K636 million, which was a massive under subscription. This can be partially attributed to NAPSA’s absence or its minimal participation in government bonds. Also, the uncertainty regarding debt restructuring has most likely resulted in non-resident bond players pulling out their investments upon maturity. This will certainly negatively impact the exchange rate further.

    Added to this, inflation is now hitting double digits despite assurances by the Minister of Finance that it was unlikely to do so. Alas, the Statistician General announced on April 27 that the April inflation rate had reached 10.2 per cent.

    All this points to a lack of comprehensive economic recovery policy/strategy by Mr Hakainde Hichilema’s UPND government. Instead of coming up with a master plan for the country’s economic recovery, it seems to be in “fire fighting mode”. Principally, it is focusing on day-to-day operational matters instead of formulating a strategic economic recovery master plan on how it will incentivise domestic value addition, bring Mopani and KCM on board, and come up with a clear policy on agriculture, among other things.

    As long as the government remains operationally focused and not strategic, our economy is headed for doom.

    The lack of consistent policies includes NAPSA partial withdrawals. On one hand, the Bank of Zambia raises the statutory reserve ratio in the market to stifle liquidity in the hope that the Kwacha depreciation can be tamed, as explained by the Minister of Finance; but at the same time there is a need to pump K11 billion back into the same market through partial NAPSA withdrawals, increasing liquidity in the market. So which is it to be? Decrease liquidity to tame Kwacha depreciation or increase liquidity to gain political mileage and appease the masses? What exactly is the policy direction?

    Effectively, the fiscal side is cancelling out or neutralising the monetary policy measure. The right hand does not seem to know what the left hand is doing. Providing liquidity in an already starved market is a good measure to stir economic growth. Admittedly, inflation may be negatively affected, but we can live with that in the short term, but contracting the economy by reducing liquidity in the market is like removing blood from a patient. Achieving a single digit inflation number is meaningless if the patient dies. This is a very narrow perspective on how to solve the economic malaise of the country’s economy and grow it. A balance needs to be struck between creating an environment for economic growth while also managing inflation, and this may mean inflation trends outside the 6-8 percent target range for a while. However, once the economy starts to grow, inflation will drop as a consequence.

    Fred M’membe