Zambia sees increase in copper output despite COVID-19 mine closures

Zambia, a country heavily reliant on copper mining, has seen a surprising 3.9% increase in copper output to 342,734 tonnes in the first five months of 2020, despite facing mine closures during the COVID-19 lockdowns. This unexpected rise in production has raised questions about the sustainability of this trend amidst challenging economic conditions in the country. The mining sector, a crucial driver of Zambia's economy, has defied initial expectations of a 3% decrease in copper production for the year, indicating some resilience in the face of adversity. However, concerns loom over the overall economic outlook of Zambia, with the government anticipating a contraction of at least 4% due to the impact of the pandemic across various sectors. Ridle Markus, Africa Strategist at Absa Corporate and Investment Banking, highlighted the difficulties faced by Zambia, noting that the economy is under significant strain. Moody's, the ratings agency, has pointed out weaknesses in Zambia's credit profile, suggesting a potential restructuring exercise on the horizon. The need for urgent action is evident as the country grapples with a challenging business environment, including struggling sectors like tourism, manufacturing, and retail sales, which are expected to weigh on economic output. The ongoing virtual consultations with the International Monetary Fund (IMF) offer a glimmer of hope for Zambia. The IMF's involvement could provide critical assistance in the form of emergency funding to alleviate immediate fiscal pressures and pave the way for long-term macroeconomic stability. Markus expressed optimism in the IMF's potential to offer short-term relief and guide Zambia towards a more sustainable economic path. The upcoming statement from the IMF is eagerly awaited as it is expected to shed light on the nature of support that will be extended to Zambia. Shifting focus to Nigeria, concerns over revenue collection have surfaced, with the country only managing to collect 56% of the required revenue. This shortfall, highlighted by Nigeria's Finance Minister Zainab Ahmed, poses a significant challenge to the country's economic prospects. Against a backdrop of weakened economic conditions and global uncertainties, Nigeria faces the looming threat of lower revenues, further exacerbating fiscal pressures. President Buhari's recent signing of the revised 2020 budget into law reflects the government's acknowledgment of the challenging financial landscape ahead. As Zambia and Nigeria navigate their respective economic challenges, attention is squarely placed on the resilience of their key sectors, such as mining in Zambia and revenue collection in Nigeria. The road ahead remains uncertain, with both countries treading cautiously in the face of unprecedented disruptions and mounting pressures. The decisions and actions taken in the coming months will shape the trajectory of these economies and determine their ability to rebound from the current challenges.