bh24 23 july 2014

News Update as @ 1530 hours, Wednesday 23 2014Feedback: [email protected]: [email protected]

By Oliver Kazunga Senior Busi-ness Reporter

CABINET has approved strategies aimed at promoting value addition and beneficiation in the mining sec-tor to grow the economy in line with the Zimbabwe Agenda for Sustaina-ble Socio-economic Transformation (Zim-Asset).

Addressing delegates at the ongoing 2014 Mine Entra Conference in Bula-wayo, Mines and Mining Development Minister, Walter Chidhakwa said in order to drive the economy forward Cabinet agreed to prioritise value addition and beneficiation in the dia-mond sector, implementing the coal-bed methane gas project in Lupane, as well as promoting mineral benefi-ciation on resources such as iron ore, chrome, coal, and nickel deposits.

“In Cabinet yesterday (Tuesday) we agreed that we institute and imple-ment the three. We cannot continue exporting our rough diamonds with-out value addition but to sell polished

diamonds.

Over the last two months, we have been looking at negotiations with investors for our diamonds.

“We are looking at the possibility of trading diamonds for value addition. We know there are people (foreign market) that have the experience for manufacturing jewellery and exten-sive marketing of jewellery, we want to sell to you our diamonds; we must have a foot print to say a certain percentage is going as polished dia-monds; a certain percentage is also going out as Zimbabwe jewellery.

Let me assure you that we have done a sufficient amount of work in that regard,” he said.

He said the second area that Govern-ment was prioritising was the coal-bed methane gas project in Lupane.

“We have started pumping of the gas out of Lupane, a true historical moment....the gas will be used for the production of energy and ferti-lizer.

We also see the significant develop-ment of petrol-chemical industry as we purify the gas,” he said, adding that the third area of focus was nat-ural resources such as chrome, coal and nickel deposits.

As Government forges ahead with value addition and beneficiation, he said the ban on raw chrome export would be kept in place.

He said Government was also looking at restructuring his ministry as well as computerising systems to elimi-nate corruption as well as improving efficiency and mineral output. ― Chronicle. •

Cabinet approves value addition strategy

Minister Chidhakwa

3 NEWS

By Sifelani Tsiko

Listed beverages concern, Delta Cor-poration, is reportedly pressing ahead to close 15 customer collection depots (CCDs) as part of strategies to contain costs and rationalise operations.

Sources said this move is likely to lead to hundreds of job losses.

This comes as the beverage maker’s lager and soft drinks volumes fell 21 and 8 percent respectively for the first

quarter ending June 2014. However, sorghum beer volumes increased 15 percent as hard pressed consumers resorted to the cheaper opaque beer brands.

“At least 15 CCDs have been closed in Harare and other parts of the country because of the tight business environ-ment. Jobs are being lost and we sim-ply don’t know whats going to happen,” a source said

Delta Corporation company secretary

Alex Makamure could neither confirm nor deny the closure of the depots.

“The company has over the years intensified direct deliveries to custom-ers to improve service and have face to face contact with our retail part-ners. This will invariably result in the throughput at some of the CCDs reduc-ing to unsustainable levels.

We therefore review each business unit periodically based on viability, seasonal business trends, customer service and

other parameters, including adjust-ments to opening hours.

We have no programme for a whole-sale closure of depots,” he said in a response

Delta has a total of 35 depots country-wide, which act as either customer col-lection depots or distribution centres.

The tight liquidity conditions prevailing in the country has hit beer retailers and consumers hardest, resulting in reduced demand for beer at the cus-tomer collection depots.

“Consumer demand remains depressed in line with prevailing sub-dued economic performance. The stretched consumer is now focusing on value for money products,” the com-pany said in its Q1 trading update.

The company’s earnings have been on a decline after it recorded a 9 percent decline for the full year to March 2014.

Delta controls about 96 percent of the beer market and about 92 percent of the sparkling beverages in the country. •

Delta in depot closures?

5 NEWS

By Rumbidzayi Zinyuke

Zimbabwe’s dairy industry is beginning to show signs of recovery after raw milk production for the first half of 2014 went up marginally as the availability of stock feed as well as the number of heifers in the country increase.

Production was depressed in the first quarter as producers struggled with a shortage of stock feed exacerbated by the stifling economic situation.

Regional dairy officer Addmore Wan-iwa last month said the availability of harvested crop had positively impacted on affordability of stock feed and this would positively affect milk production in the first half and going forward.

Figures released by the Dairy Services Department in the Ministry of Agri-culture, Mechanisation and Irrigation reveals that production for the six months to June was 26,7 million litres. This was 1 percent higher than the same period last year.

Retailers took up 23,9 million litres dur-ing the period under review up from 23,8 million in the same period last year. Milk retailed by producers totalled 2,8 million litres as compared to 2,6

million litres last year.

On a month-on-month basis, produc-

tion for June was 3,52 percent up at 4,5 million from 4,3 million litres last year.

The country’s dairy industry has been struggling and this has resulted in dairy companies failing to meet national demand of 120 million litres per annum.

Last year, producers failed to meet the production targets of 70 million litres after recording 54,6 million litres of milk down from 55,9 million litres in the previous year.

The dairy industry is currently oper-ating at 45 percent capacity with an estimated 223 registered dairy opera-tors and a dairy herd of about 26 000 animals.

At its peak in 1999, Zimbabwe pro-duced over 150 million litres of milk annually and was exporting into the region and beyond. •

First half milk production marginally up

By Lynn Murahwa

Banking giant Cabs says it will seek to raise at least $70 million dollars in lines of credit by the end of the year from its mortgage securitisation deal.

Speaking at the launch of the bank’s new look, managing director Kevin Terry said the group will raise $50 million by the end of this month with hopes of acquiring a further $20 mil-lion by the end of the year.

"By the end of this month we will have access to over $50 million dol-lars in lines of credit and by the year end we hope to access a further $20 million in terms of a mortgage securi-tisation deal we are currently working on,” he said.

He said the money would be chan-nelled toward the bank’s housing schemes and other

Terry said Cabs was working on launching a Visa MasterCard in the future in line with the group’s new vision.

"We started a Visa MasterCard pro-ject that will be operating on the Zimswitch network in the near future, we started up our mobile banking unit 'Textacash' which we originally con-ceived as an entry into the unbanked informal sector but we discovered that it subsequently migrated into our traditional customer base," he said.

He added that the group will also be launching a mobile phone application at the end of the month to maintain

convenience and ease of accessibility.

"We will be launching a mobile Smart-phone app at the end of this month to continue this journey to making

banking more convenient and more accessible. This is a new beginning for Cabs, we have many new beginnings in life and this is just one," said Terry.

He also said the new look by Cabs will be implemented in all its branches starting this September.

"Now the time has come and we have a new brand and soon a new look in our branches, the first of those will roll out in September and there will be a gradual rollout throughout the rest of our branch networks over the next couple of years," said Terry. •

7 NEWS

CABS to raise $70 million lines of credit

AdM-DI156506-

BH24

By Funny Hudzerema

Communal and A1 resettlement farm-ers dominated this year’s tobacco deliveries raking in more than half of the $671,5 million realised from the sale of the golden leaf to date.

According to latest statistics from the Tobacco Industry Marketing Board, more than 17 000 auction tobacco farmers brought in their crop from the

communal areas across Zimbabwe and another 21 562 delivered the con-tracted crop from the same areas.

Communal farmers sold tobacco worth $169,2 million this season while A1 resettlement farmers delivered tobacco worth $148.3 million. Over 31 000 A1 farmers delivered their crop to auction floors.

TIMB said approximately 9 300 A2

farmers brought in 64 million kilo-grammes of the golden leaf worth $254 million while 7 189 small scale commercial farmers delivered 23,9 million kgs of tobacco worth $71,3 mil-lion.

The marketing season ended last month with almost 50 million kg sold through auction, more than 160 million kgs worth $535 million was accounted for by contract sale which continues

until end of August. This year’s average prices have been lower at $3,17 from $3,69 last season. Despite the higher prices of contracted crop at $3,32, the auction crop fetched a significantly lower price of $2,69.

Indications, according to experts, are that most of the country’s tobacco pro-duction will continue to be sold under contract as growers are unable to fund their operations •

10 AGRICULTURE

Communal farmers dominate tobacco deliveries

The equity market was back in the red today dipping 0,13 percent despite six counters trading in the positive and only one trading in the negative.

The Industrial index lost 0.25 points to close at 185.61 points as retail giant OK dropped 0.99 cents to trade at 16 cents.

Gains were recorded in cement maker Larfage which recovered 5 cents to trade at 60 cents and ZB Financial Holdings which added 2 cents to close at 6 cents.

Econet was up a cent to trade at 74 cents and ZPI rose by 0.05 cents to settle at 0.85 cents.

The Mining index went up 1.80 points to close at 59.24 points as Bindura gained 0.20 cents to 4.80 cents. Falgold , Hwange and RioZim were unchanged at previous trading levels. . ― BH24 Reporter •

11 ZSE REVIEW

Equity markets back in the red

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BH24

Dairy products are one of the strate-gic commodities in the economy of Zimbabwe, since they are not only a major consumer item but also a main source of farm income and employ-ment in various parts of the country.

But milk production has been failing to meet demand as the industry grapples with a myriad of challenges brought about by a challenging economic sit-uation.

The dairy industry is currently oper-ating at 45 percent capacity with an

estimated 223 registered dairy oper-ators. At its peak in 1999, Zimbabwe produced over 150 million litres of milk annually and was exporting into the region and beyond but now we are a net importer of milk and milk prod-ucts.

Last year production was 54,6 million litres, a figure far less than the tar-geted 70 million litres which still falls short of the national demand of 120 million litres per annum.

The low supply of raw milk is contrib-

uting to the high import bill as dairy companies import whole powdered milk to supplement.

Although production went slightly up in the first half of 2014 to 26,7 million, the figures are still too low to cover the shortfall by year end.

So we are still stuck with a huge import bill for milk and its products.

But really, are imports the best solu-tion we can come up with?

Zimbabwe already has a huge import bill without adding things like milk to it. Government should put in place measures to eliminate the need to import milk. We have our dairy farm-ers who only need to be capacitated to increase their production.

Nestle and Dairiboard have been proactive in increasing the national herd by importing heifers. Dairiboard has many outgrower schemes for its dairy cows especially in Chipinge where their sterilised milk plant is. The move to increase the national herd by importing heifers has contributed to the increased the number of milking

cows and subsequently the increase in milk production.

The heifer importation scheme is expected to provide an additional four percent of raw milk per month.

Although we applaud their initiatives, we feel there is more to be done.

The price of local milk and milk prod-ucts is higher than that of imports. This should be addressed as soon as possible.

The short-term response of milk out-put to prices will be mainly in the form of yield increases. If the big proces-sors can support the small scale farm-ers, yield will invariably increase and [prices will go down.

Government should also work on pol-icies that make dairy farming in Zim-babwe more profitable so that local dairy products can be able to compete with imports in terms of prices. People should identify with their products and it will only happen if they can afford to buy those products from the shelves where they have a wide selection of cheap imported products. •

13 BH24 COMMENT

Zimbabweans need to identify with local milk products

Powdered milk

In what could be the single-largest contract awarded to construction major Murray & Roberts (M&R) since the Eskom power build programme, M&R subsidiary M&R Cementation

has secured a R2.6-billion contract to develop an underground mine beneath diamond major De Beers’ open pit Venetia mine, in Limpopo.

The contract will see M&R developing the entire underground mine and will include the sinking, equipping and commissioning of a decline shaft and two vertical shafts; horizontal tunnel development to provide access to and the establishment of loading levels; as well as the development of associated ventilation, ground and water handling infrastructure.

M&R group CEO Henry Laas said on Tuesday that the group’s local project

team would be complemented with project management and operational capacity from its cementation mining companies in Australia and Canada.

The “more advanced” Canadian shaft-sinking methodology would be used for sinking the vertical shafts, with M&R subsidiary Cementation Can-ada providing specialist training for the shaft sinking crews.

“The Canadian shaft-sinking model is designed for all activities in the shaft-sinking production cycle to be undertaken in-line.

Although good sinking rates are pos-

sible with this methodology, the pri-mary drive in the transition to this methodology is improved safety, as no concurrent shaft-sinking activities are required,” Laas explained.

The Venetia mine is currently South Africa's largest producer of diamonds, contributing 40% of the country's yearly production.

De Beers expects to invest about R20-billion in the Venetia underground mine to extend its life to beyond 2040, with the conversion from an openpit to underground operation expected to begin in 2021. ― Mining weekly •

15 REGIONAL NEWS

Murray & Roberts awarded mammoth R2.6bn Venetia mine contract

Deals worth $900m to be unveiled at Africa Summit Companies will unveil at least $900 million in business deals at a US summit on investment in Africa next month, according to the Commerce Department.

The US-Africa Leaders Summit, to be held August 4-6 in Washington, will be the forum for companies to announce the deals, which include some US

government funding, agency spokes-woman Marni Goldberg said today in an e-mail. She didn’t have further details.

The US and China, the world’s two larg-est economies, are both vying for influ-ence in Africa, which is rich in natural resources and home to a growing mid-dle class. The summit, which President

Barack Obama’s administration says is the largest for a US president and Afri-can heads of state, will focus on trade

and investment.

US business executives and leaders from 45 African nations are scheduled to attend, according to the Commerce Department. The event, which isn’t open to the public, will include sessions on health care, food security, infrastruc-ture, and regional stability, according to an agenda. ― Bloomberg •

17 DIARY OF EVENTS

The black arrow indicate level of load shedding across the country.

POWER GENERATION STATSGen Station

14 July 2014

Energy

(Megawatts)

Hwange 421 MW

Kariba 750 MW

Harare 45 MW

Munyati 29 MW

Bulawayo 0 MW

Imports 0 MW

Total 1245 MW

23 -25 July - Mine Entra, Place: Zimbabwe Inter-national Exhibition Centre, Bulawayo

24 July - OK Zimbabwe Thirteenth Annual Gen-eral Meeting Place: OKMart Functions Room, First Floor, OKMart, 30 Chiremba Road, Hillside, Time:

15:00 hours.

1 August - Sixteenth Annual General Meeting of the members of Econet Wireless Zimbabwe Limited, Place: Econet Park, 2 Old Mutare Road, Msasa, Harare, Time; 10.00am

THE BH24 DIARY

19 ZSE

ZSEMOVERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

ZB 50.00% 6.00 OK ZIM -5.82 16.00

LAFARGE 9.09% 2.90

ZIMRE 6.42% 13.00

BNC 4.34% 1.90

MASH HOLDINGS 4.16% 258.00

ECONET 1.36%

IndicesINDEx PREVIOUS TODAY MOVE CHANGE

INDUSTRIAL 185.93 185.72 -0.21 POINTS -0.11%

MINING 57.83 57.44 -0.39 POINTS -0.67%

Stocks Exchange

21 AFRICA STOCkS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire 246.37 +2.18 +0.89% 07Mar

Egypt 7,949.60 -75.68 -0.94% 06Mar

Ghana 2,354.16 -7.26 -0.31% 18June

Kenya 4,896.77 -13.83 -0.28% 21July

Malawi 12,662.47 +0.00 +0.00% 07Mar

Mauritius 2,074.51 -3.51 -0.17% 07Mar

Morocco 9,544.10 +21.01 +0.22% 07Mar

Nigeria 42,784.30 -107.52 -0.25% 21July

Rwanda 131.27 +0.00 +0.00% 24Oct

Tanzania 2,018.97 +25.40 +1.27% 07Mar

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,503.90 +0.81 +0.05% 10Sep

Zambia 4,242.74 +14.95 +0.35% 10April

Zimbabwe 185.72 -0.21 -0.11% 21July

African stock round up Commodity Prices

Name Price

Crude Oil 1,300.91 -0.21%

Spot Gold USD/oz 1,292.63 -0.26%

Spot Silver USD/oz 19.38 -0.46%

Spot Platinum USD/oz 1,421.25 -0.33%

Spot Palladium USD/oz 798.50 -0.64%

LME Copper USD/t 6,770 -0.18%

LME Aluminium USD/t 1,780 -1.17%

LME Nickel USD/t 18,230 -1.73%

LME Lead USD/t 2,095 -1.41%

Quote of the day — "Our dOubts are traitOrs and make us lOse the gOOd that we Oft may win by fearing tO at-tempt." ― william shake-speare

Globalshareholder.com

Apple Inc. (AAPL) signaled that the long wait for new products is nearing an end.

With bigger-screen handsets in devel-opment, Apple said yesterday that shoppers are delaying buying new iPhones, which will weigh on sales in the current quarter ending in September.

Yet rather than dissuade buyers from procrastinating, Apple stoked anticipa-tion for new devices on a conference call, with Chief Executive Officer Tim Cook talking about an “incredible pipe-line” that “we can’t wait to show you,” and finance chief Luca Maestri declaring it would be a “very busy fall.”

Looking ahead to new gadgets is the main reason investors barely reacted to Apple’s fiscal third-quarter results yes-terday.

The world’s most valuable company posted a 12 percent rise in net income to $7.75 billion and a 6 percent revenue increase to $37.4 billion, with strong iPhone and Mac sales making up for a drop in iPad demand.

Even so, Apple shares were little changed in extended trading, after ris-

ing less than 1 percent to $94.72 at yes-terday’s close in New York.

Instead, investors were buzzing about Apple’s coming slew of products. The Cupertino, California-based company, which hasn’t released a new mobile device since last year, is working on

larger-screen iPhones, a potential wear-able device and an upgrade to Apple TV, people familiar with the plans have said.

“You’d have to live in a cave to not know that Apple is coming out with a big new batch of iPhones,” said Michael Binger, a senior portfolio manager at Gradient

Investments LLC, which manages about $600 million and owns Apple stock.

“We’re coming in to a big time for Apple in the back half of the year.”

Apple has released new iPhones each September for the past two years. ― Bloomberg •

22 INTERNATIONAL NEWS

Apple hints new products near with bigger iPhones looming

The past few weeks provided me a rare chance to listen to a different view about investment and innovation on the African continent. I wish to share that through this short article.

Clearly, the continent is an emerging market, which has a golden opportu-

nity to tap into the strong global senti-ment of goodwill about its chances. At present, the universe is conspiring with us, a lot seems to be going right.

In general the numbers are conducive for growth. There is a growing popu-lation exceeding one billion, relative

stability in many countries, a growing middle class and a massive adop-tion of technologies, improvements in infrastructure and a strong extraction industry, among other positive factors.

The fastest way for countries or for that matter a continent, to grow and

catch-up is to adopt and adapt innova-tions from countries that already have them.

This enables it to leap-frog the long and sometimes costly processes of research and discovery. There must also be a strong sense of solving local problems. So, Africa can do the same. The question is how Africa can do it.

One way to make that easy is to have policies that encourage the flow of capital, ideas and investment onto the continent.

During the past few weeks, I had a golden chance to be in workshops, seminars and company visits arranged by the Yale World Fellows Programme at Yale.

These included a visit to IBM’s inno-vation Centre in Cambridge, Massa-chusetts; seminars at the Yale Centre of Engineering Innovation and Design (CEID); workshops facilitated by IBM and Barclays, presentations from tech entrepreneurs like John Gosier (Appfrica), Nikhil Patel (Mi Fone), Asifi Gogo (Sproxil) and by venture capi-talists (Tokunboh Ishmael) and Shuaib

23 ANALYSIS

Is Zimbabwe missing out on Africa’s growth wave?

24 ANALYSIS

Siddiqui (Acumen).

I also had a chance to visit an innova-tion hub in New Haven, Connecticut, where start-up companies share infra-structure, resources and ideas.

What is clear is that, going forward, small and large firms with global expansion plans value the opportuni-ties in Africa, and see a compelling case for investing their resources in the form intellectual and financial capital on the continent. However, there is a proviso.

The investment climate, national pol-icies, a sense of purpose and vision, actually catalyse the process of cre-ating an ecosystem that helps both local firms and some global entities to choose a destination for their invest-ments.

What is also clear from this experience is that from a technology perspective the greatest focus is on specific coun-tries that have a very conducive envi-ronment for innovation and creating solutions that solve African challenges.

Leading that pack is Kenya, which has a technology policy that has received much media attention. Readers may have heard of Kenya’s plan to develop a Silicon Savannah.

This demonstrates a desire to develop tech friendly policies and build a con-ducive ecosystem. On its part, IBM has a research centre in Nairobi, and will have its famed IBM Watson – first cog-nitive computer – there.

Other countries also receiving the attention of global tech companies, venture capitalists and other investors are Ghana, Nigeria, South Africa and, to some extent, Rwanda.

An environment that engenders tech innovation is man-made. It’s not driven by nature or geography or position of a country. The trouble with investment waves across regions is that when they come, you have to be ready and have an ecosystem prepared to take full advantage of them.

Failure to do so leaves a country picking the crumps from the technology spill-over table.

So the big question is: is Zimbabwe ready for this focus on the continent? My assessment is that it is not. It is not because Zimbabwe is yet to develop a well-coordinated innovation and tech policy to create a thriving environment for tech companies.

There is no viable ecosystem for tech entrepreneurs. If it’s absent for tech

entrepreneurs, then what does that mean for global firms?

There is room for improvement on the investment climate overall.

The coordination between the minis-tries that are responsible for creating this environment is suboptimal at pres-ent. These include the ministries of ICT, Industry and Commerce and that of Finance. There are many other factors that are important and must be consid-ered at the national level.

What is clear is that Zimbabwe’s national development policy doesn’t create an environment as good as that of other African countries to take advantage of the movement of invest-ment in technology in Africa. So what’s the point of this article?

The point is, Zimbabwe will miss the current wave of investment in tech and innovation in Africa, unless we urgently address key bottlenecks relating to policy and creating a viable tech eco-system.

If we don’t, the country will miss the boat. The first point in dealing with a problem is in actually realising that there is one. Then next step is how we fix it. These two steps need to be dealt with urgently. ― Techzim •