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Morning Update

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Zimdollar return demands citizens’ confidence (Standard, Sunday June 28, Pg 13)

Zimbabwe needs to set up the right incentives and restore confidence for citizens to be willing to transact, if it is to

introduce a local currency, the United Nations Development Programme (UNDP) has said. UNDP senior economic

advisor Amarakoon Bandara told delegates attending the Zimbabwe National Chamber of Commerce that the country

needed to reduce price uncertainty by way of insuring against inflation and reinforcing independence at the central bank,

thereby strengthening prudential regulation.

Empowerment board in levy blitz (Sunday Mail, June 28, Pg B1)

The National Indigenisation and Economic Empowerment Board last week dispatched officers to collect US$120 from

local businesses operating in reserved sectors. Foreigners in the sectors reserved for locals are being charged US$520

each. Statutory Instrument 66 of 2013 reserved specific sectors for locals, and these intended beneficiaries are now

crying foul that they are being charged to do business in areas that Government had set aside for them. It was unclear

last week if the fees had force of law via gazetting. The reserved sectors, as from January 1, 2014, are agriculture

(primary production of food and cash crops), transportation, retail and wholesale trade, barbershops, hairdressing and

beauty salons, employment and estate agencies and grain milling as well as bakeries, tobacco grading and packaging,

tobacco processing, advertising agencies, milk processing and provision of local arts and crafts, marketing and

distribution. Foreigners have a firm foothold in sectors that Government has ring-fenced for locals. Businesses in these

sectors were recently issued with reserved sector compliance status notices and given seven days to pay the fees or

lose their operating licences. A snap survey in the capital indicated that most hair salons and barbershops had received

the compliance notices.

IDBZ engages foreign advisors (NewsDay, Monday June 29, Pg 7)

The Infrastructural Development Bank of Zimbabwe (IDBZ) has engaged South African financial advisors to secure

US$100m for the funding of various infrastructural projects. The funding is expected to be availed before year end. IDBZ

chief executive Charles Chikaura said the funds would be for water, energy and transport projects. He said the

infrastructure bank had decided to look for funding from outside because there was high demand on the local market and

the market was still not yet deep, especially for IDBZ which deals with large projects. Chikaura said at the moment, he

could not offer specifics with regard to the bonds as they were at preliminary stages.

Govt urged to act on audit reports (Herald, Monday June 29, Pg 1)

Government should ensure the expeditious prosecution of all public officials exposed by the Auditor-General of engaging

in corruption, mismanagement of public funds and poor corporate governance, legal practitioners have said. The Auditor

General (AG), Mildred Chiri, presents audit reports to Parliament every year but the culprits seem to get away with

murder. Lawyers said it was the duty of the legislators as people’s representatives to ensure the implementation of the

AG’s recommendations. Their call come against the background of recent revelations by the AG’s Office that government

could have been prejudiced of hundreds of millions of dollars by mostly State enterprises among them the Zimbabwe

National Roads Administration, Zimbabwe Mining Development Corporation and Environmental Management Agency

due to mismanagement and poor governance. Ironically, it is on the back of the profitability of the State enterprises that

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government is working to turn around the economy as they are integral to the mega-deals signed between Government

and China recently.

Harare’s dying industries (Standard, Sunday June 28, Pg 13)

At Trinity Engineering in the Willowvale industrial area, tall grass can be seen adjacent to an abandoned tanker which

lies in the yard. An administration block has paint peeling off from the walls, a sign of neglect. The place looks deserted,

with the only noise coming from a grinder as four employees worked on a task. The company is owned by Guy Georgias,

the Zanu-PF central committee member who unsuccessfully tried to get damages over the imposition of sanctions on

Zimbabwe by the European Union. At Gleneagles industrial park, there is a sign that indicates the property owners are

looking for new tenants. Across the road, the signage on one of the country’s biggest car assembler, Willowvale Mazda

Motor Industries (WMMI) is deteriorating in tandem with what is happening at the company. The story is the same at its

sister company, Deven Engineering. The company has a “for sale” tag but takers are hard to come by. Prospective job

seekers that used to frequent the area are nowhere in sight. They could probably have resorted to vending. Harare’s

industrial hub is stuttering, a mirror of the state of Zimbabwe’s industries in a decaying economy. The story line is the

same in the Southerton area where only Delta and BAT among a few others have managed to weather the economic

storm.

Loan impairments continue to rise (Standard, Sunday June 28, Pg 14)

The slugging economy has led to rising impairments as loan repayments remain a challenge, analysts have said. This

has raised fears that banks may cut back on lending critically needed to reboot the economic sectors. The Reserve Bank

of Zimbabwe (RBZ) said as at March 31 2015, 13 banking institutions out of 18 reported profits and a decline in

aggregate net profit was recorded to US$4.02m from US$22.40m the same period last year. RBZ said the decline in

aggregate profit was due to loan impairment charges which increased to US$40.18m from US$12.31m as at the end of

March last year and softening of loans.

Tourism ministry, ZimStats to conduct survey on visitors (NewsDay, Monday June 29, Pg 7)

The Ministry of Tourism and Hospitality Industry in partnership with the Zimbabwe National Statistics Agency will next

month conduct a survey to obtain information on various characteristics of visitors into the country, a government official

has said. The Tourism Satellite Account (TSA) Visitor Exit Survey (VES) will cost US$250k and the exercise would be

conducted over a period of 12 months. TSA generally can be defined as a statistical instrument designed to measure

tourism performance and its contribution to the national economy. Tourism and Hospitality Industry minister Walter

Mzembi told journalists last week that the Africa Development Bank would fund the survey.

Banks called to lower interest rates (Herald, Monday June 29, Pg B1)

The Reserve Bank of Zimbabwe (RBZ) says it has engaged banks to discuss the high cost of finance with a view to

getting them to lower interest rates to an average of 15%. RBZ Deputy Governor Khupukile Mlambo said this during

panel discussions at the Zimbabwe National Chamber of Commerce annual general meeting held in Victoria Falls last

week. Mlambo said the RBZ was trying to get the banks to lower their punitive interest rates regime through moral

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suasion to avoid a situation where the monetary authorities resorts to controls.

Financial illiteracy cramps capital markets (Sunday Mail, June 28, Pg B2)

Zimbabweans are not exploiting existing platforms for wealth creation on capital markets due to financial illiteracy,

Chengetedzai Depository Company (CDC) chair Zwelibanzi Ndlovu contends. Ndlovu said millionaires and billionaires

around the world made their bones on capital markets – something not happening in Zimbabwe. He said the lack of

participation on local markets could be due to a perception that such investments were for the elite.

Norupiri takes over as ZNCC boss (Sunday Mail, June 28, Pg B4)

Davipel Trading boss Davison Norupiri took over the helm of ZNCC at the industry representative body’s annual

congress held last week. The congress, running under the theme “Addressing Competitiveness challenges in the

emerging economy”, ran from June 24 to June 26, 2015. Norupiri, who was ZNCC vice president, takes over from

Hlanganiso Matangaidze who had led the organisation for the past two terms. The new president said his election

signals a “new era, a new beginning, a new team and hopefully a new philosophy (which) marks the dawn of “more

deeper relations as we continue to maintain a loud, clear, rational voice in Zimbabwe’s business landscape”.

Auditor-General beats deadline (Herald, Saturday June 27, Pg 2)

The Auditor-General, Mildred Chiri, has commended her staff for producing the 2014 audit report ahead of the June 30

deadline as required by law. The Auditor-General’s Office is statutorily obliged to produce annual reports of the

preceding year before June 30 of the following year and has over the years failed to produce them before the deadline.

The Auditor-General tabled the report in Parliament on Tuesday. The deadline for tabling the audit reports in Parliament

was initially set at September 30 although the Auditor-General failed to meet the deadline in those instances. The

Auditor-General’s Office was also not spared the brain drain that hit most sectors of the economy as a result of the

sanctions-induced hardships that have affected the country in the past 15 years. The loss of experienced staff resulted in

the office failing to meet its statutory obligations on time.

Zimra partners Microsoft, SAP for new e-service platform (NewsDay, Monday June 29, Pg 7)

The Zimbabwe Revenue Authority (Zimra) in partnership with Microsoft and SAP has launched an e-service platform to

provide fiscal services whose delivery is mediated by information technology. Speaking at the launch on Friday, Zimra

commissioner-general Gershem Pasi said the authority was looking positively to respond to business and technological

changes so as to improve convenience and to reduce tax compliance costs.

Zim Diaspora remits US$1.6m (Daily News, Saturday June 27, Pg 11)

The Zimbabwean Diaspora remitted over US$1.6 billion into the country in 2014, with most of the money being used for

consumptive purposes, the Central Bank has said. Kuphikile Mlambo, the Reserve Bank of Zimbabwe deputy governor

told delegates attending the Zimbabwe National Chamber of Commerce annual congress in Victoria Falls on Thursday

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that while official figures show that only US$837m was remitted last year through formal channels, the actual figure was

very high.

Tobacco sales reach US$500m (Daily News, Saturday June 27, Pg 11)

Zimbabwe Tobacco farmers have so far earned US$505m from the sale of 170 million kg of the golden leaf, a

development that is expected to ease liquidity crisis in the country. Latest statistics from the Tobacco Industry and

Marketing Board, however show that sales on day 77 were down 16% from US$600m realised in the same period last

year from the sale of 189 million kg.

‘Desist from setting uniform seed cotton prices’ (Daily News, Monday June 29, Pg 11)

The Competition and Tariff Commission has warned the Cotton Ginners Association of Zimbabwe (CGAZ) to forthwith

desist from restrictive practices of setting uniform prices for seed cotton bought from cotton farmers. This comes as

cotton farming in the country is under serious threat mainly due to low uptake as farmers are turning to the more

rewarding tobacco crop while serious pricing issues continue to discourage them from producing the white gold.

Dumisani Sibanda, CTC’s chairman last week ordered CGAZ to individually negotiate seed cotton prices with their

contracted farmers instead of imposing uniform prices.

Medical aid industry bill ready (Daily News, Monday June 29, Pg 6)

A bill meant to restore sanity in Zimbabwe’s chaotic health insurance industry is complete, government officials have

said. Health and Child Care permanent secretary, Gerald Gwinji, said recently that his ministry expects the bill, which will

pave way for the creation of a regulatory authority, to be presented to Cabinet by end of this month. Zimbabwe has over

23 registered medical insurance companies. Government is on record that medical aid societies were short-changing its

members.

Car imports down (Herald, Monday June 29, Pg 2)

The volume of imported second hand vehicles passing through Chirundu border post has significantly declined in recent

months amid concerns over high duty charged and some related costs. The high cost of importation particularly Zimra

duty calculations and revaluation of the cost of the vehicle have seen cars piling up at Zimra yard at Chirundu post as

people fail to raise the amounts required. Recent survey at Beitbridge and other borders also revealed that duty for

smaller second hand vehicles was increased by up to US$400 with those importing-state-of the-art vehicles forking out

more. Sources at the post said vehicle imports could have declined by as much as 60% in the last 6 months

Metbank, Tetrad on the brink (Sunday Mail, June 28, Pg B1)

Metbank and Tetrad Investment Bank are sitting on a knife edge, with the Reserve Bank of Zimbabwe (RBZ) under

pressure from stakeholders who believe that monetary authorities should withdraw their licences to protect depositors.

There is anticipation that RBZ boss John Mangudya will make a pronouncement on the two institutions in the next

possible Monetary Policy Review. Tetrad and Metbank have capitalisation of US$3m and US$19.7m, respectively, and

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have been struggling to meet obligations to depositors. Banks in the Tier I strategic segment, in which the two institutions

lie, are required to have minimum core capital of US$100m by 2020 so that they can absorb the risk associated with the

scope and complexity of their activities. Tier II institutions should maintain minimum capital requirements of US$25m.

Manufacturers, retailers in Buy Zim gridlock (Sunday Mail, June 28, Pg B2)

Mutual distrust between manufacturers and retailers is not showing signs of letting up, with the latter accusing the former

of filling shelf space with imported products even where competitive local products are available. At the Buy Local

Summit in Victoria Falls between June 17 and June 19, manufacturers were adamant retailers were foisting imported

goods on consumers. It is believed that if retailers give preference to locally-manufactured goods, this would create a

positive multiplier on the economy. Local industries are struggling to reclaim markets lost to imported commodities in the

hyper-inflationary period leading to 2008.

Zimplats accounts for 17% of 2014 exports (Sunday Mail, June 28, Pg B4)

The country’s biggest platinum miner Zimplats accounted for 17 percent of the US$3.5 billion exports last year and was

duly crowned the overall Best Exporter by the Reserve Bank of Zimbabwe (RBZ) at the Zimbabwe National Chamber of

Commerce (ZNCC) annual awards last week. The company also won the Best Exporter award in the mining sector.

Official statistics indicate that the mining giant exported ore worth US$540m in 2014. The country’s total mining exports

topped US$2.2 billion in the period, implying that Zimplats shipments accounted for a quarter of revenues realised in the

sector. RBZ deputy governor Khupukile Mlambo indicated that Zimplats will get free access to export documentation for

the next year for their efforts.

Rio Tinto leaves Zim (NewsDay, Saturday June 27, Pg 3)

Rio Tinto has disposed of its stake in Murowa Diamonds and Sengwa Colliery Limited as the global resources giant exits

the local mining sector. In a notice on Friday, Rio Tinto said it had completed the sale of its 78% interest in Murowa

Diamonds and 50% interest in Sengwa Colliery Ltd (Sengwa) to RZ Murowa Holdings Limited. RioZim Limited owns the

remaining 22% in Murowa and 50% in Sengwa and is set to assume overall management of both entities. Rio Tinto said

it was of a firm belief that the “future of these assets can be best managed by entities with existing interests in

Zimbabwe”. In the first quarter of 2014, carats recovered at Murowa Diamonds were 40 000, down 42% from the same

period in 2014. Rio Tinto said the decline was a result of a planned plant shutdown to reconfigure the processing plant

and a decision to reduce production rates pending confirmation that a new 15% export tax did not apply to Murowa. The

government had put a 15% tax on diamond sales, but was forced to rethink in order to improve the viability of the mining

industry.

Amatheon Toyota in US$10m agro-partnership (Daily News, Monday June 29, Pg 11)

Amatheon Agri Group, a Germany-owned company with agriculture interests in the southern Africa region has partnered

a Japanese company Toyota Tsusho Corporation in an agro-partnership project worth US$10m . Carl Heinrich Bruhn,

chief executive and founder of Amatheon explained that the projects represents both companies’ shared understanding

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of responsible and profitable investment in the growing agricultural sector of southern Africa.

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