EXPERTS CALL for WIDER USE of RAND: Page 3 $6
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EXPERTS CALL FOR WIDER USE OF RAND: Page 3 $6 News Worth Knowing Thriving citrus farm under siege: Page 3 June 13-19 2019 ESTABLISHED 1969 @ FingazLive www.fi ngaz.co.zw Facebook: The Financial Gazette ZSE Report The All Share index gained 1,01 percent on Tuesday to close at ‘Currency 191,65 points. Old Mutual add- ed $0,5874 to close at $13,9864, Padenga increased by $0,0953 to close at $1,8953 and Innscor rose by $0,0571, closing at $2,3571. Delta also added $0,0353 to $3,6266. The Industrial Index was up 0,98 percent to close at 639,54 points while the Top 10 tinkering Index gained 1,41 percent to close at 184,01 points. The Min- ings Index gained 2,44 percent to close 248,51. Currencies (Bloomberg) % change ◀ USD:ZAR 14,7602 0,63 EUR:USD 1,1323 0,03 ◀ GBP:USD 1,2755 0,24 USD: JPY 108,3900 0,12 won’t help ◀ Stock Markets ◀ ◀◀ ZSE (All Share) 191,65 1,01 ZSE (Minings) 248,51 2,44 14,484,00 0,11 JSE ◀◀ FTSE 100 7 339,95 0,79 ◀ 0,05 Dow 26 048,51 Commodities ◀ Gold 1 334,00 0,54 ◀ economy’ Platinum 813,14 0,27 2,47 Brent Oil 60,75 ◀ Paul Nyakazeya government to contemplate introducing a new Grains (Grain SA) ◀ Group Digital Editor currency. White Maize ZAR 2 466,14 2.2 “Currencies work when there is confi dence, Soya ZAR 4 625,03 ◀ 0.6 ◀ HE government’s continued currency which is very low at present. It is like shares on Wheat ZAR 2 788,37 1.4 twiddling and push for a new legal ten- the stock market. For a counter to have value, Tder will not solve Zimbabwe’s deepen- it has to be backed by fundamentals that are ing economic woes, analysts have warned. consistent and point to a brighter and predict- No change in exchange This comes as President Emmerson Mnan- able future,” he said. gagwa has made a surprise announcement that He also noted that the multi-currency sys- rate policy: Nigeria the country would have a fresh currency by tem, which was adopted in 2009 to — in part NIGERIA’S central bank said year end — a declaration which saw the re- — contain infl ation, had failed to achieve that it made no change to its cur- cently-introduced RTGS dollar taking a beat- objective. rency and naira policies, after ing on both the formal and parallel markets. “Infl ation has continued to increase and it is a revision on its website led Confusingly too, Finance minister Mthuli being driven by the exchange rate. Against this some analysts to speculate Ncube had recently told Parliament that he had background, if there is nothing to back the new that it was ending a system of been misquoted regarding Zimbabwe’s plans currency, the parallel market will continue to multiple exchange rates. to introduce new money by end-2019 — high- thrive,” he added. “Nothing has changed in lighting the damaging policy fl ip-fl ops that Veteran economist John Robertson said Nigeria’s exchange rate struc- continue to dog the country’s “new dispensa- without serious foreign currency reserves, ture,” and the naira’s value tion”. Mnangagwa’s planned new currency would RICHMOND Furniture managing director Henry Ruzvidzo continues to be determined Economic experts who spoke to The Finan- not be “stable enough” to solve Zimbabwe’s takes over the helm of the Confederation of Zimbabwe Industries by trading in the Investors’ cial Gazette this week said instead of fi ddling problems. (CZI) at a time the organisation has warned of a gloomy econom- & Exporters’ FX Window, with the currency, what the country needed “We need to fi rst restore agriculture to pro- ic outlook for 2019, and also projected that industry capacity Isaac Okorafor, a spokesman badly were far-reaching structural reforms. duce all our food requirements. Having to im- utilisation will decline to 34,3 percent this year from 48,2 percent for the Abuja-based institu- recorded in November last year, as the business environment con- Batanai Matsika, research head at Mor- port most of our food for the last 20 years did tion, said in a text message. tinues to deteriorate. Picture by Freedom Mashava gan and Co, also said it was too early for the To Page 2 – Bloomberg Page 2 | June 13-19 2019 The Financial Gazette National News ‘Currency tinkering won’t help economy’ From Page 1 would stampede into a sell-off of the new unit, in most of the damage to our balance of payments a bid to preserve value through other currencies and our currency,” he said. and assets. Robertson also argued that foreign direct in- “The fiscal excesses, compounded by a cen- vestment would also continue to be low because tral bank whose footprint is too big … have been of the lack of a “clear and transparent exchange the major sources of instability in the market and rate” to fairly price the American dollar — given as long as they are not addressed, the new cur- that the local unit was not tradable elsewhere in rency will suffer the same fate as other (notes) the world. before it,” he said. “The market will not be impressed if a new And equities analyst Ranga Makwata also currency is not well supported by production said the talk of a new currency would worsen volumes. So, support has to come from strong the public’s confidence loss, and likely result in investment into farming and manufacturing, many people choosing to convert their holdings which means that government has to dramatical- to United States dollars and other assets like eq- ly improve our investment environment. At pres- uities. ent, it is one of the worst in the world,” he added. “There's so much policy inconsistency, which As a result, many experts say, Zimbabweans is feeding the confidence loss and that needs to are likely to continue rushing for the greenback be addressed to stabilise the economy, and cur- and other currencies to hedge themselves against rency,” he said. the vagaries of a local currency. “We need investment in areas that generate Brains Muchemwa, another economist, foreign currency and import-substitution sectors Arthur Mutambara was among those who believed that the market to improve availability of forex in the country,” Alex Magaisa Makwata said. “As long as we remain import-dependant, demand will remain high and the local currency will continue losing val- ue with inflationary results,” he added. But economist and former opposition kingpin Eddie Cross held a different view. “It has been a part of Ncube’s intentions from day one to introduce a local currency. It is designed to give people a reliable means of exchange,” he said. “The main policy platforms to support the currency are in place. I think the current spike in inflation and exchange rates will be short-lived,” Cross told The Financial Gazette. The plans for a new currency come as debate on the need for Zimbabwe to make greater use of the South Afri- can rand to stabilise prices and the economy — at least in the short to medium term — has re-emerged. However, it has been evident that the authorities are highly reluctant to go that route, as they deceptively argue that this would involve many technicalities, including join- ing the Rand Monetary Union. Government insiders say authorities are keen on intro- ducing a new currency, mostly on political grounds, and to give them control over monetary policy decisions — a coveted privilege that was lost nearly 10 years ago. But Arthur Mutambara, a former deputy prime minister in the short-lived coalition government, said before a new currency could be introduced, four fundamentals needed to be addressed urgently. “There is need for confidence in the system. There should be reserves to back the currency. The government should also cut down on expenditure ... fiscal consolidation is very important and the other important thing is produc- tivity,” he said. On his part, lawyer Alex Magaisa has said that while the government claims to have allowed the market to deter- mine rates through the interbank market, it has not loosened its grip on trade — which partly explained why the parallel market remained vibrant. “The government is confused as to the direction … to follow over the economy. The minister (of Finance) … is a pro-market man. He long explained his dislike of the surro- gate currency,” he said. “However, the party that he serves (Zanu PF) has other ideas. It has never been comfortable with losing control. Resources must be directed by the State purportedly for the public good, but really for the benefit of the privileged elite,” Magaisa said. [email protected] The Financial Gazette June 13-19 2019 | Page 3 National News Simbisa wins Top Companies award Calls for wider Paul Nyakazeya James Musoni, who was the guest of hon- Group Digital Editor our at the event, said the prestigious Top Companies Survey “promotes a culture of FAST food chain Simbisa Brands (Simbisa) competition and efficiency”. use of rand grow last week won the Top Companies Survey “The economic challenges and sanc- Nelson Gahadza big concern,” he said. negatively affected compet- 2019 award for best performing Zimbabwe tions imposed on Zimbabwe cause threats Business Reporter On the other hand, itiveness,” the think-tank Stock Exchange-listed company. and setbacks but they also present opportu- economist Persistence said in a research note. The survey, held under the theme “Re- nities for the private sector to think outside RESIDENT Emmer- Gwanyanya said it has been Finance minister Mthuli ality Check ― Adapting to a New Normal’ the box and produce more locally made son Mnangagwa’s government's thrust to pro- Ncube recently said govern- ― was hosted by The Financial Gazette goods.