16 Cbz Chair Appointment Raises Eyebrows

CBZ CHAIR APPOINTMENT RAISES EYEBROWS: Page 3 $16

News Worth Knowing Investors dump equities for TBs: Page 5

August 29-September 4 2019 ESTABLISHED 1969 @ FingazLive www.fingaz.co.zw Facebook: The Financial Gazette

ZSE Report The All Share Index lost 2,6 percent on Wednesday to close at 167,3 points. Delta dropped $0,1016 to Govt pay close at $3,1984, while PPC eased $0,0865 to end at $2,1135 and Padenga traded $0,0554 lower at $1,6451. The Industrial Index was down 2,7 percent to close at 556,3 points, while the Top 10 Index was down 3,8 percent at 149,5 points. The Minings Index lost 0,1 percent to close at 269,6 points.

Currencies (Bloomberg) % change hikes will ◀ USD:ZAR 15,3685 0,38 EUR:USD 1,1081 0,08 ◀ GBP:USD 1,2205 0,69 ◀ USD: JPY 105,6900 0,06 ◀ Stock Markets ◀ ZSE (All Share) 167,30 2,6 ◀ ZSE (Minings) 269,60 0,1 12,075,00 0,77

JSE ◀ ◀ FTSE 100 7 073,31 0,23 Dow 25 777,90 0,47 harm the ◀ Commodities ◀ Gold 1 544,31 0,10 ◀ Platinum 872,57 0,76 ◀ Brent Oil 60,17 2,13

Grains (Grain SA) White Maize ZAR2 153,12

◀ 0.30 Soya ZAR 4 763,38 0.7 ◀ ◀ economy Wheat ZAR 2 665,96 0.30 Shame Makoshori balloon,” it said. FBC records Companies Editor The local research firm warned further that the country’s ailing economy could also “slide to hy- $54,3m profit HE government’s plans to award civil servants perinflation, which will be driven by money supply FBC Holdings (FBC) has reported a a whopping 76 percent pay hike will escalate growth and rising fuel prices”. 265 percent surge in after tax profit to inflationary pressures and push the economy John Robertson, an economist, weighed in, tell- $54,3 million in the half year to June T 30, 2019. deeper into recession, experts warned this week. ing The Financial Gazette that “the economy will John Mushayavanhu, the group’s This comes as many independent economists say contract by as much as 10 percent this year, against chief executive, yesterday attributed the country’s real year-on-year inflation — which Fi- government’s projected two percent”. the performance to exchange and fair nance minister Mthuli Ncube recently banned from “It is a complicated thing. Growth is going to be value gains following the introduc- being published — is now hovering above 500 per- very negative. This (pay increases) is going to cause Toyota Zimbabwe managing director Sebastien Ben- tion of the local currency. “The group cent. the so-called budget surplus to disappear,” he said. ning says the company is re-energising and re-focusing recorded a total net income of $198,4 “By nearly doubling the minimum salary for civil “Funding for service delivery will be directed its business to cater for changing consumer needs. This million in the period under review, pri- servants, government will be shooting itself in the toward civil service salaries. Government will com- comes as the country’s motor industry is facing stiff marily driven by the banking subsid- foot,” advisory firm Econometer Global Capital said. pensate for this by imposing more tax, which will af- competition from cheap and grey imports. Zimbabwe iaries,” he said. FBC’s asset base more than doubled “Treasury’s fiscal consolidation thrust will effec- fect consumer buying power,” Robertson observed. has lost over US$5 billion to car imports since 2009. Picture by Freedom Mashava to $2,3 billion, up from $1,1 billion in tively go off the rails as domestic expenditure will To Page 2 the same period last year. -Fingaz Page 2 | August 29-September 4 2019 The Financial Gazette National News Salary hikes will harm the economy From Page 1 Other economists noted that although Trea- sury had provided “cushioning allowances” to civil servants in recent times, these increases had been eroded very quickly by concomitant sharp rises in the prices of goods and services. On his part, Kingstone Kanyile — Mtilikwe Financial Services (MFS)’s chief executive — said government’s move to raise civil servants’ salaries would have “devastating effects” by way of prolonging economic contraction and stagna- tion. “Zimbabwe’s recession could be prolonged for at least three years unless Ncube pulls a surprise and rolls out inflation containment measures to stabilise the economy following the wage hikes,” he said. Kanyile also warned that if government was not careful, it would soon “have no choice but to turn to the printing press, to fund the pay hikes”. “If government avoids the printing press, that will be a bold and good move,” he said, adding that Ncube could also be forced to increase the country’s unsustainable national debt — which currently stands at a staggering $18 billion. Kingstone Kanyile John Robertson Trust Chikohora “The government is in a catch 22 situation ... Inflation will continue to increase due to high perinflationary territory until currency confidence ures may also raise speculation, as unofficial es- cent pay hike offer. money supply growth,” Kanyile said. issues have been resolved,” Kanyile said. timates will be used. The budget surplus may be According to a recent consumer survey, the “Our economy is already in recession. It will “The Finance minister is likely to come back aided by the two percent tax and the duties on fuel country’s poverty datum line — which represents continue to be in a depression for the next 36 for another supplementary budget as a fiscal defi- if the prices continue to rise,” Chikohora said. the cost of a given standard of living that must be months unless significant cit is imminent. Tax rev- “However, by year attained if a family of six policy shifts are made,” “By nearly doubling the minimum enues will be inadequate end I think we are likely “Our economy is already in re- people is not to be deemed he said. salary for civil servants, govern- to contain this wage in- to end up with a bigger cession. It will continue to be in a poor — now stands at “The supposed fiscal ment will be shooting itself in the crease,” he added. budget deficit because of depression for the next 36 months about $610 a month. surplus will be wiped foot. Treasury’s fiscal consolida- Trust Chikohora, anoth- other pressing needs like Latest figures from out by this 76 percent in- er economist, concurred maize imports,” the for- unless significant policy shifts are the Zimbabwe Revenue crease in recurrent expen- tion thrust will effectively go off with the other experts, also mer Zimbabwe National made. The supposed fiscal surplus Authority also show that diture. Not even the two the rails as domestic expenditure warning that the salary Chamber of Commerce will be wiped out by this 76 percent while revenues for the first percent tax can contain will balloon.” hike would be inflationary. president said. increase in recurrent expenditure.” half of this year exceed- this unbudgeted-for fiscal “The salary increase The hastily introduced ed targets, maintaining expense,” the MFS boss Econometer Global Capital would be inflationary, salary increments — that trend going forward said. unless there are effective which will see the lowest Kingstone Kanyile is likely to prove difficult “What you will see immediately is an increase subsidies. We may see a wage-price spiral which paid civil servant earn $1 023 per month, up from given the deteriorating state of the manufactur- in government domestic debt, which will increase may further feed hyperinflation,” he said. $582 — come after the government’s 300 000 ing, mining and agriculture sectors. money supply. We will also continue to be in hy- “The non-publication of annual inflation fig- strong workforce recently turned down a 10 per- [email protected] Govt in dilemma over land invasions Tabitha Mutenga prime land. and fair re-distribution of land. Markets Editor “We are carrying out a land audit. We “We are aware that a number of people have suddenly have a preliminary report, which we will become interested in land because it is now the only most GRICULTURE minister Perrance submit to Cabinet soon. In the findings we viable form of investment given the current economic reali- Shiri says government is in a dilem- have cases of multiple farm ownership, ties,” Shiri said, adding that it was going to be a difficult de- Ama on how to bring the land reform double allocations, absentee landlords and cision for government to come up with a win-win situation programme to a smooth end. all sorts of information on land under-util- after the land audit results are out. Zimbabwe embarked on the controver- isation,” Shiri said. “When we talk of underutilised land, there is a political sial land reform in 2000 when more than Government is carrying out a coun- aspect to it. If you go to that individual who sacrificed their 4 000 of the country’s 4 500 white farmers trywide land audit, which is expected to time to be part of the jambanja and secured a piece of land were stripped of their land under former inform its policy in terms of land redistri- and then government suddenly tells that person to move president Robert Mugabe’s government. bution in view of the large tracts that are over for a Mr or Mrs X who used to oppose land reform, Mugabe justified the land grab as a way lying idle across the country, contributing to hesitating to take part, it’s a bit tricky. to correct colonial-era land ownership dis- under-productivity in the agriculture value “We should also not forget the manner in which we ac- parities that had favoured whites and to chain. cessed this land, as some were very much against land re- stimulate economic growth for black Zim- The audit also seeks to flush out multiple form, it is only now that people are beginning to realise that babweans. However, nearly 20 years later, farm owners and correct some of the wrongs it is irreversible, hence this growing interest for land from all land invasions continue, with government brought about by the chaotic fast-track land quarters, which is good. We want our people to have access at times also abetting new farmers to grab reform programme and ensure transparency to land,” he said. Under the land reform programme, over 10 million hectares was acquired and redistributed to a wide range of ben- eficiaries, the bulk of them being the politically connected and war veterans, but huge chunks of the land are currently lying idle. Shiri said it was not proper for the country to continue importing food when over 400 000 families were given prime land for agricultural production. “We cannot be importing food and agricultural produce, we need to be self-sufficient, we need to be a major export- er of agricultural produce and as a result, government has come up with a way of accommodating those who lack capacity in production and obviously there is a limit to which government will remain tolerant. “The time will come when government will want to see full utilisation of land, hence farmers have been advised to approach financial institutions for funding. They can also approach companies and enter into contract growing and outgrower schemes, including the recent approval of joint ventures by government,” he said. This comes as President Emmerson Mnangagwa’s administration has previously described idle farmers and illegal settlers as an impediment to viability of agriculture as a business. Shiri said government will soon be left with no option but to downsize the land of farmers who fail to fully utilise it for redistribution to aspiring farmers. “This time we will demand proof of resources to finance their farming activities,” he added. [email protected] The Financial Gazette August 29-September 4 2019 | Page 3 National News CBZ appointment raises eyebrows

Omega Ukama Senior Staff Writer

RESIDENT Emmerson Mnangagwa has appointed American-born Kazakhstan businessman Marc Holtz- Pman, as CBZ Holdings Limited (CBZ) chairman amid governance and procedural concerns regarding the move, and Eurasian groups’ growing clout in the economy. The surprise announcement came as Akribos Wealth Managers (Akribos) ― reportedly fronting energy tycoon Kuda Tagwirei’s interests ― has bulked up a 26 percent-plus stake in the listed financial group and Harare is seeking stronger commercial ties with Russian-linked countries. In an August 21, 2019 letter to CBZ chief executive Blessing Mudavanhu, Finance minister Mthuli Ncube said Mnangagwa had appointed Holtzman “with effect from Marc Holtzman Emmerson Mnangagwa Blessing Mudavanhu September 1”. “The new chairman is … Holtzman, who is an interna- of the financial group, there has been widespread tution”, questions remain on which trans-Atlan- In the meantime, the appointment also brings tional businessperson with wide experience globally. Gov- concern over “undue influence” in the affairs of tic investor would put money into a bank facing another dimension to the identity and profile of the ernment looks forward in (sic) your support and drive in tak- the ZSE-listed company. a US$300 million-plus Office of Foreign Assets real owners of the stake represented by Akribos ing the bank to new heights under new leadership at board While state television has claimed Holtzman Control fine and targeted sanctions under the Zim- after weeks of speculation that it was Tagwirei. level,” he said. was “representing American money into the insti- babwe Democracy and Economic Recovery Act. [email protected] This also comes as Mnangagwa has reportedly sought ― on his January trip to Astana, the Kazakhstan capital, and the United States in September last year ― a closer working relationship between his administration officials, and Kazakh investors, including the former Soviet republic’s largest private bank Kazkommertsbank, also chaired by the American banker. While Mudavanhu has declined to comment on the changes, ex-chairman and business consultant Luxon Zembe said Holtzman’s appointment could be “in violation of good corporate governance”. “According to the company’s articles of association, as it was when l was chairman, board members are elected by shareholders and they (in turn) elect the chairman among themselves,” he told The Financial Gazette by telephone this week. “Unless the articles… and shareholders’ agreement have been changed, the appointment is in violation of good corporate governance..,” Zembe said. Interestingly, he said that “this kind of thing has actually happened before when I was chairman and there was an attempt by the government to remove me… but l stopped it (as) it was illegal, and the plot collapsed”. Even, though According to the com- Holtzman’s backers pany’s Articles of Asso- claim the bank’s char- ciation, as it was when ter allows the gov- I was chairman, board ernment to appoint members are elected by a chairman ― since shareholders and they the state’s combined shareholding with (in turn) elect the chair- the National Social man among themselves. Security Authority Unless the Articles of As- was above 30 percent sociation and the share- ― it could not be es- holders’ agreement have tablished whether the been changed, the ap- company’s statutes pointment is in violation had been amended, of good corporate gover- as company secretary nance.” Rumbidzayi Jakanani also refused to comment on the issue. Luxon Zembe, former chair And Muchadeyi Masunda — a vet- eran lawyer who sits on many Zimbabwe Stock Exchange (ZSE)-listed company boards — said such an appointment could only be made if CBZ’s articles and shareholders’ agreement expressly allows it. “Whether it was proper or legal is a matter which is up to what is dictated by the articles… and shareholders’ agreement of CBZ,” he said. “What I assume is that the government and the mystery shareholder, who has been acquiring stock, put their heads together and decided on the move,” Masunda told this publication on Tuesday. Holtzman, who is also chairman of the Rwandan central bank, was in the country this week and is said to have “hit the ground running after reportedly summoning CBZ’s top managers, and demanding a short presentation about their plans and what they see of the bank’s challenges”. And at a time Mnangagwa’s administration has been very keen on taking political, and economic cues or lessons from Rwanda President Paul Kagame, Kigali’s envoy to Harare, James Musoni, however, told The Financial Gazette that the east African country had neither recommended nor had any role in the global businessman’s appointment. “I know Marc is the… chairman of Bank of Kigali and he is doing a great job. His appointment… is entirely the decision of the leaders of Zimbabwe,” he said. Equity Axis, a local equities research firm, was also quick to criticise the government’s “blatant violation of corporate governance tenets at the publicly-traded CBZ”. “Government is meddling again in the affairs of CBZ… (and) the president has appointed the board chairman… (in) an unprecedented move. (This comes as) the bank has also been abused by politicians..,” Equity said over the weekend. Since 2004, when the government acquired full control Page 4 | August 29-September 4 2019 The Financial Gazette National News Govt urged to resuscitate old mines

Shame Makoshori duction of new geological information has drastically declined. Much Companies Editor of the country was mapped more than 40 years ago before the advent of modern mapping technology and reinterpretation of geological IMBABWE is sitting on significant mineral wealth, which is ly- structures and processes using technology,” the report noted. ing idle in hundreds of old mines, many of which were briefly The report emphasised that Zimbabwe must be fully explored to Zexploited and abandoned almost a century ago, according to the give policy makers and investors enough data to plan for the future. Geological Society of Zimbabwe (GSZ). Official data indicates that only 60 percent of Zimbabwe has been It said the old mines are potentially great frontiers for expanding the mapped for exploration. country’s biggest foreign currency generating industry, which has set This explored area was also worked on using old techniques and an ambitious target to become a $12 billion sector in four years. machinery, which were not as efficient as the new technologies. This would represent a 344 percent surge in earnings from $2,7 Across Africa, new investors including those in platinum and gold, billion in 2017. have been returning to old dumps to scoop minerals from places that But a GSZ report, which was released recently, indicates that the were dug using old technologies. $12 billion target may remain a pipe dream unless national ambitions “There is so much untapped potential because most of the explo- are twinned with moves towards fully understanding the quantum of worked in the 1930s, with only a few having been mined to significant ration data that is being used now was generated in the 50s and 60s minerals embedded across provinces. depths,” GSZ said. and the industry has not been subjected to exploration using modern GSZ added that due to recent advancements in exploration and “Most of these have never been scientifically investigated. Techni- techniques,” Nicholas Taruvinga, the managing director of AeroSurv, mining technologies in the past few decades, huge quantities of unex- cal data on many of these dormant workings is clearly suggestive of the said recently. ploited minerals can be discovered and give every investor the oppor- need for further investigations. Thus, with hundreds of old mines dot- “We are seeing a great deal of potential in the area of exploration, tunity to mine in a country where almost all mining areas have been ted across the country, opportunities for re-discovering some of them which has largely gone uncontested,” he said. claimed. as significant deposits are enormous. Mineral occurrences are revealed GSZ said there had been lot of new mineral discoveries that had not “There are hundreds of abandoned mines, the majority of them last through systematic exploration and regional geological mapping. Pro- been systematically described and recorded. [email protected]

Peter Moyo Trevor Manuel PUBLIC NOTICE Moyo not backing IMPORTATION OF COMMERCIAL down in Old GOODS BY INDIVIDUALS Mutual fight ETER Moyo has lodged an urgent application for the board of Old Mutual board and its chairperson Trevor The Zimbabwe Revenue Authority (ZIMRA) in this public notice PManuel to be declared as having deliberately inter- fered with the functioning of the courts. would like to advise that all individuals importing commercial In a new affidavit, the on-again, off-again Old Mutual head stated that his second axing by the financial services gi- goods into Zimbabwe would be required to apply for a Business ant on August 22 was “deliberately calculated to undermine the efficacy of the judgment of this court”. Partner Number through the ZIMRA E-Services Platform on the In an open letter published on its website last week, Old Mutual said it took the step to terminate Moyo's tenure as website http://efiling.zimra.co.zw or visit your nearest ZIMRA chief executive for a second time “after legal advice and on careful reflection by directors, with proper regard to their office for further assistance. fiduciary duties to the company”. Moyo is currently challenging his first firing in June in Please note that with effect from 9 September 2019, no individual court. Judgment in that case is expected at the end of August. Old Mutual said last week that Moyo may decide to importing commercial goods, for example goods for resale of a challenge his second notice of termination in court. The group said it would once again defend its position if he did value exceeding RTG$8,000.00, will be cleared unless they have so. “We will stand our ground if he does, naturally and at all times continuing to respect the law and our court system,” a the Business Partner Number and a valid Tax Clearance Certifi- statement from the group read. cate. The former Old Mutual chief executive challenged his initial dismissal in court in late July, arguing he was being victimised for bringing up what he said was a conflict of The requirements for the application for a Business Partner num- interest for Manuel. Manuel has denied this. On July 30, Judge Brian Mashile found that his dismissal ber are: was unlawful and ordered Old Mutual to reinstate him on a temporary basis. However, he was barred from work the day after his court victory, after the country’s second-largest • Stamped current Bank Statement insurer filed a notice to appeal against the judgment. Moyo, in his affidavit filed on Monday, states that his lat- • Identity card est application is a continuation of his previous bid to have Old Mutual declared in contempt of court for failing to reinstate him. Arguments in this case were heard on August 16 • Proof of residence in the form of a utility bill, supported with and judgment reserved until the end of the month. He is now asking the court to hold off on that ruling un- an affidavit if not in your name til arguments in his latest application are heard on Tuesday September 3. “(The) act of interference is exacerbated and aggravated by the fact that there is a pending judgment. To anticipate the judgment and act recklessly and precipitously as Old Mutu- Please approach your nearest ZIMRA Domestic Taxes office for al has done, is a grave act of interference with the functioning of the court,” Moyo’s legal document reads. further enquiries or assistance. On August 22 a law firm representing Old Mutual sent a letter to Moyo's legal team denying the company was in contempt of court by firing him for the second time. Moyo cited Section 165 of the constitution in his new court papers, which vests judicial authority in the courts. He states that Manuel and 13 non-executive directors should be Commissioner General Public Notice No. 31 of 2019. declared in breach for “interference with the functioning of the court”. He also wants Manuel and the non-executive directors to pay the costs of this application personally “as this conduct does not promote the interests of stakeholders … and in fact harms them”. An Old Mutual spokesperson told Fin24 on Tuesday that the company would not be commenting as the matter is before the courts. - Fin24 The Financial Gazette August 29-September 4 2019 | Page 5 National News Industry wary of inflation

Paul Nyakazeya payment support and the deposit base of $2 bil- “Containing money supply growth comple- Group Digital Editor lion cannot sustain it,” said CZI. mented by other confidence building measures The organisation said other factors that could (is) also important. There is need to review the HE Confederation of Zimbabwe Indus- increase month-on-month inflation include fail- government overdraft at the Reserve Bank of tries (CZI) says inflation pressures are still ure by the interbank market to supply adequate Zimbabwe (RBZ) to four percent of last year’s Tembedded in the economy due to a huge foreign currency to the productive sector and revenue. In addition to targeting reserve money budget deficit, lack of a sustainable agriculture additional funding for Command Agriculture of RBZ should also target credit creation and subsi- financing model and productive inefficiencies $3,2 billion. dies,” said CZI. emanating from electricity outages. “Productive inefficiencies emanating from The group added that a proper sequencing The country’s largest industry body said Ju- power outages will result in imported inflation. of policies should be adopted and government ly’s month-on-month inflation of 21 percent ― Already there are signs that the country will need should raise revenue first and then spend it. though it receded from June's 39,3 percent ― was to import wheat because there is no energy to irri- “Going forward, a budget deficit whose- fi still worrisome and decisive measures needed to gate the winter crop,” CZI said. nancing is likely to be monetised given the coun- be taken to stabilise key performance indicators. CZI said tillage efforts for the 2019/2020 ag- try’s lack of balance of payment support options, Fungai Nyaungwa CZI said the month-on-month inflation fig- ricultural season would be curtailed by fuel short- pose a great threat to any stabilisation efforts. ure would increase going forward due to the ages and the short to medium effects of this can “The productive sector is currently con- financing of the budget deficit of $4,6 million be catastrophic as it affects food security and raw strained by a difficult operating environment, announced in the Mid Term Budget review by material supply to agro-processors. implying that in the short term the country will Investors dump Finance minister Mthuli Ncube. To contain inflation, the business member experience shortages, which will need to be met “The budget deficit is likely to be monetised organisation said the interbank market should be by imports, resulting in importing inflation,” CZI equities for TBs because the country has no recourse to balance of more effective and efficient. added. [email protected]

Kuda Chideme Special Projects Editor

HE Zimbabwe Stock Exchange (ZSE) is losing its appeal to investors after shedding over $8,3 billion Tin value over the last two months, with most investors turning to Treasury Bills (TBs). The local bourse, which had enjoyed a bull run since the beginning of the year, is now cooling down faster following the re-introduction of the local currency as the sole medium of exchange towards the end of June. In the six months to June, the ZSE’s All Share index had gained some 29,97 percent ― the highest in the SADC region but equity trades are now dominated by sells, resulting in a downward spiral on the market. Fungai Nyaungwa, a market analyst, told The Finan- cial Gazette that the current sell-off trend would continue in the short to medium term, as investors opt for more liquid options. “In my view investors are selling off in search of liquidity while TBs seem attractive given that they are tax exempt and can be used as collateral for overnight accommodation by the RBZ,” she said. According to Finance minister Mthuli Ncube, during the first quarter of 2019, Treasury issued $180 million worth of government paper to restructure last year’s ma- turing debt. The central bank subsequently invited bids for two separate facilities to fund government programmes and both instruments were oversubscribed. The $30 million 91-day paper attracted $132,7 million worth of bids while the $60 million 365-day one generated $121 million in bids. Upon assuming office last year, Ncube pledged to stem reliance on the debt instruments to finance government’s budget deficit after he made startling revelations that between 2016 and August last year, government had issued US$5,5 billion worth of TBs as spending largely went unchecked to fund various budgetary priorities and at times political party projects. But with the economy showing clear signs of stress and the prospects of a recession becoming more real, it is apparent that government will be forced to return to the market to sustain itself. Treasury will also be forced to borrow heavily to avert starvation for at least 5,5 million Zimbabweans who, according to the United Nations, face the very real risk of going hungry this year as economic hardships and a severe drought take a toll on the country’s population. However, market experts assert that the continued issuance of government paper will have negative effects on the country’s ailing economy. “The fact that government is currently attaining sur- pluses is commendable,” FBC Securities said in a recent research note. “However, treasury bills need not to be issued in order to allow government to spend in excess of current taxa- tion.” Financial institutions use excess reserves to invest in TBs, which ensures that they invest in interest bearing assets as opposed to keeping idle liquid resources, especially now when disposable incomes are thin for possible lending opportunities. FBC Securities noted that issuance of TBs as a contractionary monetary policy tool slows down inflation . Slowing inflation by reining economic growth cools off the markets and brings down overall demand in the economy. “Contractionary monetary policy however can be counterproductive, if applied during recession periods like we are in, it also accelerates recession into depression. High interest rates leave little money in circulation in the already suppressed economy. Business investments contract and people are laid off. This leads to low house- hold income, no savings and consequently low purchasing power. Since businesses are discouraged to expand, it might also take time for these same businesses to recover and others ultimately folding,” the equities research firm added. [email protected] Page 6 | August 29-September 4 2019 The Financial Gazette

National News Zimbabwe, SA trade gap narrows further

Omega Ukama trade deficit has been magnified by Senior Staff Writer unstated foreign trade activity. “Trade deficit says that you are IMBABWE’S trade deficit importing things that cost more than with South Africa (SA) has your export earnings, the question Zdeclined by about 83 percent is who is funding that difference? to $96 million in the seven months “We can try to account for it by to July 2019 compared to $574 mil- saying there is FDI, diaspora remit- lion recorded in the same period last tances and so on but when you add year, official data has shown. these things together, there is still A worsening foreign currency a gap, which speaks to a section of shortage and rising inflation have the economy that is not accounted Workmen install an Access Finance billboard at Delta Corporation’s Graniteside eroded purchasing power, leading for when we do our national ac- depot in Harare yesterday. The finance firm has been on an aggressive expansion to suppressed demand in the econ- counts,” Hoto told a business con- drive of its in-store service after sealing partnerships with Electrosales, Gain Cash omy. ference recently. & Carry, Irvines and the Nyaradzo Group, among other outlets in Harare, Bula- Data from the Zimbabwe Sta- “It simply means that the signif- wayo and Victoria Falls including airports. Picture by Freedom Mashava tistics Agency (Zimstat) shows that icant part of the economy is not in imports from South Africa, which the equation and, or the exports are remains Zimbabwe’s major trade understated to the extent that they partner, were $893,6 million during go out in the grey market and come Command agric funding the period under review, down from back as imports in the formal mar- Douglas Hoto $1,48 billion in the previous compa- ket,” he added. rable period. the period under review to $2 bil- In 2018, Zimbabwe’s trade defi- to fuel corruption: Analysts In all, the country’s imports de- lion from $2,2 billion in the previ- cit grew by close to a billion dollars clined by about 30 percent to $2,8 from $1,77 billion in 2017 to $2,68 ous comparable period. Tabitha Mutenga and Paul Nyakazeya tobacco production,” Mugano added. billion in the seven months to July billion. While Finance minister Mthuli Staff Writers The leakages, rent seeking, and high de- 2019 compared to $4 billion record- The southern African country Ncube says the decline in imports fault rates associated with the programme, ed in the same period last year. has persistently run trade deficits is a result of government’s efforts INANCE minister Mthuli Ncube’s limit the ability of current agricultural As a result of the decline, the since dollarisation in 2009, record- towards import substitution, market latest decision to continue financing schemes to tackle the root causes of agricul- country’s trade deficit during the ing only a single monthly trade sur- experts assert that the majority of government’s farmer support scheme, tural inefficiency and economists advising period has shrunk to $679 million imported goods are being smuggled plus over the period. F command agriculture, during the 2019/2020 government to make sensible business de- from $1,8 billion in the previous Official data shows that the into the country to avoid high taxes season will significantly drain the country’s cisions and turn agriculture into a profitable comparable period. country’s cumulative trade shortfall at the country's borders. already burdened fiscus, analysts have said. business. This was not withstanding a five since 2009 has breached $20 bil- Douglas Hoto, a local statisti- This is despite his earlier admission ― Batanai Matsika, head of research at percent decline in exports during lion. [email protected] cian, says Zimbabwe’s persistent under the Transitional Stabilisation Pro- Morgan and Co, said government should gramme (TSP) ― that government should rope in the private sector to fund the import involve private players in the financing of substitution programme. agriculture. “Government has not been efficient in However, in his mid-year budget review efficiently allocating resources through and supplementary budget presentation, command agriculture. Inviting private sec- Ncube announced a $2,8 billion funding tor funding will also free up more resources package for command agriculture in a for capital expenditure,” he told The Finan- move analysts say was ill advised given the cial Gazette. controversial programme’s poor loan per- From the 2019 National Budget, it was formance. Official figures show that only expected that government would stop fi- 33 percent of command agriculture loans nancing the programme as it had contrib- have been returned in full. uted to government’s huge budget deficit Economist Gift Mugano said Ncube’s since its introduction in 2016, with reports decision to continue funding agriculture in of abuse and patronage blighting the initia- the face of massive corruption and again tive. ignoring the dividends which come with Victor Bhoroma, an economic analysts, commodity exchange “is not only disap- said Ncube’s sudden U-turn could have pointing but also forces us to raise the fun- been caused by political pressure from key damental question if government is keen to stakeholders in government. address the structural rigidities we are fac- “Remember there is the political side ing as a nation”. to every economic policy in every country This was after Auditor-General Mildred and at most times it has more influence than Chiri had revealed that US$3 billion from all other considerations such as increase in Treasury earmarked for the programme was debt, growth in money supply or inflation,” misappropriated in the past few seasons. he said. “The minister was right to say that gov- According to Ncube, the programme ernment must leave the private sector to will be extended for another year to restore fund agriculture in his submission in the food security and is targeting 210 000 hect- TSP and 2019 National Budget statement. ares under maize and 30 000 hectares under International best practices have shown that soya beans at a cost of $2,8 billion. where markets are allowed to allocate re- “To close the loopholes during the forth- sources under market system development coming agriculture season, government is or making markets work for the poor, the adopting a targeted approach, which selects results are optimal,” he said. exclusively farmers with a track record of Zimbabwe’s fiscal deficit has been very honouring their loan obligations from pre- toxic, breaching the US$10 billion mark vious programmes and have a history of by December 2017. The budget deficit was producing high yields,” he said. caused by huge expenditure on defence, “Farmers need financial support, there employment costs, security and command are clear market failures when it comes to agriculture, raising fears of another budget financing of farming. Government must deficit as government borrows to finance make sensible business decisions when pro- the programme. viding support to agriculture and also treat Zimbabwe will this year import close farmers like businesses that must make a to 800 000 tonnes of maize because of the profit. The schemes must be designed and erratic rains received during the 2018/2019 run to compel farmers to reimburse govern- rainy season despite $3 billion being allo- ment. Government should still accept by cated towards command agriculture during intervening in this way, it taking huge risks, the previous seasons to boost food security. but at least those risks ought to be carefully “Through command agriculture, gov- and clearly managed for the taxpayer,” said ernment dishes out resources without ac- Tapiwa Mashingaidze, an economic advis- countability, which is in total contrast to the er. framework of contract farming. So, farm- Market experts said it was prudent for ers as rationale economic agents, will go Treasury to channel all funds through the for free inputs which cannot be accounted banking sector, with Agribank playing the for, as borne out by the growing debt under lead role in the scheme, given the default command agriculture, as opposed to a strict rate, lack of control in implementation and mechanism that guarantees full recovery of failure to significantly improve crop output. the investments by the private sector into [email protected] The Financial Gazette August 29-September 4 2019 | Page 7 Page 8 | August 29-September 4 2019 The Financial Gazette Leader Page

News Worth Knowing No end in sight to economic woes F THERE is one thing that President Emmerson Mnangagwa and his government have perfected: it is self-destructive policies and in- Ieptitude. With the country’s economic crisis intensifying and tensions reaching fever pitch as ordinary citizens try to cope with rising costs, developments on the ground show that our leaders are clueless when it comes to dealing with the country’s pressing challenges. For most of the year, Finance minister Mthuli Ncube maintained there were growth prospects for the sickly economy, choosing to ignore forecasts by the International Monetary Fund and glaring evidence in his backyard, which showed that the country was in dire straits. If Ncube’s insistence that the economy was on a sound footing and Dawn Properties chairman Phibion Gwatidzo operates a Backhoe loader during the ground-breaking ceremo- enough evidence that he is out of touch with reality, then his response ny of the firm’s Marlborough Sunset Views housing development in Harare. The $200 million project will see last week about the price of bread should pass off more as a fatal combi- the construction of 354 stands with the first phase of 70 houses to be completed by December 2019, while nation of "arrogance and ignorance". sales are scheduled for January 2020. See story on Page 23. Picture by Freedom Mashava. In 2019 alone, the prices of bread and fuel ― like all other commodities ― have gone up more than five times, so it should not be a surprise that some civil servants are demanding much more than the 76 percent salary raise proposed by government. Zim ‘not open for business’ There is no guessing as to what will happen to the so-called budget surplus, which the minister has been harping about given the new bills. While some circles might be quick to label the demands as outra- FTER following quite a num- Critically, and if Mnangagwa could Crucially, and if Loice Matan- geous, conveniently pointing out that Treasury is already overburdened ber of issues and events in the do it to his dear comrades Mupfumira da-Moyo and her ZACC team are and struggling to keep its accounts in check, one only needs to walk into Acountry, especially over the and Douglas Tapfuma, who amongst going to tell us ― through their muted a grocery store to accept the fact that the cost of living is increasingly past four or so weeks, l have not only us mere mortals is safe? approach or responses ― that they are come to the conclusion that Zimbabwe And what might have been lost on not interested in understanding what getting beyond the reach of many Zimbabweans. is a country that is not ready for global many rejoicing or chuckling at this really transpired in Marange and Kin- Zimstats would have us believe that the monthly inflation rate for capital and international cooperation, duo's woes is that the 21-day incarcer- shasa after several United Nations re- June was down to 21 percent from 39 percent the previous month but but is being ruled by a bunch that is ations not only take away people or in- ports, Hwange Colliery after the Ralph ordinary citizens, who still have to buy their hard-earned meagre sal- clearly out of its depth. dividuals' rights, but add onto a chronic Bommet report, then we might as well aries from cash dealers on the streets, will attest that the reality is far From the unconstitutional strate- problem associated with the rule of law resign to what constitutes graft and is from that. Life is increasingly becoming difficult. gy of prosecuting corruption-accused in this country. selective application of the law in this According to the United Nations, at least five million Zimbabweans people through "21-day special certif- As such, which investor ― includ- country! face starvation this year and with a staggering 1,5 million urbanites also icates" to the exclusionary policy of ing the Chinese, British, Russian and Just this week, parliament's pub- facing severe food shortages as economic hardships take a toll on the making some companies receive pay- Americans ― would want to come to lic accounts committee heard about populace. ments and be exempted from paying a country where its own citizens are how a company called FSG ― wide- A severe drought has also added to the country’s problems and Trea- duties in foreign currency, it would detained, if not tormented, on uncon- ly-thought to be Fertiliser, Seed and sury has to borrow more funds to import grain. seem President Emmerson Mnangag- stitutional grounds? Grain ― was handed $400 million While the tobacco industry, which usually eases the country’s foreign wa's government is well on course to Which foreign national would want for fertiliser imports in murky circum- currency needs, defied the odds by surpassing last year’s record output outdoing itself in further ostracising it- to visit a country where commercial stances and I believe Zimbabweans of 252 million kilogrammes, the quality of the crop has been disappoint- self from the world through its violent disputes can be criminalised and you will be watching keenly as to what the ing and earnings have been far less than could have been achieved. crackdowns on civil demonstrations. end up rotting in a filthy slammer for corruption-busting agency will say, The season started off to a slow start with bungling on the part of And in addition to its sickening se- up to a month ― and what guaran- and do over the next couple of days. government over payment modalities and taxes. lective application of the law culture, tees are there that a constitution-vio- And apart from engaging in idle Output and earnings from the extractives sector have also been disap- where those fingered in the Chiadz- lating government will respect court "political talk, and actions", which pointing because of the increasingly challenging operating environment. wa, Congo, Hwange and command judgments in the event of an investor have continued to consign this nation agriculture plunder are allowed to getting a favourable outcome or win into a pariah and retard the economy, The economy is evidently under immense stress and it is high time the roam free, the Harare administration (when disputes are referred to the ju- our government is plodding ahead minister addresses the weak fundamentals, which are causing inflation is certainly continuing with such "non- diciary)? with shameful and piecemeal projects, and untold suffering for the masses. sensical projects as making an entire And for reference, the Nssa issues which have no meaningful impact on president commission a 6,5 kilome- and their treatment ― in totality ― are the developmental agenda and goals of tre-long road" in the Zambezi Valley quite telling. the country. Southern Africa’s Leading Business and Financial Newspaper and conducting state business through And talk of the selective applica- These include Transport minis- Established 1969 witchhunts, and blackmail. tion of the law, if not "animal farm ter Joel Biggie Matiza's temerity and Publisher: Modus Media But this is a classic Zanu PF tem- syndrome" that is so pervasive in this chutzpah to drag Mnangagwa for a plate and way of doing things or its rul- society, you have a whole govern- 6,5 kilometre scrap-and-repair job in MARKETING EDITORIAL General Manager - Marketing ing or governance tenets, where other ment ― and president ― who allows Mana Pools when people continue to Editor-In-Chief & Chief Oper .zw people's rights, respect for convention Zimbabwe Consolidated Diamond die on that treacherous Beitbridge to Christopher Goko: gokoc@fingaz.co.zw Brand Executive - Advertising Corporation chairman Killian Uka- Chirundu highway. Managing Editor Edwin Vengesa: ev .zw Open Forum ma "to sign a joint venture agreement This is the same guy who has pre- Eric Chiriga: chirigae@fingaz.co.zw Senior Sales Executives with Alrosa Diamond of Russia" and viously mouthed off something to the Senior Assistant Editor Christobel Washaya: cwashay .zw yet Robin Vela is being hounded for effect that government has budgeted Chris Gumunyu: gumunyuc@fingaz.co.zw .zw with alleged croynism at Nssa when he nei- $100 million of local money in fixing News Editor .zw ther picked any suppliers or partners a major portion or part of that 1 100 John Kachembere: kachemberej@fingaz.co.zw Sales Representatives - Harare Dumisani Mugari nor unilaterally signed any documents kilometre-long road and when it costs Markets Editor .zw as a non-executive chairman" of the no less than US$500 000 to upgrade, Tabitha Mutenga: mutengat@fingaz.co.zw Frank Nyandoro: fny .zw organisation! and rehabilitate a kilometre of an old Special Projects Editor Edreck: emudzingany .zw Kudakwashe Chideme: chidemek@fingaz.co.zw and normalcy are secondary to its in- But this is Zimbabwe, where the motorway. Sales Representative - Bulawayo terests, and norm-defying penchant norm, legality and convention do not While we have gotten up to $21 Group Digital Editor Clever Pedzisai: [email protected] Paul Nyakazeya: nyakazeyap@fingaz.co.zw and quest for power. matter. million from Japan to "seal that part of Brand Executive - Events While l hold no brief for the incar- And after banning the use of multi- the road", where is our national pride Companies Editor K .zw Shame Makoshori: makoshoris@fingaz.co.zw cerated Priscah Mupfumira ― who ple currencies, we also saw a few com- and sense of seriousness to deliver on Brand Executive - Subscriptions Staff Writers Tatenda Taka: t .zw was seized by the Zimbabwe An- panies in the form of the Multichoice those fancy infrastructural promises, Omega Ukama: [email protected] ti-Corruption Commission (ZACC) ― probably out of the government's and does Matiza's embarrassing antics Adelaide Moyo: [email protected] Subscriptions Representatives Nelson Gahadza: [email protected] Ronald Madiviko: rmadivik .zw after a "forensic audit" on the National interest in the satellite firm ― being inspire confidence at all, especially Freedom Mashava: [email protected] Elizabeth Nyamaruze: eny .zw Social Security Authority (Nssa) ― allowed to continue charging in hard when he is also superintending those Production Supervisor Chief Executiv how does a normal government and cash, and then there was statutory in- multi-million dollar airport upgrades? Kudzai Rushambwa: rushambwak@fingaz.co.zw .zw society countenance a scenario where strument 170, which also exempted Recently, we were also ambushed its citizens are detained for days on end Gushungo Dairies from paying duty with a tsikamutanda approach to the Bulawayo on the basis of an unconstitutional or- for imported materials in forex. so-called 'land barons' issue by the Editorial, Advertising & Circulation 1st Floor, Princess Court, der or certificate? And the question is: was the idea Zanu PF youth league in a develop- 2nd Floor, Green Bridge South, Eastgate Complex, Corner Forth Street/9th Avenue, P. O. Box CY 376, CAUSEWAY, Harare, Zimbabwe Bulawayo. And the tragedy of it all is that just to benefit Robert Mugabe's dis- ment much akin to the William Mutu- Tel: +263-242-781 572 Tel: (029)75873/75270 many Zimbabweans would laugh it tressed Alpha and Omega Dairy or manje attack on the Reserve Bank of Website: www Distributed by: ANZ off, disregard or brush this aside un- there are more important, if not vested Zimbabwe. VOLUNTARY MEDIA COUNCIL OF ZIMBABWE der the guise or pretext that it is this interests, and crucially, will this sick- And when all is said, and done ― The Financial Gazette newspaper subscribes to a Code of Conduct that promotes truthful, accurate, fair and balanced "ex-Zanoid cabinet minister's misery" ening discriminatory culture end and coupled with the regime's self-destruc- news reporting. If we do not meet these standards, register your complaints with the Voluntary Media Council of when it can befall anyone of us, and how it impacts on the country's invest- tive move to pulverise its citizens ― it Zimbabwe at: No 34 Colenbrander Rd, Milton Park, Harare. Telephone: 04-778096 / 778006 24 Hr Complaints line: 0772 125 659 more importantly, strikes at the core ment prospects/outlook due to the way is quite clear that Zimbabwe "is not Email: [email protected] or [email protected] Twitter: @vmcz http://www.vmcz.co.zw | Facebook page: vmcz of basic rights on the presumption of it entrenches perceptions of a country open for business", and neither is it un- Zimbabwe innocence and access to bail! so much given to policy flip-flops? der the control of a capable leadership. August 29-September 4 2019 Page 9 Companies&Markets The Financial Gazette ZSE OUTSHINES COMPETITORS - p11 USD/BWP Sugar (USD/lb) Cotton (USD/lb) Nickel (USD/t) Palladium(USD/oz) THE Zimbabwe Stock Exchange recorded the best performance amongst regional peers in the half year to June but the growth was inflationary, an African Development Bank 0,22% 0,95% 0,03% 0,03% 0,01% report has shown. 11,0926 11,47 57,12 15 780,03 1 473,86 ... as pension funds seek High inflation value in property investments

Nelson Gahadza ravages banks Staff Writer Adelaide Moyo ELF-ADMINISTERED pension funds’ investment Staff Writer in property increased 30,96 percent for the quar- Ster ended March 31, 2019 as they sought to hedge IMBABWE’S financial institutions are against losses in the equities market. vulnerable to value destruction in the pre- The self-administered funds’ assets are largely composed vailing inflationary environment as they of investments on the stock market. Z According to the Insurance and Pension Commission hold assets which are denominated purely in a domestic currency, a local equities firm has said. (Ipec) quarterly report, equities and investments in prop- IH Securities (IH) said latest inflation statistics erty accounted for 76,80 percent of the fund’s total asset show that year-on-year inflation hit 230 percent base. in July 2019 from 175,66 percent in June and the “The total asset base for self-administered funds was equities firm said to achieve real returns on that mainly composed of long-term investments in the form of same year-on-year basis, banks would have to equities totaling $1,14 billion and investment properties beat that inflation benchmark. totaling $375,01 million respectively, mainly on account “As the country hyper-inflates, assets that of the need to preserve the value of funds in the inflation- are denominated purely in Zimbabwean dollars ary environment,” said Ipec. (ZWL) will become vulnerable to value destruc- Infographic by Darius Mutamba The report shows that the value of the sector’s assets tion, unfortunately the banking sector by its na- had remained flat at $1,97 billion from December last year. ture is amongst the most vulnerable in that sce- a sad outcome for the country which needs loan May 1, 2019 impacted positively on interest and “However, there was a 30,96 percent increase in the nario. Real net interest income has been eroded funding in order to stimulate growth,” IH said. related income despite the achievement of inter- value of investment property from $286,35 million as at by inflation,” Lloyd Mlotshwa, director and head The firm said in full year 2018, banks regis- est margins which remained negative when com- December 31, 2018 to $375,01 million as at March 31, of sales at IH Group said. tered growth in net interest income buoyed by an pared to inflation,” said Ronald Mutandagayi, 2019,” said the report. “Whilst lending rates have gone up since the increase in investment in government securities ZBF’s chief executive. Ipec noted that the increase in investment property was, accommodation rate was increased, we estimate and some growth registered in loans. Agribank recorded a profit of $4,6 million for however, offset by an $83,95 million decrease in the value that depending on quality of the borrower, those “Mobile money transactions continue to dom- the five months to May 31, 2019, which was 23 of equities. rates on average sit in a spectrum between 20 inate the volume of transactions, however, the percent above the projected $3,7 million. “The decrease in investment in equities was mainly due percent and 30 percent, which is still massively banking sector’s strategy of increasing non fund- Metbank’s after tax profit surged 254 percent to the decline in the value of listed equities on the Zimba- sub-inflation; therefore banks are making- neg ed income has started to bear fruit as highlighted to $17 million for the year ended December 31, bwe Stock Exchange.” ative real returns and we don’t see how they in the first quarter of 2019 volume and value con- 2018 compared to $4,8 million in 2017, largely The sector’s assets contributed 36,70 percent of the emerge from that spiral in the short term unless tributions,” IH said. driven by improved non-interest income. pension industry’s $5,38 billion asset base, and the sector’s there is a significant retraction in inflation itself.” CBZ Holdings, Zimbabwe’s largest financial FBC Holdings reported a 90 percent increase asset base translated to an average capital accumulation “As a result of the above, we have seen banks services group by assets, says its after tax profit in after tax profit the year ended December 2018 per member of $16,651.27 during the quarter. strategically shifting focus from lending (which increased to $72,2 million in the year to Decem- driven by a 39 percent growth in income. During the period under review one fund; Autotyres is their core business) to developing channels of ber 2018 from $27,8 million in 2017, largely on Nedbank Zimbabwe profit was up $14 million Pension was dissolved leaving the number of registered non-interest income (loan to deposit ratio as at increased net non-interest income. during the six months ended June 30, 2019 from self-administered funds at 172. 2018 as low as 40 percent.” ZB Financial Holding said its profits in the $4,36 million achieved in previous comparable The 172 funds were being administered by 5 adminis- In its Zimbabwe Banking Sector Report, IH five months to May increased 183 percent to period attributed to a growth in non-interest in- trators and 5 life offices. said the bank’s thrust is now more on transaction- $17,6 million compared to $6,2 million recorded come. Despite recording 1,432 new entrants the total member- al banking to generate fee income and leveraging in the same period last year. Stanbic Bank recorded a 26 percent growth in ship for self-administered funds decreased from 119,217 technology. “The relaxation of controls on lending rates by net interest income up from $55,1 million in the as at December 2018 to 118,564 members during the quar- “Whilst this is the appropriate survival strat- the Reserve Bank in April 2019, and subsequent comparative period to $69,7 million. ter under review, largely as a result of a high number of egy for a bank in the current environment, it is adjustment of interest rates by the group from [email protected] exits, totaling 2,943. [email protected] Page 10 | August 29-September 4 2019 The Financial Gazette Companies & Markets Apple sheds $44 billion

PPLE'S reliance on China is iPhone production out of China over wake of the latest tariffs announce- Apple rejected it and the supplier ended up looking increasingly like its the course of 18 months. The comments.People familiar with iPhone expanding in China. Abiggest handicap.The world's pany would require three years to production have said that it is nearly The recent effort by GoerTek to shift most influential consumer electron- move 20 percent out, he adds, which impossible to relocate manufacturing some of its AirPods production to Vietnam ics company shed $44 billion of is still less than the 25 percent of iP- of Apple's iconic device in a whole- was done by its own volition, people famil- market value Friday after a pair of hone production that Apple needs for sale manner due to the difficulty of iar with the decision said. but neither of those pronouncements from Beijing and its domestic US market. American procuring a skilled labour force else- relates to the iPhone, which remains chiefly Washington cast a spotlight on its tariffs on goods from China would where, a point that Apple chief exec- made in China, with some assembly of older massive Chinese production base, therefore directly impact Apple's big- utive Tim Cook has hammered away models happening in India and focused on from which almost all of the world's gest moneymaker. at in public as well. the domestic market there. Tim Cook's ability iPhones are made. Ives calls Trump’s latest com- The challenges of replicating the to lobby Washington for tariff relief will be United States president Donald ments on China gut punch to Cuper- complex production lines and nec- tested over the coming weeks. Trump this weekend ordered Amer- tino in the title of his report. Apple’s essary infrastructure are also major He has so far been able to obtain a tem- ican companies to immediately start main assembly partner, Foxconn, has hurdles. porary reprieve for iPhones, iPads and Apple looking for alternatives to manufac- claimed that it has the capacity to While Apple has asked at least laptops, which won't be subject to US tariffs turing in China, which is something build all of the Cupertino company's some suppliers for proposals on until December 15. but going forward, unless Apple is thoroughly unprepared for, US-bound iPhones outside of China, ex-China production, there is no sign an unlikely rapid resolution to the trade war is according to analyst David Ives of however all indications are that to de- the Cupertino company is preparing reached, Apple looks like it will have to draw Wedbush Securities. In a best-case ploy it would require a great deal of for a large-scale migration. up comprehensive plans for building iPhones scenario, says Ives, Apple would be time and money. Apple's stock price In one case, an assembler pro- outside of China, however costly that maybe. able to move away 5 to 7 percent of took two big hits on Friday in the posed a location outside of China, but – Bloomberg Huawei sees a US$10bn hit UAWEI expects US export restrictions to reduce annual revenue at its consumer devices business by Habout US$10 billion, as the company is banned from buying American components like semiconductors and software. China’s largest technology company is seeking ways to replace key US suppliers such as Cadence Design Systems and Synopsys, deputy chairperson Eric Xu said on Friday. The overall damage to the company will be a “little less” than billionaire founder Ren Zhengfei’s initial estimate, Xu added. Huawei is seeking to develop alternatives after coming under intense pressure from the Trump Administration, which has argued its technology represents a security threat. On Friday, it introduced its most powerful artificial intelligence chipset, the Ascend 910, which is poised to rival some of the best offerings from Qualcomm and Nvidia. Earlier this

month, it offered the first glimpse of an in-house software - HarmonyOS that may someday replace Google’s Android. The company is also researching ways to replace chip-design software tools offered by Cadence and Synopsys, Xu told a news briefing in Shenzhen without elaborating. “There were no chip design tools 10 years ago, but the industry still developed chips,” said Xu, who argued that Ca- dence and Synopsys were not must-haves for design. “Intel started to develop chips in the 1970s, when those companies didn’t exist.” Since May, Huawei has occupied the uncomfortable position of being both an established global brand and a member of the US Entity List, which bars it from trading freely with American suppliers. Despite a series of 90-day reprieves, the latest of which came this week, the uncertainty caused by American sanctions has already cost the company a great deal. Already, it reported slower sales growth in the second quarter compared to the first as the ban started to bite, especially into a consumer business encompassing smartphones and laptops.That in turn is accelerating Huawei’s effort to become self-reliant. One area in which the Chinese company is rapidly developing in-house expertise is semiconductors, propelling Bei- jing’s ambitions of weaning itself off foreign chips. HiSilicon — Huawei’s chip design subsidiary — has been developing its capabilities for a long time, and it’s recently grown into the second largest customer (after Apple) for the world’s biggest chip manufacturing contractor Taiwan Semiconductor. Huawei has also elevated the presence of home-grown technologies throughout its product line from base stations to smartphones and servers as a key step to limiting the damage of the US ban. The Ascend 910 processor unveiled on Friday is a show of technological prowess. It will be used for AI model training, and Huawei says it outperforms all existing competition. Xu proclaimed that “without a doubt, it has more computing power than any other AI processor in the world.” The company also unveiled MindSpore, an AI computing framework that — along with the 910 — is supposedly twice as fast as Google’s TensorFlow.” — Bloomberg The Financial Gazette August 29-September 4 2019 | Page 11 Companies & Markets ZSE outshines regional peers Shame Makoshori tuitive bull-run that was underpinned by the monetary cri- Companies Editor sis in the southern African country. “This performance is on the back of increasing infla- HE Zimbabwe Stock Exchange (ZSE) recorded the tionary pressures thus investors have been seeking safe ha- best performance amongst regional peers in the half ven on the local bourse which has been matching changes Tyear to June but the growth was inflationary, an Afri- in the general price levels. The industrial and all share in- can Development Bank (AfDB) report has shown. dices year to date performance individually rose by 29,97 The ZSE’s all share index rose by 29,97 percent in the percent between January and June 2019 whilst the top 10 first six months but has since tapered off, shading about 20 and industrial indices rose by 24,6 percent and 19,77 per- percent of its value since June. cent respectively, said AfDB. The 29,97 percent was far ahead of second placed Jo- “Worst performers in the region include the Lusaka hannesburg Stock Exchange, which reported a 7,47 per- Stock Exchange whose year to date performance of the cent growth during the period, AfDB noted in the Monthly all share index went down by 19,6 percent on the back of Bulletin for July. an increasing debt burden and weakening currency. Other “In the first half of 2019, the Zimbabwe Stock- Ex worst performers include the Tanzania all Share and Nai- change indices exhibited exceptional performance com- robi NSE 20 indices that declined by 11,04 percent and pared to its regional peers,” said AfDB. southern Africa. The ZSE’s top 10 and industrial indices 10,99 percent respectively,” the report noted. The report said ZSE leveraged on a huge swing to- Government has stopped publishing an- rose by 24,6 percent and 19,77 percent re- Along with the charging indices, ZSE turnover moved wards the capital markets by risk averse investors that nual inflation data, but according to Steve spectively, AfDB said. by 9,2 percent to $1 billion in June this year surpassing the stampeded to hedge against hyperinflation, which peaked Hanke, the US inflation expert, the rate ZSE had sustained its bull run since previous annual turnover record of $926 million, which to 175,6 percent in June — the highest inflation rate in ended at 552 percent in July. 2017, when it enjoyed another counter-in- was set last year. [email protected] Masholdings’ projects under threat

Omega Ukama Senior Staff Writer

ASHONALAND Holdings (Masholdings) says it may delay its planned property developments Mbecause of the tough operating environment ob- taining in the country. The operating environment is increasingly becoming tough characterised by rising inflation, shortages of electricity, fuel and foreign currency. “The challenging operating environment may delay the timing of development projects that the group has in the pipeline,” the property developer said in a trading update for the three months ended June 30, 2019. “The company will however continue looking for strategies to ensure that projects commenced will be delivered as planned and cost management measures will be employed for all projects underway”. The group said construction projects have also been affected by an increase in construction costs, lack of liquidity and lack of foreign currency to import foreign supplied building materials thereby reducing capacity utilisation “The property of businesses and consequently market is likely to threatening profitability in real remain depressed terms. in the short to “The property market is likely medium term. to remain depressed in the short to The group will medium term. The group will con- continue with its tinue with its strategic positioning strategic posi- thrust through scouting and acqui- tioning thrust sition of strategic land banks, and through scouting preserve value,” the group said. and acquisition During the quarter under re- of strategic land view, the group acquired a proper- banks, and pre- ty in Milton Park, for $2,9 million serve value,” for “a bespoke development for an identified corporate occupier”. The group said the acquisition was in line with its “portfolio diversification thrust”. The group says servicing of the proposed Westgate cluster development is now 95 percent complete with a total of $800 000 million having been spent on the project “in line with the budget”. “Pre-purchasing of buildings materials significantly reduced project risks,” the group noted. The group also noted that disposal of Old Windsor Park Ruwa serviced stands is still in progress and it is “actively marketing the project to different finance houses”. Meanwhile, the group says it recorded a profit of $9,4 million during the period under review. The company’s trading update shows that the 623 percent increase in profit was driven by fair value gains in its holdings in quoted equities amounting to $4,5 million. This was after the Zimbabwe Stock Exchange gained more than 80 percent during the period as investors sort refuge from inflation, which rose from 75,86 percent in April to 176 percent in June. However, since government reintroduced the Zimba- bwean dollar as the sole legal tender on June 24, a significant portion of these gains would have been reversed after the stock market lost about 25 percent in value. [email protected] Page 12| August 29-September 4 2019 The Financial Gazette

Delta has nothing to hide

Simbiso Musa aged to be consistently transparent in a ing environment, Delta updated the with detailed information available on their website. The volatile environment. Delta`s disclosures market of the constraints at the Spar- company has issued quarterly trading updates. Current- ELTA Beverages (Delta), the largest beverages are characterised by informative caution- kling Beverages unit throughout the ly it is not a regulatory requirement on the Zimbabwe company in the country, continues to lead the ary statements, unlike other companies year. In addition, they also delivered Stock Exchange but Delta goes a mile further to inform Dway as in disclosure and investor relations. which only warn investors to be cautious comprehensive transaction updates. investors about their business on a quarterly basis, en- Delta is once again the winner of the Disclosure and without the background of the transaction. The market has been closely follow- abling analysts to almost accurately forecast revenue Investor Relations Award. Delta, as a company, has man- Given the challenging operating The Coca Cola Company transaction flows. Their analyst briefings are comprehensive,- sup ported by a reasonable level of engagement. Overall, this delivery has been constant, presenting a cutting edge which most companies have failed to emulate. A call for enhanced disclosure reforms in a volatile operating environment Disclosures provided in connection with financial statements are essential to an investor’s understanding and analysis of the economics underly- ing the information in financial statements. Since the reintroduction of the Top Companies Survey in 2014, very little progress has been made on the market with regards to improved disclosure hence a call to enhance disclosure reforms by the regulator. There is significant room for improvement as capital market players have conformed to box ticking exercises, which is highly inadequate. Consideration of disclosure reforms from the investor perspective is an important contribution that is yet to be included in a substantial way in the current dialogue on disclosure reforms. Significant focus should now be on howre- cent economic events and secular trends have informed efforts to reform financial reporting disclosures. It is prudent that any dialogue regarding financial reporting and disclosure reform must bein- formed by current events and the current environment, or context into which such reforms might be introduced. The financial year 2018/2019 was inundated with significant monetary reforms which threatened a lot of business models. In such an environment, where- by financials cannot be fully interpreted at face value, companies need to walk closely with investors with regards to bridging the information gap. The majority of companies altered their business models and as such full disclosures were pertinent. It was not prudent for companies to just publish their results and not take time to explain the numbers to their stakeholders. The 2018/2019 financial numbers for most companies were characterised by adverse opin- ions from the auditors, a position which then needed companies to enhance their disclosure capacity. The lack of such disclosures as exhibited by some companies is worrisome and hence the call for regulatory bodies to tighten disclosure requirements, with mandatory analyst briefings, quarterly trading updates as well as terms of references for disclosures in annual reports. — Top Companies Survey. The Financial Gazette August 29-September 4 2019 | Page 13 Companies & Markets BAT pursues US$22m dividend

Nelson Gahadza sure a steady flow of foreign currency to foreign currency for external payments. Staff Writer support the company’s current and future During the period under review, volume across the foreign currency requirements.” business portfolios decreased 20 percent driven by re- RITISH American Tobacco (BAT) Zimbabwe The amount is included in the com- duced consumer disposable incomes. says it has opened negotiations with the Reserve pany’s balance sheet for the interim pe- “The Premium Brand, Dunhill, recorded a decline BBank of Zimbabwe (RBZ) to pay US$22 million riod to June 30, 2019 under $27 million of 87 percent compared to the same period in prior year it owes to foreign shareholders. accounted for as “amounts due to related driven by the Company’s inability to import Dunhill as This comes as several firms have over the past two parties”. duties are required in foreign currency,” he said. years failed to repatriate dividends owed to foreign share- Last year, BAT indicated that it was He added that the value for money brands, Madison holders and settle obligations to foreign suppliers due to consulting with the major shareholder on and Everest, declined by 21 percent and the low value for the country’s dire foreign currency situation. how the cash resource could be utilised money brand Ascot, also declined by two percent. Leslie Malunga, BAT’s finance director, on Monday within the business until the situation nor- However, despite the decrease in volumes, revenue said the central bank has asked companies to transfer all malises. increased 48 percent to $29,4 million from $19,8 million legacy debts with supporting documentation for remit- During the period under review, due to price increase to cover for increased costs. tance at a rate of 1:1. amounts due to related parties increased Malunga noted that gross profit also increased 61 “However, if dividends will qualify as legacy debt to $27 million compared to $20 million percent driven by positive impact of raw materials pur- is yet to be confirmed, the cigarette manufacturer might same period last year. chased at lower costs. have to consider sending the money through the inter- Malunga said the increase in amounts During the interim period under review, non-current bank rate,” he said. to related parties was caused by delays in assets increased by $9,6 million driven by an asset re- “From a long-term perspective, we are talking to our receiving the exchange control approvals valuation performed. Inventory reduced by $0,2 million bankers and still looking at other possible options to en- for the contracts and general shortage of Leslie Malunga driven by leaf seasonality. [email protected] ZB targets tier 1 capital base

Nelson Gahadza Staff Reporter

B Financial Hold- ings (ZB) says Zit is targeting to achieve Tier 1 capital level of $100 million in the next few months ahead of the 2020 deadline. In 2014, the Reserve Bank of Zimbabwe (RBZ) ordered commercial banks to achieve Ron Mutandagayi minimum capital requirements of $100 million within six years in order to strength- en the financial services sector. Several financial institutions such as CBZ bank, CABS and FBC Bank, among others, have already surpassed the $100 million mark. Ron Mutandagayi, ZB’s chief executive, said the group was confident of meeting the minimum capital level before year end. “We have capacity to engage the shareholder for more funding, but there should be a serious business case. For now, we are saying we will be able to generate the funds internally and meet the deadline,” he said. The diversified financial services group is currently sitting on capital levels of around $90 million as at June 30, 2019. Market experts are of the view that a huge core capital base indicates long-term stability for the banking sector that in recent years was characterised by bank failures, particularly indigenous-owned financial institutions. However, Mutandagayi said the group’s mortgage lender ZB Building Society capital level is still lower, but the group is looking at how it can capitalise the building society. According to the central bank, the minimum capital threshold for building societies was increased from $10 million to $80 million, finance and discount houses from $7,5 million to $60 million and from $1 million to $5 million for microfinance institutions. Mutandayi said the group’s lines of credit surged 30 percent to US$40 million from US$30 million in the prior period last year, but appetite remains low. “At the moment we have US$40 million credit lines which we are disbursing, the rate of disbursement has been a bit slow because of the difficult economic environment but we continue to urge those that export to come forward and take advantage of the credit lines that we have,” he said. In terms of overall group performance, the banking business continues to dominate the group’s operations. Group’s total income grew 144 percent to $94,2 million from $38,6 million in the previous period. Net interest income from lending and trading activities stood at $14,3 million, representing a 40 percent increase from $10,2 million previously. “This is attributed to expansion in the earning assets portfolio which grew by 57 percent and also assisted by the re-pricing of loan assets in May 2019 following the removal of the regulatory rate ceiling which applied previously,” said Mutandagayi. He said net earnings from lending and trading activities marginally declined 4 percent from $10,9 million in the previous period to $10,5 million. [email protected] Page 14 | August 29-September 4 2019 The Financial Gazette Motoring Honda Jazz Sport 1.5 CVT The wrong badge on the right car

ment levels and if this car is broadly representative, the complete absence of trim squeaks and rattles will be equally appreciated. For those with an eye for detail, the use of one-piece doors is a TOP GEAR with Richard Wiley plus (most Japanese-sourced cars feature welded-on window frames) but the untidy application of “seam filler” ANY a moon has waxed and around the inner edges of all the doors waned since I last drove a and tailgate jarred somewhat. Honda Jazz so the recent ar- So too did the absence of any trim M around the inner tailgate area which rival of a Lunar Silver 1.5 Sport was most welcome. Before I’d even turned showed off too many spot weld marks over the starter motor, and notwith- and seams without any sealant. Small standing the Sport moniker attached to things for sure but this a Honda and I this model, it was hard not to notice the expect more from a manufacturer with long wheelbase and all the rear space a reputation for getting the detail right. this liberates. Then open the hatch In terms of performance and de- and be prepared for a surprise when it livery, the 16-valve 1.5 litre four pro- comes to the luggage space, even with duces a healthy 97kW but at a rapid 6 rear seat backs in-situ. 600rpm, and a torque peak of 155Nm at More about the practicality of Long wheelbase is clearly evident in this profile a merry 4 600rpm. Honda’s hatch in a mo, but allow me This should tell you that revs are to dwell for a moment on some deri- needed to get the best out of the mo- sive remarks attributable to one Jere- tor, and so it is. The bald figures show my Clarkson who, a few years back, a max of 180km/h and a 0-100 run in suggested that the Japanese brand had 9.8s but to achieve these laudable fig- acquired a reputation for appealing to ures, you’ll need to put up with a fairly the “blue rinse brigade.” To the uniniti- buzzy reaction from under the bonnet. ated, that’s a euphemism for old ladies By contrast, open road cruising is who, even in my neck of the woods in a most pleasurable affair with plenty the Cape, have gravitated to the Jazz in in reserve at the national speed limit. numbers. Mechanical commotion is muted and Inevitably, Clarkson paid a visit to a steepish gradients present no great ob- bowls club in the UK to prove his point stacle. In fact, when you are not trying but perhaps in an effort to shake off an too hard, this Jazz rewards the senses image that I suspect Honda didn’t re- but it’s that CVT transmission that ally want, they slapped a Sport badge seems to want to hold back the snappy on their compact hatch and added a few engine when the throttle is mashed into hang-on body bits to identify the driver the carpet. And the presence of paddle as a potential Red Bull Honda driver. shifters doesn’t help the cause. Over a My cynicism is sourced in two sig- week’s varied use, I recorded a most nificant aspects of the latest Sport and pleasing fuel consumption figure of these two “things” simply don’t find 7.1l/100km. a place on or within any competitive Silly as it seems for a Sport-badged model which carries a “Sport” moni- model, it delivers its best when it’s ker. driven with some restraint. Take the tyres first. The admittedly That’s because the CVT has less Rear space is surprisingly generous. Well-padded seats are not particularly sporty. sporty black alloy wheels are home to opportunity to apply its darker side, a very old-school 185/55R16 tyres. Who side which includes too much slip that ever heard of a sport model in the last in turn causes the engine to get more decade riding on such high-profile rub- vocal. All the while, overall refinement ber? is enhanced by low levels of wind and More significantly though, this road-induced noises. Honda transmits the energy from its There’s just a hint of rustle around 1.5 litre motor to the front wheels via a the base of the large windscreen pillars CVT transmission. The Japanese love and coarse tar can telegraph just a hint affair with this type of stepless auto of knobliness, but nothing really to box is frankly a worry as CVTs just worry about. don’t work as well as torque converter The truth is the Jazz Sport would or dual clutch gearboxes, especially be- be all the better with a manual box or cause they are infused with a leisurely with a dual clutch arrangement. While disposition that has no place in a sport it rides fairly firmly, surprisingly so for model. a car with relatively high-profile tyres, Sure, when used in an unhurried there’s still a well-judged dose of pli- manner, a CVT works fine but give the ancy on hand and overall control is top motor a few beans and the transmission drawer stuff. protests by winding up and causing the It feels like a bigger, heavier car ex- motor to sound strained. The installa- cept that it responds more quickly to the tion in this Honda benefits from paddle helm which is directed by a superbly shifters and it’s far from the worst of its set up power steering system endowed type, but in terms of urgency, it doesn’t with a lovely linear feel and consistent deliver in a manner befitting the badge. weighting. The brakes, complete with a Had Honda elected to give the mod- Roof spoiler and “jazzier” bumper for Sport model. host of electronic aids, feel more than el a less grandiose name – for example, capable too, but do suffer from mildly Honda Jazz S – I would not have ex- but most notable of all, given that the orangey-red trim inserts, sports decent- pily rear park sensors are on board. too much assist at very low speeds. pended so much energy on these two Jazz is a Hatchback, was the rake of the ly-padded, cloth-covered front seats So too are electric windows, air con, a In conclusion, if it weren’t for the issues as the Jazz package displays lots windscreen. It’s one of the most laid picked out with red stitching. Height multi-function steering wheel complete CVT gearbox and its deleterious effects of virtues. back in the business but the sleekness it adjustment is on hand for the driver with cruise, Bluetooth and sound op- on the manner in which the spritely en- For starters, it looks rather appeal- imparts does impinge on three quarter and while those pews are comfortable tions, not to mention generous connec- gine delivers its wares, this version of ing with its body colour side skirts, rear forward visibility. enough, they are hardly sporty in terms tivity in the shape of USB, HDMI and the Honda Jazz would sit near the top spoiler and door handles, not to men- Access to the interior is provided of lateral grip. The rear is where the power sockets. of its class. tion lots of “air vents” and gloss black courtesy of a keyless system which re- real surprise is delivered as the space A triple instrument cluster – with It just seems so incongruous to at- mirror housings, rear diffuser and low- veals a neat and tidy cabin that’s none- offered is really good for a car of com- no temperature gauge - provides a mix tach a Sport badge to a car and then er front grille, both of which are picked theless endowed with more than its pact dimensions. The floor is nearly flat of analogue and digital displays all of undo its potential with such a trans- out with a red stripe. All these “sporty” share of hard and scratchy plastics. The and there’s loads of kneeroom while which are supplemented by a central mission. Having said that, if you’re not bits stood out against the smoothly ap- only soft-touch bits can be found in a the boot space at 359 l (expandable to infotainment display screen that an- always in a hurry, you’ll find a lot to plied but slightly-short-of-gloss silver thin band of padding in the vicinity of 889 l) is equally generous. noyingly offers impractical on-screen like in terms of unexpected roominess, paint. Panel gaps, with the strange ex- the cubby lid and around the door and Rear pax might feel a bit hemmed volume adjustment. good refinement, sharp handling allied ception of the bonnet to fender clear- centre armrests. in by the hefty rear pillars, which by Certainly, no-one could possibly to a generally good ride, and finally, ance on both sides, were really good, The all-black interior, complete with definition impair rear vision, but- hap feel hard done by in terms of equip- plenty of built-in safety systems. The Financial Gazette August 29-September 4 2019 | Page S1 Agriculture Trends Introducing Corteva Agriscience

ORTEVA Agriscience (Corteva) grows progress 2016. cycles and improve accuracy toward breeding targets, bined germplasm, talent, and experience to improve by putting farmers and consumers at the heart Growing our products such as doubled haploids and, ear photometry, as well cultivar breeding and development for Africa Cof agriculture. By doing this, it reshapes the in- Seed solutions: Canola, cereals, corn, rice, silage as genetic breeding technologies like predictions and • Research efforts support breeding programs for all dustry to meet the needs of the 21st century. Corteva inoculants, sorghum, soybeans, and sunflowers. Crop marker-assisted selection. crops, including maize, sunflower, grain sorghum, for- believes that the future of farming depends on align- protection solutions: herbicides, fungicides, insecti- Integrated field sciences (IFS) age sorghum, wheat, dry beans, and soybeans. ing the food value chain from end to end. Through this cides, pasture and land management, seed applied tech- The IFS R&D team works with a strong pipeline Talent Corteva believes a more financially secure, sustainable, nologies, urban pest management, turf and ornamental of crop protection products and develops data to deter- Corteva’s world-class R&D organisation includes innovative and responsive agricultural industry can be pest management. Digital services: software for grow- mine the value of a product and helps the Commercial global and local scientists who develop useful tools achieved. ers to build and sustain stronger businesses by maxi- Organisation to sell this value. IFS works cross-func- to accelerate the discovery and delivery of new prod- Corteva helps to shape an industry that is better able mising yield with data-driven crop models, improving tionally with the regulatory and breeding teams in field ucts across multiple crops for farmers. We are a glob- to understand and react to market demands that can ef- teamwork efficiency and communication, measuring trials on the biology and registration data for the devel- al organisation that creates local solutions. “We have fectively harness science, technology and innovation to profit down to the field-level and simplifying farmland opment and commercialisation of crop protection prod- approximately 5,000 researchers, scientists spread out optimise productivity and that has the know-how and research and transactions ucts, biologicals, seed treatments and agronomic traits over 130 countries, focused on value creation. We have resources to help chart its own long-term success in the Growing across Africa and the Middle East for the management of insect and nematodes, diseases talent all over the world, with field stations, insectaries, face of challenge and change. The future of farming depends on innovation. The and weeds. and other assets focused on field studies from early dis- Corteva is a company that’s been cultivated on a Africa Middle East research and development organi- Local capability covery phases through launch in support of both Crop healthy 200 years heritage. It brings together DuPont sation combines Global Reach with Local Application l This includes state-of-the-art field testing infra- Protection, Seeds and Seed Applied Technology plat- Crop Protection, Pioneer and Dow AgroSciences to and works to develop innovative solutions, improve structure and facilities labs, controlled environments, forms,” Corteva said. create a market-shaping, stand-alone agriculture com- productivity and create value for African farmers now and automated greenhouses including the drought re- “These talented men and women bring us a wealth pany with leading positions in seed technologies, crop and in the future. search facility, the Africa Technology Hub and an in- of expertise and areas of strength amongst many others protection and digital agriculture. It works across the Breeding sectary in Delmas, South Africa. are synthetic and formulation chemistry, best-in-class global agriculture value chain to create a more efficient A combination of strong science, technology and lWorld-class genomics & sequencing technolo- genomic expertise and data analytics. Complementing food system. “We will continue to invest in some of agricultural knowledge backed by elite germplasm gies. the breadth and depth of our talent is the competitive- the most recognised and premium seed brands in ag- and advanced breeding capabilities as well as leading lFully deployed advanced phenotyping through ness of our technology.” “We have state-of-the-art field riculture, such as Pioneer and Pannar as well as our competencies in trait characterisation and development drones, satellite imagery and more testing infrastructure and facilities, labs, controlled en- award-winning crop protection products,” Corteva said. make Corteva a leader in breeding. Corteva’s research Global scale and local expertise vironments, and automated greenhouses. Automation is The firm has operated in Africa since 1956, and network is infused with leading Research & Devel- lThe technology hub incorporates key seed and a fundamental strength of ours and, in keeping with our integrated its seed and Crop Protection businesses in opment (R&D) technologies which shorten breeding crop protection research and testing locations, com- focus on productivity.” The story of DripTech RIPTECH Irrigation seeks to be the They could then draw up the best plan for most prominent supplier of irrigation the best solution – whether it’s overhead ir- Dand related equipment in the coun- rigation, centre pivot or drip irrigation. Our try. It aims at offering farmers, businesses drip irrigation schemes help minimise water and home owners the best possible means to wastage and can be easily linked to solar not only move water more efficiently but to powered pumps making it ideal for rural sit- also conserve it, save time, reduce costs and uations where no electricity is available. increase yields! DripTech can supply every aspect of the Modern irrigation has arguably become irrigation plan including borehole pumps, the world’s most valuable innovation. Farm- tanks, booster pumps and pressure switch- ers are under ever increasing pressure to es. With our own ‘Pipe Factory’ we can also optimize their water use. Facing challenges supply the recommended diameter piping like drought, salinization, ground water de- from 20mm up to 500mm whether for un- pletion, changing seasons and lack of access derground or surface applications. DripTech to water reserves. DripTech Irrigation seeks stocks a wide range of pipes, fittings, valves, to provide simple, cost-effective solutions to filters and virtually any accessory you could deliver greater ROI (Return on Investment). possibly need. Our range of piping includes Back in 1995 DripTech first opened its PVC, HDPE, LDPE, copper and galvanised doors to the public and never looked back. pipe, lay-flat hose and suction hose. A pipe Run as a family business, DripTech now has threading service is also available for steel five retail outlets, Coventry Road, Glenara, pipes. Harare Drive, 2nd Street and one region- DripTech has also been involved in ur- al branch in Mutare. In addition Halsteds, ban water schemes including water supply N.Richards and Forsters Irrigation in Bula- and sewerage systems at Aspindale in Ha- wayo also stock a wide range of Driptech’s rare and the Hopeville development in Bu- quality products. lawayo. We also supply irrigation systems The family business for residential and corporate gardens. Op- DripTech not only imports quality prod- tions include micro-jets and automated pop ucts but also produces them. Seeing oppor- up systems on timers. The aim is to reduce tunities to meet local demand, DripTech water wastage and maximise the efficiency invested into the latest equipment for two of water use. factories. It manufactures its own PVC pipe Partners from 20mm up to 500mm and HDPE up to DripTech has also sought to align itself 90mm. Our pipe is made from only virgin with reputable brands such as Netafim, plastic and is SABS and SAZ compliant. Otech and the renowned brand DAB Pumps. Our 2nd factory is used to manufacture blow DAB pumps are manufactured in Italy to the moulded water & grain storage tanks. The highest specifications and are supplied with first of its kind in Zimbabwe. These tanks a two-year warrantee. Should any problems come in 5000L, 2000L and 1000L sizes are occur our state-of-the-art workshop is able incredibly strong and air tight. to diagnose and resolve the issue. We aim to The company initially only specialized keep a full range of spare parts for whenever in drip and micro-jet irrigation, equipment maintenance is necessary. solely supplied to the agricultural sector. Currently we are running a promotion However, since 2002 DripTech diversified on Solar Power Borehole kits. We have two into urban water supply as well as mine option available ¾ hp and 1hp options. Both drainage equipment. We now have a vari- systems are completely off grid and could ety of solutions for almost any agricultural give you up to 20,000L per day as long as need, seeking to offer only the best advice the sun is shining! and design for our customers. If a farmer or Would you like to know more? smallholder is needing a new irrigation sys- Visit anyone of our branches today to get tem installed DripTech could assess things your quote or simply call us on 0867 700 like water availability (a dam, a borehole 7000. Alternatively go to our website for or a tank), soil type, crops, local vegetation, more information www.driptech.co.zw land gradients and other relevant factors. Follow us also on Facebook Page S2 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | S3 NATIONAL UNIVERSITY OF SCIENCE AND TECHNOLOGY GRADUATE SCHOOL OF BUSINESS

Applications are invited from suitably qualified and experienced the University towards building a world-class, progressive persons for the following post that has arisen in the University: and high ranking institution. • Be an active member of relevant committees of Senate and boards, with specific responsibility for policy determination INSTITUTIONAL RESEARCH and oversight on standards of academic, operational, student welfare and support services. AND QUALITY ASSURANCE KEY COMPETENCIES AND ATTRIBUTES DIRECTOR The successful applicant will be expected to display a good combination of the following: This high profile position seeks a creative thinker who will be • Excellent oral and written communication skills, computer expected to spearhead the integration of the currently devolved literacy, and the ability to articulate and report on visions, institutional quality assurance functions of the university to advance perspectives, events and trends pertaining to institutional academic excellence in the realm of STEM higher education and quality. the Education 5.0 focus in the contemporary Zimbabwean context. The anticipated diverse footprints of the IRQA Director and his/ • Ability to connect smoothly with the internal and external her Office will include, inter alia, walking and working the NUST publics. vision, mission, and strategic directions through promotion of • High level decision-making and problem-solving skills. customer satisfaction, enhancement of operational and financial efficiency, championing continuous improvement efforts, and • Client-centred focus and proven organizational skills. prompt detection of impediments to quality practice. This will entail • Ability to create and promote a culture of proactivity, constant, effective and systematic interaction with other members innovation, transparency, efficiency, collaboration, and of the NUST Management Team, coupled with a tactical oversight flexibility. of the operations of the entire university community, to ensure protection of the University’s reputation and its compliance with prevailing quality assurance advisory and regulatory frameworks. QUALIFICATIONS AND EXPERIENCE The post requires an individual with:- Reporting to the Vice Chancellor through the Pro-Vice-Chancellor 1. An earned doctorate degree in quality assurance or (Academic, Research and Consultancy), the Director will maintain management or any closely related discipline, backed working links with the Pro-Vice-Chancellor (Innovation and by strong and well-aligned undergraduate and masters’ Business Development), the Registrar, the Bursar, the Librarian, degrees preferably in a STEM discipline, all from recognised Principal Officers’ Deputies, Faculty Deans, Dean of Students, Universities or other higher education institutions. Directors of Institutes, Centres and Sections, Chairpersons of 2. At least ten (10) years’ experience working in quality Departments, and other line managers. The position therefore assurance systems implementation and management at a calls for a flexible but focussed individual with a proven inclination university or other high profile institution or organisation, or towards organisational management at senior level, and/or similar experience in university teaching, research or other expertise in service delivery. senior position in which quality assurance is embedded. 3. Any relevant career development courses and experiences KEY PERFORMANCE AREAS will be considered. The successful applicant will be expected to: • Source, avail and manage knowledge and information APPLICATION PROCEDURE on quality assurance matters pertaining to teaching and Applicants must submit six (6) sets of each of the following learning, research and development, student welfare, documents:- Application letter, Curriculum Vitae (giving full campus facilities, all-round operational efficiency, and any personal particulars of applicant including full name, place and other functions as defined by university leadership from date of birth, qualifications, employment and experience, present time to time. salary, telephone numbers and the names, addresses (including • Contribute to the initiation, development, implementation email) and telephone numbers of three contactable referees) and and review of academic programmes and other projects to certified copies of certificates addressed to:- safeguard institutional quality standards. • Identify deficiencies in systems and operations and proffer The Senior Assistant Registrar (Academic) effective corrective solutions. National University of Science and Technology • Initiate and execute relevant education and training to P O Box AC 939 University employees of various grades. Ascot • Monitor institutional effectiveness and assist managers to make informed decisions. Bulawayo, ZIMBABWE • Investigate client needs and experiences and solve problems through consensus. The closing date for the receipt of the applications is Friday, 13 . • Collect and analyse client performance data to explain September, 2019 problematic issues and predict trends affecting quality product and service delivery. The National University of Science and Technology is an • Liaise with local and international vanguards and custodians equal opportunities employer. In the interest of promoting of quality assurance to enhance the university’s competitive gender parity, female candidates are encouraged to apply. advantage. • Integrate agreed international standards into the work of ONLY SHORTLISTED CANDIDATES WILL BE CONTACTED. Page S4 | August 29-September 4 2019 SPECIAL FEATURE The Financial Gazette What the heck is going on?

Crosby Pamberi could be the shortest serving chef in history. Now, many people are turned off by economic data. OMETIMES it’s impossible to see clearly what’s go- So, I have created two simple charts below, which I think ing on — especially in this world of 24-hour rolling anybody can relate to. They show easily comparable data Snews and social media. Nobody can escape. for annual growth rates between Zimbabwe’s GDP and the I am a currency dealer. My job revolves around constant- UK’s GDP. The red dotted line is a trendline which attempts ly shaping and re-shaping my views as the news changes. to predict where the two economies will be at the end of the To survive, in my world, I must stay abreast of the news and next three-year period. (Graphs) ahead of general opinion in order to help my clients make Comparing the UK and Zimbabwean economies, decisions. In a nutshell, no matter what is going on, my job post-recession, the Zimbabwean economic growth has is to make sense of what is happening in order to answer the bounced back at a higher rate. An extrapolation of the trend- question: What the heck is going on? line (red dotted line) seems to suggest that this could hold For this reason, I don’t like surprises (or at least, the true in future too. wrong kind of surprises!) Now, all investments carry varying levels of risk. And In my world, surprises cost money and make clients an- foreigners considering investing in Zimbabwe have to price- gry — which is the same thing really. When forecasts for in a “liability of foreignness” premium to the cost of their data which impacts the market (e.g. inflation, GDP growth, investment (i.e. “What are we prepared to lose?”) They must interest rates etc) are wrong — which they sometimes are — then factor that into their Return On Investment (“What exchange rates move in ways that are contrary to what the must we get back to make this risk worthwhile?”). After market expected. For this reason, I like taking a few minutes those two questions are digested in Excel spreadsheets; the each day to consider the contrarian view. Markets often fol- findings distilled via PowerPoint presentations and boards low patterns (technical analysis), and historically, when A have been wowed by the graphics from the Tableau Visu- has happened X would follow (fundamental analysis). Now, alisations that accompany the whole show; frequently, the just because A is happening today, doesn’t mean that X will decision taken will always be the same: No, Nein, Non or follow because this time around there may be B and C to nomic growth, for the past several decades, As I see it, some incredible opportuni- Nyet. The differences between these answers isn’t just in consider; and when taken in totality, A, B and C could lead are shrinking. The latest quarterly GDP fig- ties lie in emerging and frontier markets. the language but also the varying degrees of politeness with to an outcome of Z. So, I often ask myself: “What could I be ures for the two countries, released less than Zimbabwe is a frontier market. It is highly which the refusal is meted out. A refusal, no matter how po- missing?” . . . “What would happen to a particular currency one week ago, show negative growth of 0,2 risky. Unfortunately, right now, the UK is lite, is still a refusal. if such and such a forecast came out better or worse than percent. If that is repeated in the next quar- also extremely risky because of the current Fortunately, every economic downturn has its success expected? . . . What would happen if a certain assumption ter, both economies would be in a technical fears of a Hard Brexit. Whether that will stories. The tough part is finding them while everyone else was wrong?” recession. Many of us — whether we like it actually materialise or not is impossible to is scurrying for cover. So, the aim of this series of articles is to take a glimpse of or not — could be on the verge of losing the predict because of the peculiar nature of this And, guess what? It gets better, because as Zimbabwe- the global economy and a few snapshots of specific econo- very shirts on our backs. bubbling pot that is Brexit. Its ingredients ans in the diaspora; we have a “familiarity advantage”. We mies, delve into a bit of history; and use observations thereof True, economies always bounce back include a drizzle of incompetence; a gen- are better placed to gauge, manage and navigate several el- as a factual and rational basis for some crude decision-mak- and things will eventually be right again. erous dollop of farce, and a sprinkling of ements of that risk than non-Zimbabweans. For example, ing. The purpose of all that is to come to bring up an unusual However, in my opinion, because risk is xenophobia. It will be served — if it’s ever on our trips to visit families in Zimbabwe, we could source idea: to form a contrarian view, if you will. everywhere you look, if I am to take a risk, served at all — on a bed of cold lies; several goods abroad, for as little as $100, which we re-sell back The global economy is in peril because of trade wars, I would rather take it where the return, if/ months late. Funnily enough, the two chefs in Zimbabwe. If the return is zero; the loss is exactly that: tensions between the US and Iran and Brexit risks which when it comes will be huge. Or, at the very involved in serving up this concoction (or $0. If the return is good, we try again with $200 worth of threatens both the UK and EU economies. All major stock least, if I am re-balancing or diversifying previous versions of it) have been forced to goods, which we might send with a friend or a family mem- markets are in a tail spin. The yield curves in the UK and US my portfolio in an environment with stormy resign. We are now on our third chef in three ber or other cheap means, and so on. And if it works out, a have inverted, which suggests that a global recession could clouds on the horizon; then it is worth con- years. He only started work last month but business can be born out of that. The cost of doing that, in be imminent. The British and German economies — pow- sidering the potential returns of all the risky already bets are being placed on how long terms of both business risk and financial outlay, is minimal. erhouses that have been strong engines for European eco- options at hand. he will last in the job. There is talk that he A multi-national corporation cannot enter or leave a market at such minimal cost. We can help source goods that are uniquely Zimbabwean (e.g arts and crafts); or that can be produced cheaply in Zim- babwe and be sold at competitive prices in our destination countries. At little or no cost, we can employ our networks of friends, family, neighbours and former schoolmates to help us source such products. A multi-national corporation does not readily exploit such networks. When things go wrong in Zimbabwe, for example with the current power shortages, we find out about them almost immediately. Things going wrong means there is a problem. That problem is often a business opportunity. There will be a reward to the risk taker who provides a solution to that problem effectively; cheaply and delivered to a high standard. The reward is commonly known as profit. And the most nimble-footed problem-solver is further reward- ed with first-mover advantage. That often means enjoying higher profits for longer; before everyone else, and their ferret, jumps on the bandwagon and the profits are eroded — assuming of course that the problem still exists by then! A multi-national company cannot respond to opportunities in Zimbabwe as quickly as this. The above limitations to the nature of investments that multi-national companies can take advantage of, means there are opportunities which ordinary people and small- and medium-sized business can take advantage of. So, why are we not doing it, or, doing it as much as we should? The picture is complex. However, amongst the long list of reasons (many of them controversial!) that I hear about, one of the most common threads is that there is a limit to what one can achieve through family and friends. I take that to mean that our individual networks are too small. In my entire life I have never encountered anybody who complained of having too many friends! It is no coincidence therefore that many successful people say: “Your network is your net worth”. Others say: “You are the average of the five people you spend most time with.” The point is this: it is through collaboration with others that we can leverage our efforts to achieve much more than we can on our own. Collaboration helps us break out to achieve our true potential. I think that the logic of this statement holds true regardless of social status, race, gender, political affiliation or any other difference that keeps us, as Zimbabwean people, apart. Now, I intend to follow through with my contrarian view. So to give it a chance of success, I need to develop the networks that will enable this to happen. It is for this reason that I will be attending the Zimbabwean Outward Trade Mission to the United Kingdom to meet Zimbabwean and British business-people and explore opportunities for collaboration. It will be held in the first week of September in London and Birmingham. It is a chance to meet key figures in Zimba- bwe’s growth sectors such as renewable energy, agriculture, tourism and mining. Specific opportunities for working with UK companies exist for horticulture importers, FMCG (retail, wholesaling and manufacturing), fabric suppliers, fashion, leather, arts and crafts; home designs, furniture suppliers and biometric access control systems. Pamberi is the CEO of Heritage Pay. You can reach him on [email protected] The Financial Gazette August 29-September 4 2019 | AGRIBANK 1 AGRIBANK 2 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | AGRIBANK 3 AGRIBANK 4 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | AGRIBANK 5 AGRIBANK 6 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | AGRIBANK 7 AGRIBANK 8 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | STANDARD CHARTERED BANK 1 STANDARD CHARTERED BANK 2 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | STANDARD CHARTERED BANK 3 DAIRIBORD | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 1 FBC 2 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 3 FBC 4 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 5 FBC 6 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 7 FBC 8 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 9 FBC 10 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 11 FBC 12 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 13 FBC 14 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | FBC 15 FBC 16 | August 29-September 4 2019 The Financial Gazette The Financial Gazette August 29-September 4 2019 | Page 15 Column Three useless hiring, selection criteria AST week we focused on why the interview is The results are revealing; process based on this criterion more does not guarantee that an individual has the worst selection tool due to its low reliability they found no significant unstandardised, leading to the selection of acquired enough knowledge to do the job well. I Land validity. This week we will focus on other job relationship. the wrong people for the job. am sure you know people who possess required selection criteria that are close to useless but employers still What is even more The third factor often preferred by qualifications but fail to deliver on the job. use them regardless of ample scientific evidence showing worrying is that even employers is the years of education. This is The only way to get the right people for any little to no relationship with actual job performance. in cases where people often reflected in the higher qualifications job is to assess them for cognitive ability as it A cursory look at most job adverts will show that had worked in exactly demanded by employers. In the study by the biggest predictor of performance in any job. employers, especially in Zimbabwe, still use age as a the same role in other Schmidt cited above, he found that the Despite all the scientific evidence, organisations criterion when hiring. Research shows that there is no organisations, they found relationship between years of education still prefer the unscientific, unsubstantiated relationship between age and performance. If you find that no significant relationship. and actual job performance was significant selection tools and criterion (experience, age, there is any relationship between age and job performance it What this means is that HR Perspective but very weak (r= 0.1). Look at how and years of education as reflected in demands points to a faulty performance assessment tool that overrates scientific research shows with employers demand Masters degrees and for higher qualifications). A recruitment and people based on their age instead of performance. that candidates who have Memory Nguwi some such other higher qualifications. The selection tool that does not include the assessment In a seminal article in 2016 (The Validity and Utility more experience do not approach alone is a sure way to exclude of cognitive ability, personality and managerial/ of Selection Methods in Personnel Psychology: Practical perform better than those with less experience highly capable people from jobs. This means leadership competencies through validated and Theoretical Implications of 100 Years of Research in a job. What this means for employers is that many organisations could be losing many skilled selection tools will always get you the wrong Findings), Schmidt found no relationship between age and do not overemphasise years of experience when people by using these exclusion requirements. people. performance. hiring as that has no relationship with actual While years of education has a weak relationship lNguwi is an occupational psychologist What does it mean therefore if employers continue to job performance. Most employers prefer to put with actual job performance, job knowledge and managing consultant with Industrial put age restrictions when hiring? It means employers and arbitrary experience requirements that are not has a strong significant relationship with job Psychology Consultants. He writes in his more specifically managers are looking for opportunities to backed by research. This makes the selection performance (r=0.48). Possessing a qualification personal capacity. influence who is selected. In the process, they exclude very capable people who may not fit the age range preferred. The only time it will be reasonable to use age as a criterion is when you want to omit people who are over the retirement age and children who are below the employment age range. Any other reason is wasteful expeditious fishing by poorly informed managers or just outright corruption. Another factor often used in job selection is experience in a similar role or such other experience stated in the job advert. In the same study above, Schmidt found the correlation between job experience and performance is significant but very weak (r=0.16). What it means is that you should not put too much weight on it when recruiting. If you do, you may lose good and capable candidates who may not have the requisite experience but have the right cognitive capacity for the role. In an article by Alison Beard (Harvard Business Review), she reports on a study by Chad H. Van Iddekinge (et al) of Florida University, they reviewed 81 studies to investigate the connection between an individual’s prior work experience and performance in a new organisation. Zim situation: Uncertain, complex or both

Desmond Jairosi-Chipunza

COMPLIANCE mandate has evolved from remaining advisory to risk management; the time between major “events is decreasing; there are just too many shocks and overnight changes; annual compliance plans after once-a- year risk assessments are no longer effective.” Steve Culp (Forbes.com) This is an apt description of the compliance control and risk management role and is even more appropriate in Zimbabwe although Culp was referring to a global phenomenon. Colleagues in other jurisdictions within the writer’s work circles always remark that if you have worked in Zimbabwe, you can work anywhere else. There are two pertinent deductions from the above quotation being that the compliance mandate is ever changing and will continue to change while becoming more strategic and a source of competitive advantage. Compliance should not be viewed as a requirement, rather, for the extended value it can bring to an organisation. The other deduction is a reality check, has your function matured even to the advisory level? That level may still be aspirational for some and therefore worth noting that there are more mountains to climb. The purpose of this discussion is to characterise the regulatory and operating environment in Zimbabwe and to proffer suggestions on how the captain of the ship remains in control and focused on the ultimate destination and expected to ride the waves, survive tsunamis and cyclones. It is also a moot point whether our situation is uncertain or complex. Is uncertainty not the norm and therefore should be managed? Does uncertainty lead to complexity? Are there opportunities in an uncertain environment and do compliance officers point out those opportunities contained in regulation to business? In the military they use the term VUCA (Volatile, Uncertain, Complex and Ambiguous). The VUCA world demands new strategies, it cannot be business as usual as traditional compliance approaches may no longer work and may amount to disruption of business. When uncertainty and complexity are low, strategy formulation is akin to solving puzzles. The Zimbabwean situation is the real world of live problems for which there is no methodology to follow in most cases. Tactics and strategies for the growing compliance profession to consider in an environment such as the instant one include: To Page 17 Page 16| August 29-September 4 2019 The Financial Gazette Column Value for purposes of computing mineral royalty

INING houses should be overjoyed the value of the resource, invoice (underlined our own As explained above, mineral producing countries by the recent enactment through and not on any value added emphasis), whilst section do not sell refined products, instead they sell MFinance Act no 2 of 2019, which downstream activities. This 244 has provided that miners concentrate and matte. Therefore, the relevant face has reinstated the deduction of mineral accords with the value of should pay royalty on all value of the invoice is that of concentrate or matte. royalty in the computation of taxable the minerals obtained from minerals or mineral-bearing Because concentrate and matte are opaque products, income with effect from January 1, 2020. the earth and not on the products won from mine which are not widely traded, for this reason they Mineral royalty has always been value of the mineral derived location. The meaning as often do not have market prices. It is internationally deducted in the computation of taxable from further beneficiation to the phrase “face value of accepted that the agreed price of concentrates is based income until repealed by Finance Act no. 1 processes, which is a the invoice” is however not on the sum of value of the contained metals (“payable of 2014 with effect from January 1, 2014. function of CIT. It defies defined in our law, leaving metals”) less the sum of deductions and penalties. This article however, seeks to ventilate the logic for mineral producing taxpayers and authorities Thus the agreed payment will be based on the provisions of the law regarding value for countries to benefit out of to apply the general rule of percentage of the mineral content in the concentrate by purposes of computing mineral royalty. functions such as mineral Tax Matters interpretation of statutes the reference price of a grade (A) mineral obtained on This is a common problem confronting most treatment and refinery when with that words should take the major commodity exchanges such as the London mineral producing countries and more often these take place outside their Marvellous Tapera their ordinary, grammatical Metal Exchange (LME); Shanghai Futures Exchange than not the value for purposes of mineral jurisdictions. meaning. According to the (SHFE) or the Commodity Exchange Division of the royalty and corporate income tax (CIT) are The law regarding the value for purposes Collins dictionary, face value means “the New York Mercantile Exchange (COMEX). often confused to be the same. of mineral royalty is contained in s 37B of value written or stamped on the face of a In order to apply this, price deductions and penalties Logically, mineral royalty should be the Finance Act and s244 of the Mines and commercial paper or coin”. It is the figure need to be eliminated. These are typically treatment based on the value of products at the early Minerals Act. Section 37B mandates the written on the face of the invoice net of and refining charges, and penalties for impurities and stages of the transformation chain, namely Zimbabwe Revenue Authority to deduct expenses necessary for bringing the product or penalties for excessive moisture where necessary. at mine gate. It should be levied only on mineral royalty from the face value of the to its salable condition. In other instances, costs such as insurance, sea freight, taxes and duties may also be deducted depending on the contract terms. This derivation “Logically, mineral royalty namely proceeds should be based on the value less a proportionate of products at the early share of incidental stages of the transformation transportation, chain, namely at mine gate. insurance, refining It should be levied only on and smelting the value of the resource, costs is known as and not on any value added the Net Smelter downstream activities. This Returns (NSR) and is the basis for accords with the value of mineral royalty. the minerals obtained from This valuation is the earth and not on the buttressed by s244, value of the mineral derived which provides from further beneficiation for the payment processes, which is a function of royalty on of CIT. It defies logic for all minerals or mineral producing countries mineral-bearing to benefit out of functions products from the such as mineral treatment ground, and the and refinery when these closest product to a mineral that is won take place outside their from the ground jurisdictions. ” is concentrate (mineral bearing product) and not pure mineral. The deductions that are normally made in arriving at the NSR include the following: Treatment cost: This is a charge paid by the miner to have its concentrate treated through smelting to produce saleable metal. This is typically quoted in US$ per tonne of concentrate, and is theoretically a function of the cost of smelting. In practise, it fluctuates as a function of the supply/demand balance in the concentrate market; Refining Charge (RC): This price is paid by the miner to the processor for refining the contained metals in their concentrate to produce a saleable metal. The refining charge is based on the payable metal content, and is theoretically a function of the cost of refining. Similar to treatment costs, it fluctuates as a function of the balance between supply of smelter matte and refinery capacity and penalty charges ― the penalty charge is specific to particular elements that result in additional process activities being necessary to remove them from the final metal product, or that need to be disposed of in an environmentally friendly manner. A penalty is usually specific for a particular deleterious element, and is related to the cost of its removal and/or disposal, or the extent to which it reduces the value of final metal product. In conclusion, a royalty is a usage based tax, which is deducted on the specified minerals at source, based on the face value of the invoice. It is calculated as a percentage of the gross fair market value of minerals produced. Nevertheless, a simplified approach is required in order to remove alternative interpretations. As for our neighbouring country Zambia, they have defined “gross value” as “the realisable price for sale Free on Board at the point of export in Zambia or point of delivery within Zambia”. We may also want to adopt the same in order to bring harmony and uniformity in the interpretation as well as computation of royalties. This will enhance accountability in the remittance of mining royalties and maximise value for government from the mining sector. Meanwhile Matrix Tax School will be hosting the Tax and Business Interface 2019 from October 9 to 12, 2019 at Troutbeck Inn, Inyanga. l Tapera is the founder of Tax Matrix (Pvt) Ltd and CEO of Matrix Tax School (Pvt) Ltd. He writes in his personal capacity. The Financial Gazette August 29-September 4 2019 | Page 17 Column Ethical board leadership: A case study

HE board of directors is the citadel of corporate board and committee meetings is not consistent the next board meeting. John brought to the governance and ethical leadership of the organisation throughout the year. committee a CV of his brother-in-law’s cousin Tover which it presides. Consequently, it places an The cases who met the minimum requirements. He did not onerous burden on the director to exhibit behaviour above 1. On a frequent basis, John buys goods from mention this to fellow committee members but it reproach both on and off the official business arena. Ethical Builders Bazaar on staff account, which offers 25 surfaced at the second round of interviews. leadership is the fulcrum around which revolves inherent percent discount. Directors are not eligible to it Questions practices of fairness, transparency, accountability and social but to theirs, which offers a 10 percent discount. 1. Did John breach any ethical leadership justice. John persuaded the branch manager to open a protocol? If so, list the evidence. The practical challenge is that a director is first and staff account for him without arranging through 2. In case (1) identify at least two ethical foremost a member of the community in which he has to the general manager of the business. He draws issues raised by John’s conduct and say why? display “super human” traits. When the economic and Executives Only Corner the same common products like cement, lime and 3. In both cases what behaviour can be viewed social hardships escalate so does the temptation to lower the with paint almost monthly, which raises the suspicion as breach of a director’s duties? moral barriers and compromise the ethical vanguard. The Shepherd Shonhiwa that he may be on-selling in his neighbourhood In summary, ethical leadership rests squarely case below is a depiction of our everyday life from which but this has not been proven or investigated. on will power to stay the course in the face of crucial ethical leadership lessons can be drawn. Due to their size and the turbulent economic 2. Last quarter, the board of Northern Foods adversity. However, will power is like a muscle John Sibanda is in his mid-40s and sits on a number of environment giving rise to human capital had two vacancies and charged the remuneration/ ― it’s a finite resource. Thus, it needs to be boards of business organisations as an independent non- problems, these two businesses demand more nomination committee to scout the market and continually re-energised. “Courage is what it executive director. The two big ones are Builders Bazaar, than just the officially determined time of recommend candidates to the board. Detailed takes to stand up and speak for the right” ― this which is a general dealer for all building products and their board members. Ad hoc board and board person and job specs were agreed by the is the ethical principle to be pursued. Northern Food Processors, which deals in maize milling, committee meetings are convened as emergencies board, which the committee would use in their l Shonhiwa is a chartered director (SA) Flour milling and pre-packing of various dry human as well arise. John is on the remuneration/nomination recruitment and selection. The four-member and has authored books on leadership. He as animal foods. committees of both companies. His attendance of committee had to present a shortlist of three to writes in his personal capacity. Zim situation: Uncertain, complex or both From Page 15 1. Retrain and refresh your memory and that of the business on old and new requirements some of which are superseded, some repealed partially leaving remnant continuous obligations. It is easy for the network to discontinue a process once they misinterpret the new regulations or if it is convenient to do so. 2. Look ahead on risks and opportunities presented by artificial intelligence, virtual currencies and corporate conduct. Especially on conduct, as the business thrust is on increasing profits and containing costs, client interests may be relegated in the process as a result of business strategies and decisions. 3. Identify needed changes in operating model, technology and talent. Clients have become more and more sophisticated and discerning; business itself is automating. There is need to continuously scan for enhancements such as regtech (regulatory technology) and consider having diverse skills within the compliance structures such as IT. Be digitally fluent and be a better user of data so as to deliver risk insights. 4. Be close to the business and understand consequences of each decision. The more ambiguous the rationale, the more the risk. 5. Regulatory changes should be implemented in days not months. We have noticed in Zimbabwe that new regulations are passed on the assumption that banks have already implemented the previous ones. While it may be granted that bank systems are inherently supposed to be intact and not malleable for security reasons, it is critical that changes be implemented forthwith or the bank is caught up in a cumulative compliance web. 6. Encourage people to act with integrity. Zimbabwean hardships affect individuals directly and leaders should appreciate that properly motivated people are the strongest links, it is not enough to force people to do what they are told. Accordingly, the compliance status of a bank is also a function of how the human resources department is responding to staff welfare. 7. All requirements from regulators should be run as a project and the projects should be prioritised and those working on the projects should have the skill and knowledge of requirements and inside-out understanding of existing organisational procedures and rapport with senior management. Top-down approach is ideal. 8. Engage the custodian of the regulation to appreciate and explain grey areas and practical challenges militating against either immediate or complete compliance. Being close to business as in 4 above should be complemented, since regulations are introduced conveyer belt style, some are vague (deliberately or otherwise), some apparently incomplete, by cultivating a consultative relationship with the regulators. Vague and ambiguous requirements mean the banks assume a fiduciary duty towards their clients as they interpret and decode. It is critical to seek audience with the particular regulator for clarity and confirmation of the spirit of the regulation as well as the mischief they would be seeking to address. This gives the compliance officer room to adopt, where appropriate, benevolent interpretation approach to the rules. Pay attention to the global regulations, which tend to have extra territorial direct and indirect impact to the local industry such as GDPR (General Data Protection Regulation), FATF (Financial Action Task Force) recommendations and Wolfsburg Principles. Resist the temptation that these do not apply to locally incorporated banks as the application is not always direct and may be through counter parties or third- party suppliers. 9. Exercise judgment, we exercise judgment based on our experience and intuition. Are women more intuitive than men ... It may be debatable whether intuition should be To Page 20 Page 18 | August 29-September 4 2019 The Financial Gazette Column Role of judges in politically charged environment

UDGES are a rare breed of people. jurist, with a great deal of Questions have been raised how our country is presently steeped in this culture Society regards them in high esteem human rights defending and jurisprudential debate of state impunity. Jand the law places certain limits on experience acquired when appears to intensify over the To the victims of police brutality and malicious their criticism. Thus passing comment about he practised as an advocate role that some of our judicial arrest, the last port of call is the courts. In dictatorial these important court officials is, in other during the harshest times officers are playing in so far environments or those regimes that have no regard words, risky business. of apartheid, is a good tutor as the development of our law for the rule of law, targeted victims of state abuse One has to keep his criticism within on human rights law. He is is concerned. Others perceive have nowhere else to find protection other than from acceptable boundaries and any overstep well placed to lecture about our superior courts as well our esteemed judges and magistrates. might invite a sanction. This week I have the conduct of judicial as the magistrates court as Thus, in some instances the last bastion of decided to take the risk by giving my officers with regard to being guilty of complicity by democracy to remain standing when all other state opinion about the true role of judges, victims of state abuse. failing to restrain the excesses structures are infiltrated by excessive executive especially those operating in politically I found his paper very of some state actors who interference, the courts in most cases have remained charged environments like ours. enlightening and it left have shown a propensity to steadfastly independent in the quest to protect I had an opportunity to read a paper me wondering to what abuse power by committing citizens from the impunity of those who govern. prepared by the late Justice Arthur extent some of our judges Legal Matters atrocious rights violations It is on this basis that Justice Chaskalson urged with Chaskalson, former Chief Justice, and appreciate the need to by arresting and detaining judges to jealously guard their independence because VOTE MUZA Constitutional Court Judge of the Republic make our Bill of Rights a suspects with impunity on as just argued, they are the last source of hope, of South Africa in which he discussed the realistic piece of law that trumped up charges, all this in where a culture of lawlessness, murder, torture, subject of human rights and in particular does not offer a token remedy to citizens, a way meant to entrench a political culture assault, plunder, genocide and other manifestations how judges should assist in translating but a practical protection that courts should of dictatorship and lawlessness. There is of evil have entrenched themselves. It is more than human rights law into practice. The famous always be able to energetically implement. more than apparent evidence to confirm necessary for judicial officers to actively remain alert to their role to guard against the excesses of the Executive. Without their protection, victims of abuse might remain remediless and become prone to wanton abuse by either the police or other state security structures. Zimbabwe is on a knife edge characterised by a lot of state impunity, state “Others perceive our orchestrated superior courts as well as the violence, magistrates court as being institutionalised guilty of complicity by failing abused and torture. This to restrain the excesses of some becomes a state actors who have shown convenient time a propensity to abuse power for some of our by committing atrocious court officials rights violations by arresting to uphold and detaining suspects with their oaths by impunity on trumped up energetically charges, all this in a way protecting meant to entrench a political political culture of dictatorship and arrestees who are detained lawlessness. There is more on trumped up than apparent evidence to charges. confirm how our country During the is presently steeped in this apartheid era, culture of state impunity. To those judges the victims of police brutality who decided to and malicious arrest, the last stand on the side port of call is the courts.” of the people had great difficulty in translating human rights into law because of an excess of oppressive legislation that they were called upon to interpret and enforce. However, some did not want to have their judicial consciences and independence hindered by this bureaucratic shortcoming. They identified weaknesses in legislation, especially ambiguities arising from power draughtsmanship and inclined their interpretations of those oppressive statutes in favour of the liberty of an accused. They did this for the sake of humanity and for the sake of justice. One such judge famous for frowning at oppressive apartheid laws was John Discott. He has a celebrate dictum often cited in matters of human rights law that he made in Re Dube 1979 (3) SA 820. In this case he had been called upon to decide in review proceedings whether an administrative decision was in accordance with justice. He had this to say: “The trouble is that it was not. It may have been in accordance with the legislation and, because what appears in legislation is the law, in accordance with that too. But it can hardly be said to have been “in accordance with justice”. Parliament has the power to pass the statutes it likes, and there is nothing the courts can do about that. The results is law. But that is not always the same as justice. The only way that Parliament can ever take legislation just, is by making just legislation”. Judges need to remain mindful of the fact that some of the laws they are called upon to enforce are indeed laws, but such laws may be devoid of justice hence the need on their part to uphold justice and not unjust laws. Such judicial activism saved a lot of anti- apartheid activists who had been targeted by ruthless apartheid enforcers who had inclination to arrest and detain, torture and kill without restraint. The danger, however, as stated by Justice Chaskalson is that when gaps were found to take advantage of ambiguities in the law, such gaps were often closed by new legislation and Zimbabwe is not alien to this experience. There are well documented cases where government rushed to close openings that might have been created by the judiciary. l Muza, a Harare-based legal practitioner, writes in his personal capacity. [email protected] The Financial Gazette August 29-September 4 2019 | Page 19 Column Adopt agile strategies to survive N NOVEMBER 2018 Finance minister Mthuli Ncube true test of top class management. The argument story of 2008-9 can provide insights on what presented the 2019 National Budget, with the mantra here is that, the role of management should go strategies to adopt to reduce the impact of the I“Austerity for Prosperity”. The budget detailed the beyond the internal organisational challenges economic problems. Whilst some of the points measures that government had taken to address fiscal but also cover external issues. This requires have been highlighted in this article it is good for imbalances and what it was doing to rebuilding the managers to continuously forecast and design organisations to look for relevant business cases economy. The minister made it very clear that the road to emergency plans that ensure organisations sail that they can benchmark with to learn from and prosperity was not going to be easy and organisations and through the current economic storms. Whilst the guarantee survival. individuals had to brace themselves. argument may be that the economic environment The business environment is affected Now fast forward nine months later, the road has indeed is a given and there is not much that management by various factors within the internal and Brian Makumbe been a bumpy one, major highlights being shortages and can do, it however is the ability of managers external environment and survival can only be price rises of fuel, introduction of a new currency, acute slower pace. While organisations might fear to design plans that work which ensures that guaranteed by how well organisations respond shortages of electricity and reduced disposable incomes. that a radical change in salaries may be difficult organisations are successful. As such managers and adapt to these changes. It is thus in the best This has greatly affected organisations and they have been to reverse if the economic environment is to have to eat, work, pray and dream up effective interest of organisations to ensure that they forced to be very agile in adapting and adopting new ways stabilise, currently it is good for organisations plans that work. align themselves with the changes such that of doing things. This article is going to focus on ways in to cushion employees against the unbearable International case studies they do not lose business and close. A turbulent which organisations can adapt to the current economic economic environment and examples of ways You would realise that economic instabilities economic environment requires organisations challenges as the country takes the road to economic to do this is through giving hardship allowances, that occur in any given country at any given point to swiftly adapt and come up with solutions recovery. food hampers, providing lunch and transport would have occurred in some regions and as for problems before they occur. According to Flexi-time among other things. These assist in making life such organisations have to benchmark with past Heraclitus the only thing that is constant and While flexi-time refers to a more flexible wayof bearable for employees and thus enhance their and current cases on how they can manoeuvre enduring is change as such change should be working which enables employees to balance their working productivity. given the economic hullaballoos. planned for and adapted to. Adaption is key. hours and commitments outside work, given the 10 to 18- Agile managers Proven country cases of the Asian financial hour power outages, transport and fuel woes, it becomes The economic challenges in Zimbabwe are a crisis of 2008 among others and the Zimbabwean l Makumbe writes in his own capacity. strategic for organisations to embrace flexi-time and allow employees to determine how they want to work as long as they achieve organisational objectives. Flexi-time is a work arrangement that calls for organisations to measure employees by what they deliver other than by the number of hours put at work. As such organisations should now ponder about setting targets and clearly communicate what should be achieved. Given the current problems of transport, fares and fuel shortages individuals who have the capacity to work from home can do so as long as they meet targets. This helps shave off the stress and turmoil caused by the need to wake up very early and queue for fuel and cheaper transport and ensures that the work gets done. An inflexible 8 to 4 coupled with the transport turmoil has drastically reduced employee performance. While not all organisations and functions can adopt flexi-time, those in the services sector and administrative roles in manufacturing whose jobs do not require them to be physically available at work can adopt the approach. According to Pam Walden, flexi-time is a truly modern and cost effective way of embracing what people produce other than hours worked. Shift reconfigurations The current power outages have seen most organisations going for between 10 to 18 hours without power and they have resorted to generators. However, this has been un-sustainable as fuel prices have been continuously increasing. Manufacturing organisations have been hit the hardest, as they have to produce more to satisfy demand. It becomes reasonable for most organisations to switch working hours, and reconfigure their shifts such that they align them to the times power is restored. This then means that where most organisations were running the day shift, the shifts can now be converted to night as in most instances power is restored between 10pm and 5am. This allows organisations to save on cost of production. However, where this happens organisations have to engage employees through the various modes of representation to ensure that they have buy-in and understand the reasons for the shift reconfigurations. In this instance the organisation can have a shorter running day and night shift to ensure utilisation of power when it is restored. Organisations can also invest in renewable energy such as solar power to ensure that they have enough reserve energy in case of power rationing. Organisations that have started investing in solar power include Econet Wireless. Focusing on products/services that create most value Organisations exist to make profits and ensure sustenance of the business as such with the current economical upheavals it becomes critical for organisations to focus on areas that produce maximum value such that maximum return can be retained for the business to ensure survival. For instance, if an organisation produces two products, and one creates more value more than the other, in terms of sales, capacity utilisation, lower costs production and profits it becomes better for the organisation to invest in products/services that create more value. However, in doing this the organisation should make sure not to compromise the viability of their business and their brands. More so this also has to be done in direct contact with the customers served. Cheaper alternatives - raw materials and spares With the increased scarcity of foreign currency which most organisations relied on to import spares and raw materials, it has been difficult to service machinery and import raw materials. One of the best bets in the interim is to search for local materials to close the gap caused by the inability to import. Whilst this provides business for local suppliers it also provides a sustainable back-up for organisations to service their machines and produce. Hardship allowances and cost of living adjustments Employees work for remuneration to take care of their families and other commitments. Given the current instability in prices of goods, it becomes difficult for individuals to survive. On average, prices have increased more than threefold, and salaries have increased at a Page 20 | August 29-September 4 2019 The Financial Gazette Column Blockchain backlash just part of tech lifecycle Peter Williams Blockchain is an example of the digital enforcers will be left helpless in the face of land titles, tax regulation and even food safety. fever that can sweep across communities Bond-type villains running rings round the In his book The Blockchain and the New HE blockchain backlash has begun prompting irrational exuberance. guardians of society. Architecture of Trust, Kevin Werbach argues that ― but will in its turn be supplanted, Blockchain, cry the evangelists, is going Once the fever of fear breaks, the rather than constituting a radical technology, Tallowing the technology’s immense to change our lives, with the work of realisation will emerge that the technology blockchain relies on social cohesion and stability. potential as a vehicle for trust to flourish. the finance director or the practitioner does not herald the end of civilisation as For Werbach, a professor at the University of Since the late 1950s, the technology we know it, and will not take us captive Pennsylvania’s Wharton School of Business, it is deployment lifecycle has been an accepted ― either because it does not have such all about “translucent collaboration” ― sharing model of new product adoption. The intrinsic power or because government and data but without giving up control. Bitcoin is an stages of 21st-century innovations go society are able to intervene to maintain example ― a currency that has an acceptable form something like this: invention, emergence, some semblance of order. of governance even if no individual is in charge. enthusiastic adoption, criticism/resistance, transformed in ways that are barely At the same time, we worry about Once blockchain is seen as a new form of acceptance and integration. imaginable. the downside of blockchain and are trust, it may really come into its own. The uses of So many digital technology products Hard on the heels of the fervour comes disappointed that its progress has not been blockchain so far do not play to this strength. When have quickly impacted our lives. Societies the fear and then the backlash. That’s as speedy as expected. we find what the killer app is for this distributed are changing because of smartphones where we are now with blockchain, as it Aside from the world of bitcoin/ trust, this translucent collaboration, then blockchain and the apps they facilitate. But even so, is pointed out how the distributed ledger currency, the practical applications of will truly flourish. apps do not change human nature, rather technology is fast becoming the tool blockchain so far have been tentative. Williams is an accountant and journalist. they reinforce who we are. And even the of choice for every type of villain. We We’re in the midst of a world of small- best educated and most rational of people worry that if blockchain is exploited in a scale projects, demos, pilots and potential- Reproduced with permission from ACCA’s Ac- – such as finance professionals – can fall clandestine fashion by the unscrupulous, use cases, including payments, supply counting and Business magazine accaglobal.com/ victim to irrationality and groupthink. then regulators, tax collectors and law chains, digital IDs, data sharing, voting, ab. Zim situation: Uncertain, complex or both From Page 17 employed, however, in the instant context it should be read as intuitive judgment as opposed to just intuition. This comes naturally, especially when over time you have trained yourself to be inquisitive and unassuming. 10. Whistleblowing. Deriving from 6 above, this is a function of culture and integrity. The compliance personnel cannot be omnipresent, thus they should create ambassadors and disciples who can alert the institution of any genuine and ascertainable unethical behaviour. 11. Guard correspondent banking relationships jealously. There is no business, no commerce without correspondent banking relationships. As we view the environment as complex, third parties who facilitate cross-border transactions for among other things the most revered FDI, would also be viewing the country as uncertain and complex, thus on their heightened monitoring list. They will be looking for excuses to exit the market and de-risk. It is thus the increasing value of compliance functions to ensure the country is not blacklisted by ensuring there is monitoring of international laws that have direct and or indirect impact on local operations. Speak truth to authority. 12. Acknowledge that the Authorised Dealership Licence is probably the most important at a point in time than the general banking licence. 13. Trust however verify. Compliance obligations are executed through others, which is why relationship building and management is key for those in compliance. Mix and mingle with business colleagues officially and socially while keeping a professional distance when necessary. While business functions may attest to have embedded certain requirements, it is imperative to independently confirm for the reason that attestations on their own are not and should not be relied upon. Annual monitoring and testing plans drawn in November for the ensuing year are no longer relevant given the pace of change. The plans should have a six-month horizon and be risk based. 14. Do not specialise, understand the entire compliance universe and Enterprise Risk Management. You may have a core competence, however, ensure you are able to operate on a different desk. That way, the science and philosophy of compliance is more apparent. This is imperative as the future of your own current role is also uncertain. The business, as a first line of defence, should always answer the WHAT, WHY, HOW questions on their approach to risk management before launching new products and channels. First line of defence should deal with KYC responsibilities to allow compliance to attend to and deal with new risks and to respond to business efforts to grow. 15. Customer education, partner businesses in customer focus groups as compliance to pre-empt customer complaints through explaining regulations, why the bank adopts certain approaches and customers’ own obligations with respect to compliance for instance exchange control acquittals. Once complaints are contained and with them reputational risk, the compliance officer can focus on other competing priorities. 16. Report and escalate. Do not surprise stakeholders as they should understand potential risks before they crystallise. Your report is your own and no other executive should vet it before submission. Fellow current compliance professionals should consider themselves in a career changing and hardening furnace. As pressure produces diamonds, so are they being shaped and sharpened professionally by the complexity. Business expectations from them continue to increase yet room for giving the wrong advice is dwindling. It is submitted that life in general is uncertain, you have no way of knowing what tomorrow brings yet you do not stop planning for it. The environment is indeed complex. Organisations such as the Compliance Society of Zimbabwe should, once fully operational, make some of these challenges easier to solve as well as enable cross industry practitioners to empathise with each other and coin sustainable best practice while protecting its membership. Industrialised collaboration naturally improves efficiencies and effectiveness. l Jairosi-Chipunza is the head - Conduct, Financial Crime & Compliance at Standard Chartered Bank Zimbabwe and writes in his personal capacity. The Financial Gazette August 29-September 4 2019 | Page 21 National News Zim missing Mboweni issues surprise out on growth strategy for SA OUTH Africa’s Finance minister Tito Mboweni fired a shot across Sthe bows of the government, publishing an economic strategy for gold revenue the country on the Treasury website. The strategy, which has been distributed to all cabinet ministers but Shame Makoshori 72 percent in 2018). The gold industry has is not a cabinet document, makes Companies Editor grown phenomenally over the past decade, far-reaching recommendations on a with gold output having increased from 3,6 variety of policy areas that fall under IMBABWE has the potential to tonnes in 2008, to peak at 35 tonnes in 2018. the responsibility of his cabinet col- more than double its annual earnings Gold revenue has also increased significant- leagues, but have an important bear- from gold to $400 million if invest- ly from $110 million, to US$1,35 billion Z ing on the performance of the econ- ment is channelled towards expansion of during the comparable periods,” he said. omy. the existing gold mines, a report by the Gold In May, Gono said the sector would re- Mboweni published the document Producers Association has shown. quire capital injections for up to $1 billion along with a call that members of the In 2018 gold revenue reached $140 mil- in the next five years to generate $4 billion. public make comments, which should lion but the association indicates that with He said after peaking to 27 tonnes in be directed to the Treasury. the right conditions, gold firms could scale 1999, Zimbabwe entered a long period of The Treasury said that the paper is up shipments and give government up to bust, which affected its performance. a detailed examination of the structur- $400 million a year. However, the subsector remains key to al reforms that can reverse the down- At this rate, 20 000 jobs will be creat- the development of the country, “notwith- ward trend in South Africa’s growth Tito Mboweni ed in gold mines, from the current 12 000, standing the lost decade”. potential and competitiveness. according to the report titled Gold Industry “For every dollar created in the gold “Weak growth over the past six us with an economy that has almost •Prioritising labour-intensive Growth Strategies. industry an estimated $3 will be created in years is a function of both cyclical and 30 percent unemployment.” growth. It says the gold mining sector has the other sectors of the economy arising from structural factors, although structur- The paper draws on the National •Implementing focused and flexi- potential to increase contribution to exports the multipliers,” he said. al factors have dominated, including Development Plan and makes propos- ble industrial and trade policy to pro- to 35 percent by 2023, from 25 percent cur- “The indirect multipliers include the sharply declining competitiveness … als on: mote competitiveness and facilitate rently. indirect and induced impacts of the mining A series of cyclical shocks, such as •Modernising of network indus- long-run growth. The gold mining sub-sector is targeting sector to the economy (backward linkages political turmoil, drought and, most tries to promote competitiveness and •Creating export competitiveness 100 tonnes of bullion by 2023, surpassing (e.g. transport, supplies, professional ser- recently, load-shedding by Eskom inclusive growth. and harnessing regional growth op- Mali and Tanzania’s current output of 61 vices) and forward linkages (e.g. electricity have further exacerbated the depth of •Lowering barriers to entry and portunities. tonnes and 47 tonnes respectively. generation) etc. The formal gold industry the slowdown. Together, these have addressing distorted patterns of own- •Quantifying the impact of pro- Mali and Tanzania were the biggest gold has created in excess of 12 000 direct jobs served to compound and prolong the ership through increased competition posed growth reforms. — Business producers in 2018. (25 percent) of total formal mining employ- effect of weaker confidence, leaving and small business growth. Day Thomas Gono, chairman of the Gold ment of around 40 000 and an additional 33 Producers Association, says gold mines can 000 in indirect jobs. Further, the artisanal double their share to gross domestic product and small-scale sector is estimated to ab- to 15 percent by 2023, from seven percent sorb in excess of 500 000 people. The gold currently. industry contributes 18 percent of its rev- The gold subsector produced its highest enues to government revenue through tax output ever of 35 tonnes last year. payments and other fiscal charges,” he said. “Gold output could have been in ex- Growth in the mining industry has been cess of 50 tonnes by 2018 assuming a five affected by high royalties, taxes and fees. percent annual increase in output from the These had previously combined with 1999 localised peak due to moderate capital uncertainty created by the State’s threats to injection,” said Gono. seize foreign controlled mining firms to de- “The industry has huge scope for further stabilise the sector. growth as it still has excess capacity (with Government has since reversed the con- average capacity utilisation estimated at troversial policy. [email protected] Page 22 | August 29-September 4 2019 The Financial Gazette National News Brainworks seeks fresh capital Adelaide Moyo The conversion is subject to share- ny has proposed certain amendments to the company’s Staff Witter holder approval. constitution to align the same with best corporate gov- “The rights offer forms part of a broad- ernance practice by establishing certain thresholds on RAINWORKS Limited (Brainworks) says it in- er capital restructuring of the company to borrowing powers and executive directors and/or other tends to raise US$5,6 million (R85,799 million) extinguish materially all third- party debt. employees’ remuneration. If, in the future, the board re- Bthrough a renounceable rights offer to extinguish The capital restructure will involve the quires certain thresholds to be exceeded, shareholders third-party debt due in October. conversion of certain loans with existing will be provided with an opportunity to consider and The diversified investment firm owes a total of shareholders into new shares at a conver- vote in respect thereof,” the listed company said in a $17 million in both current and long term debt, with sion price of R6,50,” Brainworks said. statement. $12,89 million in current obligations and $4,2 million Recently, Brainworks said it will al- “The constitution amendments therefore provide in non-current. low shareholders to determine thresholds shareholders with an ability to participate in material de- The Johannesburg Stock Exchange-listed firm said on directors’ borrowing powers and exec- cisions which could place the company under significant in terms of the rights offer, 13 199 997 shares will be utive remuneration. financial difficulty,” Brainworks added offered to shareholders at a price of R6,50. The Peter Saungweme-led investment Shareholders will accordingly be requested to con- “The proceeds from the rights offer will be used holding firm said amendments to the sider the relevant special resolution pursuant to the con- by Brainworks to settle an expensive loan held by the company’s constitution were being made stitution amendments and, if deemed fit, approve it with company. The loan matures on October, 17 2019. The to ensure shareholder participation in line or without modification by written consent in terms of settling of the loan will assist the company to reduce with best corporate governance practice, section 117 of the Act. its level and cost of debt which the board of directors allowing shareholders to vote on deci- Brainworks’ portfolio includes interests in hospitali- believes will have positive impact on earnings and will sions that could place the company under ty, real estate and logistics. position the company to attract new equity investors,” significant financial difficulty. The company currently holds stakes in hotelier Afri- Brainworks said in a circular on Tuesday. “The board of directors of the compa- Peter Saungweme can Sun and Dawn Properties. [email protected] Padenga gold deal gets nod

Omega Ukama Senior Staff Writer

ADENGA Holdings (Padenga) yesterday received a greenlight from its shareholders to acquire a ma- Pjority stake in gold miner Dallaglio Investments. The listed crocodile skin producer’s shareholders unanimously approved the deal at an extraordinary general meeting in Harare. The transaction now awaits regulatory approval from the central bank and other government departments. “Padenga seeks to reduce this concentration risk through diversification into alternative, export oriented business, and has identified the gold mining sector as attractive from a long term perspective, particularly in respect of the historic world-wide demand for gold and the capacity for gold mining to produce hard currency which is not readily available in the local Zimbabwe market,” the company said in a circular to shareholders, prior to the meeting. Padenga intends to acquire 9 036 shares, representing a 50,1 percent shareholding equity in Dallaglio, to be settled by way of a cash injection in $90,36 and about US$20 million to be paid in kind by the delivery of mining equipment to Dallaglio. The mining firm — incorporated in Zimbabwe in 2005 — is in the business of developing and operating large scale commercial gold mines in the country. Dallaglio owns Pickstone Peerless Mine near Chegu- tu, which produces more than 60 kgs of gold per month. The company also owns Eureka Mine near Guruve, which is under development with a target to eventually produce 140 kg of gold per month by 2020. The mining company’s assets have total measured and indicated resource of 1,6 million ounces. In its 2018 financial year, Pickstone Peerless Mine recorded turnover of US$26,7 million and profit after-tax of US$2,7 million. Meanwhile, IH Securities (IH), a local research firm has also talked up the deal saying it will reduce risk concentration and grow value for shareholders. The research firm said Padenga’s current resources provide some scope to develop and grow the mining operation with the prospect of an unbundling and separate listing of the mining operation once the economy stabilises. “Whilst the proposed transaction appears to be an unusual pairing, it is value accretive, as it diversifies Padenga’s concentration in crocodile farming and significantly enhances the business’ earnings whilst- re maining purely export-focused. With 79 percent of sales in 2018 being ultimately to one luxury goods brand in Europe, the croc-skin producer faces a significant client concentration risk,” IH said. Padenga, which has operations in Zimbabwe and the United States, is said to be the source of nearly 85 percent of the global supply of Nile crocodile skins used for high-end luxury fashion brands. In Zimbabwe, the company operates three crocodile breeding and production farms namely, Kariba Croco- dile Farm, Ume Crocodile Farm and Nyanya Crocodile Farm. Each farm has the capacity to breed close to 15 000 hatchlings per year. [email protected] The Financial Gazette August 29-September 4 2019 | Page 23 National News Dawn unveils $200m housing project

Shame Makoshori ect. asset side. However, we lack significantly when it comes Companies Editor “Our value proposition to the diaspora to revenue generation and by focusing on property devel- is that of a well governed company that can opment, we are trying to cure this ailment so that in future AWN Properties Limited (Dawn) has commenced deliver on its promise. Our partnership with we can deliver healthy dividends to our shareholders,” said construction of its $200 million Marlborough Sun- Masimba (Holdings), a listed entity on the Gwatidzo. Dset Views housing project in Harare. Zimbabwe Stock Exchange, should further The land under construction falls close to the Gwebi Riv- Patrick Matute, Dawn’s chief executive, said a total 354 enhance that value proposition,” he said. er and the company has provided sufficient buffer to protect stands will be delivered, with the first 70 expected to be Dawn’s chairman, Phibion Gwatidzo the environment. completed by December this year. He said the units would said the housing project dovetailed with the Dawn has made a commitment to the Marlborough En- be on the market early next year. company’s objective of creating long-term vironmental Action Group and the Harare Wetlands Trust “The delivery of 354 stands, with an estimated gross rev- shareholder value. that it will protect the environment. enue in excess of US$20 million indeed fulfils the pledge we He said Dawn’s commitment was to Harare City spokesperson Michael Chideme said the made to shareholders to become a fully integrated property create a sustainable property development project was in line with the capital’s object to transform Ha- company,” he told stakeholders at a ground-breaking cere- business unit that meets the company’s min- rare into a World Class City by 2025. mony on Tuesday. imum return on equity threshold. "Obviously Harare is moving towards achieving a world “While others might question the timing of the develop- “The whole end game for Dawn is to class city status and that requires developers to come up ment given the current challenges, we are of the strong view be an integrated property house, providing world class property development projects," said Chideme. that a market still exists for both first time home buyers and the whole ecosystem for property investors, Dawn has over the years evolved into one of the biggest investors”. owners and corporates. property market players in Zimbabwe, having been formed Matute noted that Dawn will be targeting Zimbabwe’s “As most analysts would agree, Dawn is in 2003 via a demerger of the PropCo arm of Zimsun, now Phibion Gwatidzo diaspora market to generate foreign currency from the proj- blessed with a quality balance sheet on the African Sun. [email protected] Cyril Ramaphosa’s economic dilemma

Terence Corrigan

VEN by the standards of political Eidiosyncrasy that South Africa can exhibit, President Cyril Ramapho- sa’s remarks to an assembly of the ANC Women’s League demonstrated a tilt to the bizarre. “We will,” he declared, “turn our economy around, we will turn it around whether people Cyril Ramaphosa like it or not.” One can’t help but think it’s one of those comments that encapsulates rather more than the speaker intended it to. It’s a tacit admission that the country is in deep and serious trouble. That at least is clear. As Ramaphosa was pledging an economic turnaround, foreign bondholders were disposing of South African bonds to the tune of some R2 billion a day. The rand languished below 15 to the dollar. And the downgrading of South Africa’s credit rating to junk by Moody’s seemed pretty much to have become a certainty. Well, we could do with a turnaround. And just why the president would imagine that the public might not like it, might approach it in the manner of a petulant child being forced to take a cold bath, is hard to fathom. Something that most of us get to learn as we grow up, even those with the advantages of status and material prosperity is that we don’t always get what we want — whether it’s a new PlayStation, a Maserati, or tragically in the case of millions of South Africans, a modestly-paying job. And maybe therein lies the problem with the president’s sentiments. Nothing will turn this around, but large doses of investment. Local investment, foreign investment. Yet we’re seeing just the opposite. Fixed capital formation in June was down 3,2% year on year. Manufacturing, supposedly our future, is being hit particularly hard. The tragedy is that despite the still consider- able attraction that South Africa might hold to investors, its economy is trapped behind barriers that are in many respects self-constructed. Last month, Ramaphosa said that to get the economy moving, “we will need to make tough choices on everything from labour legislation and SOEs to policies on the NHI, the national minimum wage and the Reserve Bank”. Well, a tough choice does not imply a wise decision, and those in the offing generally yawn towards immediate political expediency. Tough only in the sense of deferring what might be un- popular within his party. SOEs? Perish the very thought of privatisation. Eskom may be the largest threat to South Af- rica as a growing concern, but there is scant sense of how to deal with it. Except another bailout and the whirligig of executives. The Reserve Bank? Nationalise it. Labour legislation? A sacred cow. Meanwhile, the country’s fetid policy uncertainty swal- lows up the confidence of investors. Last week, the president went on to say that one of the big things was to stop bickering. We need to pull in the same direction. Investors would simply love that. “Where there’s unity, there’s growth” — a rhetorical in- terjection worthy of Hallmark maybe, but at odds with the idea of tough choices. After all, if we can all just get along, the choices are probably uncontentious anyway. — IOL Page 24 | August 29-September 4 2019 The Financial Gazette National News Rwanda deal to boost ICAZ Winter School small-scale Zim miners kicks off in Sun City

Shame Makoshori Companies Editor HE Institute of Chartered more about what’s happening in Accountants of Zimbabwe Zimbabwe with the energy sector be- IMBABWE is expected to tap (ICAZ)’s Winter School and ing top of the list. into Rwanda’s experience in T Investor Attraction Conference starts “Senior government officials Zsmall-scale mining and rebuild today in Sun City, South Africa. will engage with renewable energy a stronger and sustainable subsector This year’s edition, which will project developers, Financiers and with a bigger say in the development end on September 1, is being held Promoters deliberating on consulta- of the extractive industry. under the theme “Disruptive Innova- tive candid conversations,” said the Known for its cutting-edge eco- tion — Investing for Growth”, with institute. nomic blueprints that have helped it more than 300 delegates expected to Topics on discussion at the con- build one of Africa’s biggest econom- converge at the prestigious calendar ference this year include the state of ic success stories, Rwanda has one of event. the energy industry in Zimbabwe, the most viable small-scale mining “The Institute of Chartered Ac- government’s efforts to fast track re- sectors modelled along the coopera- countants of Zimbabwe has con- newable energy projects and ensure tive system. sistently contributed to both the ac- corruption is addressed, the licensing Zimbabwe, on the other end, has An estimated 500 000 people are currently earning a living out of counting profession and the society process and the regulatory environ- over the past decade seen a huge small-scale mining in Zimbabwe. around it and the theme of this year’s ment in the country, as well as the movement into small-scale mining, Winter School and Investment At- national project pipeline and funding where an estimated 500 000 people this MoU, we would like to see how panding but dangerous gold panning traction Conference augments the in- gaps. are currently earning a living. the two countries can cooperate spe- zones, where they have been “victi- stitute’s vision,” ICAZ said this week ICAZ is the longest established Tapping into Rwanda’s experienc- cifically in terms of sharing training mised, criminalised and stigmatised”. in statement. and the largest Zimbabwean profes- es was a key part of a Memorandum facilities in the mining space. Second- There has been unprecedented The institute said more than fifty sional accountancy organisation. It of Understanding (MoU) inked by the ly, we would like the two ministries, closure of companies in the past de- chief executives and chief finance was set up on January 11, 1918 and two countries this week. the Ministry of Mines and Mining cade, which has forced hard-pressed officers from some of Zimbabwe’s is a statutory body incorporated in “We also would like to cooper- Development in Zimbabwe and our Zimbabweans to switch to a range prominent companies will be part of terms of the Chartered Accountants ate and enhance the production of sister ministry in Rwanda, to share of informal activities, including gold the 300 delegates. Act. minerals in the two countries and expertise to capacitate the respective panning, as they battle to bring food “Attending the conference is the The institute is a member body of our colleagues in Rwanda have very ministries and other institutions in the onto their tables. most efficient and least costly way to the International Federation of Ac- interesting experiences in the devel- mining space to develop the potential Artisanal miners have contributed meet with over 150 companies repre- countants, Pan African Federation of opment of the small-scale mining which exist in the two countries”. to leakages through well networked sented at this conference. Accountants and the Public Accoun- sector,” said Mines minister Winston According to a 2015 parliamenta- cartels that have been circumventing “By participating in Investor tants and Auditors Board. — Staff Chitando. ry report, at least 150 000 women and official delivery channels prejudicing Roundtables attendees will learn Writer [email protected] “We also would like to share those children have endured inhospitable treasury of potential revenue. experiences. In terms of the spirit of conditions in Zimbabwe’s fast ex- [email protected]

ForFor the the week week ending ending 28 13 August March 20192019

For the week ending 13 March 2019 The Financial Gazette August 29-September 4 2019 | Page 25 National News Tobacco forex earnings down 30pc

Tabitha Mutenga the central bank offered them 50 percent, while the mer- Markets Editor chants also wanted their loans extended to farmers repaid in US$. IMBABWE’S tobacco earnings have plunged by According to the TIMB, tobacco deliveries dipped by at least 30 percent to reach US$517 million from 52 percent to 17,5 million kg in the first 20 days of trade ZUS$735 million in 2019. while the value of tobacco sold was US$30,3 million down Statistics from the tobacco regulator, Tobacco Industry by 70 percent compared to the same period last year. and Marketing Board (TIMB) show that despite surpass- Commenting on the marketing season Edward Dune, ing last year’s production of 252 million to 255 million ki- Zimbabwe National Farmers Union director said it was logrammes (kg), income from the country’s major foreign unfair to expect agriculture (tobacco) to perform miracles currency earner declined as prices were depressed in 2019 in a non-functional economy. compared to 2018. “This whole economy is not functioning normally and The marketing season closed yesterday (Wednesday) resultantly agriculture cannot be exceptional. after 110 days of marketing. “Input prices have increased more than 10 times since “Tobacco auction sales are closing on the 28th of Au- the promulgation of Statutory Instrument 33 of October gust and the mop up sale is on the 10th of September,” 2018, then SI 142 of 2019 which abolished eth multi-cur- TIMB said. rency system, had its negative effects to eth commodities Tobacco earnings reached record high levels in 2018, pricing regimes,” Dune said. where 70 percent of the 252 million kg output was reg- The tobacco season was dogged by disputes between merchants and farmers He added that the legislative instruments point to istered by small-holder farmers, but performance in 2019 over payment terms. sub-sector inefficiencies caused by an inefficient economy. was below expectation as a result of the government’s in- Together with mining tobacco earnings were this year consistent currency policies. sales continued to be dogged by disputes ment terms. The farmers wanted to be paid expected to anchor a turnaround of the economy. The tobacco season started on a very poor note as between merchants and farmers over pay- 100 percent in US$ for their produce, but [email protected] Zim economic woes hit Distell Tabitha Mutenga Markets Editor

ISTELL Group (Distell) says Zimbabwe’s currency devaluations and liquidity restrictions negatively Daffected its operations. This comes as the South African Alcoholic beverages company, which produces Amarula liquor, Hunter’s and Sa- vanna ciders, had previously indicated that its profit could drop by six percent following the currency swings and severe foreign exchange challenges in Zimbabwe. “Distell Group trading conditions in Angola and Zimba- bwe remained challenging with currency devaluations and liquidity restrictions in tough economic conditions impact- ing on operating performance,” the company said. “As a result, the group announced earlier this month that it would prudently impair about two-thirds of the value of its 26 percent investment in Best Global Brands Limited (BGB) that has the majority of its operations in Angola, as well as raise a credit loss provision of about 80 percent on its United States dollar dominated savings bond with the Zim- babwe Reserve Bank.” The beverages brewer last year invested US$21,7 million in the central bank’s savings bonds following severe currency restrictions that limited the ability of customers to repatriate funds to South Africa. In light of the uncertainty and economic difficulties facing Zimbabwe, Distell decided to recognise a credit loss We have opportunities for Graduate Trainees in the following: provision of about 80 percent on the savings bond. For the year ended June 30, 2019, Distell delivered solid • Marketing • Sales revenue growth in all three categories resulting in strong top • Finance line growth in 12 out of its 15 top brands. • Human Resources Comparable group revenue including excise grew by 9,4 • Supply Chain and Operations percent to R26,2 billion on constant volumes driven strong- If you are 26 years old and below with a relevant degree of the upper second class ly by growth in African markets. Revenue excluding excise division (2.1) & above, with at least 10 points at A level plus a B or better in O Level duty grew by 8,8 percent Maths, get in touch with us today and apply to undertake our exceptional graduate The group said it will continue to work and support the trainee programme. Send your CV, Cover letter and certified copies of your African Distillers Limited (Afdis), in which it holds an indi- qualifications to [email protected] before 20 September 2019. rect shareholding. “The company will also continue to work closely and support Afdis team in Zimbabwe, as they work through a challenging transitional period,” Distell said, adding that the group was confident in managing these risks by continuing to expand on local production. All countries and categories delivered overall double-digit volume and revenue growth, led by Nigeria, Ken- ya, Zambia and Mozambique. The Africa region contributed 59,6 percent to foreign revenue growing its overall contribution to group revenue to 15,5 percent in the period. Richard Rushton, Distell’s chief executive, said the company was upbeat about its performance and continued JERICHO 691277 resilience of the business, especially amidst a challenging consumer environment, a subdued domestic economy and increased competitive activity. “Our results reflect the positive changes in our operating model and culture aimed at driving superior market place execution and enhancing margins. I’m particularly pleased that our Africa strategy is delivering as we expand our route- to-market capability and local production,” he said. [email protected] Page 26 | August 29-September 4 2019 The Financial Gazette National News Mtsambiwa leaves Hippo Valley

Paul Nyakazeya 640 000 tonnes. from trading on the Zimbabwe Stock the Securities and Exchange Commis- Johannesburg and London Stock Ex- Group Digital Editor “Tongaat Hulett can confirm that Exchange (ZSE) after the company sion of Zimbabwe (SECZim) to con- changes to protect investors against Sydney Mtsambiwa, the previous failed to publish its results within the sider the application for the suspension speculative trading. YDNEY Mtsambiwa has re- managing director of our Zimbabwean stipulated timeframe. and the investing public will be advised Tongaat Hullet said an ongoing fi- signed from Hippo Valley Estates operations, decided to take early re- “The ZSE advises members of the of the determination by SECZim as nancial review has revealed that “cer- S(Hippo Valley) after serving the tirement from Tongaat Hulett effective investing public that it has put a halt soon as it becomes available,” he said. tain past practices” do not reflect the sugar producer for close to three de- July 31, 2019 after 29 years of profes- in the trading of Hippo Valley shares Hippo Valley, which had announced company's business performance ac- cades. sional and dedicated commitment to on the ZSE,” Justin Bgoni, the ZSE’s earlier this month that it would publish curately. The company’s equity — the Mtsambiwa, who was the group’s the company,” Adelaide Chikunguru, chief executive said in a statement. results by August 14, had requested for value of the business after liabilities managing director since 1998, last year the group’s corporate affairs executive, “This development has been ne- a further extension to delay the pub- — in its 2018 financial results has been briefly assumed a top post at Tongaat told The Financial Gazette. cessitated by a formal request made lication of its audited financial state- overstated by between R3.5 billion to Hullet South Africa. “Following Sydney’s retirement, by Hippo Valley for the suspension of ments to October 31, 2019, but the R4.5 billion. The Johannesburg Stock Exchange Aiden Mhere has been appointed as the trading in its securities after it failed to ZSE turned down the request. The overstatements were related to (JSE)-listed sugar maker is a major acting country manager of the Zimba- publish its audited financial statements The suspension of Hippo Valley the treatment of Tongaat Hullet's prop- shareholder in Hippo Valley and Trian- bwean operations,” she said. for the year ended March 31, 2019 as also comes at a time when its parent erty assets, and PricewaterhouseCoo- gle, representing a combined installed Following Mtsambiwa’s departure, per the previous public notices. company in May had requested its pers has been called in for a forensic sugar milling capacity of more than Hippo Valley shares were suspended “ZSE has now formally requested shares to be suspended both on the investigation. [email protected] Zim farmers to get ‘Choppies audit flawed’ subsidised power

Adelaide Moyo Tabitha Mutenga Staff Witter Markets Editor

USPENDED Choppies chief executive, INANCE minister Mthuli Ncube says government Ramachandran Ottapathu, has cautioned will soon be subsiding electricity costs for farmers at Sthe company’s shareholders not to accept FUS$0,03 per kilowatt hour (ZWL$0,27/kWh). the recently released legal and forensic reports Government, which imports electricity at US$0,12/ which he says are skewed and do represent the kWh, recently approved a power tariff increase from truth. US$0,01 (ZWL$9,86) to approximately US$0,05/kWh Ottapathu was granted a right of reply to (ZWL$0,45) for non-exporting business and ZWL$0,27 the summary responses to the EY Report and for domestic users. Desai Law Group (DLG) report which came Ncube said it was critical for the agricultural sector to as investigators were battling to untangle a get “a subsidised tariff” to ensure maximum production. complex web of ownership and overlapping Zimbabwe is currently receiving 400 megawatt (MW) historical transactions involving senior execu- from Eskom South Africa and 50 MW from Hydro Cahora tives that prejudiced the group and sharehold- Bassa (HCB) in Mozambique. The country owes Eskom ers. US$23 million in unpaid bills and Treasury has committed The Botswana-headquartered supermarket to weekly payments of US$890 000. chain has been in crisis since last September The crippling power shortages experienced for the past when the Botswana and Johannesburg stock three months have seen industry, operating at half its in- exchanges halted trading of its shares and re- Choppies has been in crisis since last September. stalled capacity and reeling from low efficiencies associat- quested clarification on the reasons for a delay ed with antiquated equipment and low production. in results for the year ended June 30, 2018. Foreign currency shortages, recurrent breakdown of Ottapathu said the credibility of the foren- between the board led by former Botswana is also flawed. It is important to note that nei- aged equipment, debt and severe reduction of water lev- sic report is questionable at best. president Festus Mogae and Ottapathu over ther a draft nor extracts of the forensic report els at Kariba Power Station have contributed to the energy “Annexure two (summary) presents an in- control of the group, which operates 260 were circulated to the various parties who crisis. accurate and incorrect summary of the report. stores in Botswana, South Africa, Zimbabwe, were interviewed to enable them to comment Responding to a question from delegates during the Na- In addition, the forensic report fails to verify Zambia, Kenya, Tanzania, Mozambique and on the remarks allegedly attributable to them tional Agri-Business Conference in Harare last week, on any of the information it received and failed to Namibia, and employs more than 17 000 peo- or the findings that are influenced by EY’s in- the sustainability of the subsidy considering government is resolve any conflicting versions of facts pre- ple. Legal and forensic probes commissioned terpretations of the interviews and information footing 75 percent of the electricity bill for farmers, Ncube sented to it. Instead, it simply ignored certain by the board have since pointed the finger at provided or lack thereof. No interested person, said government was comfortable with the subsidy as it is facts. As a result, it cannot credibly resolve numerous governance lapses at the group and either affected by the report or who had given in support of agriculture productivity. any issues relating to the finalisation of the laid the blame largely on Ottapathu. information, was afforded a right to be heard Producers raised fears that government may be charging 2018 annual financial statements,” he said. But he dismisses the probes as skewed. or a right of reply,” he said. an affordable tariff to farmers for an unavailable commod- He added that the language and leaps ap- “Annexure two presents a skewed and con- Ottapathu said the transactions noted as ity and will end up using expensive energy alternatives. pear to have been “designed to embarrass Ot- trived version of what is otherwise a bland, suspicious in the legal report were taken on “The country is importing power from South Africa be- tapathu instead of focusing on what the foren- poorly drafted and largely inconclusive foren- the advice of lawyers retained by Choppies cause of the drought, but the power subsidy is sustainable sic report actually says.” sic report. Similarly to the legal report, the fo- and approved by the board. because those who are paying the full tariff will subsidise “I caution shareholders not to accept the rensic report has taken excessive liberties with Ottapathu said the legal report traverses a those who are getting subsidies,” Ncube said, adding that report at face value,” he advised. its assumptions and its fundamental premises number of concerns raised by the board but fo- it was a way of ensuring productivity in the agriculture During the extraordinary general meeting are flawed,” he said. cuses on three areas which only criticises him. sector. to be held next week, shareholders will vote “The information and verbal advices actu- “DLG did not seek to establish the truth The maintained tariff for ferrochrome smelters and oth- on resolutions contained in the legal and fo- ally provided to EY by certain of the individ- and assumed that one-sided versions given to er miners at US$0,067/kWh and US$0,098/kWh, respec- rensic reports emanating from investigations uals interviewed overtly appear to be incom- it were truthful. DLG neglected to raise these tively, is expected to fund the power tariffs by government. into Choppies’ business and allegations of fi- plete and conflicted with other information with Ottapathu for his comment or response. The miners are ring-fenced in a special account solely nancial misappropriation and money launder- available and verbal advices of other inter- Regrettably there was no attempt by DLG to for purposes of importing electricity, while Zesa Holdings ing against Ottapathu. viewees.” present a fair and unbiased account in its Legal is allowed to bill all other exporters in foreign currency. Choppies’ troubles are traced to a dispute “The methodology of the EY investigation Report,” he said. [email protected] [email protected] Omnia plans US$130 million rights offer

Tabitha Mutenga will be used to partly repay the bridge principal debt providers, comprised Increased working capital re- concern ... and to maintain an optimal Markets Editor debt facility. The rights offer will re- of a term loan of US$326 million, and quirements, following the recent ac- capital structure resulting in a reduced duce debt levels to be within the com- committed overdraft and other facili- quisitions and expansion into new cost of capital”. MNIA Africa (Omnia) is plan- pany’s targeted range, thereby afford- ties of US$117,3 million. jurisdictions, were funded through a “To maintain or adjust the capital ning to raise US$130,4 million ing the company access to undrawn This bridge debt facility allowed combination of borrowings and bank structure, the company may adjust the Othrough a rights offer aimed at debt facilities and reducing the com- the company to settle all existing overdraft facilities. dividends paid to shareholders, return reducing the company’s US$443 mil- pany’s cost of capital,” Omnia said in borrowings and overdraft facilities at The net loss after tax, together capital to shareholders, issue new lion debt. an update to shareholders. June 24, 2019. with the increase in the company’s shares, or sell assets to reduce debt,” The diversified chemical and - fer “The remainder of the bridge debt In the 2019 financial year, Omnia debt levels, was not in line with the the company said. tiliser group, which has a major stake facility, after reduction by the pro- was adversely impacted by droughts, company’s principal debt providers’ Omnia is a diversified pan African in Omnia Fertiliser Zimbabwe and ceeds of the rights offer, is expected late rains, a volatile South Africa expectations and covenant require- chemicals group that supplies chem- Acol Chemical, said it has finalised to be refinanced into a structured term rand, a material slowdown in the lo- ments. icals and specialised services and and obtained the required approvals loan and working capital debt pack- cal and international mining industry, The Johannesburg Stock Ex- solutions for the agriculture, mining to offer 100 million ordinary shares to age.” and overall difficult trading condi- change-listed firm added that the and chemical application industries in investors. The company secured a US$443 tions, resulting in a net loss after tax equity raise is part of a plan to “safe- Africa and beyond, including in Zim- “Proceeds from the rights offer million bridge debt facility with its of US$26,5 million. guard its ability to continue as a going babwe. [email protected] Life & ArtsNews Worth Knowing August 29- September 4 2019 Page 27 Finding a good restaurant away from home

Lionel Page quality, we used data from Yelp, a major online platform where users rate restau- HEN looking for a restaurant rants.Yelp has a global outreach that al- stay away from the tourist lowed us to investigate this question in Wtraps, economics tells us. cities all over the world, such as Paris, ‘Successful people choose their friends wisely’ Where to eat? It’s a question you’ve London and Sydney. probably pondered when visiting some- We mapped Yelp’s ratings on to topo- ESEARCHERS have found that friends in derstand how jurors decisions are influenced direct where unfamiliar. Though it’s fun to ex- graphical information from OpenStreet- high places may get you recognised but ulti- ties the extent to which jury members tend to favour plore a strange suburb, town or city, when Map, an open-source repository of local R mately harm your chance at glory. candidates with whom they have worked in the past. you’re hungry you’d rather minimise the information on streets and buildings. Being friends with an award juror can increase Reciprocity the extent to which jury members tend to chance of paying exorbitant prices for an What we found was exactly what was a person's chance of being nominated but decrease favour candidates from whom they have themselves unpleasant experience. predicted by economic theory: restau- their chances of being selected as the victor, accord- been favoured in the past. Cliquishness the extent to Can economics help? rants in tourist areas have lower ratings ing to the study published in the Academy of Man- which jury members tend to favour candidates who We’ve combined economic theory than those in non-tourist areas. Stay away agement Journal. are part of the same network clique as the jury mem- with data from online restaurant ratings from the tourist traps, economics tells us. These findings should invite some healthy cyni- bers. to identify a few simple strategies that Your best bet are those cozy places away cism among those who still have unconditional faith The researchers found that while all three dynam- will help you find a decent restaurant in from the bustle. in the universalistic principles that are supposed ics can improve a candidate's chance of receiving an unfamiliar places. Visibility trap to inspire meritocratic institutions, but should also honourable mention, only reciprocity boosts their The key? Location is almost every- The existence of tourist traps may come as hopeful news to those who have long lost chances of being the victor. thing but in the opposite sense to what a come as no surprise. If you’ve ever gone that faith, said Simone Ferriani, Professor at the Uni- Having a direct tie to, or being a part of the same real estate agent would have you think. sight-seeing in a big city, you know there versity of Bologna. clique as an award juror can help candidates be When it comes to restaurants, quality of are restaurants whose business is based For the study, researchers combined statistical shortlisted or nominated but then actually prevent location is inversely correlated to quality on attracting tourists, and that they are analysis of eight years of decision-making data from them winning, he said. of food and service. often pricey and ordinary. the most prestigious Norwegian advertising industry This, we believe, is because people in charge of Search costs This insight goes beyond just restau- competition with industry member interviews and granting prestigious honours may be driven by self- The first economic principle that’s im- rants. In economic terms, any time a busi- sought to understand how relationships between ju- serving relational interests, as much as the genuine portant here are “search costs”.If you’re ness deals with uninformed customers, rors and entrants affect competition results. desire to signal their moral integrity and deflect po- from out of town, it’s likely your search higher prices and lower quality is more Three relationship dynamics were used to un- tential inauthentic concerns away he added. – IANS strategy will involve looking for some- likely. thing appealing within walking distance A key characteristic to attract unin- of where you are staying. To decide if it’s formed customers is visibility. A restau- appealing will involve walking past it. rant on a main road or busy thoroughfare, Suppose you do this. Perhaps it not exact- for example, can be found by potential ly what you wanted. Should you press on, customers simply walking around.To test looking for a better whether restaurants with high visibility option? It’s a risk. You may end up are indeeed more likely to offer worse trudging around only to end back at the deals, we looked at restaurants that were same spot 30 minutes later. Settling on more visible but not necessarily in touris- the first restaurant you find may therefore tic locations. We focused on corner be the best option to minimise search restaurants visible to pedestrians from costs. Economic theory provides a key two streets instead of just one. insight about markets with search costs Again we looked at Yelp ratings, and for customersBusinesses can take advan- again the effect was there: corner restau- tage of these costs to raise prices or lower rants had lower average ratings. The larg- quality. They can do this because they est effect was for corner restaurants on deal with more uninformed customers. big avenues in tourist areas, where aver- Consider a large city with tourist and age restaurant ratings were more than 0.2 non-tourist areas. stars (out of 5 stars) lower. In non-tourist areas, restaurants will Find the hidden restaurants rely on local customers. If they do not So our advice is the following: You provide good food and maximise your chance of finding a fan- prices, customers are likely to go else- tastic dining experience by stepping away where next time. A restaurant that satis- from the beaten tracks. Whether search- fies its customers will get return business; ing online or on foot, look for the “hidden one that doesn’t is more likely to go out restaurants” tucked away on side streets of business. In tourist areas, the situation and the like. Avoid the establishments is different. Visitors do not know the with huge garish signs that are clearly quality of each restaurant they encounter, pitching themselves to tourists. Your sec- and at best might be repeat customers for ond-best option, when in doubt, is to look a few days. So restaurants can charge for a chain restaurant as a “safe haven” in higher prices and serve lower quality a touristic location.Such establishments food without much risk of harming long- are unlikely to offer you a surprising ex- term profits. perience, one way or other other. What Big data to the rescue you expect is probably what you’ll get To investigate how customer igno- but when it comes to restaurants, the bet- rance influences restaurants price and ter option is usually around the corner. Uefa will name its Men’s Player of the Year News Worth Knowing today with Liverpool defender Virgil van Dijk up against Juventus forward Cristiano Ronaldo Sport and Barcelona’s Lionel Messi for the award. Page 28 August 29-September 4 2019 chance to cement a seat at Red Bull for next season. But Red Bull are tough taskmas- SPORT SHORTS ters and they will be expect- ing a lot, which Gasly was unable to deliver. Tiger Woods eyes October On top of that, Verstappen is arguably the driver of the return after knee surgery Formula 1 season so far, and is a tough yardstick. MASTERS champion Tiger Woods is seeking an October re- Albon has a humble and turn after revealing he had a knee operation last week. self-effacing manner, but he won’t be short of self-con- The 43-year-old, who ended an 11-year wait for his 15th fidence - he and Verstappen major in April, said arthroscopic surgery repaired minor carti- go way back. In fact, talk to lage damage in his left knee. the Dutchman’s father Jos The world number eight hopes to play in the PGA Tour’s Verstappen, and he will tell new event in Japan, the ZOZO Championship, from 24-27 breakneck isrun of nine the last fourback! races - than speed on the grid. prove. The four-time champi- you that Albon was the clos- October. races in 14 weeks, Hamilton is under threat from Ferrari start both Spa on is fighting for his seniority est thing Max had to a main Woods, one short of Sam Snead’s 82 PGA Tour wins, has Adotted all around the Bottas. and Monza weekends as in the team in the face of a rival in their karting days as had four previous knee operations and four back surgeries. globe, starts at this weekend’s When will Hamilton tie it favourites, and the races very stern challenge from Le- youngsters. The latest operation was performed by Dr Vern Cooley, Belgian Grand Prix and takes up? If he can make 42 points present a golden opportunity clerc. He should have had his Albon is raw and inexpe- the season to its conclusion in on Bottas in the next five for Sebastian Vettel and Le- own win, which he lost to a rienced, but clearly very tal- who said: “I expect Tiger to make a full recovery. We did what Abu Dhabi on December 1. races in Belgium, Italy, Sin- clerc to finally notch up that driving error and subsequent ented. He is exciting to watch was needed and also examined the entire knee. There were no In that time there is a lot to gapore, Russia and Japan - at long-awaited first win of the controversial penalty in Can- and will be out to make a additional problems.” sort out - some scores to set- 8.4 points on average a race, year - and in Leclerc’s case, ada in June, and his guile and name for himself. After winning his fifth Masters title in April, Woods missed tle, recoveries consolidated which seems eminently doa- of his career. experience could give him Bottas set for Mercedes; the cut at the PGA Championship and Open. and under-achievement to be ble - he will be 104 clear after If Ferrari can finally grasp the edge in the end. Ocon for Renault He withdrew from this month’s Northern Trust shortly be- rectified, the line-up of next the Japanese Grand Prix, and an opportunity - rather than What if they don’t win Red Bull are far from the fore his tee time citing a mild sprain, but returned for the BMW year’s grid to distil, the future that would do it. let it slip through their fingers, this year? Well, traditionally, only team needing to sort out Championship at Medinah Country Club. However, his 37th- of the sport to be secured and, Failing that, it’s hard to as they have done in every that has led to blood-letting their 2020 line-up - many place finish meant he did not qualify for the Tour Champion- of course, a championship to see how Hamilton won’t be single case one has presented in Maranello. All bets would other seats are up for grabs. be won. 78 points clear after the fol- itself this year - which driver be off. Key among them is the iden- ship finale, which he won the year before to end a five-year So what can people ex- lowing race in Mexico. will it be? How will Albon get on? tity of Hamilton’s team-mate spell without a PGA title. — bbc.com pect starting at Spa this week- Can Ferrari finally get a Vettel is ahead in the The third team in the top next season. end? win? championship, but Leclerc three, Red Bull, have a new Mercedes team boss Toto When will Hamilton This season has been a has in many ways been more line-up for the final races of Wolff went away for the Sanchez going to Inter Milan become a champion? grave disappointment for impressive. the season. Pierre Gasly has summer saying he would be It is a ‘when’, not an ‘if’, Ferrari, who expected to The 21-year-old would been demoted to the junior deciding between Bottas and INTER Milan that Lewis Hamilton will win challenge for the title but have won in Bahrain in Toro Rosso team, and An- reserve driver Esteban Ocon have agreed a a sixth world title this year, have been steamrollered by April had his engine not gone glo-Thai Alexander Albon for the seat. And while noth- loan deal to sign assuming no unforeseen cir- Mercedes and promoted to re- ing has been completely set- forward Alexis cumstances such as injury have not yet place him. tled, the strong indications are Sanchez from or illness. The 34-year-old won a race. Albon has that Bottas will be retained Manchester heads to the Belgian Grand It would be ...all eyes on been quietly for another year, and Ocon United. Prix with a 62-point lead over astonishing in impressive in will join Renault alongside Inter boss Mercedes team-mate Valtteri some ways if his rookie sea- Daniel Ricciardo. Bottas with only 234 still the team ended son - matching Those announcements Antonio Conte available. the year with- Hamilton his vastly more could come as soon as the is keen to sign Mathematically, of out a victory, experienced Belgian Grand Prix this Sanchez before course, Bottas has a chance to but with only nine chances sour in the closing laps. He team-mate Daniil Kvyat for weekend - in fact, it would the European overhaul Hamilton; realisti- remaining, an unconvincing should have won in Baku pace and putting in a couple be no surprise if they were transfer win- cally, he doesn’t have a hope. performance so far, and Red had he not crashed in qualify- of outstanding performances, among the first things to dow closes on The Briton has won eight Bull very much on a roll, it is ing when looking a certainty especially in the wet in Ger- emerge when teams and me- Monday. races this season, the Finn a serious possibility. for pole. He led all but the many, which have convinced dia arrive there on Thursday. If a deal only two. Hamilton won the Lucky for Ferrari, then, last two laps in Austria before Red Bull he should be the one Ocon’s return to the grid goes through, last race in Hungary with a that the next two races pres- being passed by Verstappen. to replace Gasly. after a year out would leave brilliant comeback drive in ent them with arguably their And he has out-qualified Vet- It is a stunning opportuni- the German Nico Hulken- Sanchez will link up with ex-United team-mate Romelu Lu- which team and superstar best chances to win for the tel for the last five races. ty for Albon, who described berg looking for a seat, and in kaku, the striker having joined the Serie A club for £74m this driver were in perfect har- rest of the season. But Leclerc is still raw the move as “surreal”, add- a bit of a pickle. summer. mony to produce arguably The Belgian and Italian and inexperienced, and there ing: “It’s a big jump into the But while McLaren long However, Inter have not agreed an option to buy Sanchez at his best win of the year, Grands Prix are a week apart are weaknesses in his game. deep end, but I’ve got my ago tied up Carlos Sainz and the end of the loan agreement. while Bottas has not won and both are on classic, high- He makes too many mistakes swimming shorts on.” Lando Norris, there are open- United’s highest earner, Sanchez is thought to earn around since Azerbaijan in April. speed circuits where straight- and, with a more aggressive The 23-year-old was ings at Haas, where Kevin £400,000 a week, a figure way outside of Inter’s current pay Hamilton has extended line speed is key to overall driving style than Vettel, he born in London to a British Magnussen has a deal for structure. his lead over Bottas by 31 performance. They are, in has still not fully got on top father and Thai mother, and 2020 and Romain Grosjean It has been suggested United may subsidise his salary as part points in the last three races, F1 vernacular, power-sensi- of managing the Pirelli tyres. has spent most of his life in does not, and Alfa Romeo, and in the last two Bottas has tive - and Ferrari’s engine has And Vettel the UK, but races under where Kimi Raikkonen is se- of a deal and last week Inter offered to pay £150,000 of San- been disappointing, crashing the most power and the best has a a Thai licence. cure and Antonio Giovinazzi chez’s weekly wages, but United wanted more. out in Germany when he had straight- point H e has the is not. Sanchez has had a disastrous 19 months at Old Trafford a chance to make up a big line t o At Racing since leaving Emirates Stadium in January 2018, scoring just chunk of points on Hamil- Point, Lance five times in 45 appearances. ton, who had his worst race Stroll will ob- He scored twice last season and only once in the Premier for years, and destroying his viously stay League and, had he stayed at the club, would have predominant- race when he collided with - his dad owns ly played in the Europa League and Carabao Cup. — bbc.com Ferrari’s Charles Leclerc on the team - and it the first lap in Hungary. would be a sur- As a result, Bottas is in prise if Sergio much more danger of losing Perez did not also Faf du Plessis joins Kent second place to Red Bull’s continue. SOUTH Africa cricket captain Faf du Plessis has joined Kent Max Verstappen - who is And at Wil- as an overseas player with the county bidding to reach the T20 only seven points behind liams, while Blast knockout stages. after a superb George Russell run of two is under con- The Spitfires are third in the South Group with two games wins, and tract and has to play and may need to win both to secure a place in the quar- a second been highly ter-finals. place impressive, Du Plessis, 35, arrives in time for their home match against i n there have second-placed Gloucestershire on Thursday. to be ques- “I’ll do my best to contribute and hopefully help lift a tro- tion marks phy,” he said. over Rob- He replaces Afghanistan all-rounder Mohammad Nabi in ert Kubica, Kent’s T20 squad as well as bolstering their side following an whose form since his return after injury to New Zealand fast bowler Adam Milne. eight years out recovering Du Plessis has previous experience of county cricket af- from horrendous injuries has ter playing for Lancashire under a Kolpak agreement in 2007. Mercedes drivers Valtteri Bottas and Lewis Hamilton not been what he would have Faf du Plessis has been South Africa captain across all formats wanted. — bbc.com since 2016 — cnn.com