EX-BAT BOSS SPEAKS OUT: Page 24 $4

EX-BAT BOSS SPEAKS OUT: Page 24 $4 News Worth Knowing ZSE bull-run continues: Page 11 May 30-June 5 2019 ESTABLISHED 1969 @ FingazLive www.fingaz.co.zw Facebook: The Financial Gazette ZSE Report The All Share index gained a massive 6,92 percent on Tuesday to close at 176,81 points. BAT added $1,80 to close at $32,10 Market while Delta rose by $0,2878 to $3,4771 and Econet was $0,2103 higher at $1,6212. The Industri- al Index was up 6,92 percent to close at 591,51 points as the Top 10 Index gained 8,84 percent to close at 173,32 points. The Min- ings Index was up 4,29 percent at 200,10 points. Currencies (Bloomberg) % change ◀ USD:ZAR 14,7645 0,20 EUR:USD 1,1157 0,03 anxiety ◀ GBP:USD 1,2652 0,01 ◀ USD: JPY 109,2700 0,10 ◀ Stock Markets ◀ ZSE (All Share) 176,81 6,92 ◀ ZSE (Minings) 200,10 4,29 ◀ JSE 14,700,00 1,38 1,59 FTSE 100 7 153,42 ◀ 0,93 Dow 25 347,77 ◀ Commodities ◀ Gold 1 283,83 0,35 0,65 batters Platinum 794,52 ◀ 2,40 Brent Oil 68,43 ◀ Grains ( ) Grain SA ◀ White Maize ZAR 2 433,39 6.00 ◀ Soya ZAR 4 626,68 5.2 ◀ Wheat ZAR 2 727,36 5.1 First female president RTGS$ for Chamber of Mines Omega Ukama “There is panic in the market. Things like ELIZABETH Nerwande was Business Reporter power cuts and fuel shortages are driving the yesterday elected president of rates up,” he said, adding that the interbank mar- Zimbabwe’s Chamber of Mines, HE RTGS dollar continues to take a heavy ket must be allowed to determine rates and op- becoming the first female to lead battering against most major currencies — erate freely. the 80-year-old body. amid worrying indications that it may soon Chris Mugaga, the Zimbabwe National The Mimosa Mining Com- T pany corporate affairs executive trade above 10 to the American unit, as the coun- Chamber of Commerce (ZNCC) chief executive, try’s hard cash shortages escalate. warned that the road ahead would be tough. ― who took over from Bindura This comes as Zimbabwe’s official inflation “The exchange rate will continue to slip until Nickel Corporation’s managing has hit a 10-year high of 75 percent, thereby the equilibrium is discovered. It could hit around director Batirai Manhando ― piling more pressure on already-stressed local 11 or 12 by year-end if things continue the way will be deputised by Unki Mine’s businesses — as commerce and industry also they are,” he said. Rwandese ambassador to Zimbabwe James Musoni, pictured at chief financial officer Coleen continue to reel from power blackouts and fuel “In the absence of clear and sound economic his Harare office recently, is set to be The Financial Gazette’s guest Chibafa and Demand Gwatinetsa shortages, among other ills. reforms to boost production, parallel market for- of honour at its prestigious Top Companies Survey launch on June of How Mine. 7, 2019 in partnership with Old Mutual. With Kigali maintaining a Sifelani Jabangwe, the Confederation of Zim- eign currency rates will continue on the upward Nerwande, a former executive solid growth path and emerging as one of Africa’s most sought-af- director of the Consumer Coun- babwe Industries’ (CZI) president, told The Fi- trajectory,” Mugaga said. ter investment destinations, the country's GDP per capita has cil of Zimbabwe, has been in the nancial Gazette this week that the recent surge in In the ZNCC boss’ view, “it is things like the grown by 5,2 percent, the highest on the continent after Ethiopia. parallel foreign currency rates was due to a lack central bank’s forex retention policy that is abet- Picture by Freedom Mashava. mining sector for over 10 years. of confidence in the economy. To Page 2 – FinGaz Page 2 | May 30-June 5 2019 The Financial Gazette National News Market anxiety batters RTGS$ From Page 1 John Mangudya and Finance minister Mthuli other long-standing idea that the local currency must always ting the crisis”, as well as “the country’s interest Ncube are in agreement that the interbank and track the trading of the rand to the American dollar. rate policy, which is also compounding the situ- parallel market forex rates will converge around However, others feel the “theories are too simplistic” and ation”. June-July, the benchmark Old Mutual Implied the RTGS$ is likely to “hold steady at single digit levels as “The monetary policy was silent on inter- Rate — which has been in use since the hyper- the Zimbabwean market’s liquidity is tight at RTGS$1,6 bil- est rates, and with inflation rising, it means that inflationary days — puts the RTGS dollar-green- lion in electronic balances to purchase foreign cash, and the we have an expansionary monetary policy. This back exchange rate at seven-plus. recently introduced US$500 million interbank facility might gives people room to borrow money and to take This, at a time when the local unit has depreci- just be enough to satisfy demand for genuine currency seek- long positions in the forex market,” he said. ated by 100 percent to trade at five to one United ers or buyers”. “There are people talking about the tripartite States dollar and from 2,5 points in February. And with the local economy also slowly re-dollarising negotiating forum (TNF), but I don’t think that And with the formal market failing to quench — as witnessed by a number of retailers and other business- we need that. Rather, we need just a negotiating the country’s voracious appetite for foreign cur- es which have started quoting prices in US dollars — the forum. “In the tripartite arrangement, certain rency, some economists see the RTGS dollar parallel market has been running amok over the past three stakeholders such as the informal sector are left trading at between 17 and 23 to the greenback in weeks, after it emerged that the government was in the mar- out,” Mugaga added. the medium to long term, and such projections are ket for US$80 million to fund electricity imports. Brains Muchemwa, an economist, concurred based on a number of assumptions including the But Finance ministry permanent secretary George Guva- with him saying: “On the back of our exports, Brains Muchemwa “economic interactions” between national debt matanga believes that the parallel market is “way too insig- which have not been growing fast enough to and average foreign earnings of US$800 million. nificant to influence economic activities and that, therefore, counteract the domestic monetary expansion, the ply that has been growing at a considerably fast Proponents of these devaluation scenarios the American-local dollar exchanges should settle at four”. exchange rate should continue weakening. pace year-on-year,” he said. also cite the country’s low reserves, which must “There is no normal market that moves in a few hours. “This has been reflected in broad money sup- While Reserve Bank of Zimbabwe governor be a minimum 12 months import cover, and an- From a rate of 1:4 to 1:8 without trade. It is actually a clear reflection that we cannot base our prices on that market,” he argues. While the former Barclays Bank Zimbabwe managing director acknowledges “the existence of black markets ev- erywhere else in the world”, Guvamatanga has somehow contradicted his principal’s earlier pronouncements that they “will not seek to align the interbank and parallel market rates”. In the meantime, big corporates including Pearson Gow- ero’s Delta Corporation have been complaining about their struggles to get foreign currency on the interbank market. “The interbank market doesn’t have enough dollars for everybody. We have participated there ... but we are not get- ting as much as we would like,” he said at a recent presenta- tion of the company’s March 31 results. Meanwhile, Ncube blames the parallel market for stok- ing the country’s runaway inflation. “The parallel exchange rate market premiums have re- mained the major source of inflation driving up prices, par- ticularly prices of tradable goods,” he says. “In the outlook, inflation is anticipated to gradually sub- side as the impact of fiscal consolidation and tight monetary policy measures restrain demand,” the Cambridge-trained economics professor said. Similarly, cable manufacturer CAFCA has also warned that the current cash shortages would lead to “hyperinflation”. “The shortage of foreign currency is going to lead to acute hyperinflation and the customers will not be able to either afford or finance purchases from CAFCA,” the company said recently. John Robertson, a veteran economist, weighed in saying: “Activity on the black market suggests that the owners of US dollars don’t want to put them into a bank account. They are still of the opinion that they might never see them again, as has happened before”. “Government is suffering from a trust deficit, as it was government that withdrew US dollars from corporate, per- sonal and even charity bank accounts about 12 years ago. “The banks were unable to stop government from taking the money, so now neither the banks nor the government are trusted,” he said, adding that the “crisis will persist until we increase export earnings, or the country, including the government, learns to live on fewer imports”. On his part, businessman Nigel Chanakira said the con- tinued weakening of the currency reflected poorly on policy makers. “That a currency can continue to collapse so spectacular- ly in a matter of days is an indictment on the policy makers of Zimbabwe,” he said.

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