AFRICAN SUN, LEGACY DEAL SOURS: Page 3 $4 News Worth Knowing ‘Zim such a small economy’: Page 7 February 28-March 6 2019 ESTABLISHED 1969 @ FingazLive www.fingaz.co.zw Facebook: The Financial Gazette ZSE Report The All Share index dropped 0,12 percent on Tuesday to ‘Floating close at 151,99 points. Old Mu- tual lost a further $0,1361 to settle at $8,8539, while Hippo Valley Estates was down by $0,0374 at $1,7101 as Edgars decreased by $0,0250 to end at $0,1015. The Industrial index was down 0,13 percent to close at 506,99 points, and the Top 10 index lost 0,46 percent to close currency at 149,57 points. The Minings index was flat at 216,50 points. Currencies (Bloomberg) % change ◀ USD:ZAR 13,8624 0,21 ◀ EUR:USD 1,1397 0,07 ◀ GBP:USD 1,3299 0,35 USD: JPY 110,4300 1,4 ◀ Stock Markets ZSE (All Share) 151,99 0,12 alone not ◀ ZSE (Mining) 216,50 0,00 ◀ JSE 16399,00 0,55 FTSE 100 7 096,71 0,76 ◀ 26 057,98 0,13 Dow ◀ Commodities (Bloomberg) 0,12 Gold 1 327,35 ◀ ◀ Platinum 868,05 0,76 ◀ sufficient’ Brent Oil 65,80 0,90 Paul Nyakazeya eign currency. We need to cloud seed the market Grains (Grain SA) White Maize ZAR 1 993,81 1,3 Online Editor with foreign currency,” he said. ◀ Soya ZAR 4 591,78 0,6 Chris Mugaga, the Zimbabwe National ◀ Wheat ZAR 2 338,58 1,3 HE Reserve Bank of Zimbabwe (RBZ) Chamber of Commerce (ZNCC) chief execu- ◀ and analysts agree that the recent intro- tive, said the 30-day maximum retention period Tduction of a battery of measures to stabi- for foreign currency earnings, was also poten- lise the foreign exchange market and commod- tially problematic. Warren Buffet ity prices by the central bank would not alone “The retention window should be pushed to solve the country’s economic challenges. 90 days, as 30 days is too tight. And because loses $25 billion This comes as experts have also warned that the interbank market for foreign currency has WARREN Buffett's company demand for hard cash in the country is likely to just been introduced, it will probably be volatile recorded a $25 billion loss in the remain high in the foreseeable future — with initially, and there needs to be a cushion for ex- fourth quarter to December 2018 Zimbabwe’s external payment backlog still at porters,” he said. due to a big drop in the paper val- US$600 million. “With the current arrangement, we might ue of several stock investments. And with banks having traded not much thus have exporters looking for havens outside The US billionaire said Berk- more than RTGS$5 million at last week’s cur- of the system,” Mugaga said, adding that “and shire Hathaway's businesses are rency auctions — against an aggregate monthly if they go to the grey market, then we will be performing well overall, but it demand of RTGS$200 million-plus — concerns defeating the very purpose of the interbank mar- has to record the market value about the adequacy of the new policy measures ket”. of its stock holdings at the end are not unfounded. Nick Ndiritu, a money manager at Allan ECOCASH chief executive Natalie Jabangwe at the launch of of each quarter and Buffett has “Companies need to boost production be- Gray, concurred saying: “Once the dust set- the company's mobile money service's real-time rewards pro- struggled to find attractive acqui- cause the floating of the US dollar alone will tles … the long-term success of any currency gramme in Harare last week. EcoCash is a subsidiary of Cassa- sitions recently. not, for example, enhance productivity in the reforms in Zimbabwe depends on the extent to va Smartech (Cassava), a fintech firm that was recently spun off Berkshire lost $25,4 billion, country,” bank governor John Mangudya told a which government can curb the growth of mon- from telecommunications group Econet Wireless and listed on or $10,31 per Class B share. This is down from last year's profit of local daily last week. ey supply and maintain fiscal discipline”. the Zimbabwe Stock Exchange. - Picture by Freedom Mashava — Picture by Freedom Mashava $32,6 billion, or $13,19. “We will arrange foreign lines of credit since “It is too early to tell how this new system -Bloomberg demand will be greater than the supply of for- To Page 2 Page 2 | February 28-March 6 2019 The Financial Gazette National News ‘Floating currency alone not sufficient’ From Page 1 foreign currency supply constraint will work, but it is an important step bottlenecks and the consequent un- in the right direction,” he added. viability of the interbank foreign “Given the persistent mismatch currency market”. between demand and supply of for- Research firm Akribos Capital eign currency, and the lack of for- said the success of the interbank eign reserves among other factors, foreign currency system was likely the weakest link remains the abil- to “reduce” parallel market trading, ity to sustain a stable market-de- as corporates shifted to the formal termined exchange rate,” banking market. group BancABC said in an advisory “The major point of concern was note last week. financial dis-intermediation, given It added that “in the event that that foreign exchange transactions the exchange rate remains under were being done in the parallel or persistent depreciation pressure, the alternative market, and there was economy may gravitate towards hy- limited activity in formal banking perinflation, leading to abandonment channels,” it said this week. of RTGS dollars while speeding up However, Akribos also said the Adrian Cloete Gift Mugano the pace of re-dollarisation”. Trust Chikohora parallel market would not “fade Economist Trust Chikohora said: for exporters. tions will undoubtedly slow down rate,” he said. away” completely, given that it re- “Demand for foreign currency will “Exporters have the answers to economic growth in the medium In this light, South African Air- mained a key source of foreign cur- remain high and the rate could move all our problems and government has term, it is still the best foot forward ways — which has nearly R1 billion rency for individuals and informal upwards if the supply side … is not to make life as easy as possible for towards creating a stable and pre- stuck in Zimbabwe — had since im- businesses. addressed”. them,” he said. dictable macro-economic environ- posed strict ticketing conditions in On Friday last week, Finance “I still advocate for us to do away “Right now, every exporter faces ment,” he said. response to the new measures. minister Mthuli Ncube told a Daily with the bond note and trade in forex a mountain of regulations and the The Oxlink Capital founder also Old Mutual Securities (OMSEC) News breakfast meeting that the 1:1 for now until economic fundamen- need for so many permits, all cost- said under the current economic en- also said a lot more needed to be policy had cost the economy and the tals are right because the RTGS dol- ing money, and so much so that some vironment, the only way to protect done to fix the economy, including State billions. lar is likely to continue losing value, have even given up trying to find the value of the RTGS dollar was enforcing fiscal discipline in govern- Gift Mugano, another economist, resulting in inflationary pressures, foreign markets,” Robertson told through a free-floating rate. ment. also said the 1:1 rate had created and distortions,” he added. The Financial Gazette. Muchemwa emphasised that ex- “The effectiveness of a foreign several problems, including corrup- On the currency retention thresh- He also said the two percent ports needed to improve to ensure an currency market and sustainabili- tion and other arbitrage opportu- olds, Chikohora said “exporters will transaction tax was adding to pro- adequate supply of US dollars. ty of the new RTGS dollar will be nities emanating from the inherent still need to surrender a portion of duction costs, making local goods Adrian Cloete, a portfolio manag- largely determined by the ability of distortions. their forex to the RBZ at 1:1, mean- less competitive in foreign markets. er at Cape Town-based PSG Wealth, the government of Zimbabwe to cut He said by liberalising the ex- ing that although exporters will now Brains Muchemwa, another econ- said South African companies with back on its deficit-financed expendi- change rate, the RBZ had thus wiped get more value for their money, they omist, said while the move by the significant holdings in bond notes ture activities. out the possibilities of such grey ac- will still not get full value”. RBZ towards “a full float” was com- valued at par with the greenback “The second pillar … of this pol- tivities. On his part, veteran economist mendable, a corresponding rise in would be hard hit by the new mon- icy is ensuring that the export indus- “By floating the change rate, the John Robertson said if exports were interest rates and reserve thresholds, etary measures. tries’ operating environment is con- competitiveness of exporting sec- properly supported, foreign reserves to further shore up fiscal prudence, “Those South African companies ducive for competitive commercial tors is expected to significantly im- would improve markedly and to would help to anchor the exchange … when preparing their statements, enterprise,” OMSEC said, adding prove,” he said. such an extent that government rate. would be impacted as they would that “any market distortion over the [email protected] would allow 100 percent retention “While the tight liquidity condi- have to translate now at a different interbank market rate could cause See also Page 8 $8bn coming our way – Ncube Ndakaziva Majaka measures implemented by the govern- “There are other mining deals that securities.