ZIM SLIDES INTO RECESSION ― IMF: Page 3 $4
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ZIM SLIDES INTO RECESSION ― IMF: Page 3 $4 News Worth Knowing Govt breaks the bank: Page 4 April 11-17 2019 ESTABLISHED 1969 @ FingazLive www.fingaz.co.zw Facebook: The Financial Gazette ZSE Report The All Share index added 0,57 percent on Tuesday to close at 124,60 points. Innscor gained Industry $0,1545 to end at $1,4974. Old Mutual rose by $0,0513 to trade at $8,2662 while Simbi- sa picked up $0,0475 to close at $0,7100. The Industrial in- dex was up 0,59 percent to close at 415,57 points, and the Top 10 index gained 1,07 per- cent to close at 118,49 points. The Minings index was flat at buffeted 192,40 points. Currencies (Bloomberg) % change USD:ZAR 13,9588 0,93 ◀ EUR:USD 1,1232 0,28 ◀ ◀ GBP:USD 1,3065 0,10 USD: JPY 111,1400 0,13 ◀ Stock Markets ◀ ZSE (All Share) 124,60 2,17 ZSE (Minings) 192,40 0,00 ◀ by fresh JSE 14 158,00 0,20 7 420,25 0,07 FTSE 100 ◀ 0,72 Dow 26 150,58 ◀ Commodities ◀ Gold 1 304,92 0,06 ◀ Platinum 894,63 0,31 ◀ Brent Oil 70,84 0,33 Grains (Grain SA) White Maize ZAR 2 145,76 ◀ 0,2 ◀ volatility Soya ZAR 4 781,71 0,01 Wheat ZAR 2 491,20 ◀ 0,4 Paul Nyakazeya in the foreseeable future given the low output Online Editor prospects, high unemployment and rising infla- Namibia sticks tion,” advisory firm Morgan & Co warned last IMBABWE’s sickly economy is experi- Friday. to SA rand peg encing severe fresh headwinds, triggered It added that a tell-tale sign of harder eco- Zby spiralling production costs, soaring nomic times ahead was the confirmation by NAMIBIA is ruling out dropping parallel foreign currency rates and a subdued major companies such as Truworths, Edgars its currency peg with the South aggregate demand as disposable incomes con- and Dairibord — which recently released their African rand “unless something tinue to plummet. financials — that they were operating below very drastic happens”, given As a result, experts warn, the country is capacity, as well as the fact that some firms had the close trade links to its larger grappling with the threat of stagflation for the gone under judicial management due to lack of neighbour and the drive by the second time in a decade — a situation in which foreign currency to import raw materials. world’s biggest producer of ma- the inflation rate shoots up, economic growth “Inflationary pressures may also arise from rine diamonds to recover from a rate slows down and unemployment remains communication-intensive businesses (such as two-year recession. high. mobile network operators and Internet service “We have to consider all the This comes as business is reeling from providers), transferring the higher tariffs bur- INSTITUTE of People Management of Zimbabwe president Pre- options, but after having consid- growing wage-hike pressures and the negative den to end-consumers,” Morgan & Co said. cious Nyika. The institute is developing human resources stan- ered that we still think that back- ing one-on-one with the rand is effects of rocketing inflation — which hit a 10- It also warned that “should the new tariffs dards, which it believes are essential for economic growth. Zimba- the best option,” Namibian Pres- year high of 59 percent in February — while be rejected, consumers and businesses should bwe has suffered serious brain drain, with over three million of its highly-skilled human capital migrating to various countries due ident Hage Geingob said in an consumers are groaning under the weight of the expect erratic communication services from interview in Cascais, Portugal, country’s ever rising cost of living. telecoms operators”. to the deteriorating economic situation in the southern African country. Picture by Freedom Mashava where he attended the Horasis “Zimbabwe could be heading for stagflation To Page 2 Global Meeting. – Bloomberg Page 2 | April 11-17 2019 The Financial Gazette National News Industry buffeted by fresh volatility From Page 1 ments linked to foreign exchange short- Mortgage lender CABS concurred ages and the relationships between in- with Morgan & Co’s view, saying most come and expenses under inflationary companies were now facing severe eco- conditions,” Washington Matsaira, the nomic challenges, with the risks associ- bank’s chairman, said in a statement ated with operating a business in Zimba- accompanying its results to December bwe continuing to worsen. 2018. “The risks and opportunities in Zim- On the other hand, CABS’s parent babwe have further escalated. company, Old Mutual, said Zimbabwe “Chief among these are those ele- was not going to experience meaningful George Guvamatanga Busisa Moyo economic revival if the government does not embark trading and companies failing to access desperate- on a comprehensive policy overhaul, and also show ly-needed foreign currency”. total commitment to restoring confidence. Trust Chikohora, a former Zimbabwe National “Going forward, the overall pace and magnitude Chamber of Commerce president, said the current of macro-economic revival is likely to depend signifi- economic situation was so dire that he believed the cantly on government’s ability to sustainably rebuild only way to stabilise rampaging prices was to “do public and investor confidence, bring spending under away with the RTGS dollar and use stable foreign control, as well as to re-engage successfully with the currencies” instead. international community,” Johannes !Gawaxab, the “This could be the only way until we stabilise the diversified financial services group’s chairman, said economy through massive foreign direct investment, in the company’s results to December 2018. as well as sustainable lines of credit from multilateral Busisa Moyo, a former Confederation of Zimba- institutions,” he said, adding that “we will also need bwe Industries (CZI) president, told The Financial high levels of aid”. Gazette that industry had not yet fully responded to “We will only be able to reintroduce our own cur- the central bank’s recent monetary policy statement rency once we have sustainable forex reserves,” Chi- (MPS), which unveiled a partially managed official kohora said. foreign currency market, as well as the country’s new However, Treasury permanent secretary George RTGS dollar. Guvamatanga has said that Zimbabwe’s economy is “In my view, it will take months before we reach far from “fragile” and that the ongoing “fast-paced” a new balance between prices, incomes and volumes implementation of a raft of new economic measures as an economy, though the unencumbered portion of would save the situation. tobacco inflows and improvements in gold deliveries “The country has been in transition since 2017 may shorten this period,” he said. and this transition was formalised in October 2018 by Moyo also said the possible solutions to the coun- an economic blueprint, the Transitional Stabilisation try’s economic challenges included authorities creat- Programme, and the actions outlined therein are being ing a “liquid and freely-trading interbank market plat- implemented at a very fast pace,” he has argued. form for foreign exchange”. In the meantime, and as both inflation an the cost On its part, the CZI Economists Roundtable said of doing business in the country continue to escalate, “the recently-launched interbank market was not op- the CZI has written to the government seeking urgent erating on a free market concept, resulting in subdued intervention. [email protected] 2018 was good: Access Finance NUMBER of Zimbabwean companies expe- last few years and challenges to remain in the econo- rienced good “revenue and sales” growth in my were listed as foreign currency and cash shortag- A 2018, a recent business confidence survey by es and rising labour costs. Access Finance (Access) says. “Success did not (always) translate into more jobs This also comes as a majority of those polled (and) respondents were polarised on future growth believe government policy had been negative in the and business prospects in 2019. Though more are positive on both these areas (41 percent to 50 per- cent) versus negative (34 percent to 42 percent),” a recap of the Access survey said, adding “improved performances had been achieved at the back of bet- ter technologies, cost reduction and operational ef- ficiencies”. “We grew revenues in 2018 and if this had been another region, we would have increased our staff for the future. We are not sure if this growth is op- portunistic or part of a longer term trend,” one of the 30 chief executives polled said. Although industry is divided on the sources and future of foreign direct investment (FDI), most of the cash is still seen as coming from China ― at 76 percent ― followed by the European Union and the United States at three percent. Access is a leading financial assets trader, which services blue-chip, small to medium-sized enter- prises and individuals. The company is expected to launch or publish another market analysis and com- mentary this month. Mining, tourism and agriculture, it said, remain the country’s economic mainstays. With some of the leaders surveyed extracted from the manufacturing, health, automotive, finance, com- modities and retail sectors, some of the key topics tackled include reasons for business improvement, staff retention, growth prospects and optimism, abil- ity to capture FDI in 2017-2018 and impact of gov- ernment policy on operations. - Staff Reporter [email protected] The Financial Gazette April 11-17 2019 | Page 3 National News Zim slides into recession: IMF Nelson Gahadza Business Reporter IMBABWE’S economy will slide into recession this year, for the first time in 10 years, largely due to fiscal Zand monetary developments in the country, the Inter- national Monetary Fund (IMF) has said.