World Bank endorses new ISN for Zim

THE World Bank Group (WBG) board of executive directors has endorsed a new Interim Strategy Note (ISN) for Zimbabwe for the period 2013-2015, the Bank has announced.

In a statement the Bank said the endorsed ISN supports three priority areas namely fostering private sector-led growth, strengthening core systems for sector management and reducing vulnerabilities and strengthening human development.

While welcoming the flexible approach reflected in the ISN the WBG board of executive directors also underscored the importance of the upcoming elections, a commitment of good governance, transparency in public financial management and a robust investment climate.

“Given the uncertainties facing the country, the ISN has been prepared to swiftly respond to changes in the country context. The anticipated elections and the new Constitution will be important developments during the ISN period.

“The ISN has been informed by three scenarios: status quo, enhanced re-engagement, and deterioration-specific features of these scenarios, current assessment of their likelihood, and possible WBG response have been set out in the document,” said the Bank.

Under the status quo scenario, the WBG will continue to support reforms and recovery through dialogue and analytical work-building upon the success achieved on this front during the ISN2 period through the Analytical Multi Donor Trust Fund (A-MDTF) and other forms of support.

If the situation improves and enhanced re-engagement can be confirmed, then the WBG will work with other partners in helping the government to develop social and economic reform programs needed to move towards arrears clearance and full re-engagement.

And the third scenario, if the political economy deteriorates to the point where most analytical work no-longer has a receptive audience, the WBG would scale back its work and staff 

SMEs starve as officials feasted

By Daniel Chigundu

SMEs Minister Sithembiso Nyoni

SMALL to Medium Enterprises and Cooperative Development Minister Sithembiso Nyoni and officials from her ministry feasted on five-star food while SMEs were left to starve at Rainbow Towers yesterday.

Small business-people drawn from around Harare and surrounding areas had been bused by Minister Nyoni in a typical rent-a-crowd scenario to grace the official launch of the FinScope MSME Survey Zimbabwe 2012.

But all hell broke loose when President Mugabe who was the guest of honour and other guests were whiskered away to the VIP Lounge for lunch which was mysteriously served at around 15:45pm.

Ministry officials shared the meal tickets amongst themselves while the 100 plus SMEs and a few journalists were advised to walk to Taste of Africa near Mupedzanhamo open market for their lunch.

ZEC ready for polls: Makarau

By Daniel Chigundu

ZEC Chairperson Justice Rita Makarau

ZIMBABWE Electoral Commission (ZEC) chairperson Justice Rita Makarau has said her commission is ready for July 31^st polls as soon as President Robert Mugabe makes the proclamations.

Addressing the media on voter registration exercise in Harare a few hours ago Justice Makarau said it was the proclamation that will lead to other processes necessary for the election.

“…concerning whether we are able to hold the election by July 31, yes ZEC is ready as long as we get the proclamation that polls are on July 31^st.

“There are three processes here and the time frames are as follows proclamations to nomination court there is 14-21 days while from nominations to polling day there is 30-41 days so it is possible but we will be guided by the proclamations,” she said.

Justice Makarau further revealed that there will be a 30 day voter registration and voter inspection as mandated by the new constitution in all of the country’s 1958 wards beginning this week.

She added that her commission has already dispatched two voter educators in every ward to inform people on the requirements and locations for voter registration.

Turning to the issue of proof of residence the Justice said people can now use affidavits which will be approved by ZEC members stationed at various voter registration centres countrywide.

Already close to 125 ZEC officials have certified as Commissioners of Oath for the exercise. Justice Rita Makarau has called on people aggrieved or those who have identified anomalies with the registration exercise to approach her commission for rectification.-  

ZSE feels election heat

By Daniel Chigundu

THE impending do-or-die harmonized elections set for sometime later in the year are reportedly affecting trading on the country’s bourse, market watchers have said in a report.

 In their wide-ranging weekly market watch Tetrad Holdings Limited said confusion regards the holding of elections and timing has resulted in some investors taking a wait-and-see approach.

 Zimbabwe is synonymous with holding disputed elections oftenly accompanied by a wave of violence as witnessed in June 2008 run-off.

“As expected and widely discussed here before, trading activity on the ZSE is much reduced. Most investors seem to be taking a back seat ahead of elections. Those that wanted to take positions already did so in the highly active first quarter,” read the report.

Already there is uncertainty in the country over economic policies and election dates. Jostling and rubbishing each other over interpretation of the electoral laws has reached alarming levels in the inclusive government.

Zanu PF hardliners are holding on to June 29 while the two formations of MDC are saying the date is not possible because of reforms they have demanded.

However the fighting in government is already driving away investors who were slowly gaining confidence in the country and is likely to force them to adopt a wait-and-see stance similar to what they did in 2009 at the consummation of the inclusive government.

Tetrad however said that even though there is reduced trading at the Zimbabwe Stock Exchange it has noticed a new trend slowly developing.

“Despite the low trading levels, another trend is emerging. Interest in the blue chips is still high. Econet for example has continued to command a high percentage of total trades on the market.

“Delta, BAT and PPC are at all-time highs, all reached last week. We expect this trend of low overall trading activity to persist but skewed towards blue chips,” the report said

Industry has lost competitive edge

By Daniel Chigundu

ZIMBABWE’S manufacturing sector which is operating at 40 percent capacity utilization owing to a plethora of challenges has been urged to focus on areas in which it still has competitive advantage than in manufacturing.

Problems weighing down production in industries include unreliable but expensive power and water supply, aged equipment and skills flight.

In its weekly market watch leading economic analysts Tetrad Holdings Limited highlighted that one of the major challenges that has made life difficult for local companies is the issue of high production cost against low revenues in the economy.

“Realigning business models has been another game-changer with most manufacturers turning to retailing. Examples that come in mind include Powerspeed, PG Industries just to name a few. Our view is that Zimbabwe no longer has the competitive edge on the manufacturing sector and this is the reason why we are a net importer of both basic and capital goods.

“We do not see the trend changing anytime soon even if one factor in the protectionist measures being implemented as our overall production cost remains high relative to our peers. Our view is that Zimbabwe should focus on areas where it has competitive advantage for instance in tobacco farming with the manufacturing sector playing a part in value addition rather than actual production of goods.

“We concur with the recent view from the Ministry of Finance that the five percent GDP growth might be an uphill task as most key sectors are struggling,” said Tetrad in a report.

 Two weeks ago the Confederation of Zimbabwe Industries (CZI) revealed that capacity utilization in the first quarter of the year dropped to 40 percent from 47 percent registered in the last quarter of 2012.

 Tetrad said the decline in the capacity utilization of the manufacturing sector is a cause for worry as it is slowly reversing the gains achieved since the inception of the multi-currency regime in 2009.

“The saddening bit about this data is that it comes in the wake of 2012’s capacity utilization plunge to 44.2 percent from 57.2 percent in 2011. Liquidity challenges according to CZI remained the major cause of the decline and we expect the trend to persist as the Ministry of Finance in its first quarter report publicly accepted that the liquidity challenge was now more real than ever before,” said Tetrad.

In trying to arrest challenges currently dogging the manufacturing sector CZI proposed cost cutting initiatives and realigning of business focus and already these measures have been credited for helping some corporates in improving their profitability since dollarization whilst those that are yet to rationalize their operations are still reeling in losses.

Tetrad however believes cost cutting is not an end in itself arguing that cost reduction can only be implemented to a certain level.

“Our view is that for most corporates costs have been reduced but the major issue now relates to tackling the slow or declining revenues. Thus cost cutting on its own will not go a long way in resuscitating the sector as the depressed economic activity is leading to low revenues. More so most costs in the manufacturing sector are fixed costs hence nothing much can be done,” Tetrad said