Encourage saving: Tetrad

Patrick Chinamasa

By Daniel Chigundu

SEASONED market watchers Tetrad Securities has urged government and the central bank to put in place measures that will encourage the spirit of saving.

According to a Reserve Bank of Zimbabwe (RBZ) monthly economic review for July 2013 demand deposits stood at 53 percent of total deposits while under-30 day, savings and long term savings accounted for 22, 12 and 13 percent respectively.

Tetrad argues that if the status quo is allowed to stand sustainable economic growth might never be realised in the economy.

“RBZ statistics continues to highlight the structural weakness in our monetary base. The persistent dominance of demand deposits compared to long-term deposits has seen the banking sector failing to fund industry needs.

“Our view remains that as long as this mismatch exists, sustainable economic growth may not be attained.

“There is need for the government and the central bank to encourage a savings culture in the economy and also put policies in place that will help attract meaningful lines of credit,” the company said.

Most industries especially in mining, agriculture and manufacturing are in need of cheap long-term funding, which is not available from the financing institution in the country.

In addition, the World Bank recently highlighted that Zimbabwe requires US$11.30billion for electricity, US$1.80billion for water, US$13.39billion for transportation and US$6.75billion for the telecoms sector.

The newly appointed Finance Minister Patrick Chinamasa has also indicated that the country’s industry is in urgent for recapitalise and retooling in-order to make them efficient.

“We are now at an urgent need to increase capacity utilisation, and I am disappointed that as country we have become a warehouse of other countries.

“This has to be reversed gradually but more damage has already been done to the textile industry. As a Ministry we will make an effort to ensure that industry is retooled so that it becomes efficient to compete with others.

“I want captains of industry to start drawing plans for retooling so that when we get resources we can channel using those plans and in the coming months we will introduce policies to revitalise the economy,” said Minister Chinamasa.

The Confederation of Zimbabwe Industries earlier in the year raise concern over industrial capacity utilisation which they say has been on the retreating side since 2012.

In 2008 at the height of economic down-turn capacity utilisation was at 10 percent, while 32.2, 43.7, 57.2 and 44.2 were recorded in 2009, 2010, 2011 and 2012 respectively.

Former Finance Minister in the now defunct inclusive government Tendai Biti had set an ambitious target of 60 percent but failed to achieve it due to a myriad of challenges.

Some of the challenges include expensive but unrealiable water and power supplies, lack of funds for retooling and excessive imports from the neighbouring countries and Asian markets

Return of the hangman?

Media hangman...Jonathan Moyo

By Daniel Chigundu

PRIVATE owned media in the country often regarded as being anti-government has been put on the edges following the appointment of Professor Jonathan Moyo as the Minister of Information in the new Cabinet.

Moyo seen as media hangman in Zimbabwe is remembered for causing the closure of the Associated Newspapers of Zimbabwe (ANZ), who were publishers of The Dailynews and Dailynews on Sunday, causing the arrest of several journalists and deportation of Andrew Meldrum.

During his previous tenure, before he fell out of grace, Moyo who is multi-talented introduced the 75 percent local content policy on all the state-owned radios and television to give way to his now defunct band, Pax Afro and the policy is however credited for giving birth to urban grooves.

Moyo’s resurrection from the dustbin is believed to have sent shivers to some of the private owned media houses and freelance journalists who had already penned his political obituary following his defeat in the just ended harmonised but controversial elections.

Weeks after the announcement of the election results some of the private owned media had headlines such as “The end of Moyo” and Moyo’s future’s uncertain” but his proverbial nine lives of a cat has shocked many.

Jono, as Moyo is affectionately known in media circles is also famed for popularising hate speech during the tenure of the inclusive government with his long and verbose articles, which gobbled acres of space in the state owned newspapers.

He fell out of favour with the international world for his leading role in penning the draconian Access to Information and Protection of Privacy Act which among other things infringes on the freedom of speech.

Which media will be hanged, or escape the noose, only the hangman (Jonathan Moyo) will decide and the world can only watch in anticipation.

Mugabe’s solution to hunger

They will need assistance

By Daniel Chigundu

PRESIDENT Robert Mugabe’s new cabinet will be called early into action following stunning revelation by the World Food Program (WFP) that about 2.2 million of rural people face massive starvation early next year.

 The WFP says the magnitude of the hunger and affected areas are contained in the Zimbabwe Vulnerability Assessment Committee (ZimVAC) rural livelihoods report were it is estimated that about one in every four rural people will need food assistance early 2014.

It is also believed that this will be the worst hunger since 2009 when more than half the population required food assistance.

In his speech at the official opening of the 103^rd edition of Harare Agricultural Show President Mugabe promised that his government would mobilise grain for the country through imports and other measures.

“In order to mitigate the effects of hunger, the government is mobilising grain from areas of surplus to needy areas. In addition, measures have been put in place to import grain from neighbouring countries.

“Going forward, it is government’s intention to ensure food self-sufficiency for the nation. Further to alleviate the adverse effects of the vagaries of climate change, government has developed multi-sectorial strategies in line with the Food and Nutrition Security Policy.

“More specifically in the agricultural sector, these involve enhancing the development of drought tolerant and short season crop varieties, the rehabilitation and development of irrigation infrastructure, promotion and adoption of technologies like conservation agriculture as well as promotion of water harvesting and water conservation techniques,” said Mugabe.

Although this is expected to be a test of character for the new government that will also have to deal with the liquidity crisis biting the economy, the WFP has indicated that it will work closely with government to help the affected.

“Many districts, particularly in the south, harvested very little and people are already trying to stretch out their dwindling food stocks.

“WFP is working closely with the government and partners to respond to the looming food crisis and will start food and cash distributions to the most vulnerable in October,” said WFP country director Sory Ouane.

Since the turn of the millennium when government implemented the chaotic land reform that was often accompanied with violence, Zimbabwe has struggled to meet its grain requirements.

Zimbabwe which before the land reform used to be the breadbasket of Africa has been relying on grain imports from South Africa and Zambia.

What makes the situation even harder for the country is that most beneficiaries of the land reform have since dumped the low paying maize, in favour of the highly priced tobacco.

Statistics on the ground indicate that Zimbabwe’s tobacco output has dramatically increased with a further increase expected in the coming season.

Tobacco statistics have also shown that about 163million kilograms of the golden leaf had gone under the hummer at various auction floors as at July 23.

During the tenure of the inclusive government President Mugabe attributed the country’s agricultural woes to deliberate under-funding by the former finance Minister Tendai Biti.

Zimbabwe unattractive PPI

By Daniel Chigundu

Badly needed... who will bring his money to Zimbabwe

ZIMBABWE which is battling to lure Foreign Direct Investment (FDI) to help capitalize struggling businesses and ease the liquidity crisis bedeviling the economy since dollarisation has been declared unattractive for business.

Results released from the global mining survey 2012/2013, produced by the Fraser Institute titled Policy Potential Index (PPI) has indicated that Zimbabwe’s mining rank has plunged from glory.

The PPI said Zimbabwe was only able to collect a mere 13.4 points out of 100 compared to 21.8 points recorded last year.

“High PPI represents policy attractiveness whilst a low reading indicates unattractive policies. The low reading saw Zimbabwe ranked 91 out of the 96 jurisdictions compared to 74, thus leaving Zimbabwe sitting in the list’s bottom 10 countries,” said the survey.

Since 2009 Zimbabwe has had to do with an unstable political environment that was laden with unnecessary clashes between political parties that formed the inclusive government.

The clashes are also blamed for producing an unattractive economic environment characterised by policy inconsistences and diverging views regards the implementation of the controversial indigenization policy.

According to economic analysts these wrangles are the major reason behind the country’s poor performance.

Other nations that had the least ranking on policy attractiveness were Indonesia, Vietnam, Venezuela, DRC and Guatemala.

Finland on the other hand had the highest ranking of 95.5 points with Sweden on second position while Botswana in terms of African countries had the highest ranking.

The Fraser’s PPI Index considers factors such as legal system, taxation system, uncertainty concerning the administration, interpretation and enforcement of existing regulations.

It also considers uncertainty concerning environment regulations, trade barriers, political stability and corruption among other factors.

Africa as a continent was also reported to have dropped for the fifth year as most nations within the continent aim to reform their respective mining industries.

Market watchers Tetrad Securities have warned against brushing this poor performance aside since mining is a critical contributor to the country’s coffers.

 “The drop in Zimbabwe’s ranking on policy attractiveness need not be underestimated particularly as the mining sector is the key contributor. In 2012 the mining sector contributed an estimated 16 percent of the country’s GDP.

“Our view is that with the huge capital requirements for the sector there is need for policymakers to come up with policies that stimulate growth of the industry,” Tetrad said.

Mining companies in Zimbabwe are still waiting for the finalization of their indigenisation proposal by government amid unconfirmed reports that indicate the new government is set to introduce a host of changes to the indigenisation regulations -

Doom as Dalny Mine closes

By Daniel Chigundu

President Mugabe...in a fix

THE country’s mining sector which had been showing some signs of growth since dollarization has been dealt a major blow following the closure of Canadian owned Dalny Mine.

Dalny Mine a subsidiary of Toronto listed mining company New Dawn closed shop on August 30, following alleged power disconnection notice from Zesa.

In its quarterly results for the month ending June 30, New Dawn had expressed fears for this closure, but had hoped that it would not come through as they were putting their all in trying to address the issue.

In a statement New Dawn said it was placing the mine under care and maintenance while workers will go on unpaid leave.

“Without electrical power, the company cannot operate the mine and thus forced shut down the Dalny Mine operations.

“As part of the shut-down, the Dalny Mine workforce is being placed on unpaid leave and the company is moving the Dalny Mine to care and maintenance.

“The company intends to engage with creditors of the Dalny Mine operations to craft a plan that will address the mine’s outstanding trade payables, which currently total approximately US$3.1 million.

“The mine is expected on care and maintenance until the company is able to satisfactorily address the financial and operational issues that contributed to its shutdown or until a potential sale, joint venture or some other arrangement is realised,” the statement said.

While the Tetrad report agreed that there was something to do with power problems at Dalny Mine it also revealed that issues to do with the delayed approval of the indigenization process, increasing payroll and power costs, high domestic royalties, taxes and fees might have prompted the untimely closure.

Tetrad said the closure of Dalny Mine paints a doom picture for the country and mining sector since mining is one of the key contributors to the Gross Domestic Product (GDP). Mining accounted for 16 percent to the national coffers in 2012 and its closure might pose some challenges for the new government.

“Closure of Dalny Mine does more harm than good for the sector. At a time when the growth of the sector was downgraded from 17.1 percent to 5.3 percent, closure of Dalny Mine implies low gold output.

“Electricity tariffs and royalties are continuously rising at a time when global commodity prices are weakening. This is reducing operational performance of most mining houses thus leading to a reduction in overall earnings for the sector.

“Added to that, the absence of medium to long term finance means the outlook for the sector is likely to remain bleak. Thus there is need for policy makers to address the critical issues for the sector and promote rather than dissuade investment,” said the Tetrad report.

New Dawn has however indicated that they will not hesitate to close all their mines in Zimbabwe should the operating environment continue to be unattractive for business.

The company is reportedly also in the process of reviewing the status of the exploration and evaluation of its assets which resulted in a program to sell some of its mining assets that are not considered integral to its long-term strategy.

The mining giant is currently engaged with several potential parties in an attempt to sell two of their mines Old Nic Mine and the Venice Mine.

Mining is a high capital business in the country and lack of lines of credit to recapitalize is reportedly hampering production and has forced some companies to put their mine under care and maintenance.