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European shares slip

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LONDON. — European shares slipped to a two-month low yesterday, tracking losses on Wall Street and in Asia as markets positioned for data that could determine if the US Federal Reserve starts trimming its stimulus next week. Investors lowered their exposure to riskier assets after a provisional budget deal in Washington this week eased some of the fiscal drag on the US economy.

That raised chances that the bond buying operations that have helped equities to multi-year highs this year could be cut at the Fed’s December 17-18 policy meeting.

“We think there is a chance that Fed tapering will begin next week. However, whether it is December, January or March is less important than the fact that the Fed feels able to make a start on withdrawing QE,” said Tim Gregory, chief investment officer at Psigma Investment Management, referring to the program known as quantitative easing.

“Recent GDP data, ISM manufacturing data and the jobs report all lend support to tapering sooner rather than later.”
Yesterday’s data focus will be on US weekly jobless claims numbers for the week ended December 7 and US retail sales data for November.

“This is the final piece of the jigsaw ahead of the Fed meeting and could make the difference when it comes to the decision on tapering,” Alpari analyst Craig Erlam said.

A secondary note of caution was added after a source said ex-Bank of Israel governor Stanley Fischer had been asked to be the Fed’s next vice chair. Fischer is seen as less doveish than Janet Yellen, the nominee to lead the US bank.

The pan-European FTSEurofirst 300 fell 0,3 percent at 1 252,55 points after falling as far as 1 249,84, the lowest since mid-October. The index has fallen about 5 percent after climbing to a five-year high last month, but is still up more than 10 percent so far this year.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0,8 percent yesterday and US shares earlier closed 0,8 to 1,4 percent lower.
In the bond market, Bund futures fell 12 ticks to 140,18, with German 10-year yields 1 basis point up at 1,84 percent in a market increasingly jittery ahead of the Fed’s meeting next week.

Italian and Spanish bonds fell after a media report said the European Central Bank could make eurozone banks hold capital against sovereign bonds to stop weak lenders from using its cash to buy up debt from crisis-hit countries.

In the currency market, the euro hovered near a two-year high against the dollar and a five-year peak against the yen, underpinned by higher short-term market rates which has seen yield differentials move in its favour.

Among commodities, Brent futures held steady above US$109 a barrel, while Gold inched up as some safe-haven bids emerged after equities dropped.— Reuters.


Celebrating local industry

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Vandudzai Zirebwa Buy Zimbabwe
Buy Zimbabwe held its inaugural Buy Zimbabwe Awards on December 11, 2013. The essence of the awards was to celebrate the remarkable and outstanding roles played by local companies in rejuvenating the economy, creating employment, generating wealth and steering national pride.
The ceremony was a fitting homage to those companies that braved the tumultuous economic period that the country underwent in previous years and have, in spite of the challenging economic environment, continued toiling to mend Zimbabwe’s industry.

It was a colourful event, officiated by Minister of Industry and Commerce Mike Bimha. Turnout was remarkably high, with critical players such as Government, industrial bodies and industry itself well represented.

The diversity of companies represented was a reflection of the general tenacity and commitment by industry to try to rebuild the economy. One could not help but feel that industry has come a tremendous way in the past years. Yes, it still faces its fair share of challenges that need serious and urgent attention, yet there are champions out there who are diligently working to support national

procurement and defend our national pride.
Surely, such champions need not go unheralded.

Evidently, the need for synergistic relations between industry, industrial bodies and Government for continued growth can never be overstated. These parties are encouraged to continue to use every platform available to find common ground and ways of steering the economy forward.

There is also need to tighten relationships with marketing associations, who play a pivotal role in promoting local brands. It is encouraging to note that companies are fast realising the importance of promoting buying local. The message that we, as Buy Zimbabwe, have been preaching that there is need to promote the production and consumption of quality local brands seems to be seriously taking root in industry.

The notion that all that is made in Zimbabwe is inferior, or that adhering to quality standards for local goods is fast falling by the wayside, thanks to the local companies who have been at the fore of consistently providing quality local products and playing an important role in economic development.

The high participation of companies in the Buy Zimbabwe Awards is a clear indication of how local industry is taking its role of turning around the economy seriously. By the adjudication team’s own admission, almost all award categories were tightly contested.

Buy Zimbabwe also recognised the contribution played by the Small to Medium Enterprises in economic growth by having a category for this critical sector. The winners in all categories have every right to be proud of their achievements, for emerging victors in such a tightly contested race is no mean feat. However, their winning should in no way encourage complacency. Zimbabwean industry still has a long way to go, and the race is not for the faint hearted, but for those who are wholly committed to the turnaround of the country’s fortunes.
And the winners of are . . .

1. Buy Zimbabwe Insignia Award, recognising Buy Zimbabwe partners for using the Buy Zimbabwe insignia on products and promotional materials
Winner:  National Foods Ltd
1st Runner-up:  Servcor
2nd Runner-up: Turnall Fibre

2. Buy Zimbabwe Partner of the Year: Manufacturing
Winner: Beta Holdings
1st Runner-up: Turnall Fibre
2nd Runner-up: BAT Zimbabwe

3. Buy Zimbabwe Manufacturing: Food Processing Award
Winner: National Foods Ltd
1st Runner-up: Schweppes Zim
2nd Runner-up: Lyons Zim

4. Buy Zimbabwe Retailer Award
Winner: OK Zimbabwe
1st Runner-up: N. Richards and Sons
2nd Runner-up: Food World

5. Buy Zimbabwe Great Comeback Award
Winner: Cairns Foods
1st Runner-up: United Refineries
2nd Runner-up: Datlabs

6. Buy Zimbabwe Telecoms Service Provider of the Year Award
Winner: Econet Wireless
1st Runner-up: Telecel Zim
2nd Runner-up: Africom

7. Buy Zimbabwe Banking and Financial Services Award
Winner: CBZ
1st Runner-up: Steward Bank
2nd Runner-up: FBC

8. Buy Zimbabwe Innovation Award
Winner: Africom
1st Runner-up: G-Tel
2nd Runner-up: Astro (Pvt) Ltd

9. Buy Zimbabwe Corporate Social Responsibility Award
Winner: Mimosa Mining
1st Runner-up: Econet Wireless
2nd Runner-up: Nyaradzo

10. Buy Zimbabwe Quality Award
Winner: Datlabs
1st Runner-up: ZFC
2nd Runner-up: Zent

11. Buy Zimbabwe Competitiveness Award
Winner: Irvine’s Zimbabwe
1st Runner-up: Dendairy
2nd Runner-up: Favco
12. Buy Zimbabwe Customer Service Award
Winner: Nyaradzo Group
1st Runner-up: Econet Wireless
2nd Runner-up: CBZ

13. Buy Zimbabwe Support Award
Winner: Capri
1st Runner-up: National Foods
2nd Runner-up: Quest Motor

14. Buy Zimbabwe Procurement Award
Winner: Zimplats

15. Buy Zimbabwe SME Award
Winner: Integrated Properties

16. Buy Zimbabwe Personality of the Year Award
Winner: Minister of Industry and Commerce, Hon. Mike Bimha
Our hearty congratulations to all winners in all categories.

Feedback: vandudzai@buyzimbabwe.org.zw or call 0773 751 878

A small car with lots of Spark

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Fact Jeke Behind the Wheel
Not your regular urban run-about — a statement that aptly describes the Chevrolet Spark with its innovative design and edgy styling.
Introduced to our market about three years ago and now a regionally produced model by General Motors South Africa as of last year, the latest generation Spark represents a revolution in design, styling and overall space utility within the dimensional constraints of the “A” segment for passenger cars.

Currently, in Zimbabwe it’s among the cheapest entry level vehicles and it’s ideal for driving schools, sales reps, lower level managers and anyone who cares to look hot. So if you have a big family, this is a no no.

The Spark has segment leading dimensions with a length of 3 640mm, height of 1 522mm and width of 1 597mm. Within those dimensions the body-in/wheels-out stance delivers a wheelbase of 2 375mm with a track of 1 410mm at the front and 1 417mm at the rear.

Encapsulating these base dimensions is a dynamic styling package. True to the Chevrolet brand, the front end of the Spark offers an aggressive appearance with its strong representation of the brand created by the unmistakeable “Bowtie” emblem on the two-tier honeycomb pattern grille. The lower air intake, defined by an aero-spoiler on its lower edge that flows into the bumper and front fender line, provides a sporty appeal.

Large dramatically styled headlamp clusters further define the front end. The headlamp lenses stretch from the front edge of the upper bumper line right back to the rear of the bonnet with their polycarbonate lenses following the smooth flow of the body lines upwards and back towards the “A” pillar and sweeping windscreen line. Behind the clear lenses the headlights, with their chrome coated bezels, add an attractive diamond like sparkle to the light clusters.

The side view of the Spark is dominated by a window line that is slanted dynamically upwards towards the sloping roofline matched by styling lines incorporated in the doors.

At first glance one is left wondering whether the Spark is really a five-door hatch. It emphatically does offer the convenience of four passenger doors, the existence of the rear doors is masked by concealed door handles mounted vertically in the “C” pillar.

This provides the illusion of a sporty three-door hatch with the real life convenience of four-door, plus hatch access.
The interior design of the Spark offers a blend of fun, fashion and functionality. The edgy exterior design is complimented by a functional approach for the interior, fully utilising the external dimensions of the Spark to optimise comfort and spaciousness on the interior.

The wide track and long wheelbase relative to competitors’ dimensions offers exceptional front and rear legroom, front headroom and rear hip-room. The result is comfortable accommodation for five adults.

Front seat passengers have as much as 1 067mm of leg-room available with shoulder space of 1 295mm and headroom of 1 010mm. Rear seat occupants have up to 893mm of leg-room with shoulder space of 1 255mm and headroom of 947mm.

The focal point of the interior design is a motorcycle-like instrument panel mounted above the steering column. This combines analogue and digital systems for a unique fun styling element that offers functionality as well in the form of enhanced visibility and convenience.

The interior styling flows out from the focal point of the instrument display to bring the elements of the front seats and door trims together in an interrupted visually appealing manner.

Trendy pattern cloth covered semi-bucket seats provide hip-hugging support when cornering. High quality materials and exceptional attention to build quality are evident in all aspects of the interior.

Special acoustic absorbent and effective underbody insulation materials assist in reducing the intrusion of noise into the passenger compartment. Wind noise is minimised by the aerodynamic characteristics of the body design and attention to detail in the design of door and window seals.

The body structure of the Spark ranks at the top of its class in terms of overall stiffness, this contributes to a structure that offers superb protection in the event of a collision.

Ultra-high strength steel is used in the side structures to add resistance to deformation from a side impact. “H” pattern steel members incorporated in the floor structure assist in preventing deformation in the event of a severe side impact. The use of high strength steel is carried over to the rear body structure to provide an added level of protection in this area.

The engine-mounting sub-frame is designed to disperse impact energy in the event of a head on collision while the steering column features an extended impact protection zone to enhance driver protection. High-strength steel is used in the front and rear crash boxes that assist in minimizing impact forces. The rear crash box plays a role in reducing whiplash injuries.

The application of front-end crash boxes has an economic benefit, as well as passenger protection benefit.
In the event of a low speed crash damage will in many instances be limited to the replaceable crushable structure rather than transmitted through to the main body structure.

The roof structure of the Spark is another high strength area that provides enhanced protection in the event of a vehicle roll-over. The Spark has been designed to withstand four times its own weight, far beyond industry safety requirements, in the event of a roll. A pedal retraction system assists in preventing the driver’s lower leg area from being trapped and injured in a severe crash impact.

Pedestrian safety is also been factored into the Spark design. Ample space is provided between the engine and the bonnet to provide a deformation space to absorb the impact of a pedestrian collision in line with European safety requirements for pedestrian protection. I firmly believe that this is a girly girly car and at least the Spark is fun and useful in the city.

If you are looking for something that is zippy and cheap on maintenance and running costs your local General Motors dealer will assist with spec variations and pricing.

Till next week, stay alive, be safe and God bless you.

Fact Jeke is an auto enthusiast with over a decade experience. She has written for several regional publications, attended many auto trade shows around the globe. You can contact her on email: missjeke@gmail.com <mailto:missjeke@gmail.com> or via Facebook: Torque with Fact Jeke & on YOOKOS

Moves underway to boost US, Russia trade

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Washington. — Russia is proposing to boost trade with the US with a comprehensive package of agreements on issues including investment and regulations, a Russian government official said. The parameters of a bilateral investment treaty could be complete within the next year, and deals on regulations and standards could be finished within five years, the official said yesterday during a lunch with journalists in Washington.

He spoke on the condition of anonymity because the negotiations are in a preliminary stage.

The Russian proposal would contain measures to increase commerce between the two nations, which last year amounted to about US$40 billion, though it wouldn’t be a full free-trade deal, the official said. Talks may resume at the World Economic Forum meeting in Davos, Switzerland, in January, he said.

The official said Russia is not ready to discuss joining the Trans-Pacific Partnership agreement, which the US is now brokering with 11 regional nations.

Russian officials have been in Washington this week to meet with members of President Barack Obama’s administration, including US Trade Representative Michael Froman and Energy Secretary Ernest Moniz. Froman yesterday met with Irgo Shuvalov, Russia’s first deputy prime minister.

US officials anticipate continuing discussions with the Russians on a prospective investment treaty and expanding the economic ties between the two countries, said a spokeswoman for Froman’s office who requested anonymity when commenting on the matter.

The overture from the Russian government comes during a time of tumultuous relations with the US. Friction has arisen over political unrest in Ukraine and Russia’s protection of Edward Snowden, the former National Security Agency contractor who acknowledged leaking classified US documents.

“One of the reasons that the relationship between the two countries is so volatile is because there’s a very limited amount of economic ties” between them, Jeffrey Mankoff, deputy director of the Russia and Eurasia programme at the Centre for Strategic & International Studies in Washington, said in a phone interview.

The two nations have joined forces to broker deals to eliminate chemical weapons in Syria and reach a nuclear agreement with Iran.
The US$40 billion in US commerce with Russia last year represented about 1 percent of total US trade, according to US Commerce Department data. Since 2009, as global trade began to recover from a worldwide economic crisis, US trade with Russia has increased by about 70 percent.

Russia has the world’s eighth largest economy by output and last year joined the World Trade Organisation. The US has the world’s largest economy.

Caterpillar Inc of Peoria, Illinois, and Boeing Co of Chicago were among companies that lobbied the US last year to alter a Cold War era law to give American businesses a stronger legal footing when dealing with Russia in the WTO.

Machinery and transportation equipment accounted for about half of the US$10,7 billion in US exports to Russia last year, with chemicals and food each comprising another 10 percent. Petroleum and coal products made up about 59 percent of the US$29,4 billion in US imports from Russia last year.

“US companies still recognise Russia as an enticing market because it’s big,” Mankoff said. —Bloomberg.

Golden Peacock roosts in Mutare

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Isdore Guvamombe Tourism Matrix
At night, the eye is fed on the cacophony of twinkling and, at times, sashaying lights with the streets on the suburbs identified as lines of low flowing traffic from moving vehicles but the untrained eye might be forgiven for mistaking Dangamvura, Yoevil and Chikanga as just but one sprawling suburb.

During the day, the valley below expresses itself in a clearer way through a manifestation of different structures.
On a cloudy day, wafting clouds kiss the mountain tops with their soft and tender lips but on a sunny day, mirage blends with the lush greenery of the mountains that ring-fence the city in ephemeral splendour.

Far, far and farther on the southern end of the valley, a white super structure under a red roof lies of the foot of a mountain.
The mountain is dotted with bush shrubbery that from the Christmas Pass superfluously blends well with the structure, giving some sort of eternal union.

The structure is the Golden Peacock Villa Hotel, a huge hotel that has changed the face of Mutare by bringing an assortment of African traditional, English and Chinese hospitality experience.

The hotel has 83 luxurious en-suite rooms ranging from standard rooms, deluxe rooms, villas and presidential suites, tailor-made to suit one’s pocket.

In their rooms, guests have access to air-conditioners, complementary internet and WiFi, LCD televisions, DStv, tea and coffee making facilities, mini bars, bottled water, special imported linen, ceramic tiles and turn-down service.

The hotel has a spacious restaurant that accommodates 150 diners and has private dining halls convenient for breakfast, lunch or dinner meetings.

The private halls have different capacities, e.g. the Golden Peacock Hall: 20 people, the Great Hall: 10 people and the Mount Hall: 10 people.

The hotel also boasts the widest menu options ranging from French, English, Afroplerican and Chinese cuisines, complemented with the Zimbabwean traditional dishes.

Trained and experienced chefs are constantly seeking new ways to satisfy the tastes of guests, offering mouthwatering meals to their valued guests and ensuring that their dietary requirements are met without any compromise to health.

Golden Peacock Villa Hotel has a state-of-the-art conference centre with various sitting capacities with the biggest conference room accommodating 350 delegates, ideal for workshops, meetings, conventions, exhibitions and weddings.

When you choose Golden Peacock for special celebrations, you are assured of quality and exceptional service.
The hotel also offers quality outside catering services at a venue of your choice in and around Mutare.

The outside catering service not only takes care of the food and beverages for events, but also ensures that your guests get timely and exceptional service.

Catering services can accommodate a maximum number of one’s choice.
There is no doubt that Golden Peacock Villa Hotel will create the right ambiance for your special event and make your day a memorable one.

This hotel has certainly changed the face of Mutare and its the place to be this festive season, when one feels in the mood to relax and also make merry.

Feedback: guvaz2008@yahoo.com <mailto:guvaz2008@yahoo.com>

New rules for asset management firms

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rbzbankA NEW set of rules and requirements for asset management firms and collective investment schemes will only be adopted next year after consultations with industry players, the Securities and Exchanges Commission of Zimbabwe has said. Asset management firms now fall under the supervision of SECZ following the signing into law of the Securities Amendment Bill last week.

They were previously regulated by the Reserve Bank of Zimbabwe.
The RBZ took over regulation of asset management companies as there was no capital markets regulator at that time.

When SECZ was set up in 2008, the intention was for the commission to regulate asset managers but that could not have been done without amending the Securities Act.

Unlike the previous RBZ regulations, there will be no limit on the number of firms that can be licensed.
SECZ chief executive Mr Tafadzwa Chinamo said asset management firms will continue using the rules and requirements prescribed by the RBZ until new rules are introduced next year.

“It is still too early to effect changes to the requirements at the moment. So the firms will continue using the same rules until new ones are introduced in 2014.”

Mr Chinamo said SECZ will make formal engagements with the asset firms in coming up with new set of regulations.
“It is a gradual process which needs time but, however, we will make necessary announcements at the appropriate time,” he said.

Mr Chinamo said the meeting will be held at the beginning of next year.
Under RBZ, all asset management firms were required to register in line with the central bank’s requirements which included having a minimum paid-up capital of US$500 000.

The managers (of the asset management firms) must be fit and proper and have sufficient qualifications and experience for the management of a company carrying out the business of an asset manager. Companies were also required to present the certificate of incorporation, memorandum and articles of association and furnish the central bank with past financial performance statements, proof of capital and tax clearance certificates. — FinX.

ZB unveils loan facility for informal traders

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ZBBlessing Bonga Business Reporter
ZB BANK yesterday unveiled an interest-free informal traders loan facility aimed at tapping deposits from the informal sector and improve the bank’s liquidity, acting managing director Mr Shadowsight Chiganze said. According to a recent study, the bulk of Zimbabwe’s urban population is involved in the informal sector, accounting for about 24 percent of the country’s US$10,81 billion gross domestic product which remains largely unbanked.

The ZB Bank facility, which comes on the back of the informal trader account launched in 2012 by the bank, came after wide consultations with small-to-medium enterprises through their associations and is expected to attract US$5 million worth of deposits from the small and medium enterprises by mid-2014.

The initial facility is for US$1 million.
The loan is a short-term loan which only attracts processing charges with a payback period of seven days.
Interest is charged only upon default.

Mr Chiganze said the loan facility will be launched in phases beginning at Siyaso in Mbare, where a MOU has been signed between the bank and Harare Home Industries Association.

“From there we will spread and expand to other areas,” he said.
The maximum loan one can apply for is US$500 and the minimum is US$100.

“Informal traders who have accounts with ZB Bank will have to submit applications in teams of four and cross guarantee each other,” Mr Chiganze said.

He said existing and new customers can come through their clubs. “We just urge customers to borrow responsibly and spend the money responsibly.”

The informal traders account can be opened with an initial fee of US$20 and has a minimum balance of US$10 per month. No charges are made for the first three withdrawals per month.

3 mining State firms’ boards dissolved

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MINISTER CHIDHAKWA

MINISTER CHIDHAKWA

MINES and Mining Development Minister Walter Chidhakwa has dissolved the boards of three mining State enterprises after some members of the previous boards ran for or took up political office. In a statement on Wednesday, the ministry announced the dissolution of the Minerals Marketing Corporation of Zimbabwe, the Zimbabwe Mining Development Corporation and Marange Resources.

In an interview, Minister Chidhakwa said there were not enough people to sit on the boards hence the need to dissolve them in order to appoint new board members.

“For example, only two people were left on the Marange board. We felt there was also need to dissolve the other two – MMCZ and ZMDC – because we want to look at what they are doing.

“Once we are clear on what we want, we will then reconstruct new boards.”
For instance, Mr Supa Mandiwanzira, who was a board member at the ZMDC, left the board to participate in the parliamentary elections.
He won the Nyanga South seat and was subsequently appointed Information, Media and Broadcasting Services Deputy Minister.

Mr Godwills Masimirembwa stepped down as chairperson of the ZMDC board to contest in parliamentary elections on a Zanu- PF ticket for the Mabvuku-Tafara seat, which he lost.

Former MMCZ board chairman Mr Chris Mutsvangwa, now the Deputy Minister of Foreign Affairs, resigned to venture into politics while Colonel Tshinga Dube, who was the chairman of Marange Resources, which is wholly owned by ZMDC, also resigned to contest in the elections.

Another former MMCZ board member, Mr Tongai Muzenda, is now the Deputy Minister of Public Service, Labour and Social Welfare while former ZMDC board member Mr Freddy Moyo is now the Deputy Minister of Mines and Mining Development

Other MMCZ board members included Mr Johnson Masawi, Mr Tendai Munyoro, Mrs Nonhlanhla Ndlovu, Mr Felix Moyo, Mr Nicholas Dube and Mr Morris Mpofu.

ZMDC board members included Mr Togarmah Dhlakama, Mr Ashton Ndlovu, lawyer Mr Psychology Maziwisa, geologist Mrs Ntombizodwa Masuku, Mr Mutabu Sibanda and administrator Mrs Esther Marava- nyika. Minister Chidhakwa added that the duties and functions of these boards will be assumed by the ministry’s permanent secretary, Professor Francis Gudyanga, until the appointment of new boards.


Econet, banks renew feud

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econetwireless28Martin Kadzere and Golden Sibanda
BANKS are once again up in arms with Econet Wireless over the mobile phone operator’s refusal to give them access to its network platform to freely roll out their financial products. This comes as Zimbabwe’s biggest mobile phone telecommunications operator has been rolling out a number of mobile phone-based financial services for its eight million subscribers including EcoCash, EcoCashSave and more recently EcoCash Payroll.

Financial institutions, through their lobby group Bankers Association of Zimbabwe, have for long expressed reservations over limited access on Econet’s network.

While no official comment could be obtained from either Econet or BAZ, highly placed banking sources said negotiations were underway. However, Herald Business understands that banks wrote to the Reserve Bank of Zimbabwe, again registering their complaints about Econet’s stance towards them.

Recently, BAZ president Mr George Guvamatanga said Zimbabwe does not have a legal framework that governs mobile banking services, opening up the sector to unacceptable practices.

“There is a feud in the market as banks are up in arms with Econet over its refusal to give them equal cost-effective and tamper- free access to its network for the delivery of mobile-based services,” said a source privy to developments.

“Econet is literally saying to banks, build your own network; this is pretty much like the Government or National Railways of Zimbabwe saying to someone who wants to go to Bulawayo by train build your own railway line.”

According to the sources, Econet does not want players with equal financial muscle on the market to compete with its mobile phone-based financial product, particularly, EcoCash, because “they want to monopolise mobile space”.

Analyst Jerome Negonde said Econet’s stance was morally wrong as the telecommunications firm was using a public frequency spectrum that belongs to everyone. Their position is said to be helping them maintain high costs for mobile banking services and that ultimately borders on monopolistic behaviour.

However, Econet chief executive Mr Douglas Mboweni once said banks could have access to its network platform through EcoCash and that financial institutions were free to use it.

“There’s a huge misunderstanding in terms of the definition of a gateway. As Econet the gate is EcoCash. Therefore, financial players who want to launch their MMTs can use EcoCash as the platform. We allow banks to transact using EcoCash even launching their own MMTs, but on the same platform. It has the capacity.

“Obviously, some have said they want another gateway; well, they are free to invest in one,” Mr Mboweni said then.
He added that it was important for financial institutions to understand that infrastructure varies between companies. “Those who have opened up their gateways have infrastructure for MMT that is lying idle.”

Analysts say instead of trying to compete with a money transfer system, banks need to concentrate on making their core business relevant in today’s market.

AfSun to dispose of Dawn stake

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The Elephant Hills Hotel in Victoria Falls was one of the beneficiaries of the UNWTO General Assembly in August

The Elephant Hills Hotel in Victoria Falls was one of the beneficiaries of the UNWTO General Assembly in August

Happiness Zengeni Business Editor
HOTEL group African Sun is seeking to reduce its short-term debt through a combination of initiatives which will include the sale of the remaining 16 percent stake in Dawn Properties and a US$6 million rights offer. Presenting the company’s results yesterday, chief executive Dr Shingi Munyeza, highlighted that the company expects to significantly reduce the short-term debt through the sale of the remaining 16,54 percent shares held in Dawn Properties at the same terms and conditions as the first sale of the 12 percent and a rights offer, among other initiatives.

The rights offer is expected to raise US$6 million. Commitment to underwrite the rights offer has already been secured from major shareholders of the company. The goal will be to reduce gearing from the current 51 percent to a long-term target of 30 percent.

Post the first sale of the 12 percent in Dawn Properties, gearing is expected to reduce down to 45 percent, which will go down further to 35 percent after the sale of the remaining 16,4 percent in Dawn Properties.

The reduction of the short-term debt is expected to boost earnings by saving an estimated US$3 million in finance charges which the company has been paying over the last two financial years.

African Sun, which went through a difficult period as relations deteriorated with its landlord, Dawn Properties, last year, seems to have turned a corner, helped by the restoration of cordial relations between the two parties and an improved operating environment which was topped by the hosting of the United Nations World Tourism Organisation General Assembly in August 2013 in Victoria Falls.

Revenue for the 2013 financial year was up 3,4 percent to US$56,3 million despite a drop in occupancy from 52 percent to 49 percent. The drop in occupancies was largely due to the refurbishment in various properties and the decreased occupancies were mitigated by an increase in the gross margin from 71 percent in 2012 to 73 percent during the year.

Cost to income ratio remained high at 63 percent, marginally down from last year’s 64 percent This is still above management target of 50 percent and with the emergence of a new majority shareholder, cost containment and reduction to set target has now been made a key deliverable and a number of measures are being implemented with expectations of positive results starting in 2014.

Operating income was up 14 percent from the previous period. This was despite a once- off income of US$1,7 million in 2012 from the exit of its management contract in Ghana, Holiday Inn Accra. Excluding the once-off income, African Sun would have recorded a 79 percent increase in operating income.

The company posted an 11 percent increase in earnings before interest, depreciation and amortisation compared with the prior year 2012. This was, however, significantly reduced by a once-off adjustment in fair value of the disposal of12 percent shareholding in Dawn Properties and the impairment of the remaining 16,54 percent shareholding in Dawn Properties by African Sun.

The impairment was as a result of the change in accounting policy on Dawn Properties investment, previously as an associate to fair value accounting.

Although the Dawn Properties-linked units were sold at a premium of 53 percent to the 30-day volume weighted average price on the Zimbabwe Stock Exchange and 51 percent above market trading price, the carrying amount had been significantly higher than the market prices.

Management indicated that it was necessary to go through the pain of re-adjustment as the proceeds of US$4,3 million were used to reduce short-term debt.

Total fair value adjustment and impairment amounted to US$7,6 million and finance costs of US$3,2 million resulting in a loss attributable to shareholders of US$6,6 million. Without the adjustments, the company recorded a profit of around US$1 million, an increase of 5 percent compared to the same period last year.

The company, which operates 13 hotels in Zimbabwe, including three in the Victoria Falls resort city and another three in Nigeria, announced that it had opened a new hotel in Ghana, which will operate under a lease agreement.

This is the first lease agreement secured by the company in West Africa. Previously, the company was operating under a management contract in Accra Holiday Inn, Ghana. The hotel, trading under the brand Amber Hotel and located at Accra Airport, was opened last weekend and is expected to contribute about 10 percent to the group turnover.

Speaking at the results presentation, chief financial officer Mr Nigel Mangwiro indicated that the company reinvested the termination fees they received last year from the Holiday Inn Accra Airport Hotel management contract, into the new hotel.

To complete the financing package of the new hotel, the company also secured a loan from Ecobank Ghana.

Powerspeed geared for rapid growth

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Farai Murambiwa Business Correspondent
Powerspeed released a pleasing set of financials for the period ended September 30 2013, buoyed in the main by the transformation of the company from a manufacturer and wholesaler of electrical products to a general hardware retailer. The move was inspired; Powerspeed which faced continued contraction is today seized with a challenge of managing its own growth.
The future looks bright, and management believe that should the momentum of the past three months be maintained, Powerspeed will at least double its net income.

Powerspeed’s history dates back to the 1970s when it operated as part of Mashonaland Holdings, then a diversified conglomerate with operations spanning the breadth of the Rhodesian economy.

When Zimbabwe liberalised its economy in the 1980s, the structure was deemed to be inefficient and the group was subsequently disbanded with Powerspeed being born out of the integration of a private company called Industrial Electric Holdings and all the electrical divisions of Mashonaland Holdings.

Today the group supplies a full range of electrical products and services across all sectors of the economy and has recently added retailing of general hardware to its portfolio of offerings. The retail segment now accounts for 50 percent of the group’s sales.

FY 2013 has been a year of transformation. New branches were opened in Victoria Falls, on Harare Street (Downtown Harare), Harare CBD, Chinhoyi as well as Gweru. Further to that, the Kwekwe, Msasa and Mutare branches were relocated to bigger premises, while the Bulawayo, Chiredzi and Masvingo branches were renovated and branded Electrosales.

This massive programme was tied down with a central warehouse connected to all stores via a state-of-the-art ICT system that had made stock movement very efficient and retail space optimisation possible.

Focus is now on consolidating these gains thereby making the system even more efficient so that further expansion will simply be a plug and play exercise.

The retail branch rollout might have been the highlight, but what management did with the non-retail entities is commendable and speaks volumes of the visionaries driving this business.

The engineering unit, which was previously the company’s flagship, has been transformed into special project implementation units, which, apart from satisfying specialised needs of clients, stands ready to offer support to the retail network.

Wholesaling to major projects and industrial clients is handled by this team which rides on the retail network in delivering to clients.
The effect has been that the transformation did not call for retrenchments, and most importantly the company retained its engineering skill base intact and can thus recommence operations quickly if the need arises.

Further, the special projects units are paying for themselves and will not need to be subsidised by the retail arm in future. Financial performance reflected these positive changes. Revenue for FY 2013 ended 2,1 percent lower than the same period in 2012 owing largely to reduced credit sales and unavailability of shop floors as the above-mentioned renovations progressed.

The group deliberately curtailed credit sales in response to the tight liquidity conditions in the market that have impaired the ability of some clients to pay.

Management disclosed that the few debtors that remain are high quality and have had an association with Powerspeed for a long time offering comfort that the debts will be honoured.

What the company lost in terms of sales, it however more than made up for it with fatter margins which added 2,4 percentage points to end at 30,4 percent. The sustainable long-term gross margin stands at circa 32 percent, but can evolve depending on contribution from the retail arm.

Hardware stores can achieve margins of up to 36 percent hence higher levels of contribution will lead to even wider margins for the group.

Opportunities to expand margins are available, notwithstanding the fact that they look good currently. Merchandise sourcing is one area that is receiving significant management effort.

Powerspeed is actively perusing avenues to cut the middleman and bring cheaper products to its clients while improving its margins at the same time.

The company has an order pooling arrangement with like-minded retailers in South Africa, which allows it to access bigger discounts from manufacturers.

Sourcing locally also presents opportunities for margin expansion. The company will use local suppliers where they can beat landed costs of imports or where they represent international brands and can supply at good prices.

Branch expansion came with a surge in operating costs which went up 9,5percent leading to a much larger decline in operating income (-16,6 percent). This is set to correct for FY 2014 and beyond when efficiency improve, while the group is able to fully utilise its retail network.

Powerspeed’s net finance costs declined from US$0,67 million to US$0,55 million ensuring net income could only decline 5,5 percent to US$0,65 million.

The company’s basic earnings per share worked out to US0,12 cents, 14,3 percent lower that FY 2012 out-turn.  The group’s balance sheet is solid. Total assets stand at US$16 million, funded by US$8 million of shareholder funds US$3,7 million loans and other non-interest paying liabilities.

The transformation of the group also brought changes to the balance sheet. Powerspeed managed to reduce debtors from US$2,8 million to US$1,8 million and applied the released cash to funding inventory.

This move is value adding, but there is again significant room for improvement. The group’s inventory (US$9,2 million) is funded only to the tune of US$6,4 million by suppliers and debt, the balance coming from the group’s own resources.

As the retail arm consolidates, it shall become possible that Powerspeed get enough credit facilities from suppliers that can cover its stock requirements. This will free more cash and enable the debt position to decline and more money to be retained for the benefit of shareholders.

Powerspeed looks geared for rapid growth over the next few years. Market capitalisation stands at US$7 million making the group one of the penny stocks on the ZSE.

Recently released financials leave the historic PER at 15x, which looks expensive, but when one considers management’s guidance for earnings to double, the forward PER of 7,5x looks undemanding for a company that at the onset of a growth phase.

It is therefore not remote to expect the market to exceed US$10 million over the next 12 months and the same strong growth to be registered beyond 2014.

Start planning for next year now

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Nyaradzo Mavindidze  Motivation
Now is the perfect time to be thinking about how to leverage your business for 2009. It’s time to start thinking strategically about the year ahead. Here’S a list of 10 steps you can take right now that will pay dividends in the next year:
1. You are responsible for the direction of your business. Now is the time to revisit your life goals, your purpose, your innermost driving force.At Avodah Consultants we call this your Primary Aim.

Your Primary Aim is about leading a life that is consistent with your core values and beliefs. With a solid Primary Aim, you will build a business that serves and supports your life. Does your Primary Aim still “ring true?” Are you satisfied that you are remaining faithful to your best self?

2. If you don’t know where you’re going, you’ll never get there! Think about what your business will look like when it is fully developed. This is what we refer to as the Strategic Objective for your business. With a clearly defined Strategic Objective, everything your company and your employees do will move the company toward that vision. What strategies could you develop for the following year that will get you that much closer to your Strategic Objective?

3. Look at the numbers. What are the statistics you can measure that will tell you if you are on track to achieve your Strategic Objective? We call these Key Strategic Indicators. It’s critical to the health of your business that you fully understand and use these indicators. Which indicators do you want to focus on next year? Which indicators – if systemised – will help achieve next year’s goals?

4. Budget, budget, budget. Budgeting requires you to think about your basic objectives, systems and resources on a regular basis. It keeps you current with what’s really going on. It’s critical that you establish a budget for next year. You could even plan quarterly budgets, to allow for a more detailed view of your revenues and spending.

5. Cash is king. Cash is to your business what fuel is to your car – if you run out, you stop. Build a cash plan that will help meet your goals. Just like with the budget, you might want to identify quarterly cash plans to allow for a micro view.

6. Work on your time management. Start to plan your strategic work for the year. Build a strategic calendar by booking appointments with the necessary people (including yourself – see #7) who will help you reach your new goals. Make an effort to book and confirm your meeting schedule through at least the first quarter of the New Year.

7. Schedule strategic business development work. This may sound a lot like #6, but I’m trying to make a point here. You absolutely must schedule strategic time with yourself, if you want your business to survive and thrive. Are you a better strategic thinker in the mornings or in the afternoons? What days of the week are you more likely to get strategic work done? Be sure to allow yourself enough time for any “catch up” work.

8. Create a to-do list for the first week of January. Taking the first step is often the hardest. So why not start now with a to-do list for Monday, January 5 through Friday, January 9. Jump start that first week with a clear commitment to change.

9. Set your goals for 2014. After you have reviewed and completed the nine steps above, determine which goals you need to complete in the next year. How many sales do you need to reach your revenue goals? How many prospects do you need to talk to in order to make that many sales? How many advertisements do you need to do in order to get that many prospects? How many systems do you need in your business to reach your goals? Which ones?

Prioritise your needs and your actions based on the Strategic Objective for your business. Make a personal commitment to reaching your goals and taking the necessary actions by scheduling what needs to be done and by when.

10. Attend the Avodah Consultants Indaba in January. A seminar designed to jumpstart your goal setting and personal effectiveness.

Feedback: nyarivk@gmail.com

Jericho makes waves in SA

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JERICHO Advertising Zimbabwe has, for the second year running, now, been the only non-South African advertising agency listed by Adfocus, the prestigious South African Advertising and Marketing Annual published by The Financial Mail. Jericho is also now ranked amongst the Top 20 South African advertising agencies, despite not having an office in South Africa.

The Adfocus recognition comes at the end of a stunning year for the Avondale-based, three-year-old advertising agency, in which it became the first-ever Zimbabwean advertising agency to be named by Adreview of South Africa as Africa Advertising Agency of the Year for the year 2013.

The Zimbabwean outfit beat long-established, multi-country networks like Ogilvy Africa, which operates in over 30 countries in Africa!
Jericho’s world-class abilities were also recognised during 2013 by SABMiller Africa in Johannesburg, who awarded the Zimbabwean agency the brief to develop a pan-African television advert for Chibuku Super.

The agency has since filmed the television ad and it is now flighting in several African countries ranging from Zambia to Tanzania.
Adfocus writes of Jericho: “Having won seven out of eight pitches and R12 million in new business [Jericho has] established its creative credentials.

It won six awards at the Ngomas show and had a Toyota ad chosen by the Japanese motor company as the best work in Africa.”
Jericho Advertising chief executive Mr Denford Magora commented:

“We are really proud to be counted amongst the South African ad agencies that are universally acclaimed as amongst the best in the world.

“We continue to be surprised to see Zimbabwean companies going to South Africa to get their advertising done, when multinational conglomerates like SABMiller and Western Union are actually coming to Zimbabwe to engage Jericho for pan-African work. It says something about the standards we have managed to establish at Jericho that, even as we speak now, contracts are being signed with a globally recognised mobile phone brand to do work for them across several African countries from our Jericho offices in Harare.

“We also continue to be the lead consultant for Western Union in major markets across the world, including the United Kingdom, Australia and Africa, where we provide strategic input for the communications in those countries to Western Union.”

Commented Ashley Mhonda, executive creativedirector at Jericho Advertising: “We at Jericho, together with our sister Jupiter agencies in Harare, Lusaka, Malawi and Gaborone, are proud to be raising the Zimbabwean and Southern African flag so high, featuring amongst some of the most respected ad agencies in South Africa, one of the creative powerhouses in worldwide advertising.” Press Release

Russia closes 3 more banks

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MOSCOW. — Russia’s central bank said last week it had withdrawn the licences of three more banks in a crackdown on shady financial activities a day after President Vladimir Putin renewed a drive to stem capital flight.The closures of the three banks, the biggest of which was Investbank — ranked 79th in Russia by assets — were linked to mounting payment problems and dubious operations, it said.

The closures come weeks after the central bank withdrew the licence of Master Bank, a mid-sized Moscow bank.

Fraud

The bank is in the most potent demonstration that Governor Elvira Nabiullina is serious about halting rampant fraud and money laundering in Russia.

Dodgy banks are the conduit for illegal capital outflows that Nabiullina’s predecessor estimated at US$50 billion last  year. Even so, Putin said last week that “nothing has been done” to implement an initiative he launched a year ago to stem capital flight that has sapped both investment and the Kremlin’s coffers.

Continuing closures have highlighted counter-party risks among Russia’s 900 banks, adding to negative sentiment on financial markets.
Depositors

The rouble fell to four-year lows following the latest closures. The central bank has stripped around 30 banks of licences since Nabiullina took the helm at the central bank in June.

The licence withdrawals of Investbank, Smolensky bank (125th) and Project Finance Bank (129th) — their combined assets are 67 billion roubles (US$2 billion), according to Interfax — did not come as a surprise.

All the three have had experienced recent payment problems with depositors and creditors, the central bank said in three
separate statements. — Reuters.

Tobacco boom vs deforestation

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Jeffrey Gogo  Climate Story
Tobacco remains a very important revenue earner for Zimbabwe, but the crop is an environmental menace.  The processes under which it is produced have docked 15 percent or 7,5 million trees from national forests per year in recent years.That’s a monumental environmental catastrophe, by any measure; particularly given Zimbabwe is planting an inadequate 2,5 million trees more each year, under the Forestry Commission. The costs of replacing the 7,5 million trees destroyed by tobacco each year tops US$22,5 million, if those trees are indigenous, barring other overheads such transport, labour, etc.

Now, the magnet of foreign currency has drawn 28 000 new farmers to tobacco in 2013, according to latest data from the Tobacco Industry and Marketing Board, pulling farmers even from previously unsuitable non-tobacco growing regions such as Matabeleland. The growth escalates environmental risks.

Of the new registrations, 48 percent are communal farmers, already well known for poor forest management practices. In short, they are well-drilled tree fellers who pay little attention to the environmental impacts of their actions.

With the new additions, there are now over 90 000 tobacco growers in Zimbabwe from just a few thousand five years ago. Happy readings for empowerment advocates but dreadful figures for environmentalists, only if the current production patterns are not significantly altered.

During the month of December, where multiple tree planting gestures are performed countrywide by the Government, corporates, schools and individuals among others as part of the annual National Tree Planting Day commemorations, the rising tobacco growers numbers, under the existing status quo, are a significant threat to such activities.

Farmers have consistently decimated indigenous forests, as if there was no tomorrow, chipping off scotchcart loads of wood, a very important source of energy for tobacco curing. However, one would require lots of it to treat just a few kilos of the crop.

Those that buy the crop should also share blame for the rampant loss of trees caused by tobacco production. Merchants and tobacco firms have been slow to respond to the forests disaster. Farmer awareness systems are generally weak.

Even with signposts standing high as early as 2000 during the formative years of Zimbabwe’s fast track land reforms that the new breed of farmers were more than likely to swell the industry, tobacco companies remained fixed on history, blind to the unfolding events, which ushered in the future.

The sorry state of events we are now witnessing around tobacco and deforestation today may be a direct result of many years of poor planning and lack of foresight not just on the part of tobacco firms but Government and other stakeholders as                                                       well.

Research and investment into alternative environmentally-friendly forms of energy for curing the crop have failed to satisfy anyone.
Big companies like BAT started encouraging farmers to adopt coal briquettes as an alternative to fuelwood as late as this year. The take up rate is still very slow.

Yet, the international tobacco market increasingly demands assurances regarding the quality and environmental impacts of production systems.

When compared to wood, coal briquettes are a better alternative, as they slow down the rate of deforestation. The briquettes were designed in a way that they can burn unassisted and thus no need for a fan.

Coal is efficient, burns faster and produces twice as much heat as wood. That means one requires less coal than they would for wood to cure the tobacco. At least 2,5kg of coal cures 1kg of tobacco, or a tonne of coal will give one three tobacco bales of average weight 120kg each. That compares with 9kg of wood necessary to treat one kg of tobacco.

The biggest challenge is transporting the coal, if someone does not bring it to the farmer’s doorstep, and convincing them to convert to wood. Forestry Commission spokesperson Violet Makoto said in a previous interview that it would be a great achievement “if we manage to commit just 50 percent of tobacco farmers to using coal instead of wood energy”.

Although there has been some movement by different stakeholders towards promoting tree planting to curb further loss of indigenous species, most farmers, particularly communal, remain ignorant of the consequences of their tree-felling actions.

The other alternatives include use of solar barns and that of fast growing exotic and indigenous trees such as eucalyptus and the acacia. The Tobacco Research Board is currently distributing seedlings for these tree species to farmers for free although the solar project is still work in progress.

It is important to support and strengthen the framework of policy and regulation that delivers improved economic, social, environmental and cultural outcomes from prudent farming practices.

New hope

TIMB chief executive officer Dr Andrew Matibiri revealed last week that the board was in the process of establishing a revolving fund to establish what are known as rocket barns for small- scale tobacco growers.

A rocket barn is another form of barn, which uses fuelwood but much more efficiently. Dr Matibiri said rocket barn use reduces consumption of firewood by as much as 55 percent “thereby saving the environment from deforestation”.

Each rocket barn that can cure up to 2 hectares of tobacco costs US$1 200 to construct.
“The environment will benefit because less trees will be cut. TIMB regional staff will identify beneficiaries. The quantum of funds for the scheme is being worked out,” said Dr Matibiri.

He further stated that the TIMB and tobacco merchants had established a Sustainable Afforestation Association to spearhead re-afforestation. The merchants will be expected to contribute an amount equivalent to 1.5 percent of total tobacco sales for that initiative.

“In addition, the same initiative is funding research into alternative energies that can be used for curing tobacco. These include coal, bamboo, biogas and solar,” he said.

Ms Makoto said the Forestry Commission had deliberately kept prices for tree seedlings of exotic extract low, some as low as US20c per plant, to support tobacco woodlot programmes.

Farmers are now being encouraged to secure a portion of their farmlands for the planting of trees, particularly eucalyptus, which grows faster, and thereby avoid mowing down natural forests.

Forests conservation within the tobacco industry must now take on a new shape and face. It is most likely wood would remain the dominant energy source going forward because it is cheap and readily accessible.

But the abuse of finite natural resources such as forests will only return to bite mankind.  Trees maintain the ecological balance without which Zimbabwe will emerge into a new Sahara with devastating impacts. So by saving trees farmers, tobacco stakeholders and everybody else should know they are actually saving themselves.

God is faithful.

Email: jeffgogo@gmail.com


Ipec ready to endorse EcoFarmer

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Mr Pupurai Togarepi

Kudakwashe Pembere Business Reporter
THE Insurance and Pensions Commission says it is on the verge of giving approval to the deal between Econet Wireless Zimbabwe and Cell Insurance for the former’s mobile phone-based insurance product. This comes after the insurance regulator recently launched an investigation into Zimbabwe’s largest mobile phone company operations of the structure of EcoFarmer.

Speaking to the Herald Business last Friday, IPEC head of prudential supervision Mr Pupurai Togarepi said they are on the verge  of concluding the deal between Econet and Cell.
“We are in the process of registering Econet as an agent of Cell Insurance. Cell will be using the Econet platform.”
“We are currently looking at the principles in the deal as an insurance regulator,” he said.
Econet Wireless developed EcoFarmer as a weather-indexed drought insurance cover for smallholder farmers allowing farmers to make a financial claim if their crops fail because of either inadequate or excessive rainfall.
Under the scheme, a farmer can buy insurance for as little as US8 cents per day deducted from their prepaid phone account during the agricultural season.
The service developed by Econet for Zimbabwe is similar to one which has been rolled out in Kenya, Kilimo Salama, by that country’s leading operator, Safaricom, which also pioneered mobile phone banking services in that country.
Kilimo Salama (“Safe Agriculture”) is an insurance designed for Kenyan farmers so they may insure their farm inputs against drought and excess rain.
The project, is a partnership between Syngenta Foundation for Sustainable Agriculture, UAP Insurance, and telecoms operator Safaricom, offers farmers who plant on as little as one acre insurance policies to shield them from losses when drought or excess rain affect their harvest.
Kilimo Salama insurance cover was designed based on a pilot project in Laikipia district in Kenya where several hundred maize farmers insured their farm inputs against drought in the long rainy season of 2009.

Stockfeeds output set to grow

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Bus4PRODUCTION of stockfeeds is expected to grow 24 percent in 2014 to 503 000 metric tonnes per annum driven by high demand particularly in the poultry industry.Stockfeed Manufacturer’s Association of  Zimbabwe chairman Mr Fungai Mungate said stockfeed production in the sector had been growing steadily over the years to 407 000mt in 2013 from 295 245 in 2012, an increase of 38 percent.

Mr Mungate said the industry is currently operating at 40 percent capacity utilisation, with installed capacity at over a million tonnes.
He, however, said investments into the sector were ongoing in preparation for future demand with two processing plants set to be installed before the end of year and another one to be installed early next year.

Mr Mungate said the sector is faced with numerous challenges, chief among them, inadequate grain supply from the local market (maize and soyabeans). According to SMAZ statistics, the sector will require 240 000mt of maize next year from the current requirement of 200 000mt this year. The sector will also require 150 000mt of soyabeans next year, an additional 15 000mt to the current required proportions.

He also decried the unnecessary imports that the industry has had to endure which include carcass meals, previously provided by the Cold Storage Company and methionine, previously provided by ZIMPHOS till 2004. Mr Mungate said the industry currently forks out  US$2,5 million on imported raw materials annually.

The main players in the stockfeeds industry include Natfoods, Agri-Foods, Pro-Feeds and Windmill. — FinX.

ABC minority shareholders slam door on ADC offer

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Mr Douglas Munatsi

Business Reporter
ABC Holdings directors are part of minority shareholders that have made irrevocable undertakings that they will not accept the buyout offer by majority shareholder ADC Financial Services. ADC, a controlling shareholder in the dual-listed ABC, is required to make a mandatory offer to buy shares of all minorities after it gained the majority shareholding after underwriting the regional banking group’s US$50 million rights offer last year.

The offer is meant to satisfy the regulatory requirements by the Botswana Stock Exchange, where ABC is primarily listed, which stipulates that any company or investor with shareholding exceeding 35 percent should make a mandatory offer to minorities.

The German financial services company had offered to buy out minority shareholders for US0,60c per share after raising its shareholding in ABC above 35 percent to a controlling 51,9 percent.

But following an evaluation of the business by an independent panel of the board, the ABC directors said the US0,60c offer was not reasonable.

Other minority shareholders that have expressed intention to reject the offer include International Finance Corporation and local private equity firm, Brainworks Capital Management Limited.

ABC Holdings group chief executive Mr Doug Munatsi confirmed that the ABC management was part of minority shareholders that declined to take the mandatory offer by the majority shareholder.

“Yes (ABC management rejected the offer) because it is too low (based on an) independent evaluation undertaken by the board,” he said.
ABC’s second listing is on the Zimbabwe Stock Exchange and operates in seven countries in the Southern Africa Development Community.

“The substance of the opinion and the view of the independent panel of the ABCH board are that the terms and conditions of the mandatory offer are fair, but not reasonable to ABCH shareholders and consequently it is not recommended that ABCH (minority) shareholders accept the mandatory offer,” ABC said.

The shareholders holding 100 020 038 ordinary shareholders, representing about 35 percent equity of the group will not take the offer, reducing the amount ADC needed for the buyout as the German company can only buy out up to 15 percent minorities.

ADC is a German incorporated financial services group listed on the Frankfurt Stock Exchange and invested in ABC Holdings through its Mauritius-registered subsidiary, ADC Mauritius.

Trafigura, ADC’s largest shareholder, had undertaken to give ADC Mauritius a loan to acquire any of the ABC Holdings shares accepted by offer participants in terms of the mandatory offer.

ADC will repay the loan by transferring the acquired mandatory offer shares, giving  Trafigura a direct interest in ABC Holdings Limited.

RBZ to consider new Cairns offer

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4_rbzGolden Sibanda Senior Business Reporter
THE Reserve Bank of Zimbabwe is expected to make a determination on a revised offer by prospective South African investor Vasari Global for its 67 percent stake in Cairns.The revised offer follows failure by the two parties to reach an agreement on the price for the shareholding amid revelations the prospective buyer offered a pittance.

Contacted for comment, judicial manager Mr Reggie Saruchera of Grant Thornton Camelsa expressed ignorance over the issue saying he had not been informed about it.

“That is news to me, I have not been informed about the revised offer,” he said.
However, Vasari Global is said to have rejected the central bank’s undisclosed price for the controlling stake arguing the price was not justified as the firm was heavily indebted. A meeting was held last week between the prospective investor and the RBZ’s assets disposal committee at which Vasari Global revised its purchase offer price.

“At the last final meeting held last week the prospective investor held a meeting with the RBZ assets disposal committee at which the revised offer was made, which the central bank has to officially respond to,” said a source close to the developments.

Vasari Global argued that it would not accept the RBZ’s quoted price, which the investor believed to be too high for a loss-making firm with a negative capital position. But the RBZ made counter arguments that the price was justified considering Cairns’ brand equity and potential to turnaround its fortunes once fully recapitalised.

The company has already returned to profitability after exponentially ramping up production capacity from a record low of 10 percent in 2010 to about 35 percent now.

This follows acquisition of new equipment by the former Zimbabwe Stock Exchange- listed firm after it accessed funding under the Distressed Industries and Marginalised Areas Fund. The funds were used to buy equipment for snacks and canning business.

Other bidders for the RBZ stake included local companies Dairibord Holdings and Judah Holdings Limited and South African firms Vasari Global Limited and Eastern Trading Company Limited, but Mr Saruchera settled for Vasari.

The investment proposal by Vasari follows the approval by the majority of shareholders and creditors of the company in June of the judicial manager’s proposal for a scheme of arrangement that would bring in the new investor.

The RBZ was selling its stake in Cairns to raise money to pay off some of its debts. If Vasari succeeds in its quest to acquire the RBZ stake, the firm will have to first obtain indigenisation and economic empowerment approval from Government.

Mr Saruchera recently said that the investor had submitted the indigenisation proposal to Government, which was still considering the plan, amid hope it will be approved.

Innscor faces US$60m fine

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Mr Alex Kububa

Rumbidzai Zinyuke Business Reporter
ZIMBABWE Stock Exchange-listed Innscor Africa was found guilty of not following proper regulatory procedures in its acquisition of a majority stake in National Foods Limited (NatFoods) and could be liable to a fine as high as US$60 million.  The Competition and Tariff Commission passed judgment against Innscor Africa Limited following allegations that it did not follow proper regulatory procedures.

CTC director Mr Alex Kububa said investigations carried out by the commission had revealed that Innscor had acted against regulations on undertaking the merger.

“We found that Innscor had indeed implemented a merger without notifying the regulator and this means we can penalise                             them according to the Competition Act,” he said.

According to the Act, if a company does not notify the regulator of a merger or the acquisition of a controlling stake within 30 days, it could be penalised an amount not exceeding 10 percent of its annual turnover.

Innscor, which recorded a turnover of US$656 million for the 12 months to June 2013, could be ordered to pay up to US$65 million as a fine.

CTC says Innscor gradually increased its shareholding in NatFoods, but failed to notify the relevant authorities, in particular the commission, of the process. Innscor is said to have only given notification of the acquisition when investigations into the move had already started.

Innscor acquired a 36 percent stake in NatFoods in 2003 and increased it to 49,9 percent in 2011, but later sold around 11 percent in 2012 to Tiger Brands leaving it with 37,82 percent. CTC only received notification of the transactions in 2012.

The probe was instituted in accordance with Section 28 (2) Chapter 14:28 of the Competition Act, under which the conglomerate was being probed for possible restrictive practices and creating unfair trade barriers against potential competition.

However, Innscor – which has denied the allegations – has reportedly filed an appeal with the Arbitration Court against the judgment arguing that they had notified the commission before consummating the deal.

Mr Kububa said since the company had appealed against the penalty with the Arbitration Court, the commission had to wait for the court’s decision.

“We now have to wait for the hearing at the Arbitration Court before we can continue with the issue,” he said.
Efforts to get a comment from Innscor were fruitless as the group’s corporate affairs executive, Mr Musekiwa Khumbula, rarely responds to the Press.

CTC opened preliminary investigations over alleged restrictive measures created by Innscor’s backward integration in June 2011.
Backward integration involves the purchase of a supplier, usually done to reduce supplier power and cut input costs.

The group has in the past few years made several acquisitions under its strategy of backward integration within the fast-moving consumer goods supply chain. The group purchased a 49 percent stake in July 2009 of Irvine’s Zimbabwe, a major producer of chicken and table eggs.

It also shored up its interest in Colcom Holdings Limited, the country’s single largest pork producer and has a controlling interest in biscuit maker Iris and Breathway, commonly known as Zap-snacks.

The conglomerate runs a vibrant retail division which consists of the Spar Corporate Store retail operations and the fast foods operations that include Chicken Inn, Baker’s Inn, Creamy Inn and the local Nando’s franchise.

Innscor has grown from a small private Zimbabwean business to one of the top public companies in less than 20 years.

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