A small pot of personal savings may therefore be sufficient to fund your start-up enterprise

Dr Sanderson Abel
Turning an idea into a viable business requires money. But in this environment where liquidity is tight, how can you raise liquidity to fund your small business so that it grows. Most people kill their business ideas by making simple but lethal mistakes in mobilising the wrong kind of money. For example, debt is good for a business, but it may be best to take on debt when a business has run successfully for a while.

It is not only dangerous to start a new business entirely financed through borrowed funds. If the business idea fails, you will fail to repay the loan and possibly damage your financial reputation.

In this piece, I discuss the concept of “equity first” for funding SMEs. Before rushing off to your bank to ask for a bank loan to fund your start up business or even to expand your existing operations, think about these innovative equity based financing ideas that will prepare you and your SME for a successful relationship with your bank.

Internal business finance
No matter how big your business idea is, start small and reinvest profits into future growth. Business is all about taking risks, but you do not want to take a big risk upfront all at once. This is especially true in this environment where liquidity is tight and it is not easy to raise all the money you need to fund your big idea.

Starting small eliminates the risk of making a big mistake and also ensures that you learn the ropes of the business and thus grow in ability and confidence. It also means that you will need smaller amount of initial capital to start the business. Your small pot of personal savings may therefore be sufficient to fund your start-up enterprise and as you trade, you must reinvest the proceeds and profits into the business.

This will naturally enhance the growth potential of your business. This is called funding the business from “internal resources”, meaning that cash-flows from the business together with your personal savings will fund the initial growth phase of the business until such a time it has gathered credibility to attract outside investors.

Use personal savings
Successful business people usually have taken huge personal financial risks at the onset. Apart from generating the entrepreneurial ideas that have made them millionaires or even billionaires, they sacrificed a huge chunk on personal savings as initial capital investment into their businesses.

Using personal savings means that you exercise total creativity in getting your business off the ground. You have the flexibility to drive your business in the direction you want and implement your ideas to the maximum without being accountable to other investors or a bank.

It also lays a strong basis for other investors and lenders to trust you with their money when eventually your business reaches a stage when it needs an external injection of capital.

Leverage trade credit
Rather than rushing off to get a bank loan to fund short-term needs of your business, make maximum use of trade credit if it is available. Negotiate with some of your suppliers for delayed payment terms rather than paying for your inputs or raw materials in cash up front.

A good start is to pay part cash and then get the difference of your input supplies on credit terms. When you are lucky to get terms, try by all means to build your business’ credit standing by settling according to agreed terms. Your credibility and goodwill as a business can become a vital asset in future.

Certain types of businesses such furniture manufacturing or shop fitting allow for the customers to pay a small deposit towards the work being done upfront. When you get the deposit apply it to raw materials and help ease off pressure on the funding needs of your business. Do not take the customer’s deposit and buy a piece of capital equipment or something else that has nothing to do with their order. This is a sure recipe for disaster. If you deliver the correct quality work, your customers will be happy to pay up the balance, making your cash-flow management easier.

Talk to family and friends for funding
Your family and friends should be the first port of call not only in developing your business idea, becoming your first customers and more importantly the first financiers of your business.

Your business model is also relatively secure with friends and family and they are less likely to hijack or steal your business idea. This group of people is therefore a good source of patient capital. You may include those who are willing partners as equity partners by giving them some shareholding. Capital from friends and family can come in the form of gifts or interest free loans.

If you are a member of a savings club, most of whom maybe part of your friends and family network; it will not be unreasonable to ask for a soft loan as long as you are committed to repaying it when it falls due.

Seek Angel Finance
Some rich individuals are able and keen to assist a good idea from a credible honest committed individual off the ground as “angel investors”. Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that go beyond pure monetary return.

They may simply want to keep abreast of current developments in a particular business arena or may be motivated by mentoring future generations of entrepreneurs, and making use of their experience and networks. In addition to providing capital, angel investors can also provide valuable management advice, important business contacts and a useful mentoring role for the business owner.

Angel investors will normally take up equity in the business but with a clear exit plan. Because they invest relatively small amounts into the business during its initial high growth phase, they get very high returns.

And finally, bank loans
I have spoken to a lot of potential business people with pretty good ideas which end up killing because they cannot get access to a bank loan. However, when your business has gone through these major phases of capital raising and has developed a reasonable trading record, it is finally ready to approach a bank for funding.

Make sure your business plan is as clear in your mind as it is on paper, you have been maintaining sufficient trading and bank records. Refer to our recent article on SME Finance entitled “Record Keeping Crucial for Successful SMEs”.

Demonstrated commitment by the major shareholders or promoters of the SME by risking own resources, a good operating track record, a viable business proposition with clear future prospects will make your SME a good candidate for a successful bank loan application.

• Dr Sanderson Abel is an Economist. He writes in his capacity as Senior Economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on abel@baz.org.zw or on numbers 04-744686 and 0772463008

Africa Moyo Business Reporter
AS efforts to boost Diaspora remittances into the country continue, a local firm Bitmari, says it has launched an affordable platform that can be used to send money from the United States. Bitmari, which was founded about a year ago but went online almost 10 weeks ago, says it sends money using the blockchain technology, such as is used by crypto curriences such as Bitcoin, which is transparent.

Co-founder of the firm, Christopher Mapondera told The Herald Business yesterday that their main objective is to promote remittances from the US to Zimbabwe at affordable rates.

“We came into this business simply because we are trying to address what we see as the needs of our people. The realised that the bulk of remittances made by people in the Diaspora are probably between $50 and $200. But the fees being charged are not that attractive. For instance, if you send $20, some of the remittance companies charge $10 which is 50 percent of the total amount sent.

“So more people are discouraged from sending money and we decided that you can send that $10 for 50c or $20 for $1 and from $20, there is a whole lot that a person here can buy and we are trying to encourage people out there to send money to their relatives,” said Mr Mapondera.

Bitmari’s local partner is Agribank, which has a wider ranch network. Diaspora remittances have become crucial to economic development, and $180 million came in the first quarter of this year. The Reserve Bank of Zimbabwe projects that $750 million would be raked in by year-end. Mr Mapondera said the Bitcoin technology is transparent and can be used in the agriculture and mining sectors, as it provides a mechanism for checks and balances.

For instance, a farmer who gets inputs can be tracked on how they would have used them. The agriculture sector had been rocked by cases where beneficiaries would divert inputs to the black market, and not channelled them towards production.

“The Bitcoin technology can be applied to any aspect of economic development here. It is a transparent platform; you can set it in such a way that all the stakeholders are aware of what each person is doing. We have already done one demonstration that farmers using the Bitcoin technology such as the women farmers we have, can get inputs but we track what they do with the inputs. When you get seed for 10 hectares, the technology helps us to tell how much seed you used per day and to cover how many hectares,” said Mr Mapondera.

He declined to say how much money has been remitted through Bitmari but said they have invested a “substantial amount of cash”, so that when money is sent, recipients should be able to receive their money. At the moment, Bitmari has just finished a 10-State campaign in the United States covering Washington DC, Maryland, Florida and Dallas, among others, targeting Zimbabweans living in those areas so that they remit funds back home.
Sinclair Skinner, an African-American, is one of the founders of Bitmari.

Acting Finance Minister Patrick Chinamasa

Acting Finance Minister Patrick Chinamasa will on December 7 this year present the 2018 National Budget, officials said on Tuesday. Presentation of the fiscal statement hung in the balance following recent changes in Government that saw President Emmerson Mnangagwa being sworn into office as the new Zimbabwean Head of State.

Former Finance Minister Dr Ignatius Chombo, who had initially been scheduled to present the budget on Thursday last week failed to do so as Zimbabwe went through a process that culminated in changes in the political leadership. Dr Chombo was subsequently arrested and is facing a slew of charges among them abuse of office, scattering the budget presentation plans.

He was on Monday remanded in custody until December 8. President Mnangagwa on Monday dissolved the Cabinet left behind by his predecessor, former President Robert Mugabe and appointed two acting ministers namely Chinamasa and Simbarashe Mumbengegwi who takes care of the Foreign Affairs in the meantime.

Chief Secretary to the President and Cabinet, Dr Misheck Sibanda said the appointment of the two acting ministers was meant to “allow for uninterrupted service in critical ministries of Government”. Processes were still underway for the appointment of a new Cabinet that is expected to take a lead in pushing for rejuvenation of the economy. Officials from the Zimbabwe Parliament and Finance Ministry confirmed December 7 as the date for the much awaited budget presentation.

The 2018 National Budget is largely expected to remain around $4 billion and is expected to give direction on new policies that President Mnangagwa has said will be targeted at jump-starting the economy through boosting exports, creating jobs and attracting foreign investment.

“The bottom line is an economy which is back on its feet and in which a variety of players make choices and fulfil roles without doubts, in an environment shorn of fickle policy shifts and unpredictability,” President Mnangagwa said at his inauguration last Friday.

“Only that way can we recover this economy, create jobs for our youths and reduce poverty for all our people who must witness real, positive changes in their lives.” — New Ziana.

Michael Tome Business Reporter
Zimbabwe should develop strategies to foster growth of the horticulture sector for it to retain its position as the country’s second largest foreign currency earner after tobacco.

Speaking at Prime SeedCo field day held at Stapleford Research Station yesterday, Permanent Secretary in the Ministry of Agriculture, Mechanisation and Irrigation Development Ringson Chitsiko, said horticulture farmers must buckle down and restore the sector’s glory as Zimbabwe’s second largest foreign currency earner.

“We are here to put our thoughts together and work towards returning the horticulture sector to its original second place after tobacco in respect to agricultural exports, even beyond tobacco and be number one agricultural exporting subsector in Zimbabwe,” Engineer Chitsiko said. Engineer Chitsiko lauded Prime SeedCo for their ever-growing expertise in developing seed varieties that are critical for the growth of the horticulture sector.

“I would like to thank Prime SeedCo for its ever continuing efforts in screening, demonstrating and extending the technologies in horticulture production,” he said. Engineer Chitsiko highlighted the need to intensify production in this sector to curb the importation of horticulture seeds from Europe, Asia as well as Southern African countries such as South Africa and Zambia.

“This is a sector that we do not only want to revive and expand but we also want to intensify because it has great returns. It’s now time we start producing horticulture planting material particularly in respect to vegetable seed production , we are currently importing from far field as Europe and Asia, South Africa, Zambia as well, we want those countries to start looking up to us for horticultural seed,” said the Permanent Secretary.

Adding on to permanent secretary’s sentiments, Prime Seed Co managing director Willie Ranby said his company was targeting to expand its local market share from the current 45-50 percent at the same time growing the company into the continent.

“Prime Seed Co has a 45-50 percent local market share and we are working hard to grow that, now that Seed-Co has offices in Ghana we will be opening a vegetable subsidiary in Accra within the next six months,” said Mr Ranby.

Martin Tarusenga
The news that President Emmerson Mnangagwa, is set to bring in a lean government, and has set in trend a policy to curb externalisation of funds is most welcome. If effective, the policy to curb externalisation will certainly improve liquidity, avail the much needed capital for local productivity, and hence domestic investment.

Foreign investment will certainly follow once macroeconomic policies such as these promulgations by the President demonstrate that Zimbabwe is earnestly charting a course to build the economy — charity begins at home. However, the effect of these policies can work better with several other supportive policies.

Such supportive policies include policies that seek to discourage the very motive/incentive to externalise, policies that seek to discourage big Government (unnecessarily), policies that drive local productivity and hence domestic and foreign investment. Policies that seek to discourage externalisation derive from a comprehensive understanding of why local economic agents may externalise.

Economic agents will typically externalise for a variety of reasons, not least as a result of a lack of confidence in the security and diversity of domestic investment instruments (property, bonds, equities, among others), a lack of confidence in the local education system, a deficient, inefficient health system, a desire to buy luxuries not locally produced, this among other wants that local productivity cannot satisfy.

In the latter circumstances, economic agents will want to keep their balances outside the country, in order to make the external purchases that they can’t find locally — that is externalise.

Apart from directly targeting the externalisation through a policy such as the one set by the President, Zimbabwe will do well by addressing the deficiencies in education, health and other such services and products. A revamping of such services and products should be combined with a promotion of consumption of domestically produced goods and services — “buy Zimbabwe”.

In the latter regard, consumption of externally produced goods and services should wholly be stigmatised and looked down on. Consumption of external health services, education services by high ranking officials such as the President, ministers, among others must especially invite vitriol.

These are policies embraced by progressive governments. The German Chancellor will not for instance be seen in public riding a British made vehicle, or be seen to be treated in the US for any health problems — that will cause a row. In corollary the President of Zimbabwe, must for instance ensure that his children, his grandchildren are locally educated, and that he receives medical attention locally.

Such a practice will ensure that the President arranges both his own resources and those of the country to build quality education services, health services both for his own interest and for the interest of the country at large. In these circumstances there will not be much need for large scale externalisation.

Policies that seek to discourage big government, drive productivity and hence create jobs, must firstly embrace those principles and practices of good governance — transparency, accountability, fairness and responsibility.

This means that everything that every economic agent does, from the President to the lowest ranking economic agents, and vice versa, must be subject to regular performance assessment, in accordance with codified high performance standards, and in zero tolerance.

This in turn means that the President and his Government have a good grasp of what it is they want to achieve in a given accounting/fiscal year, in the various economic sectors, how they will achieve and who exactly will be part of the execution team. In these circumstances there will be no duplication of functionaries, and the corruption that goes with it — hence lean government. In corollary the strategies and the budgets for such economic sectors must not be nebulous, and vulnerable to political meddling.

Any such political meddling will among other things encourage a government of untouchable cult personalities, patronage — when we begin to witness huge servile indolent crowds around the President such as youths, sons of war collaborators among others, fawning over the President, inciting such things a one centre of power.

Of course the new President of Zimbabwe must never succumb to such cheap eulogies from indolent slothful people bend on “money for nothing”. In order to guard against such mix up of party politics and Government, and consequent political meddling, there must be that distinction between political parties, ruling political party and the institutions of Government.

The ruling party is mandated by the people, in terms of the constitution, to translate its manifesto through existing permanent government institutions, but not to make those Government institutions extensions of the ruling party, in the process allowing social/communal figures such as “amai” to wade into Government. Government on its part must have strong independent institutions of the Legislative, the Executive and the Judiciary.

The Executive in particular must be a respectful body that desist from meddling with the Legislative and Judiciary. For this reason Zimbabwe’s constitution must be revised to remove all parts of the constitution that provide for the President’s involvement in the Judiciary and the Legislature. Such provisions go against the principles of good governance.

•   Martin Tarusenga is General Manager of Zimbabwe Pensions & Insurance Rights, email, martin@zimpirt.com; telephone; +263 (0)4 883057; Mobile; +263 (0)772 889 716 Opinions expressed herein are those of the author and do not represent those of the organisations that the author represent

Dr Gift Mugano
President Mnangagwa’s inaugural speech brought smiles to all Zimbabweans and the international community in general. Quick takeaways from the speech are issues regarding dealing with corruption, creating an enabling environment for business, attracting foreign direct investments, addressing sticking issues on land reform and dealing with liquidity challenges.

The speech was a mouthful and this week’s instalment builds on this speech while expanding into a debate for the new Government to building an enabling environment for Zimbabwe. Key to this, is the need to fast track reforms in areas such as indigenisation and economic empowerment, investment climate reforms, market related policies, corruption and doing business reforms.

With respect to indigenisation, the current policy of awarding 51 percent shareholding to the locals and 49 percent to foreigners is not only draconian but also retrogressive. One can equate it to a man who is proposing marriage to a young lady and they become so abusive to their new bride in return. There is no sane woman who will agree to such a proposal.

This explains why Zimbabwe has failed to attract meaningful investments for the last decade. For the avoidance of doubt, we now have ten years since the Indigenisation Act was promulgated. We don’t need to take stock on whether or not the policy yielded meaningful results. The results speak for themselves.

Ironically, in April 2016 President Mugabe clarified the indigenisation law when the then Minister of Youth Development and Indigenisation Patrick Zhuwao threatened to close companies which failed to meet the 51 percent local threshold by April 1, 2016.

The clarification by the President was to me as good as shifting the policy from indigenisation to broad-based economic empowerment. So, within Government then, there was clarity on what the Government aspires to achieve on empowerment, but the desires failed short on the back of absence of legislative mechanism to enforce President Mugabe’s statement. Unfortunately, the President’s statement is not law.

There is therefore need to change the indigenisation law and even the name for that matter. There are more benefits which come with empowerment than owning a company. Zimbabweans are in dire need of jobs.

The new law on empowerment should focus on promotion of local procurement, value chain finance models, business linkages, local content regulations, value addition and beneficiation and capacitation of Small and Medium Enterprises (SMEs). In this new era we cant afford to carry over the indigenisation law!

Investment climate reforms, changing the indigenisation law to a broad-based empowerment policy is one huge step towards improving the investment climate. However, beyond changing the indigenisation law, there is need for the new Government to work on addressing the general impediments which are deterring domestic and foreign investors from investing in Zimbabwe. These include the following:

Addressing the tax regime, that is, reducing the multiplicity of taxes and collecting agents;

Combating corruption head on;

Provision of key enablers such as reliable electricity, water and sanitation, transport, energy and information communication technologies;

Adherence to property rights;

Streamlining of the doing business environment and procedures;

Establishment of investor complaints and settlement mechanism;

Instilling efficiency in both Government and state-owned enterprises including local authorities in their various aspects of service delivery just to list a few specific examples.

Market related policies, protectionism does not work. Market related policies have proven to be the best tool in addressing efficient utilisation of resources and fostering efficiency. To demonstrate this, I will use maize prices and soya bean.

Maize price floors are a serious challenge to the competitiveness of all players across the value chain. The Government of Zimbabwe has set the price of maize per tonne at $390. Regional prices are $150 and $137 per tonne in South Africa and Zambia, respectively. The landed price of maize in Zimbabwe is around $240 per tonne.

Currently, in order to encourage local millers to support command agriculture or contract farming, the GMB is selling maize to the millers at $240 per tonne. Ministry of Finance pays $150 as a subsidy. This scenario is problematic from four fronts.

First, it creates arbitrage opportunities where one will import maize from Zambia and sell it to the GMB and makes profit without doing anything. As a matter of fact, we have heard reports that Zimbabwe is importing maize from Zambia even though there are no import permits. Corruption is facilitating everything.

Second, the subsidy under the current fiscal constraints cannot be sustained. Going into the future, Government will not be able to continue to fund inefficiencies. If this happens, what happens to sustainability of the agricultural sector? This pricing regime is a threat to agricultural viability.

Third, let us assume that God once again smiles on us and give us good rains and we work as team Zimbabwe under command agriculture and through individual efforts and produce another bumper harvest, we will have to export maize. What will be our selling pricing to the region? Obviously, we cannot sell at $390. Is the Ministry of Finance going to subsidise the region? The answer is obviously no. What is means is that we will be stuck with our maize. If this situation happens, which is most likely, it will threaten agricultural viability and will take us from self-sufficiency to food insecurity.

Fourth, other players in the maize value chain (which are not millers) like Nestle are getting maize at $390. These companies are taking through put which is quite expensive and will have to compete with regional producers of say cornflakes both in the local and regional market. The current maize price is undermining local producers’ competitiveness.

On soya bean, Government is contemplating pegging soya bean at $700 per tonne while in the region is in the neighbourhood of $250 per tonne. For starters, there is no incentive for private companies to support contract farming on soya bean from a business case point of view. Remember the business of business is business.

This explains why we are producing around 21 000 tonnes of soya bean against national demand of 600 000 tonnes. As a result, we are spending around $250 million annually on imports of soya bean. The companies which are accessing local soya bean lost their regional competitiveness by 45 percent, that is, our cooking oil is 45 percent more expensive due to the high cost of soya bean.

This means we cannot export cooking oil. This was well before the three-tier pricing system. If one takes into account the impact of the three-tier pricing system, our cooking oil will be even much more expensive.

This case study (on maize and soya bean) demonstrate that controls or protectionism cannot work. A classic example of how market related policies are a panacea is the tobacco industry. We all know that the tobacco is sold in auction system. An auction is a market mechanism which is governed by the invisible hand of demand and supply.

As such, the prices are determined by market forces. Tobacco has been named the golden leaf which has seen increase in exports coming from it year in and year out as well as increase in the number of farmers and contractors participating on it because everyone is making money. President Mnangagwa in his inaugural speech promised a market based economy. I couldn’t agree anymore with him. This article is supporting The President’s observation and rally him all the way to Canaan as we build our great country.

Together we make Zimbabwe great.

• Dr Mugano is an Economic Advisor, Author and Expert in Trade and Competitiveness Strategy. He is a Senior Lecturer at Zimbabwe Ezekiel Guti University and Research Associate of Nelson Mandela Metropolitan University. Feedback: +263 772 541 209 or gmugano@gmail.com

Munyaradzi Musiiwa Midlands Bureau
Kwekwe-based chrome smelting company Zimbabwe Mining and Smelting Company (Zimasco), met its creditors yesterday to deliberate on the proposed scheme of arrangement. This comes after Zimasco, which is under judicial management, made a turnover of more than $ 158 million within the past 16 months.

In an interview, Zimasco Judicial Manager,Reggie Saruchera of Grant Thornton International, said the ferrochrome producer was now waiting for the outcome of the deliberations before proceeding with the scheme of arrangement. Mr Saruchera said the company had also invited its creditors for a scheme of arrangement yesterday to map the way forward on how to settle the debts.

The scheme of arrangement is expected to reschedule the debt and free up some space for capital and recurrent expenditure. Mr Saruchera said Zimasco had posted a profit of more than $ 45 million over a period of 16 months. Since the beginning of the year Zimasco has contributed more than $ 103 million of the country’s total chrome proceeds.

“This morning (yesterday) we engaged Zimasco creditors on the proposed scheme of arrangement. They have started voting and we will soon hear the outcome. The outcome will help us map the way forward. We are happy to announce that we have managed to turn around Zimasco during the first 16 months of judicial management. Zimasco has made a turnover of more than $ 158 million and a profit of more than $ 45 million. This is why we are now engaging our creditors,” said Mr Saruchera.

Zimasco, which is rising from a debt overhang that had buried the group for years and currently under judicial management, has started making efforts towards liquidating debt owed to various creditors. Zimaso owed a total of $144 936 691 to creditors including $21 780 307 to Sinosteel Singapore (in liquidation), $11 350 142 to Sinosteel International and $3 309 850 to the National Social Security Authority, pension funds and NEC.

Zimasco owes $34 738 364 to financial institutions, $7 295 513 for retrenchment packages, $2 787 316 towards salaries and wages arrears (three months), among other creditors. For some debts the company considered rescheduling and repaying over 6,5 years with some over 18 months. These negotiations have been going on and the company expects that a scheme of arrangement could be in place later this month.

Zimasco, an integrated ferrochrome producer with chromite mining locations in Shurugwi, Guinea Fowl, Lalapanzi, Mutorashanga and tributor operations along the Great Dyke, has been in the doldrums for the past decade but is seeing a turn of fortunes.

Collen Tapfumaneyi

Business Reporter
A local microfinance institution, Untu Capital, is seeking to raise $5 million through listing on the Financial Securities Exchange (Finsec) Alternative Trading Platform board before year end.

The proposed listing would become third after the Infrastructure Development Bank of Zimbabwe listed its energy bonds on the fixed income trading board by way of introduction yesterday. Old Mutual was the first to trade on the platform in December last year after it listed its empowerment shares making up 25 percent of the group.

“Some regulatory approvals have already been obtained and a prospectus should be coming out; hopefully next week,” a source privy to the transaction told The Herald Business.

“It is a micro finance institution involved in on lending business and it is seeking to raise funds to boost its lending capacity. They are looking at raising about $5 million.” Escrow group chief executive Collen Tapfumaneyi confirmed the development but could not be drawn into revealing further details citing confidentiality of the matter.

“It is true, there is a company coming on board but official announcement will be made in line with regulations governing capital markets,” Mr Tapfumaneyi said in an interview. Following the listing of the IDBZ energy bonds, chief executive Thomas Sakhala, said the bank was also looking at listing some of its housing bonds once fully subscribed.

“The tradability of the instruments is an important factor for investments and we will be listing some of our housing bonds and other future bonds issuance in line with practice with other markets in order to give investors flexibility,” Mr Sakhala told market players during the event of the listing of the energy bonds.

IDBZ would start listing the $14,9 million bond issued to develop about 1 500 low, medium and high residential stands in Kariba and the $12,5 million bond issued to develop a project in Harare, the bank’s head of resource mobilisation Mr Willing Zvirevo said in an interview yesterday.

The rationale for listing the bonds is to broaden market participation to include stockbroking forms, custodians, individuals and institutional investors. The listing also enhances the liquidity of the bonds due to wider access that buyers and sellers will have to professional broking services on the Finsec. It also allows for a market price discovery.

It also become easier for investors to sell when the debt securities are listed and do not necessarily have to wait until maturity. By listing, the instruments will become more tradable. This will also provide an opportunity to potential investors who would have missed out when the bond was issued as they can buy from the current holders.

Ishemunyoro Chingwere Business Reporter
The National Railways of Zimbabwe (NRZ) is projecting a 32 percent revenue growth for this year up from the $66 million achieved last year due to grain, chrome ore and passenger railway uptake. The growth projection was highlighted by the parastatal’s management to the Parliamentary portfolio committee on Transport and Infrastructure Development and this will see the company’s receipts, mainly from freight and passenger movement, growing from $66 million to $87 million.

Presenting the committee’s first report on the inquiry into the turnaround strategy for NRZ in Parliament on Tuesday, committee chairperson Dexter Nduna, said in their submissions on the current state of the company, the parastatal’s board and management noted that they were anticipating a rise in business despite the debilitating infrastructure shortcomings.

The high projections comes just three months after the State Procurement Board (SPB), awarded a $400 million tender for its revival to a consortium comprising Transnet and the Diaspora Infrastructure Development Group.

“NRZ projected that the revenue to be generated from both freight and passengers against the anticipated increase would be $87 million,” the portfolio committee told parliament on Tuesday. If achieved, this would be a 32 percent increase from the $66 million raised in 2016. The NRZ board and management submitted that in 2017, NRZ would transport freight tonnes amounting to $3,5 million, an improvement of about 30 percent from the $2,7 million realised in 2016.

“In terms of the passengers, NRZ is targeting to move 387 000 passengers against the 287 000 that were transported in 2016. This would translate to a 34 percent improvement in passenger transportation in 2017,” notes the report. The committee said as part of efforts to attain its goals, NRZ proposed its salary revenue ratio from the current 94 percent to about 62 percent this year.

This, management told parliament, will be achieved through cost-cutting measures and an improvement in revenue, which is premised on rebuilding customer confidence as well as adopting a flexible approach to its pricing tariffs whenever necessary so as to remain competitive. The company is also forging ahead with its plans to lobby Government to expedite the enactment of legislation banning bulk goods transportation by road as well as advocating for a waiver of duty on diesel for locomotives.

The parastatal is also going ahead with the sale of scrap metal, which only last year earned them $2,5 million. The committee is, however, worried that while the reduction of the salary to revenue ratio is taking long to be implemented, there is still no compelling solutions to finance the extinguishing of the workers’ debt which is now well over $90 million.

Mr Curtis

Business Reporter
THE political leadership in Zimbabwe should work closely with international investors to revamp the manufacturing sector through crafting strategies that uphold economic growth and lead to the return of a local currency, Caledonia Mining chief executive officer, Steve Curtis, has said. The Toronto Exchange-listed Caledonia Mining concern owns 49 percent shares in Blanket Mine in Gwanda, one of the thriving enterprises in the country.

Commenting on the economic situation in the country, Mr Steve Curtis said adoption of the multi-currency system in 2009 was the right thing to do in stabilising the economy in light of the festering hyperinflation that Zimbabwe experienced over the years. He, however, said the model has limitations given the liquidity challenges that the country is going through.

“One biggest economic issue in the country is lack of foreign currency, there is a shortage and the country is trying to operate its own economy without its own currency. I personally believe it was the right thing to dollarise and stabilise the economy out of those hyperinflation periods but it’s a very difficult model to grow the economy,” said Mr Curtis.

“The Zimbabwean economy needs to grow so, I guess one of the most important things that the powers that be, which come into existence, will need to put their heads together with some very clever international people and formulate the way forward,” he said. In February 2009, the country adopted a multi-currency system that was dominated by the United States dollar to tame hyperinflation.

“I don’t think its sustainable that you can operate with somebody else’s currency in your country and l think all of us as contributors to the economy, we have to continue to work under the conditions that we have and hopefully work towards improving the situation,” said Mr Curtis. He said the country also needs to resuscitate the manufacturing sector adding that despite the prevailing economic climate his company continues to invest in Zimbabwe.

“The fact that we (Caledonia) are investing heavily is testimony that you can still do it in a challenging environment. But for an economy that probably needs to grow in double digits, there is going to be sincerity economic and fiscal policy changes. I think that must take place. That is exciting, so we look forward to that. There is high level of unemployment, Zimbabweans want to work and l think, they deserve an opportunity to have a job,” said Mr Curtis.

In his inaugural speech on Friday, President Mnangagwa said the new Government among other key priorities to grow the economy would be re-engaging the international community to improve the country’s relations with the rest of the world to attract foreign direct investment. He said Zimbabwe’s economy would be predicated on the agriculture sector as well as creating an investment-led economic recovery that rests on employment creation premium.

Livingstone Marufu Business Reporter
Zimbabwe could save over $100 million in foreign currency if it achieves wheat output of 200 000 tonnes this year, up from 65 000 tonnes attained last year. The expected rise in tonnage comes after Government provided adequate and consistent supply of water and electricity during the just ended season.

In responses to The Herald Business, an official from the Agriculture, Mechanisation and Irrigation Development Ministry, said given the ongoing wheat deliveries to the Grain Marketing Board, 200 000 tonnes is achievable.

“We are anticipating to get around 200 000 tonnes of wheat and given the way deliveries are coming, we may reach that target. Around $100 million worth of foreign currency will be saved along the way,” said the official. He said the Ministry was happy with the constant supply of water and electricity throughout the winter wheat farming season and as a result, five tonnes per hectare from the previously projected four tonnes was attained.

Most wheat across the country was harvested by a total of 195 combine harvesters. Wheat is recommended to be harvested before first rains as they affect the quality of the wheat, but some wheat is still in the fields despite the rainy season commencing a couple of weeks ago.

Meanwhile, the Command Agriculture programme, which started this season with maize production, has now been expanded to include winter wheat, with the import substitution expected to save a lot of foreign currency for the country.

Farmers were provided with all the inputs, as was the case with maize. Through the stop order system, farmers are expected to deliver an agreed tonnage to the Grain Marketing Board as repayment for the loan advanced to them in the form of inputs such as wheat seed, fertilisers, chemicals and tillage services.

Farmers with irrigation infrastructure have in the past failed to grow wheat because of lack of financial resources to buy the inputs, a gap that Government has bridged through the Command winter wheat programme. The private sector has invested over $100 million for this year’s wheat crop. Sakunda, National Foods, Northern Farming Company, Stay Well Company and CBZ Bank have committed to supporting cultivation of winter wheat.

CBZ has budgeted $10 million for on lending to wheat farmers at interest rates of between 10 and 12 percent and it is now expecting to get its money back so that it can extend that money to summer cropping farmers. On average, the country spends $100 million annually on wheat imports. Government is buying wheat at $500 per tonne, while private buyers offer between $360 and $380 per tonne.

In this scenario, most farmers will deliver to GMB, which offers a viable price. So far over 30 000 tonnes of wheat have so far been delivered to the GMB. Zimbabwe needs around 400 000 tonnes of wheat yearly to feed the market.

minimised its loss position to $1,3 million for the half-year ended September 30, 2017 from $3,3 million in the comparable period last year on the back of a 63 percent rise in turnover. The group, which owes creditors over $60 million, is under a High Court sanctioned scheme that has allowed it to continue operating after agreeing terms with its creditors on a way forward.

About half of the debt was purchased by the Zimbabwe Asset Management Company in a debt-equity swap deal. Starafricacorporation’s revenue during the six months surged to $23,2 million from $14,3 million due to a rise in sales.

“The group’s sugar sales in terms of volumes increased by 70 percent from 17 740 tonnes in prior year comparative period to 30 238 tons in the half year under review,” said group chairman Joe Mutizwa.

The improved financial position also saw the group recording a positive Earnings Before Interest, Tax, Depreciation and Amortisation (EBIDTA) which closed the period at $1,9 million from a negative $0,3 million. Mutizwa said EBIDTA was however still low to cover the group’s finance costs which resulted in the loss position.

“The improving operational profitability is however dampened by finance costs which almost entirely relate to the legacy debt,” he said. He said the company was in discussions with some of its debtors to turn their debt into equity.

“Conversion enhances the prospect of a full and quicker recovery of the company,” he said. In the outlook, Mutizwa said the firm was now focusing on increasing exports into the region.

“To that extent, the company has already completed requisite export registrations with Comesa and Sadc and is on a marketing drive with a view of achieving firm sales before the end of the financial year,” he said, adding focus was also on introducing new products. — New Ziana.

Business Reporter
Listed clothing retailer Truworths Limited merchandise sales for the four months ended November 4, 2017, experienced double digit growth across the board albeit the challenging economic environment that prevailed during the period under review. Volumes for chain stores Truworths and Topics were up 22 percent and 14 percent respectively against prior year comparative.

Number 1 stores, grew 21 percent and this was after store rationalisation. In January this year, the group closed six Number 1 stores that were unprofitable which helped reduce occupancy costs by 18 percent during the financial year 2017. Trading expenses for the three months to October 10, 2017, went down 6,3 percent.

Chief executive officer Themba Ndebele yesterday told the group’s shareholders that gross profit margins improved to 49,5 percent compared to 39,9 percent last year and was upbeat of improved earnings in the next quarter, which is the peak period.

“The business was profitable for the quarter compared to a loss in the similar period last year. We are now going into the strongest period. December is traditionally the strongest trading month of the year and we expect a reasonable trading December this year although it will be affected by product shortages on certain lines due to foreign currency shortages,” said Mr Ndebele.

Local industry has been facing foreign currency shortages due to low nostro balances affecting companies’ ability to import essential raw materials and meet their foreign obligations. Mr Ndebele indicated the foreign currency shortage could result in product shortages during winter 2018. The industry relies on imports as the country does no manufacture polyester material.

“Our business is 100 percent imports because Zimbabwe does not produce polyester. Even if we get it from a third party, it is still imported,” he said. In the year to July 2017, Truworths’ gross profit decreased by 40, 2 percent as product was discounted to stimulate sales in the first half of the financial year.

In line with the challenging economic conditions, net bad debt was higher than the prior year with write offs increasing by 121 percent and recoveries reducing by 62 percent. The allowance for doubtful debts increased by 22 percent.

Enacy Mapakame Business Reporter
Specialty retail and distribution group, Axia Corporation Limited’s revenue for the first quarter to September 30, 2017, went up 32 percent compared to same period last year buoyed by increased volumes across the board. Group chief executive officer Mr John Koumides, told shareholders at the group’s annual general meeting yesterday in Harare that profits for the period more than doubled on improved procurement efficiencies.

“Turnover during the quarter increased 32 percent compared to prior year,” he said. In the year to June 2017, Axia’s total revenue amounted to $248 million with an operating profit of $22,9 million. Axia was unbundled from industrial conglomerate Innscor and has three operating units, TV Sales and Home (TVSH), Distribution Group Africa and Transerve.

In the year to June 2017, Transerve had a 3 percent growth while DGA had a 37 percent revenue growth while TVSH also grew 37 percent. Management at Axia are upbeat of maintaining the growth trajectory into the financial year 2018. Axia operates within the speciality retail and distribution sector with dominant businesses across retail of household goods and appliances, retail of automotive goods and distribution of fast moving consumer goods.

By close of trade yesterday on the Zimbabwe Stock Exchange (ZSE), Axia shares had retreated by 0,4 cents, representing 19, 37 percent. Year to date, the stock has gained by 294 percent.

Nissan X-Trail

Tinashe makichi Motoring  Correspondent
Experience the joy of life’s adventures in a bigger, bolder crossover that has everything you need to go out there. The new Nissan X-Trail is the car of the moment Muscular styling, solid capabilities and next-level technologies on the vehicle will keep you in control and give you all the space, comfort and flexibility you need to enjoy your action packed trips. Get inside, go out there.

Intelligent power train, dynamic driving technologies and intuitive 4×4 drive capabilities make x-trail ultra-responsive and adaptable in all conditions. The Nissan x-Trail offers the available intelligent around view monitor with moving object detection. This feature comes with 4 cameras that give you a virtual 360° birds eye view of your vehicle. The Nissan x-trail can adapt to changing conditions 30 times faster than the blink of an eye.

Whether it’s sand or gravel, rain-covered surfaces or a tight turn, the system will automatically send power to the wheels that need it the most. Even in ideal conditions, the Nissan X-Trail’s awd system pays big dividends: getting a grip has never felt better Driving made simple with turn-by-turn directions, caller id and available safety features . . . All your info is right before your eyes on your 5” colour

There is advanced drive-assist display while also a driver can use the steering wheel controls to switch between different screens. Just click on the arrows its easy! Thanks to the Nissan X-Trail’s flexible seating system. The 60/40 split seat slides forward for easy access and adjusts to give you more cargo space, more legroom, and everything or anything in between. You can also recline the seats, when it’s time to just relax.

The X-trail boasts of branded weather shields that protect the cabin against the elements when windows are partially open. A slim finish that is perfectly tailored to your vehicle You can maximise your versatility with a quality towbar that has been engineered and tested to ensured a maximum breaking capacity of1 500kg and vertical load on ball of 75k.

X-trail branded rubber floor mats designed with a raised outer perimeter to contain any dirt, grass and gravel whilst protecting the cabin floor From behind the wheel there are no surprises. The x-trail has plenty of body roll, while the steering is soft rather than sharp. On the move it’s a comfortable cruiser with a well judged ride, although it’s fidgety at low speeds – finding bumps and lumps in the road around town.

All-wheel-drive cars are capable when confronted with a bit of soft-roading, too, and new features such as an updated hill-start assist system are tailored with muddy stuff in mind. Nissan has eked out an additional 15 litres of boot space in five-seat models, taking capacity with all the seats in place up to 565 litres.

However, it can’t compete with a skoda kodiaq’s vast 720-litre load space. Inside, the infotainment screen is small with outdated graphics, but it’s slick and responsive. New materials and an updated steering wheel lift the x-trail, although the kodiaq feels fresher. The current third-generation car has been around since 2013. Four years later, Nissan has freshened it up with a facelift

getbucks

Business Reporter
GETBUCKS Microfinance Bank Limited’s profit for the first quarter to September 30, 2017, rose by 66 percent to $1,1 million compared to the same quarter last year. Interest income grew 18 percent year on year to $2,1 million on the back of growth in loans and advances that also jumped 14 percent.

Managing director Mercy Murevesi, attributed the growth to the introduction of new products for the small to medium enterprises such as asset finance, home equity and mortgage loans.

“Our first quarter results to September 30, 2017, have been encouraging and the bank has continued on the path to growth,” said Mrs Murevesi at the financial institution’s annual general meeting in Harare yesterday. Equity grew by 29 percent from prior year.

Cost to income ratio improved to 48 percent from 55 percent last year on the back of the bank’s focus in growing revenues and managing costs using technology. Following the cash challenges the country has been experiencing since last year, financial services providers across the country have strengthened digital platforms as the country embraces cashless transactions.

“As a fintech player, the bank is working on increasing a number of electronic channels available to its customers for easy access to its services. To that end, the company is now fully certified to issue debit cards that also operate on the Zimswitch platform as well as Zipit. This is in addition to our existing presence on the RTGS (Real Time Gross Settlement) and paynet platforms,” she said.

Mrs Murevesi added the bank has had a significant reduction in impairments and write offs in the quarter under review due to improved credit risk assessment methodologies and aggressive collection techniques.

Resultantly, the bank closed the period with a non performing loans (NPL) ratio of below 5 percent and a loan loss coverage ratio of 80 percent. The bank is also adequately capitalised with a capital adequacy ratio of 27 percent and a net capital base of $14 million against the Reserve Bank of Zimbabwe (RBZ) minimum regulatory requirement of $5 million.

Management at Getbucks is upbeat the bank will maintain the growth trajectory as it keeps its commitment to improve cost efficiencies in order to enhance shareholder value. In April this year, GetBucks launched a $30 million bond programme. The first tranche of $5,4 million was fully subscribed while the second tranche is still open to investors.

Eng Magombo

Enacy Mapakame Business Reporter
The Zimbabwe Regulatory Authority (Zera) says there has been a rapid growth in liquefied gas petroleum gas (LPG) usage in the country as its use became popular as an alternative energy source especially for domestic consumption when the country struggled with hydro-electricity deficits experienced in the past decade.

Between January and October this year, LPG imports rose 86 percent as the market continues to switch to gas as an alternative energy source on the back of its lower cost compared to grid electricity. By end of October, imports stood at 2,8 million kg compared to the January figure of 1,5 million kg.

Figures from the energy regulator also show that in 2016, Zimbabwe imported 24 million kg of LPG, representing a 388 percent jump from 2010 figures of 5 million kg. Energy experts say use of gas as an energy source could save the country of grid electricity, and cheaper than setting up a new power plant. Meanwhile, Zera says there is a 100 percent license compliance by liquefied petroleum gas (LPG) wholesalers in the country, although the retailers are still problematic.

Zera chief executive officer Dr Gloria Magombo, said applications for regularisation were still coming through and the process was on ongoing and more still needed to be done to raise awareness on the LPG regulations.

“The extent of non-compliance is difficult to quantify. There is a 100 percent compliance with wholesalers. For the retail sector, there is more that Zera needs to do especially due to the fact that the operations can easily be set up and easily move to other areas to evade compliance,” said Dr Magombo by email. Statutory Instrument 57 of 2014 prohibits operating an LPG business without a license from Zera, while it also provides guidelines on requirements and conditions for cylinders, installers, use, handling and storage of LPG.

There has, however, been concerns that the requirements are on the upside and fuel illegal merchandise of the highly flammable substance. According to Zera, licences for retailers cost $100 while wholesalers are required to pay $2 000 for a licence valid for two years. Unsafe handling of the LPG can result in fatal accidents such as fire. However, Dr Magombo said, Zera has been holding training programmes to handling and filling procedures to enhance safety. If 2 500 tons of gas is used per month for cooking and heating, it is estimated that 104 megawatts (MW) of grid electricity would be saved.

Dr Mpofu

Ishemunyoro Chingwere Business Reporter
THE Zimbabwe Consolidated Diamond Company’s (ZCDC) stock pile of about 1,5 million carats has improved its gem or near gem quality from predominantly industrial quality by 34 percentage points following an enhanced cleaning and deep boiling exercise that aims to maximise on revenue.

Through its new Diamond Value Management (DVM) processes which analyses a diamond’s passage “from the mine to the finger”, the state owned diamond mining entity is seeking to maximise revenue for the fiscus by ensuring efficiency and effectiveness across the entire value chain. Zimbabwe last year sold diamonds at a measly average of $54,74 per carat with the precious stones’ composition standing at 93,2 percent industrial and just 6,8 percent gem or near gem quality.

Bench-marking operations to its technical partners from the world’s best diamond producing countries, the state mining entity has withdrawn from the market for later sales at the best possible time while stockpiling produce but has at the same time used the market sabbatical to enhance the value chain.

“ZCDC’s partnership with Ke Nako in the cleaning of diamonds is being enhanced to ensure effective cleaning outcomes,” said the state miner’s chief executive officer Dr Moris Mpofu.

“Through enhanced cleaning, ZCDC has managed to realise a significant improvement in the quality mix of diamond parcels as the true qualities of the diamonds are revealed after applying appropriate cleaning mechanisms. Notably, the quality mix has improved from 90:10 (industrial: gem or near gem) to 56:44 after application of enhanced cleaning processes.

“This has significant implications on the quality or value that would be realised by Zimbabwe from current diamond stock holdings of about 1,5 million carats,” said Dr Mpofu. As part of enhancing the cleaning, the state miner has also acquired a Diamond Processing and Deep Boiling facility which it is in the process of upgrading and resourcing with modern technology and appropriate intellectual property with the ultimate goal to remove non diamond impurities that conceal the true quality of diamonds.

An analysis of the market by the state miner revealed that the inability to effectively clean rough diamonds had seen diamonds which otherwise could have been classified as “Gem” or “Near Gem” being classified and sold as “Industrial” diamonds thus prejudicing the State. Meanwhile the decision to withdraw from the market by the re-branding entity has been extended after the miner noted softening of prices as well as sluggish demand in the fourth quarter.

“In line with effective sales and marketing frameworks ZCDC also took a deliberate decision not to sell its diamond stock in December as rough diamond prices remained on a downward trend in the last quarter of 2017 owing to seasonality effects and other supply and demand dynamics. ZCDC is however preparing to re-enter the market under a revised marketing and sales framework that involves the Reserve Bank of Zimbabwe and the Minerals Marketing Corporation of Zimbabwe,” said Dr Mpofu.

Livingstone Marufu
The Zimbabwe Revenue Authority (Zimra) is optimistic that it will surpass this year’s $3,4 billion revenue target on the back of measures that the authority has put in place to enhance revenue collections. These measures include increasing the tax base through registration of new taxpayers; awareness campaigns to empower taxpayers with information about their rights and obligations under fiscal laws as a way of promoting voluntary tax compliance.

The tax collector will also put in place revenue enhancement measures, such as intensified risk-based audits, a crackdown on taxpayers in order to recover debt, automation and the fight against corruption to achieve the set target. To buttress this, Zimra is garnishing accounts of tax evaders who were persuaded to pay debts but took too long to repay. The tax evaders will be tracked back as far as six years ago.

The authority has been consistently exceeding revenue collection targets since the beginning of the year except for April and June due to fluctuating mineral prices on the international market and the reduction of the rate of mining royalties on platinum. Zimra head of corporate communications Canisio Mudzimu, told Business Weekly that the revenue collector has a potential of reaching $6 billion yearly if the aforementioned measures are fully implemented.

“Zimra has put in place robust strategies to enhance revenue collections and these measures are reviewed from time to time in response to changes in the economic environment. Zimra is, thus, confident of surpassing the 2017 revenue target, which stands at $3,4 billion. As you are aware, the authority has been consistently exceeding revenue collection targets since the beginning of the year and cumulative revenue collections for the period January to September 2017 were above target by 5,93 percent,” said Mr Mudzimu.

He said high revenue performance is also a function of the Gross Domestic Product and other economic fundamentals. Zimra is implementing a battery of measures to ensure that the 2017 revenue target is surpassed. They revenue measures include fighting corruption, smuggling, tax evasion and all forms of underhand dealings, carrying out compliance checks, audits and borderline patrols to verify compliance with fiscal laws.

Also, Zimra automation system will improve convenience to the tax paying public and curbing transit fraud through the Electronic Cargo Tracking System, which monitors movement of transit cargo from point of entry to point of exit.

The Tax collector is rolling out programmes that foster compliance, such as fiscalisation which requires all Value Added Tax (VAT) registered operators to install fiscal devices and connect them to the Zimra server for real-time monitoring of business transactions. Zimra has boosted revenue collections from the formal sector through a fiscalisation project in which businesses use fiscal tax registers that capture financial information and relay it in real time to tax authorities.

However, SMEs have largely remained outside this dragnet and there is a growing push to ensure all businesses start paying tax. According to Zimra, 19 414 SMEs had registered with the revenue collector by the end of October, compared to 14 000 in June. Available figures show that at June 30, 2017, just 5 080 of these had installed fiscal tax registers.

Last month, Zimra board chair Willia Bonyongwe said initial successes in fiscalisation of informal businesses emboldened Government to widen the net to categories that are either paying value added tax through manual returns, or are non-compliant. Fiscal registers record the information on “read only” memory, meaning that once captured it cannot be altered. Taxation of SMEs has given a fillip to Treasury, with Zimra’s 2017 third quarter report showing they accounted for 25 percent of collections from businesses.

The RBZ is closely monitoring people, companies and organisations that have made suspicious transactions

Business Editor
Zimbabwe’s foreign currency shortages are worsening over massive capital flight amid indications corporates and business tycoons have externalised $3 billion between 2015 and June 2017 mainly to Mauritius and the Far East, a development now under intense investigation.

Of the $3 billion, about $1,8 billion was shipped out illegally while $1,2 billion was expatriated through service fees, management fees, technical fees and royalties, according to sources close to the official investigations. But there are concerns that even the legal flow of funds out of the country is susceptible to manipulation as companies can misinvoice particularly for services which are available in the country.

This comes as deputy governor of the Reserve Bank of Zimbabwe (RBZ) Dr Khupikile Mlambo said recently that Zimbabwe lost an average of $150 million every month in 2015 to illicit financial flows.

Documents gleaned by Business Weekly showed that a number of politicians, business tycoons and related companies (names withheld to allow investigations to continue) were among the long list of individuals suspected to be shipping out cash through various machinations. Sources said the RBZ was closely monitoring people, companies and organisations that have made suspicious transactions such as cash deposits (in neighbouring countries), misinvoicing and transfer pricing.

(Then) Finance and Economic Development Minister Patrick Chinamasa recently told Parliament, Government was investigating individuals and corporates that are externalising foreign currency. Minister Chinamasa singled out externalisation and low exports as the major factors behind the current cash shortages.

The firms that have shipped out funds, through legal channels, mainly to Mauritius and the Far East, to pay various fees have also been put under surveillance. The companies on the central bank’s radar include those in the telecommunications industry. Sources said one of the companies had already salted away $60 million in the year to May 2017.

Companies in the financial services sector, Chinese nationals and a failed black Zimbabwean banker, who has a South African identity registration and residence, are also on the list. “What most guys do not know is that central banks are networked and share information through their respective financial intelligence units,” a source said.

Also on the list is a shadowy white businessman (name withheld) who made regular cash deposits in neighbouring Botswana amounting to $6 million over the past year. Metallon Gold and ex-Harare City Council Town Clerk Tendai Mahachi are part of the list. Metallon is already in court over this issue. The former Town Clerk, Mahachi, who was arrested for an $800 000 fraud involving City Parking, is accused of transferring the amount to Ghana. Diamond firm Jinan is said to have shipped out $630 million while significant amounts were moved by collapsed MMM Zimbabwe.

Government officials have indicated that plans had been mooted to minimise capital outflows by reviewing royalty agreements, patent and copyright regulations as well as through encouraging foreign companies to register locally and ensuring that their accounts were domiciled in Zimbabwe. Externalisation has a haemorrhaging effect on the economy while it is also contributing to the widening gap between local dollars and foreign currency.

“This intense investigation is real and meant to stop the illegal flows and to help economic recovery.” However, the source declined to discuss details of the probe, only saying they were quite advanced. Dr Mlambo told a KPMG seminar that continued externalisation, finance parallel market activities and non priority and restricted imports at a premium had resulted in an exchange rate between electronic balances and foreign currency.

If the leakages continue, the country will not have capacity to create a capital base locally. There is need therefore to put further controls and to tighten border control. Analysts say that the central bank should consider utilising the methods used in the past under the old Exchange Control Act. Under this Act, many expatriate companies were required to register locally and the retention of all their revenue had a hothouse effect that created huge capacity for capital, which was then invested towards developing the economy.

“As long as foreign currency continues to haemorrhage out of the country it will be difficult to prompt any kind of sustainable economic development,” said an economist who requested anonymity. At a much broader level, Africa loses $80 billion a year through illicit flows. UN Economic Commission for Africa (UNECA) acting executive secretary Abdalla Hamdok, at the recently held AU summit, said curtailing illicit financial flows is imperative for the implementation of Africa’s ambitious Agenda 2030 and 2063 economic and social development programme.

Given the scale of the matter and the negative impact it has on Africa’s development and governance agenda, the issue of illicit financial outflow is no longer just a continental agenda but also an international one, he said. He revealed that currently a consortium comprised of pan-African institutions has been inaugurated and tasked to tackle the problem. Meanwhile, a campaign dubbed “stop the bleeding” was jointly carried out by the UNECA and AU commission.

• This article first appeared in our sister publication Business Weekly published on July 10, 2017.