Business Reporter
Business came to a halt across Zimbabwe yesterday when the country’s internet connectivity went down from mid-morning. A major fibre optic cable linking Zimbabwe to neighbouring South Africa was damaged, causing temporary internet blackout, according to information gathered at the time of going to print.

Retailers suffered a major setback as customers were unable to transact on point of sale (POS) machines, which require connectivity between banks. The situation has been exacerbated by the gradual shift witnessed in the country towards plastic money as the foreign currency shortages culminated into a cash crisis in recent years.

According to industry statistics, cash accounted for less than 20 percent of transactions at conventional retail outlets across the country as of September 2017, the balance being POS payments and mobile money. Plastic and mobile money has become so popular to an extent vendors on street corners have POS machines while a great number accept mobile money. Corporates also struggled to communicate as emails and cellphones to landlines were also down.

Companies that heavily rely on the internet like the Zimbabwe Revenue Authority and Zinara, also faced problems serving clients. Despite the situation being out of internal control, major internet service provider TelOne apologised to its customers, assuring them of improved services.

“We are currently running at 50 percent capacity at the moment after a cable was cut somewhere in South Africa. The 50 percent is coming from or link from Plumtree and Mozambique, but it will not be enough to service our clients. However, we are ensuring that we give that 50 percent to our critical clients and we hope service is up in a few hours,” TelOne CEO Chipo Mtasa said.

Tobacco farming is a source of livelihood for many Zimbabwean farmers

More than 100 000 farmers have registered to grow tobacco in the 2017/18 farming season, a 36 percent increase from 73 492 in the previous season, statistics have shown. Tobacco farming used to be a preserve for white commercial farmers, but has fast became an attractive source of livelihood for many Zimbabwean small-scale and communal farmers.

Statistics from the Tobacco Industry and Marketing Board (TIMB) show that 25 852 farmers have registered to grow tobacco for the first time this year compared to 13 842 last year with the registration still going on.

Meanwhile the Reserve Bank of Zimbabwe (RBZ) recently reviewed upwards the export incentive from 5 percent to 12.5 percent in order to boost the 2018 marketing season. In 2014, tobacco export earnings raked in $772,6 million, rising to $855 million in 2015.

It further grew to $933,3 million in last year and it is projected to grow to $980 million this year. China has remained the top destination for Zimbabwean tobacco, followed by South Africa, Belgium, United Arab Emirates and Indonesia. - New Ziana.

Dr Mugano

Enacy Mapakame Business Reporter
Economists say the recently sworn-in Cabinet should prioritise increased production, ease of doing business reforms and local content promotion as a means to hasten economic turnaround. There is consensus agriculture, mining and manufacturing industry could make the country’s road to stability faster and smoother.

These, they said, will be anchored on increased production, especially in agriculture which has for years been the back bone of the economy, supporting downstream industries, before a rapid downturn at the turn of the millennium. The sector provides an estimated 60 percent of the raw materials in the manufacturing industry while accounting for 70 percent of the country’s workforce.

However, to experience a major boom in agriculture, there is need to relook at tenure of security as the lack of finality on the matter has hindered the new breed of farmers from getting bank loans. Since the land reform exercise which saw a multitude of indigenous Zimbabweans owning land and venturing into agriculture, access to finance has been a contentious issue due to lack of security.

The 99-year lease debate has raged on for years and it is hoped with the new leadership in place, this can be concluded and implemented smoothly. Economists Dr Gift Mugano said Government also need to expedite the ease of doing business reforms which in turn should help the country attract both domestic and foreign investment.

“While the Office of the President and Cabinet (OPC) has been working on reforms, there is need to speed up this process and implementation, we should not spend more time in discussions, but implementation so that the world realises we are serious as a country,” he said.

The OPC, together with various stakeholders such as ZimTrade have been working on ease of doing export business reforms, aimed at removing regulatory obstacles that hinder smooth flow of export business in the country.

Buy Zimbabwe chief executive officer Munyaradzi Hwengwere said there was need to bring finality to local content policy and its implementation while pushing for increased production. This, he said, would also help create jobs.

“The most important thing we need right now is increase production, that is how we can create jobs,” said Mr Hwengwere by telephone.

He said Zimbabwe could take a cue from neighbouring South Africa who are implementing a local content policy on selected products to promote employment creation.

“We need to identify some products that have a huge impact in creating jobs.

In South Africa for example, the emphasis is on job creation and local consumption. It is mandatory for some products to be procured locally.

“We can do the same thing here and boost local production be it in agriculture or mining,” he said.

Mr Hwengwere cited Finance and Economic Development, Industry and Commerce as well as Mines and Mining Development as the key strategic ministries crucial in the quick economic turnaround strategy.

In his inaugural speech, President Emmerson Mnangagwa spoke against corruption and said stern measures would be taken against all those found in the wrong. Analysts concurred corruption has been a cancerous to the economy and should be nipped in the bud across all ministries.

JOHANNESBURG. – Juggling paperwork, car keys and an always-beeping cellphone, Inet Situole, a 33-year-old in a crisp white blouse, runs a fashion boutique with more than 100 customers a month – a far cry from a decade ago, when she worked as a maid while trapped in an abusive marriage.

Despite working seven days a week cleaning and cooking in an attempt to save some money, at the end of the month Situole would invariably find herself with nothing.

“My husband would take all the money and spend it,” she told the Thomson Reuters Foundation. He also beat her and was unfaithful, she said.

When she left him, Situole – an orphan since birth – was terrified of what lay ahead for her and her toddler.

“I felt like dying,” she said.

“I didn’t have anyone to run to.”

But in 2015, her prospects were transformed after she joined a scheme to help unemployed mothers set up their own businesses. The Clothing Bank (TCB) was launched in 2010 in Cape Town by two businesswomen, Tracey Chambers and Tracey Gilmore. Gilmore started out by giving unemployed friends smart outfits to wear to job interviews – but it wasn’t working.

“While sourcing the clothing was quite easy, finding opportunities for the women to get employment was really non-existent,” she said.

At about 28 percent, South Africa’s unemployment rate is among the highest in the world.

Lack of education is a key barrier to finding work, with less than a third of South Africans completing secondary school, according to a 2011 census. Chambers and Gilmore decided to combine business and entrepreneurship training with clothing to create a venture that could help tackle joblessness among mothers. More than a third of South Africa’s households are run by single mothers, a 2015 study by Statistics South Africa showed.

“We’ve always believed that if you influence and change a mother’s life, you change an entire family,” said Tracy-Leigh Kinsey who runs TCB’s Johannesburg branch. You change generations – and that’s why we focus specifically on mothers with dependent children.”

Business Ideas

Once selected, the women follow a two-year programme that allows them to study and earn a living at the same time.

“There was a huge amount of excess clothing stock in the retail supply chain. That’s how we came up with the idea of using (it) as a tool to teach unemployed women to run businesses,” Gilmore said.

The women buy the surplus clothing – customer returns or end-of-season merchandise – at discounted prices from TCB, setting up small fashion businesses and growing them as they make a profit. After the training, women are free to apply their new skills in any sector, Kinsey said.

“We push them quite hard to start their second business while they’re still here, so that they have something up and running, so that they are sustainable,” she said.

Graduates from TCB’s five branches across the country have gone on to establish crèches, cleaning businesses, laundromats, cafés and catering firms, often operating initially out of their living rooms or rented shipping containers.

Building on the success of the clothing-based scheme, TCB has branched out into other areas in recent years, such as beauty salons. Unemployed men are also being trained to repair household appliances, from toasters to fridges, using broken stock from retailers. At the same time they learn business and computer skills to help them go it alone.

TCB has also experimented with setting up small franchises such as coffee shops or early childhood learning centres, and recruiting people to become self-employed business owners. Today, Situole mentors some of the students who are launching their own ventures.

“Some come and see me for advice,“ she said. ”

I’m proud of this, as at the end of the day I’m helping someone to put food on the table.”

“Fast Fashion”

Key to the success of The Clothing Bank are donations from major South African retailers. In the Johannesburg branch, women are busy sorting through a warehouse crammed with last season’s dresses, shoes and household appliances.

“We do everything from collecting to de-branding the stock, to fixing it and making sure it’s useful,” said Kinsey, adding that it relieves suppliers of the hassle of disposing of it.

“It’s important we’re reusing this waste in a way that is helping people that aren’t as privileged, or who are living in poverty,” she said.

What to do with excess clothing stocks is becoming a controversial global issue. Some have branded the clothing industry – especially “fast fashion” – as one of the most polluting industries in the world, not least for its contribution to climate change. Making 1kg of fabric generates on average 23kg of planet-warming greenhouse gases, according to a study by global consultancy McKinsey.

In recent weeks, Danish and Swedish media have reported that some fashion giants are sending garments to be incinerated, sparking criticism from environmentalists and politicians.

Gilmore said retailers should seek green ways of dealing with unwanted stock, such as giving it to programmes like TCB. By doing so, South African retailers can also earn points on their “Broad-Based Black Economic Empowerment” scorecard, a government programme to redress the inequalities of apartheid, which provides competitive advantages to certified businesses.

“They have an incentive to give us that stock,” said Gilmore.

Woolworths, a major South African retailer, has donated almost 1,6 million items over the past seven years. Gilmore said TCB’s model could be replicated in Europe, to create business opportunities for refugees.

“It’s just getting people to be open to the possibility,” she said. – Reuters.

President Mnangagwa

Martin Tarusenga
The swearing in of the new Cabinet on Monday and the setting up of ministerial targets the following day, has brought with it high hopes as President Emmerson Mnangagwa, has for the first time in Zimbabwe, earnestly and honestly lived up to a promise of hope – the promise of a lean Government.

What remains is for the President to deliver on the promise of performance. While there will be peculiar problems like in any project, it is the expectation of most Zimbabweans that high performance by the new Government should not be a problem in the short run.

This is because the new Government is expected to achieve by merely correcting the glaringly wrong things that the previous Government perpetrated intransigently. Running an unnecessarily large redundant, inefficient, corrupt government was for instance one glaring wrong that the previous Government perpetrated, and that the current Government should aim to correct in the short run.

Apart from paying employment packages for no output at all, from taxes and sometimes from borrowed funds, widespread unabated corruption and inefficiency among civil servants from this previous Government, felled the economy from the roots.

By way of an example, pensions and insurance service provision would be held under siege by the Insurance and Pension Commission (IPEC) and by high ranking Ministry of Finance (MoF) officials. The officials consistently and persistently hindered the honouring of rightful contractual benefits from pension and insurance contracts.

Such hindrances have over time come in a motley of subterfuge and stratagems manifesting themselves as the recent alleged meddling with the Commission of Inquiry set by the then President in late 2015, the previous suppression of the 2012 Investigation report on an investigation of the same issue, the surreptitious appointment of conflicted IPEC Board members without any public consultation, and the retention of such Board members despite public protest, the appointment of IPEC officers with no clue how rightful contractual benefits are evaluated, and the deliberate delays of the revision of pension and insurance legislation to close loopholes used by insurance companies to prejudice pensioners.

The latter hindrances have all been devised to exonerate errant pension houses and insurance companies. Compelling evidence on these hindrances, and on public protests over the hindrances, abound in news items, articles and other documents dating back 2009.

In consequence of the hindrances, several issues remain outstanding not least that pensioners and insurance policyholders have still not been paid their rightful contractual benefits, upwards of US$12 billion, statutorily required to support these benefit claims has been misappropriated, and the pensioners, policyholders and the general public can no longer trust service provision of the two industries, with the IPEC and MoF officials in question at the helm.

With the loss of public confidence in the two industries, the intermediary role of the two industries of harnessing household disposable income into the economy as long term savings in pension schemes and insurance policies (part of domestic investment) is just about to be suffocated by the IPEC and the MoF officials.

Yes, public trust and confidence underpins the well-functioning of these two industries and the financial services sector as a whole. And to be sure, the records of the Registrar of Pensions (now IPEC), show that the pensions industry alone (excluding NSSA) raked an average of US$230 million into the economy every year from 1987 to 1998.

With very little in the way of benefit payment over this period, as the contributors were demographically still maturing into retirement ages, the industry should be worth upwards of $18 billion, taking into account an asset base of about US$3 billion in 1992, investment returns over the period, less charges and the little in benefit payments.

In terms of the contracts and the statutes, insurance companies are supposed to have injected these savings as investments in high return projects, and well managed companies (as shares) in such industries as mining, agriculture, construction and so on.

The corrupt actions of IPEC and MoF officials as manifested by the hindrances outlined above have however shielded insurance companies and other pension houses, with the result that pensioners continue to be denied their rightful benefits.

The new Government of President E.D Mnangagwa merely has to stop these glaring hindrances, instil public confidence in the two industries, say in a month or two, enable the two industries to play its macroeconomic intermediary role, of raking the monthly US$230 million plus NSSA contributions from households, into the economy.

The new Government must enact laws that require exacting deterrent on-going solvency measures of pension and insurance funds, in the process enshrining use of established principles and practices of benefit calculation (and liabilities thereof), of investment management of pension/insurance funds, of levying charges against these funds for services rendered, for the fair treatment of pensioners and so on.

This will call for a regular assessment framework for competent officials in the MoF and at IPEC.

As the President instructed his Ministers to adopt “quick-win” measures “ . . . to improve the livelihood of Zimbabweans in the shortest period . . . ” the MoF and IPEC must remove the glaring hindrances highlighted above and improve livelihoods of pensioners and insurance policyholders in the next two months.

Disclaimer: Opinions expressed herein are those of the author and do not represent those of the organisations that the author represent.

• 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.

Enacy Mapakame Business Reporter
Diversified industrial conglomerate Innscor Africa Limited’s revenue for the first quarter of financial year 2018 was marginally lower compared to same period in the prior year on the back of a mixed performance across subsidiaries.

Group chief officer Julian Schonken told shareholders at the annual general meeting yesterday that the group’s cost control measures were good and helped achieve savings. Resultantly headline earnings showed a positive growth against prior year comparable period.

“Overall revenue growth for the group in quarter one was marginally lower than the comparative quarter, but a slight increase in the gross margin percentage ensured that margin dollars showed positive growth,” he said.

Volumes at National Foods were lower by 14 000 tonnes on declines in stockfeeds due to the outbreak of avian influenza which reduced day old chicks availability. Maize and third party products were down by 7 000 tonnes and 6 900 tonnes respectively.

Excluding third party products, whole volume production was 5,4 percent lower but flour unit performed well with an 18 percent volume increase compared to same period last year.

Schonken, however, said profitability for the period largely met expectations and the business has continued to invest in extending its pipeline of key raw materials and has increased working capital by $9 million for essential inputs.

Revenue for the bakeries unit maintained a growth momentum on a 13 percent increase in average loaves per day compared to same period last year. The recently introduced “family” loaf accounted for 47 percent of total loaves sold in the quarter. However, the increase in raw materials costs compressed the gross margins as selling price to consumers remained flat.

“During the quarter, the transfer and re-commissioning of an 80 000 loaf per day line from Harare to Bulawayo was completed, a month ahead of schedule, and has allowed for increased capacity for the Southern region of the country. We will look to start an upgrade of our lines in early 2018, resulting in better conversion efficiencies and increased capacities,” said Schonken.

At Colcom, volumes were 7 percent lower than prior year comparable period and the decline emanated from fresh pork line, but positive volumes growth was recorded in the processed lines driven by successful targeted focus on the bacon category.

Schonken said the division maintained margins, with a favourable fair value adjustments despite operating expenditure being slightly above comparative period. Demand for product into quarter two has firmed, and will be met through additional pig producing unit, which is scheduled to come on line in the middle of 2018 adding a further 30 percent to current pig production.

Natpak recorded positive results with demand for major products (sacks and flexibles) firmer achieving a 30 percent volumes growth. Natpak’s second flexible packaging line was commissioned in financial year 2017 and operating at close to full capacity.

“We estimate that the localisation of manufacturing flexible packaging through our plants, critical to many key players in the manufacturing space in Zimbabwe, is now saving the country an estimated $12 million in foreign currency per annum,” said Schonken.

Refrigeration unit, Capri recorded a 12 percent growth in units sold on the back of on the back of increased exports to a number of regional countries. Volumes at associate company, Profeeds fell 16 percent due to reduction in the supply of day old chicks following the Avian influenza outbreak although profitability continued to improve as a result of well-priced pipeline of raw materials and cost control.

Foreign currency shortages had a knock on effect on Probrands business resulting in depressed results. Schonken, however, said the group will continue on growth strategies banking on the expected economic recovery.

“Notwithstanding the currency challenges being experienced by our business units, we remain extremely positive as regards the country’s economic recovery prospects, and will continue with our strategic agenda which focuses on improved operating efficiencies, growing our existing categories and searching for new, and complimentary growth opportunities,” he said.

Old Mutual intends to lay solar panels on the rooftops of all its properties countrywide

Martin Kadzere in VICTORIA FALLS
Old Mutual intends to construct solar power projects with capacity to generate at least 50 megawatts, a senior official has said. The projects will entail the construction of two solar power plants in Gwanda and Chipinge, Old Mutual chief investment officer (Alternative investments) Benjamin Sithole said yesterday.

He said some solar panels will be laid on the rooftops of its properties countrywide. Old Mutual, a diversified financial services group, has the biggest property portfolio in the country.

“It is a project at a very advanced stage and we should be signing some of the contracts with technical partners before end of this year,” Mr Sithole told delegates attending Zimbabwe’s first green investments catalyst roundtable here in Victoria falls.

He did not disclose the amount of investment required for the projects. The two day investor roundtable was meant to discuss ways in which Zimbabwe could develop a framework to enable to issuance of financial instruments that could be used to raise capital to finance projects considered to have less impact on climate.

Making a presentation earlier at the same conference secretary in the Office of the President and Cabinet and chairperson of the high level committee on climate change Ambassador Bornface Chidyausiku said Zimbabwe should come up with policies to enable establishment of a green loan and bond framework to raise funding for projects with less negative impact on the climate to help meet its climate goals.

Old Mutual recently commissioned a 1,5 megawatt solar power plant in Chipinge, which was financed to the tune of $1,5 million. Zimbabwe’s energy and hydro policy has identified solar energy as one the country could use to mitigate greenhouse emissions.

Studies have shown that Zimbabwe is currently emitting an estimated 26 000 giga grammes of carbon dioxide into the atmosphere, representing about 0,5 percent of the world emissions Power generation activities, mostly thermal plants, account for about 48 percent while agriculture contributes about 44 percent.

The country is a signatory to the Paris Climate Change Accord signed in 2015, which largely seeks to keep the threshold of global average temperature below 2 degrees Celsius. Before the 21st Paris United Nations Framework on Climate Change, Zimbabwe had submitted its Intended Nationally Determined Contribution like most parties to the convention.

The INDC was the country party’s own submission of greenhouse gas emissions reduction ambition/target. The INDC was adopted under the Paris Agreement to influence climate change mitigation efforts in pursuant of temperature goal by 2030. Zimbabwe submitted a conditional 33 percent energy sector per capita greenhouse gas emission reduction target.

The submission was conditional on the means of implementation namely technology development and transfer, relevant training and financial support. Zimbabwe needs about $90 billion to meet its climate goals. Of this, $55 billion is for clean energy.

Other presenters at the Victoria Falls forum concurred that while Zimbabwe had several opportunities to attract green capital, the Government should come up with investor friendly policies and work on normalising relations with the international community and potential up takers of the bond.

At the Paris Agreement in August this year, Zimbabwe indicated it was stepping up efforts to deliver its mitigation contribution. Part of the steps includes development of frameworks for investment like the green bonds among other financial instruments. The green bonds are growing category of fixed income securities to raise funds for green projects.

Minister Chinamasa

Clive Mphambela
ZIMBABWEANS wait with bated breath for Finance Minister Patrick Chinamasa’s 2018 National Budget Statement, which he is expected to present this afternoon; outlining macro-economic and fiscal objectives, targets and other projections, taking into account several underlying macro-economic and fiscal assumptions.

The 2018 Budget is hugely anticipated to provide solid indications on key economic parameters and underlying macro and micro-economic assumptions to drive economic performance, and the anticipated revenue out turns, critical for providing guidance on the expenditure capacity of the Government for the coming year.

However, what will be more important is that, Minister Chinamasa’s budget will be able to buttress the vision for a new and vibrant Zimbabwe that has already been projected and shaped in the inauguration ceremony address by President Emmerson Dambudzo Mnangagwa, which he presented on November 24, 2017.

The budget should give the nation and the world at large, the first credible indications that indeed, Zimbabwe has changed course and Government now means business. If he fails in this very first step, under the new administration, whose Cabinet was only appointed last week, all hope for economic recovery may be lost.

Therefore, beyond just delivering a credible national budget statement this afternoon, Minister Chinamasa actually faces a gargantuan and unenviable task ahead of him, balancing the many competing interests.

As things stand the economy is facing unprecedented challenges on many fronts. Inflation and monetary instability have already reared an ugly head. The economy is facing acute foreign currency position, notwithstanding the growth in export receipts and the falling import bill. The country’s external position remains precarious, with a long list of requests for outstanding foreign currency allocations/payments for imports now estimated at over $700 million.

There are serious dislocations in the financial system, the foreign exchange markets and the retail market (with multiple tier pricing) that require sober attention.

Unemployment is acutely high, with the majority of our citizens now scrounging for a living in the informal sector. In line with the declaration by the President that we need “JOBS JOBS JOBS” in the economy, the budget must lay the foundation for the creation of sustainable jobs in the economy for it to be relevant to the new order.

The resurgence of inflation in the economy is severely threatening the security of households and the fact should not be ignored that real incomes have dramatically fallen in the last 12 months. While official inflation has been recorded at 2,78 percent for October, this statistic unfortunately does not capture the real rise in business and household costs, which is significantly higher.

For businesses, the major risk is that we may see nominal wages rising significantly faster than productivity, causing further disruptions and denting competitiveness. The minister should not be shy to accept these realities if he is to deliver a meaningful and truthful financial plan for the country, which will be sensitive to the stark realities facing the nation.

The Government desperately needs to create fiscal headroom, but at the same time regain fiscal discipline. The country’s infrastructure is weak and we need new investment, in the transport sector (rail and roads), energy, public infrastructure as well as infrastructure to rejuvenate and sustain industrial and agricultural productivity.

At the same time confidence in the economy has significantly waned, if not completely eroded. Minister Chinamasa’s plan must necessarily throw some coals into the economic furnace.

However, to be fair on the man holding the purse strings, the task of balancing short term political needs with the broader demands of sustainable long term economic reforms is a very a delicate one, requiring the Minister to dig deeply into his reserves of economic management skills, political energy and administrative resolve.

As an independent economic thinker, I should hasten to caution that we should be under no illusions. We must all be clear upfront that what we all HOPE for in the budget this afternoon, and what we should realistically EXPECT maybe two very different animals.

I will not be able to talk justifiably on all the issues that Minister Chinamasa should deal with in his Budget address later today, so I will focus on a few areas which I believe are imperatives for laying the base for sustainable economic recovery.

Priority 1: Correctly incentivising exporters, driving foreign exchange generation, whilst restoring and maintaining the integrity of the multi-currency system.

Top of my list and perhaps key to the restoration of confidence in the economy, is the need for the Minister of Finance to decisively address the pervasive need to restore the integrity of the multi-currency system.

He can do so by taking the bull by the horns and speedily driving a policy to either revoke and demonetise the bond note so that we revert to the clarity and stability that existed under proper dollarisation, or alternatively, he should propose drastic changes to the export incentive, so that we can move rapidly from the current form of the export incentive, which is a destabilising monetary tool, to a fiscalised export incentive based on appropriate import taxes. This is absolutely critical for economic stability and confidence in the economy to return.

Dollarisation in 2009 ushered in price and macroeconomic stability. From the goings on in the economy at the moment, it is now very clear that liquidity challenges can only be resolved in the short-term through access to larger and cheaper lines of credit, sustaining the growth of inward remittances, portfolio and investment flows and grants and in the medium to long term, through the growth of exports, which are themselves a function of a sound investment environment underpinned by growth in productivity.

In this regard there is urgent need to honestly review the negative costs and uncertainty brought about by the introduction of bond notes. The instrument, which had the dual purpose of stimulating exports and ameliorating cash shortages, seems to have had the unintended consequences of inadvertently driving hard currency out of circulation through the operation of normal laws of economics.

As a result we have seen further dislocations in the macro-economic environment, manifesting as resurgence in harmful parallel foreign exchange market activities fuelled by both genuine economic need and speculation.

As a country, we also have an ugly multi-tier pricing system in the economy and growing grey exports, which are harmful to the sustainability and viability of local industry. There is need for Government to immediately institute measures to restore the integrity of the multi-currency system in order for confidence to return.

Priority 2: Improving the Investment Environment

This is critical for promoting foreign investment inflows as well as spurring domestic investment. In the same mix, the Zimbabwean Diaspora must be recognised as a key player in the economic recovery equation.

The Diaspora must be viewed, not just as a source of remittances, but a critical source of investment capital. Minister Chinamasa must propose an incentive package to make it viable for Zimbabweans in the Diaspora to bring back the billions they currently hold in savings.

Diasporans are also occupying critical positions across the globe and are well placed to mobilise funding for economic recovery. This constituency cannot therefore be ignored in the minister’s 2018 National Budget Statement.

The minister must also outline the plan for re-engagement of foreign financing partners. Zimbabwe needs a clear roadmap for bringing back the country into the international community of democratic nations. This will also help the economy to deal with the country’s external debt issues in a sustainable way.

The indigenisation and economic empowerment framework must be further clarified in the context of the new Government’s policy thrust. Such clarity must be given without allowing any room for the rhetoric that has previously spoiled what is otherwise a good policy for the country. Any further necessary amendments or adjustments to the policy should be made with speed.

The budget must address the inflation risk that has emerged in the economy. Over the last few months, latent inflationary pressures had begun to manifest, raising the spectre of derailing economic growth prospects. Foreign exchange and cash rationing mechanisms on the back of liquidity challenges continue to adversely impact the economy.

These problems should not be ignored and it must be clear that they are being exacerbated by the large and recurrent, current account deficits, which are symptomatic of an economy that has become excessively reliant on domestic absorption, in turn fuelled largely by the fiscal deficits. These factors have collectively given rise to the current cash and foreign currency shortages in the economy.

Ease of doing business reforms must be sped up and these should increasingly be pursued with a special focus on reducing the cost of doing business. Zimbabwe is currently among the countries with the highest costs of doing business in the region and there is need to address this aspect.

Priority 3: Civil service reforms should be aimed at improving Government efficiency, enhancing fiscal sustainability and promoting financial sector stability.

I also hope that the minister will clear the air on Government’s strategy for funding its budget deficits in a sustainable way. He must tell the nation the measures he will put in place to restore fiscal discipline on the part of Government. Fiscal sustainability and financial sector stability are like conjoined twins. The long term stability of the financial sector hinges on fiscal discipline and sustainability on the part of Government.

The inclusive and sustained development and deepening of the financial sector, through new financial instruments and creating and strengthening the financing capacity and diversification of the financial sector depends on Government maintaining strict fiscal discipline. Going forward, the Government’s full attention must be turned towards and comprehensively reviewing the country’s fiscal framework.

The current fiscal deficits and the manner in which the deficits are being financed is unsustainable and imposes significant adverse implications on the stability of the banking sector. A growing proportion of the balance sheet assets of banks is now held in the form of Treasury bills, whose value is receding as Government debt builds up.

This debt build up is not only crowding out productive sector lending, but is also raising the risk premium for Zimbabwe, elevating the cost of debt and capital. This clearly militates against Government efforts which henceforth should be actively geared towards the reduction in the overall costs of finance in the economy.

Funding the growing domestic debt in this manner is also inflationary, fuels money supply growth and thus imposes an ominous threat to the domestic savings base. This may prove disastrous for confidence in the financial sector in the very near term.

Government’s skewed expenditure patterns, with over 95 percent of its budget going into consumption, has contributed to the rising propensity for imports, the erosion of local productive capacity and the consequent depletion of the country’s foreign currency base. The budget must deal decisively with the above.

Hopefully, the budget will pronounce coherent reform proposals for the civil service. To take the budget seriously, we must get a clear sense of Government’s policy thrust on civil service reforms. I already subscribe to what I have coined as a “RETIRE, RETRAIN AND REDEPLOY” civil service reform process. Elder and pensionable servants, who have done their part, should be necessarily retired from public service.

The remaining workforce should be reconfigured to drive efficiency and productivity in the Government. Departments with excess staff should be identified and all the hard working men and women should be speedily retooled and re-equipped with new skills and redeployed to other critical areas that will drive the efficiency of the State.

For instance, if we have too many policemen for our needs as a country going forward, but feel that we have very few teachers and nurses, we must quickly offer new skills to those in the police service so that they can be moved from the police service into the other professions. This is critical and can be replicated across all sectors of Government. Funding can easily be justified for this.

With the right policy frame, external financial support can be easily secured for such a programme. This sort of redeployment of resources will be a far more effective, socially and economically sustainable process of reforming the civil service rather than the mass sacking of hard working well educated people.

Bonus payments in my view should be linked to productivity or performance. I accept that it is difficult in the short-term to assess the level of productivity and differentiate the performance of any two civil servants in the current setup.

A more careful analysis would be required. In any case we have never had a productivity bonus in the civil service but 13th cheque, which in many cases is contractual. On that score, I urge the Government to respect the contractual terms of employment of its workers by providing for and speedily paying civil service the 13th cheque.

Priority 4: Consolidating and Sustaining the Momentum now present in Agriculture.

Just like in the initial phases of economic recovery of South Korea, Singapore, Taiwan and the post war Japanese economy, which was anchored on agriculture recovery and land reforms, agriculture should underpin the first two to three years of economic recovery.

The sector provides ample opportunity for rapid investment and recovery, job creation, foreign currency generation and import substitution. Agriculture will also lay a solid foundation for the recovery and sustenance of the agro-industrial and manufacturing sectors, whilst proving the impetus for the growth of the transport and heavy engineering subsectors.

Agriculture recovery will be underpinned by unlocking the capital value of agricultural land. Government must urgently deal with the outstanding issues around the security of tenure for farmers, farm size rationalisation whilst also putting to finality the thorny issue of providing compensation to the previous land occupants in terms of the law.

Government must also as a matter of necessity, strengthen the agricultural marketing systems, so that investment can begin flow into agriculture, whilst investors are assured of reasonable returns on their investments. This leads to my next key imperative.

Priority 5: Aggressive State Owned Enterprise Reforms.

State owned enterprises (SOE) are key economic players provided they play their correct economic roles. SOEs can be leveraged to anchor both near term economic recovery and long term industrial growth.

We therefore need to get insights into Governments strategy for reforming state owned enterprises and how the Government will re engineer the SOEs so that they start contributing to the new economic trajectory of the country.

It is imperative that entities such as the National Railways of Zimbabwe, ZISCO, the Cold Storage Company (CSC) and the Agricultural and Rural Development Authority (ARDA), are immediately and speedily brought back to viability and plans to achieve this should be clearly outlined in the budget this afternoon.

In the near medium term Government must also place priority on investment in an efficient public transport system that will cut down on fuel imports and bring efficiencies in the economy, and invest the resources released into the energy sector to boost electricity generation, improve energy security and to power agriculture and industrial growth.

A bold decision on non-viable State owned enterprises or those that have little bearing on economic recovery going forward should be made to either mothballed or sell them to private investors.

Minister Chinamasa must deliver a jobs budget

Finally perhaps more importantly, Minister Chinamasa budget will only be able to justify his relevancy if all his policy measures are aimed at Creating New and Sustainable Jobs in the Country . . . If he does just that, then he will win the hearts and minds of the long suffering people.

The country is desperate for jobs . . . so the minister should go for a budget that supports the call by the President that we need JOBS JOBS JOBS!!!!

We therefore also want to hear how the Minister will lead the creation of a stable platform for capacitating micro, small and medium enterprises and driving informal sector growth. The MSME Sector has the potential for sustainable job creation and expanding the tax base. We need concrete proposals to be articulated on this front.

If Minister Chinamasa addresses these key areas, prospects for sustained recovery growth will be very good. My expectation is that the budget must be keenly and honestly aware of the downside risks that are now inherent in the economy which I have pointed out.

The Minister must therefore outline his proposals for comprehensive structural reforms which are required to sustain the medium to long term growth of the economy both in terms of a sound macroeconomic policy framework, supported by an appropriate mix of sectoral level micro-policies.

• The writer is an economist. The views expressed in this article are his personal opinions and should in no way be interpreted to represent the views of any organisations that the he is associated or connected with.

Minister Chinamasa

Ishemunyoro Chingwere Business Reporter
The People’s Republic of China yesterday extended a $153 million loan facility to Zimbabwe for the upgrade of the Robert Gabriel Mugabe International Airport, as the two countries continue to deepen their bilateral relationship.

The Asian giant also announced two grants for the construction of the New Parliament Building in Mount Hampden, including the High Performance Computing Centre being constructed at the University of Zimbabwe, taking the total to $213 million.

Cumulatively, all the projects are valued at $213 million. The loan and grants will be administered through the Export-Import Bank of China. Finance and Economic Development Minister Mr Patrick Chinamasa and Chinese Ambassador to Zimbabwe Huang Ping signed the deal in Harare yesterday on behalf of the two Governments.

The $153 million loan, which carries a concessionary 2 percent interest rate, is payable over 20 years. It also has a seven-year grace period. Minister Chinamasa said Government expects the upgrading of the airport to boost tourist arrivals as is the case with the Victoria Falls Airport, which is currently experiencing a spike in arrivals after the completion of the refurbishment exercise.

“The Government of the People’s Republic of China also gave support to the people of Zimbabwe during the liberation struggle,” said Minister Chinamasa.

Government yesterday said it had with immediate effect banned the free importation of fuel by individuals for personal use. Government, two years ago allowed individuals to import up to 2 000 litres of fuel per month for personal use without obtaining a permit from the Zimbabwe Energy Regulatory Authority (ZERA). ZERA said importation of fuel was now strictly reserved for oil companies.

“The Zimbabwe Energy Regulatory Authority (ZERA) hereby notifies the public that Statutory Instrument 171 of 2015 Control of Goods (Petroleum Products Prices (Amendment Number 5) that allowed members of the public to import up to 2 000 litres of fuel per month without a Zera licence has been repealed by Statutory Instrument 122 of 2017,” the energy regulator said.

“After the repeal, the importation of all fuel has to be done in terms of the provisions of the Petroleum Act that stipulate that only companies licensed in terms of Section 29 are authorised to import fuel.”

While ZERA did not state the reason for the ban, it had been noted that the facility has in some cases been abused by individuals mostly staying in border towns who have been importing fuel and reselling it on the local market.

Fuel imported into Zimbabwe mainly comes through haulage trucks or is pumped through the pipeline. Experts in the sector are pushing Government to revise a number of taxes imposed on fuel imports which contribute to making the product more expensive when compared with other countries in the region.

The different taxes add up to nearly half the price of the retail cost of the commodity which is currently ranging between $1,35 to $1,39 diesel. – New Ziana.

The Mbire Rural District Council (RDC) in Mashonaland Central province, will today host a business conference to showcase investment opportunities in the area, mainly in the tourism sector, an official has said. Mbire is home to the Mutota Ruins and Mushumbi Pools among other tourism facilities. The meeting, dubbed the Kanyemba Investment Conference, will seek to expose investment opportunities in Mbire district.

“Mbire district has vast opportunities which can turn around communities if its potential is fully harnessed and therefore it is prudent to hold an investment conference to lure investors. The district has potential in tourism, livestock production, cotton production and ginning, infrastructure development, aqua farming and services,” Mbire RDC chief executive officer Clodiuos Majaya said.

Majaya said the district, which has a population of 90 000 people, had vast investment opportunities and was the shortest gateway linking Zimbabwe to East and Central Africa through Zambia.

Mbire is also home to Kanyemba which is a border town on the banks of the Zambezi River on the extreme north-eastern side of Zimbabwe forming a boundary corner with Zambia and Mozambique.

Although remote, Kanyemba is a focal point for fishing and hunting activities in the nearby Dande Safari Area, and the end-point for long-haul canoe safaris along the Zambezi River starting from Chirundu or Mana Pools. Fishing lodges and camps are found in the area, with boat launching facilities. - New Ziana.

BEIJING. — Rising levels of debt pose “large risks” to China’s economy, according to the International Monetary Fund (IMF). In its first report since 2011 on China’s resilience to shocks and contagion, the IMF said it still had concerns over imbalances in the world’s second-largest economy.

A stress test on China’s banks found four-fifths were vulnerable. Beijing should put less emphasis on growth, beef up regulation, and improve banks’ finances, the IMF said. China’s “big four” banks had adequate capital but “large, medium, and city-commercial banks appear vulnerable”, the IMF said.

The stress tests covered banks holding 171tn yuan ($26tn; £19bn) in total assets, and 27 out of the 33 tested needed to raise more funds, despite already complying with Basel III regulations on bank capitalisation.

The IMF warned in October that China’s dependence on debt was growing at a “dangerous pace”. China has seen robust growth over recent years, driven by debt-financed investment and exports. But in order to maintain high growth rates, and protect jobs and social stability, local governments had extended credit and protected failing companies, the report said. China’s debt has ballooned and is now equivalent to 234 percent of the country’s total output, according to the IMF.

“The apparent primary goals of preventing large falls in local jobs and reaching regional growth targets have conflicted with other policy objectives such as financial stability,” the report said.

The IMF acknowledged that authorities were already taking steps to contain the risks.

‘‘But the Fund said China should adjust its economic strategy further. We recommend the authorities to de-emphasise the GDP growth, “ said Ratna Sahay, deputy director of the IMF’s Monetary and Capital Markets Department. Implicit guarantees to SOEs (state-owned enterprises) need to be removed carefully and gradually,” she said.

The IMF also warned against the rapid development of new financial products, which it said could “very rapidly become large and popular and potentially a systemic risk”. The Fund says better co-ordination among supervisors was essential to contain the “grave” risks posed by innovative products. — bbc.

Minister Gumbo

Walter Mswazie in Chiredzi
THE National Railways of Zimbabwe (NRZ) yesterday commissioned a $10 million rehabilitated railway line in Chiredzi. The investment, a joint venture partnership between Government and the European Union, is expected to go a long way in reducing bulk transport costs, improve efficiency in cargo movement and prevent the damage on national roads.

Speaking during the commissioning of the 35km–long newly rehabilitated Nandi–Mkwasine railway line in Chiredzi, the Minister of Transport and Infrastructural Development Dr Joram Gumbo said the recapitalisation of NRZ will save national road network from damage as transportation of bulk goods will revert back to rail transport system.

“The Nandi-Mkwasine railway line upgrading project is a result if co-operation between the EU and the Government of Zimbabwe. It was consummated under the National Sugar Adaptation Strategy jointly funded by the EU and NRZ. EU contributed $7,5 million while NRZ put $2,5 million into the project. I understand this is part of a comprehensive of support extended to our indigenous cane farmers,” said Dr Gumbo.

Minister Gumbo said the completion of the project demonstrates the success of public private partnerships (PPPs), which Government was promoting.

“This project entailed joint railway infrastructure upgrading and received support from NRZ and the EU through Canelands Trust and Tongaat Hullet Zimbabwe. It is also a fulfilment of Government’s policy on promoting PPPs through the involvement of both public and private players in capacity building and other socio-economic development projects in the country,” he said.

Dr Gumbo said the revival of NRZ would be a cost-cutting measure on the transportation of bulk goods and passengers in the country. Government has secured about $400 million for the recapitalisation of the NRZ from a foreign consortium with a few modalities being left for the finalisation of the deal.

“Rail transport is cheaper to the citizenry as compared to other forms of transport. It will be cheaper to use rail transport in transporting bulk goods and it saves the country’s roads from damage by haulage trucks,” he said.

“The recapitalisation of NRZ will involve the overhauling and renewal of rail infrastructure and equipment. This includes tracks, signalling, wagons, locomotives as well as plant and equipment. We envision the rebirth of a standard, up market and modern rail transportation system that will transform our country.”

NRZ board chairman, Larry Mavhima, said some of the company’s turnaround strategies include reducing the operating costs and improving internal systems.

Minister Chinamasa

Business Reporter
The mis-match between the supply and demand for foreign exchange, has led to the emergence of foreign exchange premiums in the market, Finance and Economic Development Minister Patrick Chinamasa has said. Presenting his 2018 National Budget, Minister Chinamasa said the continued financing of the country’s budget deficit with Treasury Bills is untenable.

“Money creation, through domestic money market instruments which do not match with available foreign currency, only serves to weaken the value of the same instruments, translating into rapid build-up in inflationary pressures, to the detriment of financial and macro-economic stability,” said Minister Chinamasa.

He said the mis-match between the supply and demand for foreign exchange, has also led to the emergence of foreign exchange premiums in the market. He noted that while the panic buying of 22-23 September 2017 was largely driven by speculative tendencies, it was also an indication of the diminished confidence caused by the disparity between electronic money balances, and available foreign exchange.

“In addition, the growth in money supply witnessed in the past few months, emanating from the purchase of agricultural produce by the GMB, and the domestic financing of the Presidential and Command agricultural programmes, coupled with heightened inflation expectations, have a great potential to adversely affect the inflation outlook.”

Minister Chinamasa said the room for domestic financing of the large fiscal deficit has now been fully depleted, and additional monetary financing of the deficit can only lead to inflation and further economic deterioration. In an effort to curb the continued weaknesses in the financial sector, and currency in particular, Minister Chinamasa said the RBZ will have to put in measures that will sterilise the impact on the stock of money supply.

“This calls for the Reserve Bank to put in place policy measures to sterilise the impact on the stock of money balances within the economy.”

In support of the monetary measures, Minister Chinamasa said there is need to adopt Fiscal Anchors that will instil and strengthen fiscal discipline in an effort to improve budget management and enhance co-ordination of fiscal and monetary policies. The fiscal anchors will include halving the Budget deficit for 2018 to below 4 percent of GDP.

This will also include ceiling of Government borrowing from the central bank in line with Section 11(1) of the Reserve Bank Act [Chapter 22:15], which requires that Reserve Bank lending to the State at any time shall not exceed 20 percent of the previous year’s Government revenues.

Government will also reduce the share of employment costs in the budget to initially 70 percent in 2018, 65 percent in 2019, and below 60 percent of total revenue by 2020.

Livingstone Marufu
FAST moving consumer goods manufacturer Olivine Industries will invest $5 million in the final phase of the margarine processing technology and soap plant upgrade.

This development is expected to improve availability of Buttercup margarine and several soap brands. The new margarine plant has already boosted production efficiencies and Olivine aims to ramp up production capacity to about 80 percent from around 47 percent.

Margarine production at Olivine was being hampered by old equipment, some of it dating back to 1947, which saw the firm losing a considerable market share to other brands. Olivine board chair Peter Madara told The Herald Business that the state-of-the-art plants in the final phase would see the company competing at the highest level.

“Olivine has finished implementing the margarine processing technology project and the soap plant project at a cost of about $10 million. The remaining $5 million will be used in the final phase of the projects. Olivine is investing in margarine processing technology in three phases over a period of three years. Phase 1 has seen the upgrading of the margarine plant to meet world class safety and hygiene standards.

Like other local manufacturers, Olivine is battling the obtaining liquidity crunch which has adversely affected importation of raw materials. Some supermarkets, especially in Bulawayo, are already rationing products such as cooking oil to ensure everyone accesses it as production lines have been throttled.

Meanwhile, Mr Madara said the first consignment of the soap making equipment arrived in Beira, Mozambique, en route to Harare. Once the equipment has been fixed, soap production is expected to begin in earnest by year-end.

The new policy comes amid concerns the country had been operating under a competition framework without a guiding policy

Business Reporters
ZIMBABWE’S Competition and Tariff Commission (CTC) has unveiled a National Competitiveness Policy to regulate mergers and acquisitions with a view to thwart anti-competitiveness agreements such as emergence of cartels as part of measures to improve the country’s business environment. The new policy comes amid concerns the country had been operating under a competition framework without a guiding policy.

“The policy came about as a recommendation from a peer review process that was done under the auspice of UNCTAD. The main finding of the peer review process was that Zimbabwe was operating a competition framework without a guiding policy so it recommended for the formulation of a policy guide and the amendment of the existing act so that it conforms to international best practice,” said CTC.

CTC further highlighted that the launch of the policy is targeted at spearheading the amendment of the competition act which is to follow the criteria of international best practices.

Addressing delegates to the commemoration of the world competition day permanent secretary in the Ministry of Industry and Commerce Abigail Shonhiwa who was speaking on behalf of Industry and Commerce Minister Dr Bimha said amendment of the Competition act is at advanced stages.

“Approval by Cabinet of the new Competition Policy in February 2017 and the launch of the policy today paves way for the new amended Competition Act in line with international best practice, which I am reliably advised by the chairman of the commission that it is at advanced stages of drafting. It is my hope that the amendment Act will assist the commission in dealing effectively with matters related to high market constrains facilitated by barriers to entry, abuse of dominant positions and market cartelisation,” she said.

She also highlighted that amendment of the law will complement efforts of enhancing the ease of doing business as it also seeks to reduce the number of days taken by the commission in a merger examination from 90 to 60 days.

“I believe this will expedite the implementation of brownfield investments in the country,” said Mrs Shonhiwa.

Busisa Moyo

Livingstone Marufu Business Reporter
Majority of oil producers have complied with Government’s mandatory fortification programme to enrich oil with vitamins that are vital to the people’s health, Oil Expressers Association of Zimbabwe (OEAZ) president Busisa Moyo said.

Fortification entails adding minute levels of vitamins and minerals to foods during processing to increase micro-nutrient intake in a population and players in the sector say all members will have complied by Government directive by year end.

Some of the foods include cooking oil, sugar, wheat, flour and commercially milled maize meal, of which OEAZ and millers saw fortification as an extra cost. Mr Moyo told The Herald Business that the fortification programme is in full swing with most companies complying with the directive.

“We have now complied with the Government directive of mandatory fortification. Most of our companies have moved to buy the equipment to do the programme. If you take a closer look at the cooking oil of our members, almost all of them are fortified now. As we speak, the majority of the oil producers in the country have already complied with almost all oil producers expected to fully comply within the next few days,” he said.

Wheat, flour and maize meal will be fortified with Vitamin A, B1, B2, B3, B6, B12, folic acid, iron and zinc. Cooking oil is fortified with Vitamin A and D and sugar with Vitamin A. He said the main reasons for delaying the fortification process were nostro account imbalances and the extra cost of importing fortificants from other countries.

Oil producers argue that given the foreign currency shortages that the country is facing, Government should have given them more time to comply due to the foreign payment backlogs that they have had from December 2016. Mr Moyo said most member companies within the association are at an advanced stage of constructing fortification plants to curb future expenses.

He said: “We are afraid that cooking oil prices may go up due to the fact that most constructive instruments will be charged at street rates. Forex to buy fortification plant apparatus will be acquired at an exorbitant rate on the black market.”

Government’s Zimbabwe National Food Fortification Strategy (2014-2018) targets micro-nutrient deficiencies after the 2012 Zimbabwe Micro-Nutrient Survey revealed that nearly 1,5 million adults had anaemia deficits that affected work performance. It also revealed that 19 percent of children between six and 59 months were Vitamin A deficient, and 72 and 31 percent had iron and anaemic deficiencies.

In June this year, Heath and Child Care Minister Dr David Parirenyatwa, said millers and bakers who did not comply with mandatory food fortification — particularly for maize meal, sugar, cooking oil and wheat flour — would have their operating licences cancelled.

The Grain Millers’ Association of Zimbabwe says it risks losing significant business if apostolic sects proceed with a threat not to consume food that undergoes the State-mandated fortification.

They argue that mandatory food fortification would cost about $20 million to import the equipment and machinery for the process and about $7 million monthly for the importation of fortificants. Customs duty still applies making the whole venture expensive ultimately to the consumer.

Minister Chinamasa

Business Reporter
Government has mobilised $266 million to fund the second phase of Command Agriculture, while 1,8 million villagers are expected to benefit from Presidential Input Support Scheme under a $153 million facility, Finance and Economic Development Minister Patrick Chinamasa has said.

This buttresses President Emmerson Mnangagwa’s inaugural address to the nation that the economy under his leadership will be underpinned by a successful agriculture sector. Presenting the 2018 National Budget at Parliament Building yesterday, Minister Chinamasa said the agriculture sector is estimated to grow 15,9 percent this year, on the back of Government co-ordinated interventions in partnership with the private sector.

He said the expanded “Command Agriculture” Programme, to include soya beans and livestock production, is expected to sustain growth of the sector. As such, Minister Chinamasa said Government increased allocations for the sector to 9 percent from 7 percent prior year.

“Building on the success and lessons from the first phase of the special maize and wheat programmes (Command Agriculture), Government has already mobilised the resources for the second Phase of the Programme to the tune of $266,4 million for maize and soya beans production.

“Under the Presidential Input Scheme, Government has doubled input support towards 1,8 million vulnerable households, at a cost of $153 million. Households are being provided with input packs, comprising of 10kg of maize seed or 5kg of sorghum, 50kg of basal and top dressing fertilisers, as well as 10kg of soya bean seed. Already, inputs valued at $70 million have been acquired and are being distributed,” he said.

Minister Chinamasa said under the “Maize Command Programme”, the target is to plant an area of 220 000 hectares, with 60 000 under irrigation, while the remainder will be under dry farming. This is expected to cost $213,5 million, broken down as $59,8 million for irrigated farming and $153,7 million for dry land.

“As at December 1, 2017, over 46 404 farmers had been contracted to plant 219 000 hectares, with 52 330 hectares under irrigation and the remainder under dry land.”

In terms of inputs supply, so far 4 109 tonnes of seed, 29 489 tonnes basal dressing of fertiliser, 1 229 tonnes top dressing and 8 640 tonnes lime and 2 541 500 litres of fuel were delivered to formers countrywide.

“In view of the importance of soya beans as input into agro-processing of cooking oils, as well as stock feeds, $52,9 million has been set aside to support soya beans production under the programme, targeting 60 000 hectares. Already, 22 276 farmers have registered, offering 65 233 hectares as at November 28, 2017.”

Minister Chinamasa said the revival of cotton production stands to resuscitate the cotton to clothing value chain, in the process improving livelihoods of rural cotton farmers in areas with poor rainfall. He said inputs support for cotton went up to $60 million from about US$40 million in the previous season with a projected output of 130 000 tonnes of seed cotton. He said Government is in the process of extending the ‘Command Programme’ to include livestock and fisheries.

“Already, the fishing industry is receiving fingerlings for breeding purposes. On livestock, the programme will focus on the dairy revitalisation programme, aquaculture, and livestock disease control to enhance the quality and size of the national herd, in order to guarantee self-sufficiency and secure export markets.

“Budget interventions will, therefore, reinforce livestock and poultry pest control, as well as disease surveillance, to reduce incidences of Foot and Mouth, Anthrax, Avian Flu and Newcastle diseases outbreaks.”

He said $9,4 million, inclusive of $5,5 million income from dipping fees had been set aside for livestock support. He said 42 250 tonnes of maize seed and 2 750 tonnes instead of 6 000 tonnes for soya beans were available for Command Agriculture programme, while 120 000 tonnes of fertiliser were available for disposal to the market. He said the fertiliser industry has capacity to produce an additional 160 000 tonnes between November and January next year.

Kudzanai Sharara Assistant Business Editor
Government will extend amnesty measures on outstanding taxes that were accrued prior to December 1, 2017, Finance and Economic Development Minister Patrick Chinamasa has said.

Presenting his 2018 National Budget in Parliament yesterday, Minister Chinamasa proposed an amnesty for interest and penalties on outstanding taxes accrued prior to December 1, 2017 for taxpayers who come forward and settle their obligations within the period ending June 30, 2018.

He said the amnesty comes as Government recognises that the economic challenges experienced over the past decade have resulted in a number of companies failing to meet their tax obligations. Government will also consider a moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation as turnaround efforts by some of the companies were affected by the adverse macroeconomic environment, exacerbated by significantly high tax arrears to ZIMRA.

“In support of initiatives to restructure the balance sheets of these companies, Government will consider, where warranted, a moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation,” said Minister Chinamasa.

Government, through the Reserve Bank of Zimbabwe, created the Zimbabwe Asset Management Corporation as a special purpose vehicle to house banking sector non-performing loans.

Minister Chinamasa also proposed to ease the tax burden on tobacco farmers by exempting them from the requirement to withhold a 10 percent tax on sales at the Tobacco Auction Floors after farmers had accumulated significant tax arrears.

“Whereas a significant number of taxpayers have been complying with the requirement to withhold tax from non-compliant businesses, this has not been the case with Tobacco Auction Floors on sales by farmers.

“In order to ease the tax burden on tobacco farmers that are experiencing viability challenges, the 2018 Budget proposes to exempt registered buyers of tobacco from the requirement to withhold the 10 percent tax with effect from 1 January 2018.”

Minister Chinamasa also made changes to the VAT on output tax charged by suppliers of goods and services: “Following realisation that some registered operators were under-declaring the extent and value of their supplies to large corporates, thereby suppressing the output tax charged and potential VAT remittances to ZIMRA.

“Whereas the withholding tax has assisted in minimising loss of revenue, it has, however, resulted in cashflow challenges for some companies that would be required to claim from ZIMRA refunds that are not timeously processed. In order to minimise cashflow challenges on VAT registered operators, the 2018 Budget proposes to review the VAT withholding rate from 10 percent to five percent of the value of taxable supplies, with effect from January 1, 2018,” he said.

Changes were also made to duty on commercial tyres as the tyre manufacturing industry continues to experience viability challenges.

“In the absence of a local producer, commercial vehicle operators are importing tyres at a relatively high cost, hence are in some instances deferring the replacement of worn tyres, risking the lives of road users. It is, therefore, proposed to ring-fence importation of 100 000 tyres at a lower duty rate of 15 percent for the first quarter of 2018.”

Livingstone Marufu Business Reporter
Non-performing loans (NPLs) dropped to 8,63 percent this year from 20,5 percent in 2015, raising expectation the financial services sector is becoming more stable.

Although the NPLs have declined to single-digit figures, they remain above the 2016 year – end target of 5 percent set by the Reserve Bank of Zimbabwe (RBZ). There are fears that while cutting back on lending might help maintain stability in the financial services sector, it will negatively impact on local economic activities as this affect loans uptake due to stringent measures. Most companies are struggling to access finance for working capital requirements, while the credit has been expensive where available.

While presenting his 2018 budget, Finance and Economic Planning Minister Patrick Chinamasa said: “The quality of the banking sector loan book has gradually improved over the years to 8,63 percent as at end of September 2017 from a peak ratio of non-performing loans (NPLs) to 20,45 percent in September 2015.

“Banks have continued to strengthen their credit risk management systems, to complement the reduction of NPLs arising from the disposal of their toxic assets to ZAMCO.”

This will contribute to more robust credit risk management practices, which will help promote the safety and soundness of the financial system. Experts believe that the creation of a credit registry system will reduce curdling loans even further.

Creditinfo, a Czech Republic credit checker, was in April 2016 awarded the tender to set up the RBZ’s credit bureau system at a cost of $1,8 million. Currently, banks use the Financial Clearing Bureau (FCB), which only keeps a register of defaulters and judgments.

The system is expected to improve the performance of the financial sector and stimulate economic development by making lending and borrowing easier, faster and ultimately cheaper. The availability of timely and accurate information on borrowers’ debt profiles and repayment history enables banks to make informed lending decisions.

The Reserve Bank of Zimbabwe has made significant progress in enhancing the credit infrastructure through the establishment of a Credit Registry and Collateral Registry. This initiative is improving the quality of loans in the banking sector, through removal of information asymmetry and broadening collateral required by banks.

RBZ will continue to intensify consumer awareness programmes and introduce value added products that will enrich stakeholder experience, including convenient access by consumers to their credit reports via mobile platforms. The Zimbabwe Asset Management Company (Zamco), an arm of the RBZ, has taken over close to $1 billion worth of toxic debt off banks’ balance sheets since it was established in 2014.

In the South African financial services sector, NPLs are forecasted at 4 percent for 2017, while the ratio for Zambia and Botswana stands at 6 percent and 4 percent, respectively.