News Update as @ 1530 hours, Wednesday 16 July 2014Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

By Tawanda Musarurwa

Telecel has taken a step further to drive financial inclusion in the country by becoming the first local mobile tele-coms firm to launch a debit card.

The debit card - Telecash Gold Card - is linked to a subscriber's Telecash Wallet and allows Telecash subscribers to make transactions on all ZimSwitch POS terminals and also enables with-

drawals from every ZimSwitch ATM facility.

Telecel's debit card is one example of the transformation of consumer bank-ing in which mobile operators are build-ing networks and technologies capable of rivaling traditional banks for control of the payment system. Telecel mobile financial services (MFS) director Nkosi-nathi Ncube said the card offers a direct integration between mobile money and

retailing services.

"Through mobile money we want to improve the transacting of the pub-lic and to uplift those who have never really had banking experience before, not just to give them a mobile wallet and stop there but to also improve their lifestyles and have more convenience," said Ncube.

He added that the debit card will also extend the reach of telecash to outlying areas without telecash agents. "One of the issues why we are launching the telecash gold card is that it broadens our distribution network where now you can be serviced by anyone who has got a point of sale terminal which is on ZimSwitch." The telecash gold card integration is the second inte-gration phase between telecash and ZimSwitch. When it was launched tel-

ecash integrated to ZimSwitch for the ZIPIT functionality where funds can be transferred instantly from any tele-cash wallet to any ZIPIT certified bank account (Wallet-to-Bank) or from any ZIPIT certified bank account to any tel-ecash wallet (Bank-to-Wallet).

The new development means that banked individuals can now send funds instantly to any telecash account from any of the existing delivery channels already available in Zimbabwe includ-ing POS, ATM, Mobile Banking and Internet.

Ncube said Telecash partnered primar-ily with CBZ to introduce the service, with other financial service firms being included through the ZimSwitch plat-form. He indicated a long term objec-tive to integrate the card with interna-tional payment options such as VISA

Telecel drives Zim financial inclusion with new debit card

2 NEWS

and Mastercard. Meanwhile, Telecel says it is pushing the Telecash product into Diaspora markets and that process had reached an "advanced stage." "We

do have plans for going into the Dias-pora market. We have already started talking to a number of money transfer agents in the major corridors, that is,

South Africa, the United Kingdom, Aus-tralia, Botswana, USA, and other areas and we anticipate to be opening up those corridors in the next few weeks,"

said

Telecel says it has so far registered 3 600 agents on its books. •

By Lynn Murahwa

Government says there is need for Zimbabwe's use of capital markets as over-reliance on banking sector has typically led to the collapse of most financial systems.

Speaking at the Zimbabwe Stock Exchange (ZSE) Parliamentary work-shop this morning Deputy Minister of Finance and Economic Development Samuel Undenge said an over reliance on the banking system for long term funding can cause the collapse of the economy because the banking sector has ever been able to satisfy the need for capital.

"Over reliance on the banking sec-tor for long term funding can there-fore result in damaging mismatches between short banking assets and long term lending which has often led to the collapse of most financial sys-tems in a number of countries.

"Besides, the banking sector has not always been able to adequately meet the need for capital especially long term capital," said Undenge.

He said that the development of capital markets is crucial for long term growth prospects of the nation because capi-tal markets affect the condition of the economy and have become a large part of financial services.

The ZSE is currently in the process of setting up an Automated Trading Sys-tem whcih should become fully opera-tional in this second half.

The ATS is expected to enhance the performance of the local capital mar-kets.

"Capital market development is a crit-ical factor for long term growth pros-pects of our country. Capital markets not only reflect the general condition of the economy but also smoothen

and accelerate the process of eco-nomic growth.

"Capital markets have become a sig-nificant component of the financial services as they offer a long term resource mobilisation platform for business communities for economic developmental purposes," he said.

Securities and Exchange Commis-sion of Zimbabwe CEO Tafadzwa Chi-namo said the economic challenges

being faced are clear but it seems it is becoming more difficult to come up with solutions for these problems.

"Economic challenges are evident but we seem to be running out of ideas on how to overcome them.

Only Zimbabweans can and should become masters of their own destiny, we believe a vibrant and active capi-tal market is part of the solution," he said. •

Capital markets are more reliable than the banking sector: Govt

BH24

4 NEWS

Zimbabwean companies not taking up excess powerBy Rumbidzayi Zinyuke

Zesa Holdings is exporting all the energy that is being generated at night because Zimbabwean com-panies are not taking up the excess electricity to run their operations more conveniently, an official said yesterday.

Giving oral evidence to the Parliamen-tary Portfolio Committee on Mines and Energy, Zesa chief executive Josh Chifamba said power generated during the night cannot be stored for use at another time so it is being sold because there are no takers on the local market.

“We have seen that customers are not keen to do off peak work. When we ask companies why they do not work off peak, they say they have

no management to supervise work at night, farmers also say it is a chal-lenge to irrigate at night.

But big mines run their compressors and other machinery during the night so they take up some of the electric-ity,” he said. Chifamba said although

Zesa had introduced ‘time of use tar-iffs’ which made it cheaper for com-panies to use electricity at night when demand is low, there was still resist-ance from the consumers.

“You need to have the right pricing mechanisms so essentially when

demand is low we can sell electricity at a lower price. But we wait for the customers to take up that tariff,” he added.

He said Zesa has had meetings with sector bodies telling them about the advantage of working off peak.

Parliamentarians also heard that the power utility has reactivated the gey-ser control system which switches of geysers during peak hours to save electricity.

Chifamba said they have harvested 42 megawatts from the exercise and had succeeded in switching demand from the peak time and placing it elsewhere. •

BH24

6 NEWS

By Sifelani Tsiko

Africa needs to promote the under-standing of biotechnology to ensure broad public awareness, dialogue and debate on current and future poten-tial agricultural applications, biosafety experts say.

African Centre for Gene Technologies (ACGT) director Dr John Becker told participants at a Assuring Agricultural and Food Safety of Genetically Mod-ified Organisms (GMOs) in Southern Africa (GMASSURE) workshop held in South Africa recently that greater awareness of modern biotechnologies was critical in boosting Africa’s food output.

“It is only through greater public awareness of modern biotechnolo-gies that African can increase agricul-tural productivity and ensure access to safe food,” he said. “Once people are aware, benefits of modern bio-technology should be balanced with potential health, environmental and socio-economic impacts.” Scientific institutions, government regulators and other stakeholders from across Africa met at the workshop organ-ized by GMASSURE to explore ways

of raising awareness on modern bio-technologies as well as ways of devel-oping effective safety and regulatory systems for biotechnology products.

Dr Jonathan Mufandaedza, head of the National Biotechnology Authority of Zimbabwe said concern was raised at the workshop over the lack the expertise to support decision mak-ing on the relevance and applicability of new biotechnologies, particularly genetically modified (GM) agricultural crops that contribute to increased agricultural productivity and ensure access to safe food. “African biosafety regulators were challenged to com-municate biotech issues more effec-tively to all people and to separate biotechnology and GM technology issues,” he said. Dr Mufandaedza said the workshop also noted that there was lack of knowledge among

farmers, businesses and the general public on how to absorb and use new biotechnological solutions to increase agricultural productivity and lower vulnerability to plant diseases and pests.

“Africa needs support to strengthen the capacity of scientists, govern-ment regulators and policy makers in biosafety and biotechnology,” he said.

“Zimbabwe could benefit from the capacity building activities (of GMAS-SURE and its partners) to promote the understanding of agricultural biotechnologies among farmers and consumers. “We need to involve the industrial sector because they are part and parcel of the whole value chain of biotech products and ser-vices.”

African biosafety experts also said knowledge of agricultural value chain stakeholders (including scien-tists, regulators and policy makers) in biosafety assessment and risk governance was critical to facilitate informed decision making on the use of biotech products in agriculture to promote sustainable agriculture and food security on the continent. •

African governments urged to promote biotech issues

AdM-DI156506-

BH24

BH24 Reporter

Government should ensure that the process of formalising the informal sector is not beneficial to one side only but also makes the SMEs com-fortable to work in a formal environ-ment.

Tashmia Ismail, a PhD fellow with GIBS, South Africa told delegates at a CEO network seminar that SMEs need to see the benefits of formalis-ing through improved services from Government.

“You put people on the radar when you ask them to formalise. But is the taxman doing his part to make sure these informal people get value for their money? We keep talking about formalising without talking about what’s in it for these informal busi-nesses,” she said.

Government has been on a drive to tap into the $7,4 billion being gener-ated by the informal sector annually through formalising their operations. However, formalising means SMEs will be burdened with extra taxes by

while they are already struggling to pay the 25 percent presumptive tax they already have to pay to Zimra.

Ismail said SMEs will only formalise if they know that they will get reliable services like constant electricity and water supply as well as good roads.

Speaking at the same event, Minis-try of Small to Medium Enterprises Secretary Evelyn Ndlovu said govern-ment was working on making sure SMEs benefit from formalising their

operations.

She also said the fastest way to for-malise SMEs is to link them to large corporate through their linkages pro-gramme.

“More than 85 percent of all SME activities is informal so if you don’t link your businesses with these small enterprises, your market will continue to shrink as they take up more and more customers,” she said.

She said her ministry was working with big companies such as Econet, Cairns and Ok Zimbabwe to ensure that most SMEs are financially included in the economy.

“We are already linking Cairns with small holder farmers who will supply their fresh produce to them to elim-inate the need to import. So at the end of the day both the company and the small scale farmers benefit from such a move,” she said. •

8 NEWS

Informal sector needs good service from Govt to formalise

BH24

Low activity marked today's trades as the equities market went down marginally by 0.02 percent to record a third day of losses since the begin-ning of the week.

The industrial index slipped 0.04

points to close at 186.08 points.

Fidelity Life lost a cent to close at 8.50 cents, while Zimplow eased 0.50 cents to settle at 8 cents and Mash retreated 0.20 cents to trade at 2.30 cents.

On the upside, ABC Holdings was the only counter in the positive territory as it gained 5 cents to 70 cents after reports that Altas Mara Co-Nvest Ltd said negotiations to acquire 50,1 per-cent controlling stake in ABC's pan African banking BancABC are still on-going.

The mining index shed 0.85 points (or 1.49 percent) to close at 56.12 points on the back of Hwange's loss. The coal miner slipped 0.70 cents to trade at 4.80 cents.

Turnover was slightly lower at $730k from yesterday's $752K.

Bindura, Falgold and Riozim main-tained previous trading levels. ― BH24 Reporter •

10 ZSE REVIEW

Equities market in third consecutive losses

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BH24

Zimbabwe has always had very strong political and economic relations with countries of the South.

This is now the perfect time, perhaps more than ever, to harness those rela-tionships for the economic benefit of the country.

Why now?

The major emerging economies of India, China, Russia, South Africa and Brazil have reached advanced stages of establishing their own financial insti-tution.

The five nations - or BRICS as they are commonly known - have taken sig-nificant steps to break away from the dominance of Western financial institu-tions, and therefore control.

Yesterday the BRICS leaders signed the long-awaited document to estab-lish the $100 billion BRICS Develop-ment Bank and a reserve currency pool worth over another $100 billion.

Although one of the main roles of the new financial institution will be to finance infrastructure and development

projects in BRICS countries, it will also become one of the major multilateral development finance institutions in the world, alongside the World Bank and the International Monetary Fund.

In this respect and in view of its origins the BRICS Development Bank strives for a more multi-polar world, at least financially.

This should be a new global financier that understands the situations and contexts of developing countries. For countries such as Zimbabwe, this

should be a welcome development and a relief from the Bretton Woods Institu-tions (the World Bank and IMF)'s pre-scriptive approach.

These two Western institutions have thus far been enjoying a degree of monopoly in global development financing services, at the expense of countries in the developing countries.

But, a competitive international devel-opment banking configuration - which the new BRICS Development Bank seeks to frame - will also benefit

the lesser emerging economies and developing nations in a number of ways. First, it will put a check on the Bretton Woods Institutions' damaging prescriptive policies (Zimbabwe and many other countries' experience of the Economic Structural Adjustment Programme (ESAP) in the early 1990s testifies to this).

Second, it could mean greater access to development facilities at cheaper rates for developing countries such as Zimbabwe. Third, as afore-men-tioned, this will be a global financier that understands the issues that face developing countries.

For instance, the fact that the $100 bil-lion fund will focus on infrastructure is a indication of this understanding.

Africa, for example needs to overcome massive infrastructural deficit in the continent, with studies showing that the continent requires about $75 bil-lion in infrastructure investment yearly to address this deficit. Isn't it a bonus that Zimbabwe has historically good ties with most - if not all - of the BRICS nations? •

12 BH24 COMMENT

BRICS Development Bank can be a boon for Zimbabwe

BH24

South Africa's rand weakened against the dollar on Wednesday as a strike by 220,000 workers in the metals sec-tor entered its third week and looked unlikely to be resolved soon.

The rand slipped 0.2 percent from its close in New York to 10.7300 at 0555 GMT.

The local unit made modest gains against the U.S. currency in the previ-ous session buoyed by strong demand for government bonds, before retreat-ing towards 10.75, a recent resistance level.

"Technically the rand is still within the longer term bull trend. However yes-

terday's move back below 10.6500 should delay the expected move to 10.96-11.00," Standard Bank dealer Warrick Butler said in market note.

On Tuesday employers in the metals and engineering sector withdrew their offer of a 10 percent annual wage

increase after striking union NUMSA maintained its demand for increases of between 12 and 15 percent.

The strike has disrupted the supply of components to automobile makers, pushing Toyota, GM and Ford to halt production at their assembly plants.

In fixed income, government bonds were broadly flat with the paper due in 2015 and the paper maturing in 2026 both adding 1.5 basis points to yields of 6.67 percent and 8.27 percent respec-tively. ― Reuters •

14 REGIONAL NEWS

Rand slips as hopes for end to metals strike fade

BH24

16 DIARY OF EVENTS

The black arrow indicate level of load shedding across the country.

POWER GENERATION STATSGen Station

14 July 2014

Energy

(Megawatts)

Hwange 421 MW

Kariba 750 MW

Harare 45 MW

Munyati 29 MW

Bulawayo 0 MW

Imports 0 MW

Total 1245 MW

16 July - Mobile Markets & Telecoms Forum Con-ference & Exhibition, Place: Holiday Inn (Harare), Time: 8:00am

23 -25 July - Mine Entra, Place: Zimbabwe Inter-national Exhibition Centre, Bulawayo

24 July - OK Zimbabwe Thirteenth Annual Gen-

eral Meeting Place: OKMart Functions Room, First Floor, OKMart, 30 Chiremba Road, Hillside, Time: 15:00 hours.

1 August - Sixteenth Annual General Meeting of the members of Econet Wireless Zimbabwe Limited, Place: Econet Park, 2 Old Mutare Road, Msasa, Harare, Time; 10.00am

THE BH24 DIARY

BH24

18 ZSE

ZSEMOvERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

ABC 7.69% 70.00 HWANGE -12.72% 4.80

FIDELITY -10.52% 8.50

MASHONALAND -8.00% 2.30

ZIMPLOW -5.88% 8.00

IndicesINDEx PREvIOUS TODAY MOvE CHANGE

INDUSTRIAL 186.12 186.08 -0.04 POINTS -0.02%

MINING 56.97 56.12 -0.85 POINTS -1.49%

Stocks Exchange

BH24

20 AFRICA STOCkS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire 246.37 +2.18 +0.89% 07Mar

Egypt 7,949.60 -75.68 -0.94% 06Mar

Ghana 2,352.45 +6.43 +0.27% 27June

Kenya 4,885.09 +51.07 +1.06% 30June

Malawi 12,662.47 +0.00 +0.00% 07Mar

Mauritius 2,074.51 -3.51 -0.17% 07Mar

Morocco 9,544.10 +21.01 +0.22% 07Mar

Nigeria 42,482.49 +714.93 +1.71% 30June

Rwanda 131.27 +0.00 +0.00% 24Oct

Tanzania 2,018.97 +25.40 +1.27% 07Mar

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,503.90 +0.81 +0.05% 10Sep

Zambia 4,242.74 +14.95 +0.35% 10April

Zimbabwe 186.56 -0.52 -0.28% 30June

African stock round up Commodity Prices

Name Price

Crude Oil 1,300.91 -0.21%

Spot Gold USD/oz 1,292.63 -0.26%

Spot Silver USD/oz 19.38 -0.46%

Spot Platinum USD/oz 1,421.25 -0.33%

Spot Palladium USD/oz 798.50 -0.64%

LME Copper USD/t 6,770 -0.18%

LME Aluminium USD/t 1,780 -1.17%

LME Nickel USD/t 18,230 -1.73%

LME Lead USD/t 2,095 -1.41%

Quote of the day — "The secreT of business is To know someThing ThaT nobody else knows." - arisToTleonansis

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BH24

Leaders of the five BRICS nations agreed on the structure of a $50 billion development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were also granted posts or units in the new bank.

The leaders also formalized the crea-tion of a $100 billion currency exchange reserve, which member states can tap in case of balance of payment crises, according to a statement issued at a summit in Fortaleza, Brazil.

Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the Inter-national Monetary Fund and the World Bank, where BRICS countries have been seeking more say.

The measures coincide with a slowing of economic growth in the five countries to about 5.4 percent this year from 10.7 percent in 2007, according to econo-mists surveyed by Bloomberg.

“The BRICS are gaining political weight and demonstrating their role in the international arena,” Brazilian President

Dilma Rousseff said after a signing cer-emony.

Until the eve of the summit, India and South Africa had vied with China to

host the headquarters of the bank, dubbed the New Development Bank. The administration of Indian Prime Min-ister Narendra Modi gave in after it was reminded that his country’s previous

administration had agreed to Shanghai as the bank’s headquarter, according to an Indian official, who requested not to be named because the talks were not public. ― Bloomberg •

22 INTERNATIONAL NEWS

BRICS agree on $50 billion bank with something for everyone

By Leonid Bershidsky

The new international financial institu-tions that Brazil, Russia, India, China and South Africa are creating this week at their summit meeting in Brazil would have made little sense in the world of Western triumph Francis Fukuyama described in his 1989 article, "The End of History?" That world, however, didn't materialize.

In this one, the BRICS nations' rebellion against Western-run pillars of the global financial system is more than just a political gesture: It is a threat and a bar-gaining tool. The World Bank has a sub-scribed capital of $223.2 billion, paid in or payable by 188 countries. The U.S. is the biggest shareholder with 16 percent. China is the third biggest, with 5.76 per-cent, which makes its share of the World Bank's capital $12.86 billion. So the $10 billion it agreed to put into the BRICS Development Bank won't be much smaller. Russia, India, Brazil and South Africa, all contributing equally, will pay in more money to the BRICS bank than they do to the World Bank. The contribu-tions that nations make to the Interna-tional Monetary Fund -- which has $315

billion in immediately available resources and more than $1 trillion it can get under certain conditions -- are also determined by the relative sizes of their economies. The U.S., again, is the biggest contrib-utor. Russia's IMF quota is $9.19 billion -- roughly half the $18 billion it will pro-vide to the BRICS nations' last-resort pool, the $100 billion Contingent Reserve Arrangement. China is contributing $41 billion to the reserve, almost three times its IMF quota.

These new institutions should not be easily dismissed: They are a big deal for the contributing countries. They will not rival the World Bank and the IMF in size, yet they don't need to: For now, at least, they will be far less global in terms of their responsibilities.

The reasons for building up alternatives to the IMF and the World Bank are in part political. Ukraine, for example, is now the IMF's fourth-largest debtor. Funding for the government, doing its best to leave the Russian sphere of influence, would not have been on President Vladimir Putin's priority list. Indeed, Russia appears to be financing a rebellion against the government in Kiev, and Putin must

gnash his teeth when he thinks about the further IMF disbursements -- more than $13 billion -- that were pushed through for Ukraine by its Western allies. The IMF is promising to reform itself, giving more power to the large developing nations: By January, China should have the third biggest quota, and Brazil, India and Russia should all be in the top 10. Putin, however, thinks changes to the system are being "unreasonably delayed." The U.S. Congress is in no rush to approve the changes, and the year-end deadline might be moved again. Besides, even after the reform, the West will have con-siderable power in deciding how to allo-cate funds. Although the IMF says its cri-teria are purely economic, Putin, for one, knows that isn't so. He remembers how Russia begged for a bailout in 1998, just before defaulting, receiving one at a time the country did not meet any of the pol-icy criteria that the international lenders of last resort usually set out.

The IMF's other big debtors are not ones the five big developing nations care about: Why would they give $23.5 billion to Greece, $22.9 billion to Portugal and $19.4 billion to Ireland if these nations' share in their trade balances are negli-

gible? By helping to bankroll bailouts on the periphery of the European Union, the BRICS countries propped up a global financial system that doesn't necessarily benefit them. The BRICS paid up, but they could easily exist in a world without a euro area. They resent the de facto power the U.S. and EU have over their money.

The willingness of the BRICS to commit more resources to their new institutions than the existing ones suggests they are serious about changing the system. The U.S. and its allies are left guessing whether the BRICS countries might eventually stop funding the IMF and the World Bank. That will not happen in the near future, in part because China, India and Brazil are among the countries with the biggest exposure to World Bank funding, and in part for political reasons: No one, except perhaps Putin, wants to split the world into hostile camps. The threat to abandon the post-World War II financial system unless it changes quickly is real, however, and the West will have to accommodate the big emerging nations if it wants to hold on to a few shreds of Fukuyama's wishful thinking. ― Bloombergview •

23 ANALYSIS

The End of the World Bank?