News Update as @ 1530 hours, Wednesday 6 August 2014Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

By Rumbidzayi Zinyuke

The problem of Zimbabwe’s ballooning trade imbalance is being exacerbated by businessmen who are importing goods that can be manufactured locally thus rendering the industry inefficient, Finance Minister Patrick Chinamsa has said.

Speaking at the Buy Zimbabwe Public Procurement conference, Minister Chi-namasa said Zimbabweans are import-ing goods such as bottled water, soap, sugar, cooking oil, cell phones and vehicle parts among other things.

“Our import bill is unsustainably high, with a current account deficit for the first half of the year at US$1,7 billion.

The nature of the imports is worrying, we are importing consumptive products that account for at least 70 percent of our import bill. When you are always eating,

eating, eating and not saving for your house or to buy a bike, that is 'import mania'. You are crazy, it’s always diffi-cult to counteract craziness on a national scale.

It means you are not thinking about tomorrow, about your children because you are eating everything.

“Why are we destroying our country and then look to other countries for imports, let alone blame lack of capacity to do things that we have capacity to do?

I am reluctant to intervene legislatively all the time. Generally, I always want to take considered steps.

We should never get to a point where we have to legislate to stop imports of water when we have Tingamira, Schweppes and a host of water bottling companies,” he said.

He said as long Zimbabwe remains a net exporter of raw materials, the country will always be poor as it transfers its skills and wealth to other countries.

Minister Chinamasa also said Govern-

ment would prioritise investment in infra-structure, especially power generation.

“And our priority is power. As long as we continue to have load shedding it becomes difficult to attract foreign direct investment and to keep you in business if you have interrupted supply.

But we must know that it is not an over-night thing. At the end of the day we have to make sure we have enough power supply for our industries,” he said.

The country currently has an energy deficit averaging 600 megawatts (MW) due to obsolete machinery and limited investment in the energy sector.

However, expansion works which com-menced this year at Kariba South Power Station are expected to be completed in 2017, adding 300MW to the national grid. •

Zimbabweans suffer from 'import mania': Chinamasa

Minister Chinamasa

By Funny Hudzerema

The arrival of low-cost airline, FastJet, is set to boost Zimbabwe’s tourism as well

as trade with Tanzania where the major-ity of local traders travel to buy goods for resale, an official said yesterday.

Speaking soon after the low cost airliner landed its maiden flight at the Harare International Airport yesterday, Trans-port, Communication and Infrastructure Development minister Obert Mpofu said FastJet’s entry demonstrates Govern-ment’s commitment to improving the aviation industry.

“The Government of Zimbabwe is delighted that fast jet is expanding its international route network to include Harare and that in doing so it is bringing its low cost reliable and safe service to the people of Zimbabwe. This demonstrates full competence to the Zimbabwean air-port as a safe destination. We expect the airline to have a positive impact to the country,” he said.

He said the relaxation of visa and less documentation for travelling will also

stimulate business through trade and tourism between Zimbabwe and Tan-zania.

The airline will service the route three times weekly with prices starting from $50 plus Government taxes one way, to more than $200 for late bookers.

Speaking at the same event, FastJet chief executive Ed Winter said affordable air travel is a key to the growth of econo-mies across Africa.

“It is expensive and time consuming to build roads and connect cities, inconven-ient for people to travel over land and if there is existing airlines flying any par-ticular route, they still exclude the major-ity of a country’s citizens due to high cost of those flights,” he said.

He said the airline will increase frequency of flights as demand increases.

Previously, traders and car dealers wish-ing to travel to Dar es Salaam had to spend at least three days travelling the approximately 2200km by road or they had to fly via Nairobi or Johannesburg.

Winter said the flights will stimulate both business and tourism for Tanzania and Zimbabwe. •

2 NEWS

Fastjet to boost tourism and trade: Minister

AdM-DI156506-

BH24

4 NEWS

Protect cooking oil manufactures, Govt told

Zim tech entrepreneur tells Obama sanctions are hurting startups

By Lynn Murahwa

Zimbabwe is importing more than $220 million worth of cooking oil and this is hurting local manufacturers who have to compete with the imports, an official said.

Speaking at the Buy Zimbabwe public procurement conference, Olivine Indus-tries chief executive Jonas Mushangari

said the country is importing more cook-ing oil than is necessary. He said Govern-ment should further reduce the amount of cooking oil being imported into the country and protect the local producers. “This is too much oil and Government should come in and support the local cooking oil producers.

The army has over 60 000 people and where are they getting their cooking

oil? They alone can consume 400 000 litres of oil a month,” he said. The rev-eletaion comes as Zimbabwe’s import bill is ballooning with the current account deficit for the first halfof 2014 standing at $1,7 billion. At least 70 percent of the imported products are consuma-bles. Mushangari added that the current challenges that are rocking the industry could be addressed with investment secured locally instead of relying on for-

eign direct investment should not be the only channel for the resuscitation of local industries.

“We cannot rely on foreign investment, we should have funding coming from within our country as well,” he said. Oli-vine has been struggling to attract an investor to help resuscitate its flounder-ing operations. •

In a rare one-on-one stage interview he held with US president Barack Obama, Zimbabwean technology entrepreneur, Takunda Chingonzo, told Obama that the supposedly targeted sanctions against some political leaders in Zimbabwe were actually hurting ordinary people.

Chingonzo said technology entrepre-neurs looking to get technology or fund-ing from US-based companies often hit a brick wall because of the sanctions.

“In our work, we got to a point where we needed to import a bit of technology from the United States. And so we were engaging in conversation with these US

based businesses, and the response we got time and time again was that unfor-tunately we cannot do business with you because you are from Zimbabwe. I was shocked. This doesn’t make sense,” explained Chingonzo to Obama.

In response, Obama said that the US is facing the challenge of balancing helping the people of Zimbabwe with what he termed "repeated violation of basic dem-ocratic practices and human rights" in the country. Obama agreed with Chingonzo that what was was needed were initia-tives that enhance as opposed to retard the progress of the Zimbabwean people.

The US president then suggested that projects be explored by Zimbabwean entrepreneurs together with the US to ensure Zimbabweans are not affected. He was adamant, however, that the US is set on sending the strong message about good governance in Zimbabwe.

Chingonzo is in the US on the Young Afri-can Leaders programme. The founder of wireless internet startup, Saisai, had the one-on-one with Obama on stage yes-terday at the US-Africa Leaders Summit in the US.

Whether anything comes out of his promise or not is ofcourse something

else. He is after all a politician and he had to have a response. It is, however, great that Chingonzo was able to artic-ulate something that some doubt – that in supposedly targeting a couple of pol-iticians with sanctions, the US actually doesn’t hurt politicians but ordinary peo-ple that just want to do business.

Chingonzo and Obama also discussed issues of net neutrality as well as access to funding for small business in Africa especially as at the summit investment pledges by US companies seemed to target large established companies and governments. ― Techzim •

BH24

The equities market has maintained its positive run for a third consecutive day this week rallied by gains in most heavyweight counters.

The industrial index gained 1.86 points to close at 192.32 points after BAT and Old Mutual went up 5 cents each to trade at 1330 cents and 270 cents respectively.

Innscor added 4 cents to close at 80 cents while Radar doubled to 4 cents and Masimba rose by 1.15 cents to trade at 3.50 cents.

On the downside, NMB lost 2 cents to close at 4 cents, Meikles retreated 0.50 cents to 18 cents and Colcom went down 0.41 cents to close trade at 26 cents. The mining index shed a

further 6.75 points to close at 83.27 points as Bindura was 0.90 cents lower trading at 7 cents.

RioZim was unchanged at 25 cents while Falgold added 1.01 cents to close at 4.01 cents and Hwange had a firm bid at 6 cents. ― BH24 Reporter •

6 ZSE REVIEW

Heavyweights rally equities market

BH24

Can you think of a reason why the Buy Zimbabwe campaign has not lived up to expectations after years in exist-ence?

Maybe it’s because Zimbabweans have been caught up in this frenzy to buy stuff from across the border at whatever cost.

They are pulling in different direc-tions with one side saying we should buy local stuff and the other saying imports are cheaper, thus rendering the campaign ineffective.

The Buy Zimbabwe Campaign has been ongoing for almost three years now and despite its intention to mar-ket local goods and services, industry is still suffering.

We still have low capacity utilisation and our import bill keeps growing. But the same campaign has been effective in many countries like China, India and closer to home, South Africa. So the question to ask is: where are we getting it wrong?

The problem is that we have become "import maniacs" as the Finance Min-ister Patrick Chinamasa rightly put it.

According to the minister, Zimbabwe-ans have been caught up in the craze to import even ridiculous stuff and this has practically killed our industry.

“We are importing consumptive products that account for at least 70 percent of our import bill. When you are always eating and eating and not saving to buy a house, or to buy a bike, that is 'import mania'. You are crazy, and it’s always difficult to coun-teract craziness on a national scale. It means you are not thinking about tomorrow, or next month or next year. It means you are not thinking about your children because you are eating everything,” he said.

And he couldn’t have said it better. Despite all the problems we have been facing, we have been making

them worse all by ourselves. f we can import trivial goods such as water and sweets, then we are definitely crazy. And we will not see the importance of buying local products.

What is lacking on the part of Govern-ment, however, is the necessary con-trol of goods that are coming in.

The fact that Government is aware that people are bringing in water and sugar and other goods we now pro-duce in sufficient quantities means that is where the problem is. People think they are allowed to do that.

We cannot say people are smug-gling these things but they are going through the border posts (and maybe these people even paying duty for them) and we only realise it when the

accounts fail to balance. Government should immediately ban import of such products. Even those that come in with individuals who do not declare them at the border because they are classified as groceries.

Of what significance to the economy is it to bring mineral water from South Africa? If that businessman is a Zim-babwean, then he needs a basic edu-cation on patriotism.

People need to be educated on the effects of importing such goods; on themselves and on the economy. Maybe it might take long to work but it will get there eventually. We might end up getting in right in the end.

And maybe Buy Zimbabwe will not be a futile campaign. •

8 BH24 COMMENT

Why the Buy Zimbabwe Campaign is not working

BH24

The investment banking business of Nedbank, which has a R20-billion expo-sure to South Africa’s renewable-en-ergy market, expects to significantly increase funding limits in the South African energy space to create capacity for involvement in the upcoming coal and gas baseload programmes.

Nedbank Capital head of infrastructure, energy and telecommunications Mike Peo tells Engineering News Online that the success of the Renewable Energy Independent Power Producer Procure-ment Programme (REIPPPP) has raised confidence among lenders and that Nedbank is among those institutions

keen to see the model replicated across other sectors.

The bank has been involved as a lender or lead arranger in about a third of the 65 renewables projects that have been approved by the Department of Energy (DoE) and the National Treasury over the past three years. It is also gearing up to participate in the fourth bid win-dow, which is set to close on August 18.

Peo says the interest being shown by large institutional investors in the renewable-energy programme has made it easier for the banks to recycle capital and, in so doing, release finan-

cial resources for additional projects.

“We now have the institutional invest-ment market waking up to infrastruc-ture, including the [State-owned] Pub-lic Investment Corporation. I believe that, if we are able to procure public infrastructure with the same consist-ency and certainty that we have seen under REIPPPP, we will be able to start tapping into a multitrillion-rand funding base that’s almost entirely untapped,” Peo enthuses.

However, the dearth of bankable pub-lic–private partnership (PPP) projects remains a major constraint. It is a far larger bottleneck than the capacity of lenders to participate in PPPs, or the availability of finance.

“South African banks are historically underexposed to long-term infrastruc-ture assets,” Peo avers, noting that this asset class has always been dwarfed, for instance, by the various banks’ mortgage-bond books.

“So, there is still much more capacity than there have been projects coming to market.”

For this reason, Peo also believes that the Presidential Infrastructure Coor-dinating Commission (PICC) should begin focusing on the preparation of bankable projects around the 18 Stra-tegic Infrastructure Projects (Sips), which range from new transport cor-ridors and power stations through to accelerated school- and hospital-build-ing programmes.

During this process, the PICC should identify which subcomponents of the Sips could be set aside for PPPs and which should be developed by govern-ment.

Once such a determination has been made, transparent programmes, sim-ilar to the REIPPPP, could be set up to ensure that projects are implemented in a way that balances affordability with investor returns.

“Success breeds success,” Peo avers. “The principles applied to REIPPPP of having proper advisers upfront, struc-turing the programme well and stick-ing, by and large, to schedules, should be deployed in other infrastructure sec-tors.” – Mining Weekly •

10 REGIONAL NEWS

Nedbank Capital set to raise energy exposure to cater for baseload

BH24

12 DIARY OF EVENTS

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

POWER GENERATION STATSGen Station

5 August 2014

Energy

(Megawatts)

Hwange 498 MW

Kariba 720 MW

Harare 38 MW

Munyati 25 MW

Bulawayo 26 MW

Imports 0 MW

Total 1307 MW

Seed Co Limited 19th Annual General Meet-ing Venue: Seed Co Administration Block at Sta-pleford Date: Wednesday 20 August Time: 12:00 hours

National Tyre Services Limited 52nd Annual General Meeting Venue : Boardroom, Stand 4608, Corner Cripps/Seke Roads, Granite-side, Harare Date: 20 August 2014 Time: 14:30 hours

THE BH24 DIARY

BH24

14 ZSE

ZSEMOvERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

RADAR 100.00 4.00 NMBZ -33.33 4.00

MASIMBA 48.94 3.50 BNC -11.39 7.00

FALGOLD 33.67 4.01 MEIKLES -2.70 18.00

RTG 23.08 1.60 COLCOM -1.55 26.00

CFI 19.05 2.50

DAWN 15.00 1.15

HUNYANI 13.96 4.00

INNSCOR 5.26 80.00

EDGARS 4.00 13.00

TURNALL 3.75 4.15

IndicesINDEx PREvIOUS TODAY MOvE CHANGE

INDUSTRIAL 184.95 183.76 -1.19 POINTS -0.64%

MINING 61.13 66.53 +5.40 POINTS +8.83%

Stocks Exchange

15 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 2,301.05 +0.70 +0.03% 01Aug

Kenya 4,943.28 +37.19 +0.76% 01Aug

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 41,801.51 -132.89 -0.32% 04Aug

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 189.52 +0.21 +0.11% 04Aug

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 — "Develop success from failures. Dis-couragement anD failure are two of the sureststepping stones to suc-cess." - Dale carnegie

Globalshareholder.com

German factory orders (GRIORTMM) dropped by the most in more than 2 1/2 years in a sign that geopolitical ten-sion with Russia is leaving its mark on Europe’s largest economy.

Orders, adjusted for seasonal swings and inflation, slid 3.2 percent in June from May, when they fell a revised 1.6 percent, the Economy Ministry in Berlin said today. Economists forecast an increase of 0.9 percent, according to the median of 30 estimates in a Bloomberg News survey. The decline is the steepest since September 2011.

The European Union agreed last week on its widest-ranging sanctions yet over Russia’s backing of rebels in east-ern Ukraine and Germany is feeling the pain, with the Bundesbank citing geopolitical concern as contributing to a probable stagnation of the economy in the second quarter. Russia counts Germany as its biggest trading part-ner in Europe. “Sentiment in Germany deteriorated, companies think twice before investing, and the engine of the economy is stuttering a bit,” said Hol-ger Sandte, chief European analyst at Nordea Markets in Copenhagen. “As

long as the situation in Ukraine doesn’t escalate the impact should be limited. We expect to see growth again in the third quarter.”

German Vice Chancellor Sigmar Gabriel this week blocked a deal for Rheinmetall AG to build a military train-ing center east of Moscow in light of the sanctions. The contract has a value of more than 100 million euros ($134

million) and the Dusseldorf-based company had planned to build more facilities in Russia.

ECB Meeting Export orders dropped 4.1 percent in June from the previous month, including a 10.4 percent slump in the euro area, and domestic orders fell 1.9 percent, today’s report showed. Orders for investment goods slid 6.4 percent and those for consumer goods

were down 0.4 percent. Basic-goods orders climbed 1.6 percent. Total orders dropped 4.3 percent from a year ago.

“Geopolitical developments and risks more than anything led to a clear reti-cence in orders,” the Economy Ministry said. “It is therefore to be expected that industry develops rather moderately in coming months.” ― Bloomberg •

16 INTERNATIONAL NEWS

Geopolitical risks weigh on Germany’s factory orders

Forget, for a moment, all the problems Zimbabwe’s economy faces; forget the unemployment rate, and never mind the ever-widening gap between the rich and poor.

Out of this economy in a country where various currencies are accepted as legal tender, a new breed of entrepre-neurs is steadily emerging.

With domestic banks lacking the capacity to lend money for productive industries, many Zimbabweans have taken up tobacco farming to stave off the spectre of unemployment. It has become an impressive opportunity to earn the cash necessary for other investments. Moses Chibaya is a uni-versity graduate with a degree in Eng-lish and Communications.

His dream of becoming a journalist has taken a hit as Zimbabwe’s media industry contracts. Newspapers have had to cut down on staff as advertis-ing revenue declines, and Chibaya’s freelance work hardly pays enough to sustain him and his parents.

Last year he altered his course, starting a tobacco farming venture in his rural area of Karoi, about 200 kilometres

north of Harare. For most small-holder tobacco farmers like Chibaya, one hectare of a good crop is worth about $10,000 dollars.

Chibaya is expecting to make no less than $30,000 this season, an amount he says will cover the pressing obli-gations that his journalism earnings barely stretched to meet. “Tobacco has transformed my life in a big way,” he says. “I am now able to look after my family.”

What started as a detour for Chibaya looks set to grow into a diversified business. This year he plans to grow potatoes and do piggery and poultry after auctioning his tobacco in Febru-ary. Having endured years of economic decline, most

Zimbabweans have become cri-sis-hardened. But thanks to the golden leaf, fortunes for the general populace have started to change. In the early 2000s, Zimbabwe was the second-largest exporter of flue-cured tobacco – a high-quality, lucrative crop.

Recent steady gains by black Zimba-bwean tobacco farmers, in the wake

17 FEATuRE

Black tobacco farmers flourish in Zim

18 FEATuRE

of the land reform programme, have raised production of the crop closer to pre-reform levels and may help sal-vage the country’s struggling export sector.

In 2013, tobacco earned Zimbabwe almost $770 million – some 10 percent of the country’s GDP.

The trend will continue: this year, the country is expected to produce 171 million kilogrammes of tobacco, signifi-cantly up from last year’s 166.5 million kilogrammes.

Zimbabwe’s Tobacco Industry and Mar-keting Board says most communal and smallholder farmers have now moved into tobacco farming.

About 16,755 of the country’s 40,000 overall registered tobacco producers are farmers in these categories.

Tendai Chikodzi lost his job when a local clothing and textile company ran into financial problems and cut back its workforce. He spent two years trying to eke out a living from piece jobs (part-time jobs), but could hardly make ends meet.

He tells of difficult times struggling to

pay school fees and hospital bills for his son, who was often ill. Chikodzi has planted five hectares with tobacco in Zimbabwe’s Mashonaland East province and is expecting to make as much as $60,000 this year. Economists in Zimbabwe say that ventures like Chikodzi’s and Chibaya’s have begun to reduce the country’s un- employment rate, although official statistics make this claim difficult to verify.

“Zimbabwe’s economy has increasingly become mostly informal and we are seeing more and more people venture into agriculture, mostly tobacco, in a bid to raise money for themselves.

"The Government has failed to provide formal jobs, the private sector is strug-gling for viability, and most compa-nies are scaling back,” said economist Johannes Kwangwari.

According to Rudo Boka, the chief executive officer of Boka Tobacco Auc-tion Floors, one of the biggest tobacco auctioning companies in Zimbabwe, the crop has registered “tremendous recovery” in the past four years.

“Tobacco pays cash on the spot. We have seen the opportunity to utilise land; to get a value from it and still be

able to participate in other sectors. It’s a 10-month crop.

After selling the tobacco, farmers do other things such as chicken- and pig-rearing,” Boka said. Her company handles 15 percent of Zimbabwe’s tobacco crop. In 2013, it handled $92-million worth of tobacco. Expecta-tions are high that a good season could result in a significant increase on this figure.

“People should embrace tobacco farm-ing as a business. Your inputs will determine the output,” she said.

Despite struggling for liquidity, some Zimbabwean banks have started get-ting in on the action.

George Guvamatanga, the president of Bankers Association of Zimbabwe, said the number of individuals borrowing to finance tobacco growing has increased.

Most of the tobacco auctioning com-panies and cigarette manufacturers in Zimbabwe have contract-farming arrangements with farmers.

These are proving to be lucrative, and even those growers not on contract arrangements are looking to expand

into the area as a source of additional revenue.

“There are a number of people now in tobacco who have an interest else-where,” said Chibaya, adding that it is a seasonal crop, a cash crop, and you are paid soon after auctioning your harvest. While the growth of the tobacco sector is a relief for many Zim-babweans, some experts believe the boom could be better and that issues of resources, inputs, knowledge and machinery are holding farmers back from their full potential.

After years of dire unemployment and bad economic news, the rise of tobacco farming, unglamorous though it may be, could spark ambitions that go well beyond the humble crop.

At a time when few other institutions can, tobacco sales provide entrepre-neurs like Chibaya with crucial start- up capital for business ventures – agri-cultural or otherwise – that could see them become millionaires.

If there is one good thing about starting from a low base it is the vast potential that exists for growth. ― vENTURES AFRICA •