Zim processes Is Hwange 7 disciplines

$450m in tax Colliery on of peak

refunds recovery path? performance
>>> Page 2 >>> Page 3 >>> Page 4

BUSINESSWEEKLY
ESTABLISHED 2017 SETTING THE ZIMBABWE BUSINESS AGENDA 8 — 14 MAY 2020

Zim gets US$300m

ZSE Top Performer to 6 May 2020
Top company: Turnall
Sector: Manufacturer
MD: Roseline Chisveto
Share Price: 21.5 cents
Weekly gain: 53.57%
YTD Gain: 95.5%

for Covid-19 recovery

Market Cap: $106 million

Golden Sibanda

G OVERNMENT has secured US$300 mil-

lion from an external financial institution
(name withheld) to supplement its $18
billion Covid-19 stimulus and economic recovery
funding package.
Highly placed Treasury sources told Business
Weekly that the Covid-19 response facility was “not
plucked off thin air”, but a realistic figure for funding
that is already available.
The external loan facility, will constitute almost 50
percent of the resources mobilised to give the econ-
omy fresh head start after the outbreak of Covid-19,
which has killed over 266 000 and infected more
than 3,9 million worldwide.
Turnall MD Roseline Chisveto This dispels widespread speculation that the Gov-
ernment was going to print money for coronavirus
response. Details about interest and tenure of the
funding under the facility, will follow in due course.
“What should be made clear is that there will not
be creation of any new money. This is funding from
various sources (including a hard currency loan
from a regional player) that is already available,” the Covid-19: How economists think governments should respond
Ministry of Finance and Economic Development

. . . as nation bets on banks in fight

source said.
Business Weekly is reliably informed that while
the package is based on funding that is already
confirmed, it remains a working figure and will
likely be higher once its details are finalised by a
technical committee.
Sources of the Covid-19 package comprise at least Business Writer about as the total value of Zimbabwe’s economic est rates to between 10 and 15 percent from the

US$300 million regional loan facility, nearly $2,5 bil-
lion from the Reserve Bank of Zimbabwe productive
sector facility, $1 billion from statutory reserves to be
returned to banks for on-lending, $4,5 billion from
State guarantees to companies and individuals and
around $2,5 billion budget supplement.
“So, if you add the numbers you will see that the
◆ To Page 2
G
overnment’s coronavirus stimulus pack- stimulus package, but part of that figure relies previous 15 to 20 percent and also increasing
age relies heavily on banks playing ball on banks providing affordable facilities to their the Medium-Term Bank Accommodation (MBA)
if efforts to combat the crippling eco- customers. facility by $500 million to bring it to $3 billion.
nomic effects of the Covid-19 pandemic and Relaxation of some credit granting rules will In addition, Treasury has indicted that there
the subsequent lockdown are to be successful, also have to be considered. will be a reduction in statutory reserve require-
Business Weekly has observed. The RBZ has also gone on an all-out drive to ments in order to release at least $2 billion of
An amount of $18 billion has been bandied get more credit into the system by cutting inter- • To Page 2

Landela eyes Metallon gold mines

Martin Kadzere

L
ANDELA Mining Venture is on the verge of
taking over Metallon Corporation’s Shamva
Gold Mine as it moves towards gaining a
greater control of Zimbabwe’s mining assets.
Ownership of Landela has largely remained a
secret, but business tycoon Kudakwashe Tagwirei,
who has vast business interests in fuel and energy
sectors, is linked to the investment vehicle.
The impending deal comes at a time Government
has just announced closed gold mines will be des-
ignated as Special Economic Zones.
Tagwirei has consistently denied any links to
Landela.
The latest development comes after mid-tier
Canadian miner B2Gold dismissed reports it was
considering buying Metallon’s Shamva and Mazowe,
saying it was not — for now — interested in any
mergers or acquisitions.
Earlier reports had indicated B2Gold would bid
for the two mines if it was to be exempted from a
law that require producers to sell gold to Fidelity
Printers and Refiners, an arm of the Reserve Bank
of Zimbabwe.
Landela chief executive David Brown told Busi-
ness Weekly in a telephone interview on Wednesday
that he was hoping the deal would be concluded “in
the short term”.
“We are working with rescue business practi-
tioners to take over Shamva Gold Mine and we
are hopeful that this will be concluded in the short
term,” said Brown, former chief executive of Impala
Platinum Mine, a significant shareholder in Zim-
babwe Platinum Mines.
“We would want to bring back the mine and create
employment.”
Metallon Corporation owns four gold mines in
Zimbabwe namely Mazowe and Shamva, which are
currently under administration. The other mines
are How and Redwing.
Mazowe and Shamva mines were placed under
the administration after the High Court granted an
application by Associated Mines Workers’ Union
of Zimbabwe for a reconstruction order. Reggie
Saruchera of Grant Thornton was appointed the
interim corporate rescue administrator of the two
mines while Dr Cecil Madondo of Tudor Consul-
tancy was also appointed the assistant administrator.
Sources told Business Weekly that apart from
Shamva gold mine, Landela was angling to buy all
other mines owned by Metallon.
“While negotiations for Shamva Mine seem to
be at an advanced stage, Landela is also interested
in all other Metallon mines,” said one source who
requested not to be named for professional reasons.
However, Brown has maintained that “at this stage
its only Shamva gold mine”.
Of late, Landela has been buying mining various
assets in platinum, nickel and chrome sectors.
The company is now a significant shareholder in
the Zimbabwe Stock Exchange listed Bindura Nickel
Corporation, Great Dyke Investments, which in
building a platinum mine expected to become the
country’s largest ahead of Zimplats, Mimosa and
Unki as well as ZimAlloys, which owns smelters
and significant chrome reserves.
Earlier, a local consortium, Vara Mining made
a bid for Mazowe and Shamva gold mine and had
indicated plans to invest as US$120 million over three
ytears towards expansion. Vara Mining comprises a
team of local entrepreneurs and business executives
◆ To Page 2

Editorial or +263 29 2888871 herbert.zharare@zimpapers.co.zw subscriptions@zimpapers.co.zw Advertising +263 24 2795771 (Harare) @businessweeklyzim Weekly Business Zim
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2 8 — 14 May 2020
ZimCoke takeover of Zisco assets frozen
Martin Kadzere
T
Senior Business Writer
he takeover of state-owned Zimbabwe Iron
and Steel Company (Zisco) assets by ZimCoke,
a Mauritius registered firm fronted by former
Bulawayo South legislator Eddie Cross, is hanging in
the balance after authorities proposed the disputed
deal to be renegotiated.
The deal entails ZimCoke assuming US$225 mil-
lion Zisco debt owed to German bank KfW GBMH
for the assets.
The assets include 328 hectares of land worth
US$16 million, plant and machinery valued at US$168
million, railway wagons and related infrastructure
(US$4 million), 48 percent shareholding in ZimChem
(US$23 million) and waste products plant (US$16
million). What makes the deal even more contro-
versial, is that the Zimbabwean inter-ministerial
taskforce, which was engaged in negotiations with
R&F, a Chinese company which had signed a US$1
Zimra
processes
$450m in
tax refunds
Enacy Mapakame
Business Writer
T
he Zimbabwe Revenue Authority
(ZIMRA) has processed $450 million in
tax refunds to companies as part of
efforts to bring business continuity during
the Covid-19 crisis, a senior official had said.
The Covid-19 pandemic has caused severe
strain on businesses and economies in gen-
eral as companies downsized operations in
implementation of national lockdowns and
social distancing.
Covid-19 induced challenges are expected
to continue in the near to long-term period
resulting in reduced revenue collections, at a
time the country needs financial resources to
fight the pandemic and economic development
projects. In response to the challenges being
faced, Zimra has come up with initiatives to
improve business such as speedy payment of
tax refunds.
“As a result of a continuous review of the
operational efficiency of all Declaration Pro-
cessing Centres, bulk Bills of Entry were intro-
duced to expedite clearance of the essential
commodity especially the importation and
movement of grain.
“The Authority is playing its part in business
continuity by expediting Tax Refunds due to
clients. A total of $450,9 million refunds were
processed in Q1 2020,” said chairman Josephine
Matambo in a statement accompanying Zimra
report for the first quarter to March 31, 2020.
Due to the pandemic, businesses have also
made calls to Government for tax relief meas-
ures in order to give them breathing space at
a time they are constrained.
One of the proposals was the speedy pro-
cessing of tax refund due to clients.
The tax authority has acknowledged the
gravity of the Covid-19 pandemic to businesses
and its adverse effects on revenue collections.
“The global economy is facing an imminent
recession due to the Covid-19 pandemic whose
impact on business will affect revenue collec-
tions.
“Some of the negative effects of the pan-
demic will be felt immediately, while others
will be long term.
“Zimra operations have been directly affected
by the pandemic that has forced the Authority
to operate with skeletal staff.
“Statutory Instrument (SI) 83 of 2020, which
effected the necessary national lockdown that
directed all businesses to shut down, except
for a few essential industries such as those that
manufacture and provide foodstuffs , will indis-
putably affect revenue collection.
“Overall, the Covid-19 pandemic is expected
to severely affect business operations and con-
sumption, resulting in reduced revenues at a
time the Government is in dire need of funding
to fight the pandemic and provide the neces-
sary social support nets for its citizens,” she said.
In order to mitigate the impact of the lock-
down on the much-needed domestic resources,
the Authority has put in place a number of
online platforms to enable taxpayers to con-
tinue making their payments and meeting their
fiscal obligations during the national lockdown.
According to the Q1 report, Zimra upgraded
its e-service platforms which has enabled 78
percent of taxpayers obtain their 2020 tax clear-
ance certificates.
Additionally, the tax authority is also devel-
oping business rules on electronic clearances
of private importers to facilitate trade, improve
efficiency and minimise contact of clients with
officers at the ports of entry, in the wake of the
Covid-19 pandemic.
During the quarter under review, revenue
collected grew 613 percent $13,88 billion com-
pared to same period in the prior year, which
also surpassed targets by 10 percent.
All revenue heads registered growth in nom-
inal terms. The growth was necessitated by
exchange rate based price adjustments which
resulted most tax payers realising higher sales
revenue therefore increasing their tax liabilities.
Major revenue contributors were individuals
and excise duty that accounted for 17 percent
and 16 percent respectively while companies
and VAT on local sales contributed 14 percent
each. VAT on imports came in at 11 percent.
billion investment agreement with Government in
2017, was not aware of the ZimCoke deal, only to
realise it during its fifth visit to China.
R&F pulled out of the deal on December 19 last
year.
“There seems to be a consensus within Govern-
ment that the deal is really bad and should be rene-
gotiated. Processes, which were disregarded when the
deal was signed, including conducting a proper due
diligence and valuation of assets need to be re-looked.
“In its current form, it will be injustice for Zimba-
bweans to allow transfer of assets to ZimCoke,” said
a source who requested not to be identified because
the matter is private.
ZimCoke is already seeking tax clearance certifi-
cates to facilitate the transfer of the assets.
ZimCoke lawyers — Titan Law has written to
Zisco requesting a representative for interviews
at the Zimbabwe Revenue Authority, a procedure
in transferring the assets. Finance and Economic
Landela eyes Metallon gold mines
◆◆ ◆ From Page B1
with extensive knowledge, experience and expertise
in mining and related services.
The consortium had already secured offshore funding
with the objective to sweat both assets to optimal returns
premised on expansion at both Mazowe and Shamva
to achieve economies of scale mainly by developing
The RBZ projects cyber risk for the local bank sector to be extreme due to technological transformation and the increased usage of e-banking platforms
that criminals are continuously targeting. Interestingly this week most banks have been warning clients to be on guard against cyber crime/risk
Zim gets US$300m for Covid-19 recovery
◆◆ From Page 1
funding, including US$300 million loan, gives you
more than $18 billion and the full details will be
known once the technical committee working on
it is done,” the Treasury source revealed.
This comes as economists have applauded Govern-
ment over the economic stimulus, recovery and social
protection relief package as critical intervention that
will avert total collapse of one of many economies
across the world, battered by the Covid-19 pandemic.
Notably too, this comes after the Reserve Bank of
Zimbabwe recently announced its first round of Covid-
19 response measures, which entailed major cuts of key
interest rate benchmarks to lower cost of borrowing to
drive recovery and production.
Others were, however, skeptical although acknowl-
edging the domestic resource funded intervention was
the only way to ease the impact of Covid-19 as “we
now know all pleas for external (IMF) financing were
not positive”.
Zimbabwe was recently excluded from global
countries that benefited from a half a billion US dol-
lars International Monetary Fund (IMF) Covid-19 debt
relief package, which the Fund said was meant to assist
towards debt service relief of countries that owed it.
The IMF said its Covid-19 funding package was for
debt relief to countries that owed the Bretton Woods
institution and had debt obligations falling due in the
next six months.
President Mnangagwa on May 1, 2020, announced an
$18 billion Covid-19 stimulus and recovery package to
support agriculture, working capital needs, mining, the
. . . as nation bets on banks in fight
◆ From Page 1
liquidity in order to increase the capacity of banks
to lend.
In its latest financial stability report released last
week, the RBZ said in order to minimise the adverse
impact of vulnerabilities that might arise in house-
holds, corporations, and the financial sector due to
the shutdown, various policy measures have been
promulgated by central banks, supervisors and fiscal
authorities.
“The measures include monetary policy easing
and relaxation of some supervisory rules to enable
banks to avail requisite liquidity and also to absorb
emerging non performing loans, and cash stimulus
to individuals, concessionary loans to SMEs and tax
incentives to corporations.”
The regulatory concessions will, hopefully, lead to
an infusion of the much needed credit, to provide
further impetus to the resuscitation of production
in the economy.
Dovetailing with the RBZ’s regulatory concessions
are loan guarantee schemes for industry and the
tourism sector worth $3 billion that banks can use
to give out special Covid-19 loans.
Treasury set up a working capital fund for industry
and is providing Government guarantees of up to
$2,5 billion for bank loans accessed by industry for
working capital purposes.
Business News
Development Ministry had already agreed to settle
the capital gains tax liability of $10 million arising
from assets transfer despite the deal being disputed.
Industry and Commerce Minister Dr Sekai Nzenza
told Business Weekly that she met her Finance and
Economic Development counterpart, Professor
Mthuli Ncube over the matter and “agreed on way
forward”.
However, she was not at liberty to discuss the mat-
ter citing confidentiality and protocol issues. Efforts
to get a comment from Cross proved fruitless by the
time of going to press as his phone was not reachable.
Prof Ncube could not be reached for a comment
this week. Zisco acting chairman Dr Gift Mugano,
maintains the deal should be revoked and the position
remains the same.
Zisco stopped operations in 2008 due to lack of
capital to recapitalise and poor management. With
its furnaces having capacity to produce up to one
million tonnes annually, the company was among
near surface resources to augment underground oper-
ations and introducing industry best practices across
the value chain.
Metallon used to the country’s largest gold miner,
accounting for more that 50 percent of output.
The company, founded in 2002 when Mzi Khumalo,
one of most recognizable businessman in South Africa
SMEs industry, tourism sector, the arts sector, liquidity
release from statutory reserves, the health sector, broad
relief measures and food grants.
In what should allay fears of money printing Finance
and Economic Development Minister Mthuli Ncube,
said the funds would be mobilised from various sources.
Notably though, the Reserve Bank of Zimbabwe has
pledged to maintain a stranglehold on inflationary broad
money supply growth to keep inflation in check, and
is aiming for a December 2020 annual inflation target
of 50 percent or below.
Economists across the world believe Covid-19, a viral
disease first detected in Wuhan, China, will sink the
global economy into its first recession post 2008 and
plunge the world wide economies to depths last seen
pre-World War Two.
Covid-19 could likely cause yet another economic
decline in Zimbabwe this year, which may throw off
rails the economy from initial growth forecast of 3,5
percent in 2020 after drought and cyclones caused an
estimated economic 6,5 contraction last year.
Economist Persistence Gwanyanya, said the mul-
ti-billion-dollar stimulus and recovery kitty would help
ameliorate the full negative impact likely to be caused
by Covid-19, whose full effect is yet to be ascertained.
“The stimulus package, whilst it appears inadequate
to meet economy’s full requirements, will go a long way
on averting total collapse of the economy.
“Covid-19 comes at a time when our economy is
experiencing serious challenges and with high risk of
falling deeper into the hole.
“Like in all other countries in the world, rolling out
For the tourism sector, a total $500 million in Gov-
ernment guarantees has been put in place for sector
players to access working capital loans from banks.
Together with the $2 billion expected to be
released from statutory reserves, banks are expected
to extend loans that are equivalent to 40 percent of
what they loaned out last year.
Inflation aside, this is a lot of credit even before you
include funds that are going to be injected as equity
into the Women’s Bank and the Empowerment Bank.
The only problem ,however, is that it seems there
is no binding agreement between authorities and
banks.
On low interest rates, the RBZ is only “encourag-
ing” banks that access the MBA Facility to on-lend at
interest rates not exceeding 20 percent.
They are not being asked to toe the line.
What has also not been clarified is the criteria
banks are going to use to avail the loans.
Are they going to rely on their usual credit risk
management practices, and how many troubled
firms would qualify if they do that.
In 2019, the loan to deposit ratio for banks was
just 36,6 percent, and according to the RBZ, this
was largely as a result of cautious lending approach
adopted by some banking institutions.
While operational details of the Government
guarantee facility are still to be finalised, there is no
Zimbabwe’s major foreign currency earners.
The controversial transaction has been marred
with acquisitions and counter acquisitions, with the
Zisco board claiming the deal is “a typical case of
asset stripping”.
Cross blames the board for sabotage. According
to Cross, the agreement was signed in July 2017, but
due to delays caused by the valuation of assets, and
that the company had to deal with two different Gov-
ernments, the deal was re-activated in July last year.
Last year-after its appointment — the Zisco board
directed the management to analyse the ZimCoke
deal and its impact on the resuscitation of company.
A decision was then taken to terminate the deal on
the basis that it made the revival of Zisco impossible
since some of its major components would become
inaccessible. The board cited gross violation of Public
Entities and Corporate Governance Act since the
previous board led by Nyasha Makuvise, was not
involved.
acquired Lomnin’s Zimbabwean gold mining assets for
US$16 million.
The mines owe tens of millions of dollars to some of its
service creditors including the Zimbabwe Electricity and
Distribution Company, which last year took Metallon
to courts over $9,3 million debt.
economic stimuli, it is the only advisable thing at the
moment.
“We now need to be positive about Covid-19, as it
presents us with an opportunity to take the reindustri-
alisation imperative seriously.
“We can no longer take this issue lightly as the world
is going through serious structural change, which points
towards home bias post Covid-19,” Gwanyanya said.
Zimbabwe has to take the reindustrialisation drive
seriously and the rescue package is only the precursor
of the stimulus packages that will be required going
forward, he said.
“This is necessary to avert deeper crisis, which will
manifest itself through mainly output and job losses,
which have serious ramifications in the broader econ-
omy.
“However, the package should be managed judi-
ciously to minimise the effects of unintended conse-
quences of the same. Government should deal decisively
with any form of corrupt tendencies around the facility.
“Measures should be taken to ensure that the facility
is applied towards production rather than consumption
otherwise it will stoke inflation” Gwanyanya added.
However, economic advisory firm, Deat Capital man-
aging Nicky Moyo, while commending intervention
by Government, warned the facility may have limited
impact due to high inflation.
“Remember this looks like a supplementary budget
more to catch up with original national budget on
November 2019. Inflation is over 600 percent and
exchange rate has collapsed to 1: 50 against the US dol-
lar,” Mr Moyo opined.
guarantee they will be a significant deviation from
the normal credit granting criteria.
In reality, while the RBZ and Government’s inter-
ventions have significantly increased funds available
for lending, it is up to each bank to balance the new
headroom to lend.
What also has to be considered is that while Treas-
ury and the central bank have increased funds availa-
ble for lending, banks themselves were already going
to face a tidal wave of Covid-19-related defaults.
Everything from mortgages to small business
loans could rapidly transform into toxic assets and
Government will almost certainly have to intervene
in yet another round of stimulus/bailout somewhere
down the road.
It is however encouraging that non-performing
loans (NPLs) are currently very low judging by the
2019 levels.
According to the RBZ, the quality of the banking
sector loan portfolio in 2019 was much improved,
as reflected by the decline in the NPLs to total loans,
from 3,95 percent as at 30 June 2019 to 1,75 percent
as at 31 December 2019.
In its financial stability report to June 2019, the
central bank said its credit risk stress tests for local
banks provided evidence of resilience of the bank-
ing sector.
This resilience will now be put to the test.
BusinessWeekly
In fact, the former board chairman signed exon-
eration letters, confirming they were not involved
in the deal. The board also claims that valuations of
assets were not properly done.
The Cabinet was advised about the deal that in its
original form would impinge the revival of Zisco as
an integrated steelworks.
A decision was made to review the deal but the
board held on to its earlier position after it was real-
ised that the debt, which the ZimCoke purported
to have taken over was still in the books of Zisco.
In a letter to the Ministry of Industry and Com-
merce in February this year, Finance and Economic
Development secretary George Guvamatanga con-
firmed there was no communication yet from KfW
agreeing to take over the US$225 million debt.
But he indicated Attorney General and the Public
Debt Management Office is facilitating agreement.
Recently, Cross claimed the agreement had been
finalised with KfW.
Russian firm
negotiates
agreement
extension
R
Business Writer
ussian company and global energy giant,
Uranium One, has requested an extension
of the period for an exclusivity agreement it
signed last year with Zimbabwe lithium developer,
Prospect Resources, which the Australia-listed
miner has granted.
Zimbabwe has proven that it has abundant lith-
ium resources.
As an important mineral resource, lithium mine
is attracting more and more investors, which will
change the development prospects of Zimbabwe’s
mining industry.
Government has listed lithium as one of the
key minerals expected to drive its grand vision
of building a US$12 billion mining industry, from
about $3,6 billion currently, by 2023 and trans-
forming the country to upper middle-income
economy by 2030.
This comes as the world has forged a war against
internal combustion engines, which cause serious
environmental pollution through emissions, hence
the push towards ozone friendly electric vehicles.
Prospect said the latest agreement provides
for extension of the 90-day exclusivity period on
similar terms of the memorandum of Understand-
ing (MoU) Agreement, signed late last year, until
August this year.
“The reason for the extension is the logistical
challenges facing all companies during the Covid-
19 lockdown, Prospect said in a recent statement.
The MOU and discussions are more fully
described in the company’s announcement of 12
December 2019.
The agreement provided for Uranium One to
complete a due diligence on Prospect and its Arca-
dia Lithium Mine near Harare.
Subject to satisfactory due diligence, Uranium
One would negotiate equity investment terms in
Prospect or its subsidiaries; and off-take terms for
at least 51 percent of the company’s future lithium
production.
Uranium One is a global energy company and
one of the world’s largest uranium producers, with
a diverse portfolio of assets worldwide, including
in Kazakhstan, the United States and Tanzania.
Zimbabwe is the world’s fifth largest producer of
lithium, with only a single producing mine, Bikita
Minerals, but could move higher the rankings once
four other new developing projects, including
Arcadia, come online.
Meanwhile, Prospect also recently signed a
Memorandum of Understanding (MoU) with
Belgian industrial minerals blue-chip firm Sibelco
for the offtake of ultra-low iron petalite product
from its Arcadia Mine in Zimbabwe.
Demand for ultra-low iron lithium, also in
ceramics industry, is anticipated to grow expo-
nentially as electric vehicles become more common
and affordable globally, driving growth in world-
wide demand for the cars, as is the world shifts
from internal combustion engines (ICE) vehicles.
As such, the MoU for lithium offtake will pro-
vide an exclusive period of time for the parties to
negotiate and execute a binding offtake agreement
for Arcadia’s ultra-low iron petalite product.
The two companies have roughly a month and
a half to negotiate the terms of the offtake agree-
ment, with the MoU slating that the signing of
the potential agreement is slated for June 1, 2020.
While the deal will come with its own terms, the
nature of an offtake agreement means Sibelco could
be set up as a guaranteed buyer for Arcadia petalite.
Generally, offtake agreements are set up before
production even begins to specify a purchase price
of the product and the date of delivery.
In Prospect and Sibelco’s case, it means Sibe-
lco can agree to buy any future production from
Arcadia at a specified price.
Prospect Executive Chairman Hugh Warner
said Sibelco is a significant “blue-chip” customer,
touting its annual turnover of around €3,5 billion.
“Sibelco is the largest distributor of ultra-low
iron petalite in Europe and possibly the world,”
Hugh said.
“Once in production, Prospect will be the largest
ultra-low iron petalite producer in the world,”
he said.
According to Prospect, the two companies have
agreed to not deal with any other party in relation
to the supply of ultra-low iron petalite.
However, Prospect pointed out that the MoU
does not mean the company needs to stop its dis-
cussions with Uranium One Group, with whom
Prospect has also signed an MoU.
BusinessWeekly
Is Hwange Colliery
on recovery path?
Tawanda Musarurwa
Senior Business Writer
N
otwithstanding the pro-
tracted boardroom wrangles at
Hwange Colliery Company Lim-
ited (HCCL), the coal producer appears to
be on a slow road to recovery, if its FY2019
numbers are anything to go by.
HCCL was placed under the administra-
tion of Bekithemba Moyo of DBF Capital
Partners in October 2018 after a string of
losses and default on a Scheme of Arrange-
ment to pay off creditors.
However, the company’s board, which
had been terminated by operation of law
after the issuance of the Reconstruction
order by Government, challenged the deci-
sion, and in February this year the High
Court ruled on their favour.
Government has since appealed that rul-
ing. But life goes on for the miner.
HCCL appears to have turned a corner
from a loss-making position in 2018 as
revenues doubled last year.
Most non-performing loans in 2019 were in the agricultural sector
Fidelity targets more foreign assets
Tawanda Musarurwa
Senior Business Writer
F
idelity Life Assurance says it is
looking to bulk up on assets in the
region, a move aimed at hedging
against inflationary pressures in the local
environment.
Rising inflation over the past year, and
estimated at around 600 percent according
to latest official statistics, has affected local
businesses across various sectors.
Fidelity chief executive Rueben Java, said
the group is targeting to expand its regional
portfolio.
“The group expects the economic
challenges in Zimbabwe to persist in the
medium-term. The deteriorating economic
PPC expects 20pc volume drop in April
Z
Business Writer
imbabwe Stock Exchange listed
entity PPC Limited, which is pri-
marily listed on the Johannesburg
Stock Exchange, says its businesses across
the continent have generally been oper-
ationally constrained in their respective
jurisdictions during April.
Most jurisdictions in the world spent the
month of April under lockdown with little
economic activity taking place except for
those that were declared to be providing
essential services.
As a result, overall sales volumes in
South Africa for April are expected to
be around 95 percent lower compared to
April 2019 due to the stringent lock down
Group revenue jumped 105 percent from
$429 million in 2018 to $881 million last year
on an inflation adjusted basis.
On historical basis, it increased by 511
percent from $69, 1 million in 2018 to $422,2
million in 2019.
“This was largely due to a combination of
an increase in high value coking coal sales
as well as frequent adjustments to product
prices in line with changes to the Interbank
rates, which were introduced in February
2019,” said HCCL administrator Moyo in a
statement accompanying the company's
2019 financial results.
The improved revenues had a direct
impact on the company’s bottomline.
On a historic cost basis, HCCL’s perfor-
mance improved from a gross loss of $3,3
million in 2018 to a gross profit of $182
million for the year under review.
But the net loss position rose from $78
million to $91 million due to an exchange
loss of $322 million on legacy foreign cred-
itors.
environment characterised by currency
volatility and hyperinflation, is expected
to significantly erode the value created by
local businesses operations and to threaten
the viability of local businesses,” said Java
in a statement accompanying the company'
2019 results.
“Fidelity Life Assurance will improve the
quality and colour of its revenue through
careful choice of target markets. De-risking
Zimbabwe through further country diver-
sification is a key strategic priority for us.”
This comes as the group’s Malawi opera-
tion — Vanguard Life Assurance Company
— recorded a 75 percent growth in total
revenue for the year to December 31, 2019.
The regional operation contributed 38
measures imposed by the South African
government.
However, there has been partial lifting
of the lockdown and operations in Rwanda
and Zimbabwe partially resumed in the
second half of April.
Cement sales in these jurisdictions are,
however, expected to be around 15 to 20
percent of the volumes sold in April 2019.
PPC Barnet in the DRC which was able
to operate throughout April is expected to
produce similar volumes compared to the
same period last year.
In South Africa, PPC is preparing to start
production to operate in line with the risk
based regulations and related CV19 Risk
Levels announced by the South African
Companies
On an inflation adjusted basis, the per-
formance improved from a gross loss of
$21 million and a net loss of $487 million
to a gross profit of $422 million and after
tax profit of $1,5 billion.
Added the administrator: “Financial per-
formance improved in 2019 against com-
parable period in 2018 despite decreased
production and sales volumes.
“This was largely due to a change in the
sales mix, which saw high value coking coal
production and sales going up by 20 percent
as well as improved product pricing.
“Production and sales were adversely
affected by the shortage of diesel coupled
with unavailability of wagons. There was a
production gap of 64 percent in total coal
mined of 1 013 932 tonnes, compared to
sales potential of 2 819 298 tonnes.
“The market remains with a high appetite
for our product as evidenced by our 2019
order book.”
In terms of operations, total coal mined
by opencast operations totalled 756 279
percent to core group revenue, benefiting
from currency devaluation in Zimbabwe.
Vanguard’s premium income rose by 68
percent to $57,8 million from $34,3 million
in 2018 as the Zimbabwe dollar weakened
against the Malawi Kwacha. The subsidiary
posted a profit before tax of $7,4 million,
up 823 percent compared to $799,546 in
the prior comparable period.
Key subsidiary — Fidelity Life Assurance
— contributed a similar 38 percent to core
revenue after realising inflation-adjusted
revenue of $335,9 million in 2019 from
$266,7 million prior year.
Overall, Fidelity Life’s numbers improved
in FY2019, as the firm turned a corner from
a prior year loss.
government on the April 25, 2020.
The Company, however, said the uncer-
tainty around the further development of
the containment of the coronavirus makes
it necessary for PPC to work with various
scenarios.
“Together with the other members of the
Industry Association a request has been
made to the Government to support the
local industry, expedite construction work
and implement the announced measures
around infrastructure development and
giving priority to local manufacturing,”
said the company in a Covid-19 update
released last week.
The company said it had implemented
various cost reduction and cash preserva-
tonnes, a 52 percent decline in production
from the previous year.
Total coal from HCCL pits was 449 454
tonnes, a 22 percent increase in production
from 2018, while the contractor Mota Engil,
mined a total of 306 825 tonnes, which was
a 75 percent decline in production.
The coal producer’s underground oper-
ation at 3 Main mine, produced 268 603
tonnes in 2019, an increase of 37 per-
cent from 2018 production of 196 060
tonnes. Management attributed the gain
to improved operational funding support
and the credit facility availed by equipment
manufacturer Komatsu SA.
Although the signs from HCCL’s FY2019
indicate rather subdued gains, a similar
trend was visible even before the company
was placed under Reconstruction.
For FY2017, HCCL narrowed its losses
position by 51 percent to $43,84 million
compared to $89,91 million in 2016, driven
by lower cost of sales and increased rev-
enues.
The group posted a profit after tax of $74
million during the period under review
from a loss position of $3,8 million on the
back of revenue growth.
Group revenues rose 52 percent to
$503,6 million from $331,9 million during
the period buoyed by fair value gains on
investment properties. Gains on investment
properties grew significantly to $ 371,8 mil-
lion from $3,1 million in 2018.
“The group’s strategic choice to focus on
inflation protection assets and core business
resulted in positive results with the group
recording a profit after tax of $74,1 million
on an inflation adjusted basis during the
year ended December 31, 2019,” said group
chairman Fungai Ruwende.
tion actions to protect liquidity through
and post the lockdown period.
The committed facilities show sufficient
headroom in South Africa under various
economic scenarios, it said.
The company said it is also continu-
ously engaging with international funders
to ensure sufficient liquidity in its interna-
tional operations.
The refinancing and restructuring pro-
ject announced in October 2019 is contin-
uing and an update of this project will be
given at the announcement of the compa-
ny’s annual results.
PPC will provide further guidance on
the financial impact on the group at a later
stage.
Did youknow?
CFI Holdings history
Fradreck Gorwe
C
FI Holdings has its history
intricately linked to the Farm-
ers’ Co-operative Society that
evolved adjacent to white agricultural
policy in 1908 when white settler minor-
ities shifted interests from mining to
agriculture.
The society was mainly into maize
marketing.
With the acquisition of the co-opera-
tive followed its evolution into an agro-
based industrial holding company with
three major operational divisions of
retail, poultry and specialised farming.
Poultry became the flagship division
and the nucleus around which other
operations create synergies.
CFI got listed on the Zimbabwe Stock
Exchange (ZSE) in 1997.
Over the years the conglomerate
walked through fortunes until its oper-
ations were threatened by debts.
In 2015 it sold Langford Estates (1962)
Limited to Fidelity to raise money to set-
tle debts with five financial institutions,
FBC Bank, Agribank, NMB Bank, IDBZ and
Standard Chartered.
With Zimre Holdings acquiring an
interest in the conglomerate in 2009,
a sigh of relief ensued. The acquir-
ing company is mainly into property
development and management, hence
fortunes for conglomerate’s property
segment.
Property magnate, Nicholas van
Hoogstraten, had his Messina Invest-
ments holding around 40 percent share-
holding in the diversified conglomerate.
NSSA also held a significant stake but
later withdrew shareholding in 2017,
resulting in Zimre Holdings becoming
the largest shareholder through its
investment vehicle STALAP after acquir-
ing 13 percent of the company’s shares.
Shareholding has already increased
to over 40 percent. Farm & City and
Vetco Animal Health are among its
retail outlets.
Further misfortunes ensued in the
form of suspension from the bourse,
ZSE.
Zimplats in strong
Q3 production
Business Writer
Z
implats delivered a strong perfor-
mance during the three months end-
ing March 31, 2020 as tonnes milled
increased by 6 percent to 1,7 million tonnes,
parent company Implats has said.
6E concentrate production also improved
by 6 percent to 150 000 ounces compared to
141 000 ounces in the prior corresponding
period.
Matte production and concentrate sales
were slightly higher than milled volumes
in the period and improved by 6 percent to
152 000 ounces.
For the 9 months ended March 31, 2020,
mill throughout of 5,08 million tonnes was
3 percent higher and 6E concentrate pro-
duction improved by a similar margin to
449 000 ounces from the prior comparable
period.
Production in matte, together with con-
centrates sold, were impacted by the accu-
mulation of in-process inventory due to the
furnace rebuild in 1Q 2020 and declined by
3 percent to 419 000 ounces from 433 000
ounces.
Meanwhile, Zimplats’ operations con-
Anglo American set to
exit coal mining in SA
M
ining giant Anglo American
plans to exit coal mining in South
Africa, in a major shift away from
carbon-intense operations.
The company has, in the past few years,
been offloading its coal assets, which has
included the sale of its Eskom coal mines in
2018, as well as the Drayton mine in Australia.
In a response to shareholder questions, the
diversified global miner said it would con-
sider its exit options, with a view to listing
the demerged business on the Johannesburg
Stock Exchange.
“We are therefore working towards a possi-
ble demerger of our thermal coal operations in
South Africa as our likely preferred exit option,
expected in the next two to three years, with
a primary listing in the JSE for the de-merged
business,” it said.
In light of growing concerns over climate
change, the global push for clean energy has
seen companies adopt greener policies, which
include measures to reduce C02 emissions.
Anglo American, which operates diamond
iron ore, gold and platinum mines in South
Africa, said its thermal coal operations in
the country ‘constitute a strong and attrac-
tive business with high-quality well-located
assets, and with access to established export
infrastructure’.
The mining giant in 2018 sold its thermal
coal mines to a black-owned entity, Seriti
Resources, in a deal worth R2.3 billion. The
mines, including New Vaal, New Denmark
8 — 14 May 2020 3
In 2016, it was suspended for failing
to publish the audited financial results
for the year 2015, which was lifted in
May of the same year after it complied.
In 2018, again the company got sus-
pended for failure to comply with listing
requirements.
Current group structure is composed
of the farming division, retail division,
milling division and properties division.
Within the farming division falls Gle-
nara Estates and the poultry concern
Suncrest Chickens.
The retail subsidiary is composed
of Farm & City Vetco, Habbard Zimba-
bwe and Crest Breeders. Victoria Foods,
Agrifoofs, Agrimix and of late Saturday
Retreat Estate, all fall under the milling
division.
Agrifoods operates maize and flour
milling plants while the other two are
mainly concerned with the production
of stock feeds, hence synergies with the
flagship poultry business.
The property division is composed
of Maitlands (45 percent owned) and
Reston developers.
Fresh lease of life had recently
been breathed into the conglomerate
through an awaiting combined invest-
ment of US$33 million for recapitalisa-
tion of Victoria Foods and Agrifoods.
The courted investors are expected to
pump into the divisions US$18 million
and US$15 million respectively.
Thus the company‘s journey reflects,
though, that headwinds seldom debar
efforts to achieve.
Profit-after-tax of $7,2 million in the
half year to March 31, 2019 was a positive
gain compared to $2,1 million posted
over the comparative period, a pointer
the company is eyeing to wean itself
off the hooks.
The suspended counter last traded
on the Zimbabwe Stock Exchange with
a market capitalisation of $75 023 919
and a share price of 70,75 cents as at
July 17, 2018.
◆◆Shingirai Norman Chibanguza is the acting
group chief executive officer.
tinued relatively uninterrupted during the
lockdown period.
The platinum miner was granted per-
mission to continue mining and process-
ing operations during the lockdown period.
Zimplats, however, had to stockpile its
mineral output as parent company Impala
Platinum Limited where it has an offtake
agreement in place declared force majeure
following the announcement of the South
African national lockdown which became
effective on March 26, 2020.
The platinum miner also issued force
majeure letters to contractors working on
capital projects and other financial institu-
tions “until the end of the current lockdown
period or any extension thereof ”.
These measures, it said, are meant to “pre-
serve the financial viability of the business”.
Going forward, parent company Implats
said although Zimplats has operated suc-
cessfully to date it remains vulnerable to
potential unforeseen interruptions during
the remainder of the forecast period.
In terms of the force majeure, the Group
said it is working towards its upliftment as
a near-term priority.
and Kriel collieries, supply coal to Eskom’s
power stations Lethabo, Thuthuka and Kriel.
According to mining and labour analyst
Mamokgethi Molopyane, the decision by the
company to let go of the coal “burden” did not
come as a surprise, in the face of a growing
need for clean energy.
Coal still viable
“But that does not mean that coal in South
Africa is not a viable business anymore, given
our reliance on coal for energy generation,”
she said.
Molopyane believes Anglo’s exit from the
coal sector is unlikely to cause any overall neg-
ative impact to the industry, as coal still forms
a major part of the country's energy policy,
including exports to other African countries
who still rely on coal.
Eskom generates most of its electricity from
coal, and the company’s new mega-power
stations, Kusile and Medupi, are coal-fired.
However, the country has been adding
renewable energy sources such as wind and
solar as alternatives. Earlier this week, it was
announced that had begun a public consul-
tation process which will pave the way for
municipalities to directly source their own
electricity from independent power producers.
Anglo American noted that it believes that
the “long term prospects of our thermal coal
operations in the country may be better served
under different ownership” given the shift
towards cleaner energy. — fin24.
4 8 — 14 May 2020
Misheck Ugaro
Unpacking the stimulus package
T
WO days before the expiry of the
first extended lockdown period on
May 1, 2020, President Mnangangwa
announced an economic stimulus package
for the country. This is aimed at assisting the
various socio-economic sectors to recover the
post-pandemic and revive the economy by
providing some relief to individuals, families
up to the corporate sector. In a subsequent
statement released by the Ministry of Finance
and Economic Development further details
were provided for clarification.
The package unveiled will assist in provid-
ing the much required liquidity to all pro-
ductive sectors. A particular focus is placed
on manufacturing, mining, agriculture and
tourism.
The Government hopes that the provision
of this package will help protect employment
by preventing pandemic induced layoffs. In
addition to protecting employment, the social
sector is being supported by receiving direct
income support towards all vulnerable groups
and individuals.
On the small to micro enterprises the
Government has directed assistance towards
recovery of the operators and individuals.
This is of particular importance given the
Zimbabwean economy’s skew towards the
SMEs sector. The pandemic has forced the
Government to take advantage and enhance
social safety nets.
The Government will use existing struc-
tures such as banks, micro-finance institutions
and mobile network operators as well as some
civic societies to expand its reach of the public
with assistance.
This will enhance a systematic and quick
implementation and distribution of the assis-
tance. The package is also aimed at upgrading
infrastructure including that which was badly
affected by Cyclone Idai.
A total package of $18 billion, being nine
percent of the country’s Gross Domestic Prod-
uct (GDP), has been set aside. The summary
distribution of the package is:
◆ Agriculture $6,08 billion
◆ Working Capital Fund $3,02 billion
◆ Mining sector $1 billion
◆ SME sector $500 million
◆ Tourism sector $500 million
7 disciplines of peak performance
Arthur Marara
G
Discipline 2: Positive Focus III
REAT people live their lives with great
focus. I am very confident that you
can turn around your business/life by
harnessing the power of positive focus. The
reason why you are where you now is YOU.
By being deliberate on what we focus on,
we increase our levels of productivity. This
article is a continuation of the series I am doing
on what I call “The Power of Positive Focus”.
The difference between successful people and
failures lies in their levels of discipline. Go
through the previous articles so that you can
connect well with this article. This week I want
to round up on this particular discipline, by
challenging you to confront yourself.
Personal audit
One of the greatest favours you can ever do
for yourself is to regularly confront yourself,
and ask yourself some important questions
about your life. You know yourself better than
anyone else. I want you to ponder for a minute
on these questions:
◆ “Where would your life/business have
been by now had you been more focused
on it?”
◆ “Where would your life have been had
you been more disciplined?”
◆ “Given a chance to live your life over
again, what would you do differently”
When you start asking yourself intelligent
questions you also begin to get intelligent
answers. I enjoyed one definition of FOCUS,
“Follow One Course Until Success”. That’s,
it! Set your goal and follow through it until
you are successful. How disciplined have you
been when it comes to focus? Are you not
easily distracted?
One year to live
Anthony Burgess (pictured) was 40 years
when he learnt that he had only one year to
live. “It was January of 1960,” he said, “and
according to the prognosis, I had a winter
and spring and summer to live through, and
would die with the fail of the leaf.”
His doctor had just diagnosed him with
a brain tumour which was likely to kill him
within a year. Within a short period of time
all his life came before him. He was finan-
cially bankrupt at the time, and he knew that
there was nothing for him to leave behind
for his wife Lynne and family. He thought of
something that could possibly help him leave
a better estate.
Burgess had never been a professional nov-
elist in the past, but he always knew that he
had the potential to be a writer. Burgess real-
ised that he could leave royalties for his wife.
He put a piece of paper into a typewriter and
began writing. There was no certainty that he
would even be published, but he couldn’t think
of anything else to do. During that period,
Burgess wrote energetically, finishing five and
a half novels before the year went through.
(This is very nearly the entire lifetime output
of E M Forster, and almost twice that of J D
The agricultural sector has been allocated the biggest portion
◆ Arts $20 million
◆ Statutory reserves liquidity release $2 has been allocated.
billion
◆ Health $1 billion
◆ Food grant $2,4 billion
◆ Broad relief measures $1,5 billion
The agricultural sector has been allocated Indeed, the country has seen an upsurge in
the biggest portion amounting to $6 billion, the upgrading of many health facilities to raise
which is broken into two parts, one being the their capacity to handle Covid-19 cases, which
winter wheat programme and the other half infrastructure will remain in place after the
earmarked for summer cropping.
It is expected that a turnaround of the
economy will be based on the agricultural will be welcome by industry, which must take
sector rising into full swing. Another nota- advantage to finance their short term needs
ble allocation is that for the social and health including restocking and meeting immedi-
Anthony Burgess (when he was 40)
Salinger who were some of the distinguished
authors of his time).
Interestingly, Burgess did not die. His cancer
had gone into remission and then disappeared
altogether. He ended up surviving his wife. In
his long and full life as a novelist (he is best
known for “A Clock-work Orange”); he wrote
more than 70 books. Burgess was able to make
himself understood in some 10 languages.
Most probably without the news of the cancer,
he may not have written at all.
Aside from English, he knew Malay, Rus-
sian, French, German, Spanish, Italian, Welsh,
Japanese, some Hebrew, Chinese, Swedish and
several others.
Burgess is also considered to be an impor-
tant biographer and linguist, aside from being
an outstanding composer, literary critic, jour-
nalist and writer. He was considered a verita-
ble genius. On November 22, 1993, he died in
London, aged 76. He would have turned 77
on February 25 the following year.
How different would your life be?
For a minute, put yourself in the shoes of
Anthony Burgess. What would your life be
if you had been told that you only had one
year to live?
What is it that you would do differently
if you only had one year to live? Burgess for
the greater part of his life had been operat-
ing in his comfort zone. It was the reality of
life ending with no significant achievement
that helped him to focus his life on building
a meaningful legacy.
Many people are like Anthony Burgess,
they are just sitting on their laurels. There is
no sense of urgency, no sense of priority and
not even any sense of focus on the future. You
do not need to be told that you have some
condition or disease in order to put your life
into perspective. You need to make a deliberate
decision to focus on your life.
Focus on dying empty
The late Dr Myles Munroe always talked
about “dying empty”, and I think he died
empty as well.
Focus on maximising your potential. A
Opinion
sectors where a combined total of $3,4 billion
This is an essential allocation, which is
hoped to directly ameliorate the suffering
of the vulnerable sections of the population
arising from the effects of the pandemic.
pandemic.
The working capital facility of $3,02 billion
human being is no different from a rubber
band. A rubber band is only useful when
stretched. You can become more useful in
life and to life the moment you begin to stretch
yourself.
There are so many things that you can do
as an individual if you apply your mind to
stretching your potential. Anthony Burgess
stretched himself and wrote more than 70
books when the news of his coming death
came to him. He could have died with all the
70 books had it not been for this push.
Do not let mediocrity be your middle
name. Set yourself up for a higher standard.
Mahatma Ghandi once said, “The difference
between what we do and what we are capable
of doing will suffice to solve most of the world’s
problems.”
Focus builds momentum
Do you know one other thing that focus
does? It builds momentum. The moment you
start taking action in the area of your focus you
build momentum. You become unstoppable.
That is what happened with Anthony Burgess.
He gathered momentum when he started
writing; and he never stopped until he reached
70 books. “When you stay focused and keep
a commitment you create momentum, and
momentum creates momentum.”
I will continue on the discipline next week.
Do not miss out the next edition of the busi-
ness weekly.
◆ Arthur Marara is a corporate law attor-
ney, keynote and peak performance
speaker, business strategy facilitator
commanding the stage with his delightful
humour, raw energy, and wealth of life
experiences. He is a financial wellness
expert and is passionate about address-
ing the issues of wellness, strategy and
personal development. Arthur is the
author of the “Personal Development
Toolkit”, “Keys to Effective Time Man-
agement” among other inspirational
books. Follow him on social media, or
WhatsApp him on +263718867255 or
email greatnessclinic@gmail.com.
ate salaries and wages and hence reduce the
likelihood of employee layoffs.
This requires an active participation by the
banks which have so far been disappointing
in their lack of presence towards activities
aimed at fighting the pandemic. The Central
Bank has, however, provided an additional
capacity through the Bank Accommodation
window amounting to $500 million, while the
recent Monetary Policy Committee meeting
reduced the interest rate on that window to
10 percent per annum.
This is good news to industry provided
banks play their part. The facility is granted
through Government guarantees.
Advertising basics for SMEs
Joseline Sithole
I
love Twitter wars (TWARs). If you are
having a bad day just go to your Twitter
page where you are assured of a “juicy”
conversation.
In many cases, someone is not happy at
all about something. Even influential peo-
ple are big Twitter users. Donald Trump is
one favourite user of Twitter. But the most
recent TWAR came from our neighbours
down South.
Somizi Mhlongo, one of South Africa’s
favourite “sons of the soil”, came out guns
blazing against butchery in the Limpopo
province for daring to publish an insulting
advertisement.
Part of the advert read: “For all your
braaivleis needs, we have rump, Fillet and
T-bone steaks. For your domestic worker
we have chicken necks, gizzards, head and
feet.” This daring insinuation that domestic
workers were only fit to eat chicken feet, got
Mzansi into frenzy.
Somizi called it, “Msunery” (The first
time I have heard of this word) The word
usually refers to anything that you strongly
disapprove of. Another TWISO (South Afri-
can Twitter user) called it “sheer racism,
bigotry, and an insult to our beloved moth-
ers.” The butcher was forced to apologise but
not before a boycott had been called out.
This “faux-paux” in advertising is quite
common and even the big companies have
been found on the wrong end of what I call
“advertising mischief ”. Companies such as
Volkswagen, KFC and Pepsi all had their
adverts pulled out for various reasons
ranging from extreme violence to racist
comments.
Though, advertisement in Zimbabwe is
not as eventful as above, we have also had
some pretty interesting stuff here ranging
from rude, unbelievable and just clumsy. In
one of my WhatsApp groups an MC (Master
of Ceremony) broadcasted an advert that
had so many grammatical errors.
I then in-boxed him and highlighted the
grammar problems. His caustic response
was “I am already famous so no one really
cares”. What is most worrying though is the
lackadaisical attitude our SMEs view this
business function. According to one SME
who is into printing, “Ha business rinon-
gofire, pasina kana advert” (one can still
succeed in business without any advert).
Basically, the fundamental objective of
advertising is to sell. Peter Drucker, a global
management guru points out that advertis-
ing is meant to achieve the following; retain
loyal customers, retrieve lost customers,
recruit new customers and reassure old
and new customers that they have made the
right decision in choosing that particular
product.
The mining sector has been granted $1
billion to assist in maintaining momentum
towards the drive to achieve a US$12 billion
industry by 2023. Various other important
sectors have also been provided with assis-
tance notable of which is the tourism sector
($500 million) and is the most affected sector
(outside health) given that travel around the
world has virtually come to a stop.
While the above package is a laudable effort
by the Government and indeed all govern-
ments around the world are implementing
similar stimulus packages in order to kick start
their economies after the pandemic, there is
a potential downside risk which needs a pru-
dent approach in order to minimise slippages.
The biggest concern is the potential of an
inappropriate funding structure for the pack-
age which may exert pressure on the budget
deficit. An innovative approach is required
from the Treasury in order to avoid financing
the package by relying on increased money
supply. The dislocation that may be caused
by increasing money supply is the resultant
impact on the exchange rate followed by infla-
tion which is already unsustainably high at
676 percent as at the end of March.
The official exchange rate is pegged at US$1:
$25 and the parallel rate has already jumped
from US$1:$33 at the beginning of the lock-
down period to US$1: 50 only six weeks later
by the end of April. This is a serious risk that
needs a careful management.
The authorities are therefore urged to har-
ness other means of funding chief of which
comes from a reallocation of resources from
the original budget allocations. The biggest
opportunity lies on the postponement of some
planned expenditures that can be held by a
year or until the country recovers.
Examples of this may include the launch
of the satellite, foreign trips, the removal of
unnecessary subsidies in particular on the
petroleum sector given now that petroleum
prices are falling. These should provide
relief to the economy and provides room to
manoeuvre for the authorities.
Fortunately, the working capital facility is in
the form of guarantees which does not equate
to a direct impact on the budget deficit as
this is provided in the form of guarantees to
the manufacturing sector’s borrowing needs
Certainly in the global arena, advertising
is an important part of business develop-
ment. Statista, a website that collects global
economic statistics estimated that in 2019,
advertising spend surpassed $560 billion
representing a growth of 4 percent. Glob-
ally, SMEs are also spending on advertising,
although according to manifest . com SMEs
spend an average of $10 000 per year.
So who are the big spenders in adver-
tising? According to Neil Patel a search
engine analyser; Samsung Electronics
spend US billion $2,41 billion, Ford Motor
Company US $2,45 billion and Proctor and
Gamble spend US $4,39 billion. In addition,
the AD Age, a leading National Advertisers
report that top 200 advertisers collectively
spent a record $163 billion on advertising in
2018 with some of the biggest ad spending
increases came from internet based giants
like Amazon 32 percent, Google 23 percent,
and Facebook 236 percent.
In Zimbabwe, the high cost of adver-
tising within the main line media such
as newspapers and television deters SMEs
from using these channels, opting instead
to leverage as much as possible on social
media. Since 2016 twice as many small and
medium-sized businesses are advertising
on YouTube.
Though SMEs use a plethora of channels,
interestingly they seem to rely a lot on Word
of Mouth (WOM) as a form of advertising. A
majority (85 percent) also do not prioritise
advertising in their day to day businesses
Wilfred who owns a printing shop in Harare
CBD but has been forced to stay at home
because of Covid-19 notes that ; “Ah people
know me and they just come without me
having to go to them.” Another big insight
that came out of the research was that, SMEs
are not really clued up about the basic prin-
ciples of advertising.
There is a plethora of advertising prin-
ciples in the market, but I have borrowed
from the AIDA model which was developed
by Elmo Lewis. AIDA is an acronym that
stands for; Attention, Interest, Desire and
Action. According to Elmo, for an advert
to be effective it should exhibit all those
four characteristics.
Attention
Elmo points that an advert should first
try to elicit attention from its readers or
viewers. To this end the advert should
clearly show consumers what it is you are
trying to portray. According to Howard
Gossage, “Nobody reads ads. People read
what interests them.” What grabs atten-
tion is striking colour, provocative imagery,
powerful diction and voices.
Interest
The next phase of an advert is to generate
interest. This can be done through story-
telling, and a very good Punch line, (Motto)
a clever hint or even a joke. Car adverts
are my favourite in this category. Here are
a few memorable ones. The Aston Martin
advert reads like this, “Protected by more
pre-nups than any other car”.
One BMW advert was saucier; and went
like this” You know you are not the first but
do you really care,” The Daihatsu advert
played on men’s favourite topic, women.
The advert reads like this; “Picks up five
times more women than a Lamborghini,”
The Mercedes Benz leveraged on its func-
tion and power; “525 horses working in a
BUSINESSWEEKLY
from the banks. It is hoped the banks will
play their part of providing funding for this
requirement as this is technically risk free
lending and hence the fees should be at a
concessionary levels.
However, the banking sector in Zimba-
bwe has already shown their lack of social
responsibility and several calls have been
made towards their almost speculative and
profiteering approach to the current eco-
nomic malaise facing the country. Typically
banking institutions have not been visible
on their participation towards the fighting if
this pandemic.
In addition, the country has already
received significant foreign donor assistance
for the provision of healthcare equipment
for the fight against the pandemic. If han-
dled carefully in a transparent manner that
generates more confidence from the donor
community, this could attract more foreign
assistance which will obviate the need to rely
on budget deficit.
Lastly, there is still an unknown variable in
the sense that the duration of lock down is not
known hence the quantum of the package is
based on the assumption that the country has
significantly covered the risk of any further
drastic rise in the infection rates.
We have already seen the nation move onto
a relaxed stage two with industry and com-
merce allowed to open and operate. This will
minimise the duration of loss making closure
for the companies. However, should there be a
turn in events and infections start rising again,
that might require reversing the relaxation.
For now the relaxation of the lockdown
conditions has been accompanied by an
instruction by the Government for employ-
ers to take charge of the responsibility to test
their employees. Unfortunately this has shifted
the cost burden from the Government to the
employer which, while having positive impact
on reducing the budget deficit, is a burden to
the employers.
We acknowledge that the Government
has on the other hand provided assistance
in the form of the stimulus package. The
pandemic is everyone’s responsibility so it
is expected and hoped that the country can
move positively towards a complete removal
of the clock down.
way that animal rights associations could
complain about” The Porshe gets attention
from the male ego motif when it claims that
“Porsche separates LeMans from LeBoys.”
Desire
After the customer’s interest has been
piqued, the advert should thus provide
information on why they should buy the
product. Customers buy products for two
reasons. These are emotional and rational
reasons. SMEs should note that because of
the competitiveness of the market consum-
ers use emotional reasons to buy products.
According to Hub Post “Emotional mar-
keting refers to marketing and advertising
efforts that primarily use emotion to make
your audience notice remember share and
buy. Emotional marketing typically taps
into a singular emotion, such as happi-
ness, sadness, anger, or guilt to name just
a few. (Check out Nike’s emotional advert
on Covid-19 lockdown. The website con-
tinues to say that out of 1 400 successful
advertising campaigns, those with purely
emotional content performed twice as well.
Soft drink companies normally use the
happiness emotion to great effect while the
insurance industry is good at “instilling”
fear. Fast foods companies normally lev-
erage on the instant gratification emotion.
Big companies who are heritage brands love
to remind consumers about the values that
have been key to their success.
However, according to Forbes Magazine,
in some instances, consumers want to know
the functional benefits of products. For
example, with hair products sometimes
would just want to know whether their
shampoo has anti-dandruff properties of
has a scent that they are looking for. In these
instances no emotions are needed here.
Action
After you create a desire, the consumer
is then ready to take action. Sometimes
adverts should be replayed for a long time
before a consumer decides to use your
product. It also depends on consumer
switching behaviour. Provide contact details
of places where one can get products. Feed-
back mechanisms are also very important.
A good example of the way you can use
this model online as an SME is by starting
a website. For example, a good website or
animation advert can generate attention.
Then generate desire through ensuring
optimum search ability. In addition the
website can be user friendly. Some testimo-
nials from consumers cab also encourage
other consumers to uptake that particular
product. A trusted payment system and
a review system can also encourage the
consumers to action their payments
In conclusion, SMEs need to take the
advertising function of business very seri-
ously. Let’s reflect on these quotes as we
seek to change our attitudes on Advertising.
“Doing business without advertising is
like stopping your watch to save time.”
“Doing business without advertising is
like winking at a girl in the dark”.
Continue to stay safe out there!!!!
◆ Joseline Sithole is an SME Consult-
ant and founder of Southern Africa
Development Consultants (SODECO).
For comments write to her on
joseline@sodeco.co.zw or whatsapp
+263773634062
BUSINESSWEEKLY Markets 8 — 14 May 2020 5

Covid-19: A case for Zim banks on

Vic Falls for new
stock exchange
cheaper connectivity tailored and quality of service to their users. The service
Z
imbabwe has announced plans to use
the allure of Victoria Falls to open a new
stock exchange, as part of a broader
plan to turn the resort town into an offshore
financial centre.
Finance Minister Mthuli Ncube has said the
designation of Victoria Falls as an International
Finance Centre (IFC) will provide the industry
with additional opportunities to hedge foreign
providers will not have to spend their resources on man- currency denominated products.
aging the infrastructure they only have to deal with how This is intended to be along the lines of other
to satisfy users. The user on the third level has to only offshore centres in Africa, where Mauritius is a
deal with service providers. stand-out offshore financial centre.
This framework would allow for power and band- Globally, such centres are found in Ireland,
width sharing among multiple service providers and the Caribbean, Luxembourg, Singapore, Hong
would reduce the need for multiple masts. Kong and the Netherlands.
“Traffic would be scheduled over limited masts or On Sunday, Minister Ncube took to social
access points that reduce the system energy consump- media site Twitter to announce that Zimba-
tion and improve efficiency. The general impact on the bwe will soon launch the Victoria Falls Stock
environment would also be reduced,” said Addo. Exchange (VFEX) that will trade in foreign cur-
The Alliance for Affordable Internet (A4AI), which rency only.
Kudzanai Sharara was also formed with the aim of bringing the cost of This is aimed at foreign investors and global
connectivity in developing countries down, says its capital, especially the mining sector, he said.

I
F there is one thing that has kept me sane during the
Covid-19 pandemic, it is the fact that I have largely
remained connected to do my work and to interact
with both friends and relatives.
I have also not worried much for my school going chil-
dren as I have managed to get them online tutorials that
can help continue broadening their knowledge and skills.
I worry though, for the less fortunate ones in our
communities across the country. The social and eco-
nomic impact of the coronavirus pandemic must have
been huge.
For adults, they have not been able to work, or socialise
with their kith and kin.
And with the parents struggling to stay connected,
one can only imagine what the impact has been like for
school going children.
Online education is not even a remote possibility
for such kids, in particular those in the rural areas and
those from vulnerable families in the high density areas
dotted across the country.
One lesson from all this though is that digital connec-
tivity, just like roads and rail should be a public good.
Even if it’s going to continue to be offered largely by
private players, Government now has to provide an
enabling environment.
The significant role that digital connectivity is now
expected to play in education, health and the economy
calls for an adjustment to regulations that boost internet
capacities.
It is key that going forward, governments must put in
place incentives that allow service providers to increase
internet speeds and capacity at very little or no cost to
the consumer.
In the recent past we have seen Government subsidise
fuel and a few other things, but with the future largely
depending on digital access, it might well be time to give
support to the telecoms sector.
This might not be necessarily through subsidies, but
can be done through other incentives.
In the past we have seen Government pushing tele-
Network service providers have been sharing few base stations
com companies into sharing of infrastructure such as
base stations.
In its last report, Potraz said Econet and NetOne are
only sharing 4 base stations out of a possible 300 but
what could make a huge impact is for Government to
invest in base stations itself and let telecommunication
companies share.
Or Government could offer tax rebates for telecoms
that put up base stations that they are willing to share.
The coronavirus pandemic has demonstrated all
too vividly that bridging the digital divide will have
to be done with urgency. As much as it will take huge
amounts of money, what it really needs are partners
who are committed for the long haul and governments
needs to play a central role of bringing this to fruition
through policies and regulations.
World Bank’s Vice President for Infrastructure,
Makhtar Diop recommends that public utilities that have
valuable assets, such as ducts and poles, buildings, land
rights, and even fibre networks could be leveraged for
cost-effective deployment of broadband infrastructure.
In a paper titled “Covid-19 reinforces the need for
connectivity”, Diop also pushes the infrastructure shar-
ing agenda.
“For telecom operators, infrastructure sharing is
the way to go to expand coverage and reduce costs in
network deployment. Second, we must power digital
transformation in some of the world’s poorest countries
by massively scaling up resources dedicated to building
the foundations of a thriving digital economy.”
Diop said the crisis caused by the Covid-19 pandemic
shows that benefits and opportunities of technology are
not equally distributed.
He gave the informal sector as an example where there
is no such thing as telecommuting. Across the world,
while online meetings have become the new normal in
lockdown, in poor countries, even established businesses,
more often than not, do not have the financial capacity
to move to online operations.
One of the biggest barrier is the cost of internet con-
nectivity, a result of high cost of power and infrastruc-
tural management. Service providers argue that it’s not
economically feasible to roll out a network to cover an
entire country, particularly in rural areas where usage
is low, but the cost of putting up a base station is equally
the same.
According to Clement Prince Addo, PhD researcher,
University of Electronic Science and Technology of
China, one way of reducing the cost of infrastructure
is to demarcate, and zone major cities — or the whole
country into zones.
Each zone takes only one mast (base station), owned
by an infrastructure provider and shared by multiple
service providers. A provider like the state regulator,
can own and manage the data from the base station. At
the middle level, service providers focus on providing
objective is to focus on policy and regulation reform to “As a global securities exchange, VFEX will
facilitate the process of bringing down Internet prices. seek partnerships with other global exchanges
A4AI has a reference target of contributing to achiev- and partners around the world, and become a
ing the UN Broadband Commission’s objective of Internet truly global platform.
access costing 5 percent of per capita income. “Foreign global companies invested in Zim-
This will be down from Africa’s average range of babwe can now seek a listing on VFEX,” said
between 20-30 percent. Ncube.
To bring these costs down, A4AI suggests focusing on ZSE CEO Justin Bgoni said his office had yet to
policy and regulatory reform that can result in a healthy get the finer details of the minister’s announce-
competitive market. ment, but it was hoping to get approval to
We need to have policy and regulatory frameworks operate in a special economic zone (SEZ) where
ensuring this and to incentivise players to compete in regulations are more relaxed and different from
lowering prices, A4AI executive director Sonia Jorge said other parts of the country.
in an interview with a regional media house Business “If we are to operate in a special economic
Tech. zone there are chances of getting tax conces-
“The second piece of what we need to do is to lower sions both for the stock exchange and the
the cost structures in the industries, allowing them to issuers.
pass on savings to the consumers. There is a strong link “It’s also treated like a separate country, so
between the cost structure and prices,” according to Jorge. you have more flexibility in terms of movement
Again the issue of infrastructure sharing was seen of money in and out of the country,” Bgoni said.
as a way to reduce the investment required. Reducing He said the repatriation of funds was one
the cost of spectrum and associated fees and through of the things the new stock exchange would
innovative uses of spectrum was also seen as a way of address.
reducing costs and subsequently prices. “If you think of other countries, it’s normally
In a blog post on its website, titled “Affordable internet good to link an offshore financial services centre
access: The cost challenge”, the Alliance for Affordable with your tourism,” he said.
Internet went as far as suggesting explicit subsidies on The plans come as foreign investors appear
retail internet access, both for infrastructure access and to have lost appetite for Zimbabwe’s capital
for end-user devices. markets. This year, foreign investors bought
“This is a strategy that should be adopted by all devel- a monthly average of just above US$1 mil-
oping countries as they seek to improve internet afforda- lion worth of shares on the Zimbabwe Stock
bility,” argued A4AI. Lower end-user prices provide the Exchange, down from a monthly average peak
best way to stimulate demand. As volumes grow, unit of US$26 million in 2013.
costs will fall and further price cuts will be enabled.” Significant changes in exchange rate policy
Another interesting suggestion is that countries and a failure to repatriate capital gains and div-
should advocate and put in place policies that encour- idends have been cited as discouraging factors.
age increased adoption of technology. In February last 2019, authorities announced
Innovation and policy initiatives in areas such e-Gov- that all shares trading in United States dollars
ernment, e-Health and the local caching of popular would from that point be valued in local Zim-
content, would fuel demand, lower unit costs, and result babwe dollars at a 1:1 exchange rate. — fin24.
in prices that become ever more affordable.

‘Digital trade only toll

for economic recovery’
A FRICA Continental Free Trade
Area secretary-general Wamkele
Mene said he had gone back to the
drawing board to review his priorities post
opportunity to reconfigure our supply and how they can be of service to public
chains, to reduce reliance on others and health is also now a priority. So I’ve had
to expedite the establishment of regional to go back to the drawing board as a result
value chains that will boost intra-Africa of Covid-19.”

Rebate of duty on essential goods

the Covid-19 pandemic and digital trade trade,” said Mene. Mene said operationalisation of the
may be the only way to awaken the sleep- As soon as he had made this undertak- trade zone must now include trade tools
ing giant. ing, both Ethiopia and Ghana went into to fight not just Covid-19, but other pan-

Mene has recommended that the launch
of the trade zone that was planned for July
1 should be postponed due to the Covid-19
pandemic, but he believes it’s the only tool
for economic recovery on the continent.
Eyewitness News spoke to Mene on
Monday, who said he and his team were
now waiting for heads of state and Gov-
ernment to say yes or no to this recom-
mendation, and for Ghana, the seat of
the secretariat, to reopen its borders, also
closed due Covid-19, for them to move
into their new offices.
Mene was sworn-in on March 19 at the
African Union Headquarters in Addis
Ababa, Ethiopia. He leads the secretariat
and is responsible for the overall manage-
ment of its day-to-day functioning.
His responsibilities include implementa-
tion of the AfCFTA Agreement and strategic
collaboration, stakeholders’ engagement
and resources mobilisation for the oper-
ationalisation of the AfCFTA Agreement.
When he congratulated Mene on his
election, the chairperson of the AU Com-
mission Moussa Faki Mahamat said:
“You have been elected on the basis of
your experience and skill. The task that
awaits you is quite gigantic but exhilarating
because you will be working on the most
emblematic project in the history of the
African Union. The African Free Trade
Zone is a necessity for Africa to strengthen
its integration.”
At the time, Mene outlined his priorities,
beginning with creating decent jobs and
improving livelihoods. He said he would
bring alive the market of 1,2 billion people,
its combined GDP of US$2,5 trillion and
more than 400 companies that earn annual
revenues of US$1 billion or more.
He was, however, cautiously optimistic,
citing key challenges including countries
that abandon the rules of the multilateral
trading system and Covid-19. He said while
the AfCFTA was the answer to the first chal-
lenge because it would consolidate and
advance continental market integration
objectives, the second challenge would
limit its impact.
“Through the AfCFTA, we have an
lockdown, and he and his team had to
work from Addis Ababa, waiting to go to
Accra, Ghana, when that country reopens
its borders after lockdown.
What AfCFTA has to offer
“What the negotiations were targeting
was reduction in value-added production
and goods to foster industrial development
in Africa,” said Mene.
In Mene’s vision, the AfCFTA will ensure
that rules of origin support Africa’s indus-
trial development objectives.
He wants car manufacturers in African
countries to use African components that
can be manufactured even by countries
that don’t have an automobile strategy.
He sees more agro-processing because
of its high-value addition and contribution
to food security, as well as centres of excel-
lence that will benefit not only countries
that are industrialised like South Africa
but all countries.
“Ghana, Nigeria, Rwanda, Kenya,
Uganda, Morocco and South Africa all
have an auto strategy — all of them see
a potential for inward investment if they
establish a manufacturing base for auto-
makers to come and invest.
We can harness this through the agree-
ment into a pan African value chain of
automobiles and other sectors.”
He said these and other sectors would
have an immediate impact on job creation
and Africa’s ability to produce in what he
called a massive scale. Fifty-four of the 55
countries have signed the agreement, but
only 29 have ratified it, but Mene said this
signalled political will and commitment to
market integration by the heads of state
and government.
Can AfCFTA survive Covid-19?
“The first few weeks have been very
challenging because I was sworn in on
the 19th of March and the African Union
shut down the following week, and so my
vision of establishing the secretariat has
been transformed by Covid-19. Some of
the priorities have been changed. Indus-
trial development, intellectual property
I
demics that would come in future.
He said a lot of time-consuming out- N order to enhance preparedness to fight the country duty free and VAT free in terms of Any person or organisation that is registered
standing work still needed to be concluded, the corona virus, and guided by the United the Customs and Excise (General) (Amend- with the Zimbabwe Revenue Authority and
but one of the difficulties was that all coun- Nations Covid-19 medical supplies, the ment) Regulations, 2001 published in Statutory has proof of that registration in the form of a
tries needed translation for all communi- Minister of Finance and Economic Devel- Instrument 88 of 2020, which was gazetted on Business Partner Number.
cation sent to them and back to the secre- opment has introduced a rebate of duty on April 14, 2020. Some of the goods that qualify
tariat. He said usually, trade negotiations essential goods imported for the fight against Who is eligible?
required countries to meet in one place coronavirus disease. Such goods may come into (See Table Below)
for two to three weeks at a time, but that
was not possible for the foreseeable future. Heading Commodity Description of goods Approved Products
Established blocs like the Southern No. Code
African Customs Union (Sacu) and the
Economic Community of West African 22.07 2207.10.90 Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or Alcohol solution
States (Ecowas) are expected to collectively higher
make their offerings to the AfCFTA but this 22.08 2208.90.99 Other undenatured ethyl alcohol of an alcoholic strength by volume of less Alcohol solution
process is now delayed. than 80% vol.; spirits, liqueurs and other spirituous beverages not elsewhere
“Sacu and Ecowas are customs unions specified.
— they have to agree on products that they 28.47 2847.00.00 HYDROGEN PEROXIDE, WHETHER OR NOT SOLIDIFIED WITH UREA. Hydrogen peroxide in bulk
are offering to one negotiating party. They
move as a collective, and between them it is 30.02 3002.15.00 Immunological products, put up in measured doses or in forms or packings for Covid-19 Test kits
retail sale
a bilateral negotiation. But that process is
quite detailed domestically and regionally 30.04 3004.90.90 Other medicaments (excluding goods of heading 30.02, 30.05 or 30.06) consist- Hydrogen peroxide presented as a medicament
because all members of that customs union ing of mixed or unmixed products for therapeutic or prophylactic uses, put up
must be in agreement. If a country is in a in measured doses (including those in the form of transdermal administration
customs union there is no other way to systems) or in forms or packings for retail sale not elsewhere specified.
come to a joint offer other than negotiating 30.05 3005.90.00 Other wadding, gauze, bandages and similar articles (for example, dressings, Wadding, gauze, bandages, cotton sticks and similar articles
internally as a customs union, and then adhesive plasters, poultices), impregnated or coated with pharmaceutical
Sacu presents to Egypt or to Ecowas.” substances or put up in forms or packings for retail sale for medical, surgical,
Mene said while Sacu and Ecowas had dental or veterinary purposes not elsewhere specified.
not concluded their offers, they were both 38.08 Disinfectants
at advanced stages of their internal pro-
3808.94.10 In containers exceeding 20 L or 5 Kg (H2O2 put up as cleaning solutions for Hand sanitiser; Hydrogen peroxide put up in disinfectant preparations for cleaning
cesses, and they would have concluded in
surfaces or apparatus.) surfaces
April, in time for the May summit that AU
chairperson President Cyril Ramaphosa 3808.94.90 Other Hand sanitizer, other disinfectant preparations; Hydrogen peroxide put up in disinfectant
was expected to host. (H2O2 Put up in forms or packings for retail sale as disinfectants or as preparations for cleaning surfaces
He said digitisation was already a prior- disinfectant preparations, containing alcohol, benzalkonium chloride solution or
peroxyacids, or other disinfectants)
ity before for the AfCFTA before Covid-19,
and its advantages were even more pro- 3808.94.10 In containers exceeding 20 L or 5 Kg (Hand sanitizer ) Hand sanitizers, hydrogen peroxide put up in disinfectant preparations for cleaning
nounced now. He said the African Union surfaces
was already working to develop digital
3808.94.90 Other ( Hand sanitizer and Other disinfectant preparations) Hydrogen peroxide put up in disinfectant preparations for cleaning surfaces
trade infrastructure to enable the trade
agreement to be effectively implemented.
“I’m talking from a customs point of 38.22 3822.00.00 DIAGNOSTIC OR LABORATORY REAGENTS ON A BACKING, PREPARED DIAGNOSTIC Covid-19 Test kits
view and for goods-in-transit, it’s very OR LABORATORY REAGENTS WHETHER OR NOT ON A BACKING, OTHER THAN
important to establish trade facilitation THOSE OF HEADING 30.02 OR 30.06; CERTIFIED REFERENCE MATERIALS.
digital platforms but we don’t have them 39.26 3926.20.10 Gloves, mittens and mitts Plastic gloves
yet at the pan-African level, which is what
3926.20.90 Other articles of apparel and clothing accessories Plastic face shields (covering more than the eye area); Protective garments made from
we are striving towards and this crisis has
plastic sheeting
underscored the need for us to accelerate
that work and rely more on digital trade 40.15 4015.11.00 Surgical Surgical rubber gloves
platforms,” said Mene. — fin24. 4015.19.10 Other latex examination gloves, whether or not sterilized Other rubber gloves.
6 8 — 14 May 2020 ZSE BUSINESSWEEKLY

Business Weekly Stock Market Update

Name Closing Previous Weekly 2019 Last YTD % Mrkt Cap Key Statistics
Price Price Change % Price RTGS$mln
Afdis 600 600 0.00 319 88.09 703.84 Indices
African Sun 50 51.58 -3.06 25 100.00 430.89 Previous Closing Change % Jan 2 2020 YTD %
Ariston 50 48 4.17 18.95 163.85 813.70 ZSE All Share Index 487.39 494.43 1.44 230.08 114.89
Art 74.5 58 28.45 13 473.08 325.55 ZSE Top 10 Index 398.25 398.67 0.11 202.68 96.70
Axia 214.75 206.25 4.12 64 235.55 1,170.16 ZSE Top 15 Index 411.9 412.64 0.18 204.98 101.31
BAT 8000 8000 0.00 4775 67.54 1,650.68 Medium Cap 700.35 725.06 3.53 287.79 151.94
Cafca 1800 1900 -5.26 178.02 911.12 157.23 Small Cap 1,549.82 1,631.38 5.26 632.83 157.79
Cassava 324.99 325.07 -0.02 140.3 131.64 8,419.12
CBZ 205 205 0.00 69.71 194.08 1,408.82 Market Capitalisation
CFI 70.75 70.75 0.00 70.75 0.00 75.02
Cottco 0.2 0.2 0.00 0.2 0.00 2.19
Previous RTGS$mln Closing RTGS$mln %
Total 63,241,247 64,058,736 1.29
Dawn 9 9 0.00 7.3 23.29 221.15
Delta 581.1 586.36 -0.90 340.06 70.88 7,464.00 Top 5 Risers
DZLH 91.5 80 14.38 42.75 114.04 327.57 Name Current Price Previous %
Econet 325.49 330.35 -1.47 147.18 121.15 8,432.07 Turnall 21.5 14 53.57
Edgars 32.01 38.45 -16.75 21 52.43 104.67 Art 74.5 58 28.45
FBC 125.25 125.25 0.00 65.25 91.95 841.62 TSL 192 150.25 27.79
FCB 22 22 0.00 9.95 121.11 474.48 Truworths 9 7.8 15.38
Fidelity Life 16.22 16.22 0.00 9.14 77.46 17.67 FMP 130 113 15.04
FML 152 152 0.00 31.05 389.53 1,049.02 Top 5 Fallers
FMP 130 113 15.04 17 664.71 1,609.60
GB Holdings 5 5 0.00 2.4 108.33 26.83
Name Current Price Previous %
Edgars 32.01 38.45 -16.74902471
GetBucks 12 12 0.00 12 0.00 139.57
Cafca 1800 1900 -5.263157895
Hippo 540.25 508 6.35 195 177.05 1,042.79
Old Mutual 4142.67 4304.78 -3.765813816
Innscor 716 716.02 0.00 352.17 103.31 4,043.80
African Sun 50 51.58 -3.063202792
Lafarge 300 300 0.00 180 66.67 240.00
Econet 325.49 330.35 -1.471166944
Mash 24.75 22.83 8.41 7.8 217.31 460.12
Masimba 48 48 0.00 18.05 165.93 115.99 Top 10 Market Capitalisation
MedTech 5.5 5.48 0.36 1.52 261.84 167.19 % of total mkt cap
Meikles 615 600 2.50 251 145.02 1,553.77 CASSAVA $8,419,116,976 13.14
Nampak 99.5 99.5 0.00 72 38.19 751.87 DELTA $7,461,597,158 11.65
Natfoods 2670 2670 0.00 901 196.34 1,826.28 ECONET $8,432,068,530 13.16
NMB 79 78 1.28 41 92.68 319.30 INNSCOR $7,131,339,903 11.13
NTS 3.1 3.1 0.00 2.15 44.19 7.87 PADENGA $2,924,604,576 4.57
OK Zimbabwe 204.25 180.93 12.89 55.24 269.75 2,539.74 OLD MUTUAL LIMITED $2,596,641,961 4.05
Old Mutual 4142.67 4304.78 -3.77 3650.03 13.50 2,711.58 OK ZIMBABWE $2,532,688,550 3.95
Padenga 540 540 0.00 245 120.41 2,924.60 NATIONAL FOODS $1,826,282,884 2.85
Powerspeed 46 46.18 -0.39 20 130.00 172.15 BRITISH AMERICAN TOBACCO $1,650,681,360 2.58
PPC 365.42 365 0.12 400 -8.65 135.52 FIRST MUTUAL PROPERTIES $1,609,604,503 2.51
Proplastics 166 161 3.11 82 102.44 415.69 Total $44,584,626,400 69.60
RTG 45.6 45.6 0.00 14.5 214.48 1,137.95
SeedCo
SeedCo International
347
452
346.75
452
0.07
0.00
190.25
300.5
82.39
50.42
851.98
1,089.90 Stock Market Weekly Review
Simbisa 280 280 0.00 125 124.00 1,574.12
Star Africa 8.08 7.94 1.76 3.55 127.61 380.98 Enacy Mapakame

T
Truworths 9 7.8 15.38 2.28 294.74 34.57 HE Zimbabwe Stock Exchange (ZSE)
TSL 192 150.25 27.79 75.75 153.47 685.64 maintained an upward trajectory with
Turnall 21.5 14 53.57 11 95.45 106.00 investors garnering a cumulative $1
Unifreight 10.8 10.8 0.00 9 20.00 11.50 billion last week.
Figures from the local bourse show that total
Willdale 6.5 6 8.33 3.13 107.67 115.57
market value during the week to Wednesday
ZBFH 150 150 0.00 72 108.33 262.79 increased by 1,29 percent to close pegged at
Zeco 0.02 0.02 0.00 0.02 0.00 0.09 $64 billion compared to $63 billion recorded
ZHL 44 44 0.00 15 193.33 674.67 in the previous week.
Zimpapers 30 30 0.00 13.4 123.88 172.80 The gains were sustained by firming
Zimplow 100.76 100.75 0.01 60.5 66.55 240.19 demand.
ZPI 15.1 15 0.67 5.7 164.91 259.22 The primary indicator, the ZSE All Share
Index added 1,44 percent of vale to close at
Bindura 48.5 44.24 9.63 16.18 199.75 606.18 494,43 points, extending its year-to-date gains
Falgold 3 3 0.00 3 0.00 3.33 to 114 percent.
Hwange 4.25 4.25 0.00 4.25 0.00 7.14 The ZSE Top 10 Index rose by a marginal 0,11
RioZim 550 505 8.91 234.6 134.44 671.16 percent to 398,67 points while the ZSE Top 15
Index also rose by a marginal 0,18 percent to
show at 412,64 points.

Free-trade deal for Africa to fight pandemic At 725 points, the Medium Caps was 3,53
percent above prior week’s 411 points. after the conditions for national lockdown Market watchers argue stocks may con-

T
HE delayed implementation of an Afri-
can free-trade agreement is a missed
opportunity as the pact offers “probably
the best form of stimulus” for the continent to
overcome the impact of the coronavirus pan-
demic, according to an enterprise that liaises
between business and the African Union.
“We unfortunately don’t have the ability to
play with quantitative easing and the exercise
of printing money,” Paulo Gomes, the vice
president of the AfroChampions Initiative,
said in an interview.
“Our stimulus is really to enhance trade
among the countries and create the condi-
tions to create jobs, develop small and medium
enterprises and make sure that we create
liquidity in the market.”
Gomes, a former executive director of
the World Bank, is one of 25 African busi-
ness leaders, including Gervais Djondo, the
co-founder of Ecobank Transnational, and
Ichor Coal chief executive officer Nonkululeko
Nyembezi-Heita, who wrote an open letter
to the continent’s political leaders. In it, they
warn that the postponement of trade under
the African Continental Free Area would be
a mistake.
First trade under the agreement, which was
due to take place on July 1, has been delayed
due to the coronavirus pandemic. While the
agreement entered into force legally last year,
protocols for trade in goods and services need
to be agreed to make the July deadline.
Instead of a full-blown postponement,
countries should work to facilitate the trans-
port of medical and personal protective equip-
ment as an immediate response to the virus,
while concluding outstanding negotiations
via virtual meetings, Gomes said.
The health and economic consequences of
the virus will result in sub-Saharan Africa’s
first recession in 25 years, according to World
Bank estimates. African finance ministers have
called for emergency economic stimulus of
$100 billion, including debt-service waivers
to combat the effects of the pandemic.
The trade pact would cover a market of 1,2
billion people with a combined gross domestic
product of $2,5 trillion, making it the world’s
largest free-trade zone.
It aims to lower or eliminate cross-border
tariffs on 90 percent of goods, facilitate the
movement of capital and people, promote
investment and pave the way for the establish-
ment of a continent-wide customs union. The
agreement is meant to be fully operational by
2030. — Bloomberg.
The Small Caps paced the fastest with a 5,26
percent jump to 1 631 points as it maintained
the biggest year to date gains at 157 percent.
Headlining risers for the week, Turnall put
on 53 percent to close at 21,5 cents followed by
Art which was 28 percent firmer to 74,5 cents.
At $1,92, TSL was 27 percent above prior
week or level while clothing retailer Truworths
put on 15,3 percent to 9 cents.
Property firm, FMP gained 15 percent to set-
tle at $1,30 wrapping up the week to find risers.
The property company has of recent enjoyed
a fine run pushing it straight into the market’s
big boys’ club — the top 10 by market capital-
isation. By close of the week, FMP was valued
at $1,609 billion occupying the tenth position.
The market was not short of fallers. Leading
bears for the week, clothing retailer Edgars
eased 16 percent to 32 cents. The clothing
retailer last week reopened some branches
were relaxed to enable those in industry and
commerce to resume business but under strict
adherence to health regulations necessary to
limit the spread of the Covid-19 pandemic.
Cable manufacturer, Cafca let go of 5 percent
to $18 while financial services giant Old Mutual
retreated 3,7 percent to $41,42.
At 50cents, hospitality group African Sun
3 percent below prior week. Telecoms giant,
Econet reduced value by 1 percent to $3,25 after
more than doubling data charges, in what the
market has viewed as an insensitive move at a
time the country is relying on data and internet
services to do business as well as access infor-
mation during this Covid-19 crisis.
Maintaining prior week levels were Afdis,
BAT, General Beltings and Zimpapers that
closed pegged at $6, $80,5 cents and 30 cents
in that order. Dawn, FCB and Lafarge were
also flat at 9 cents, 22 cents and $3 respectively.
tinue on an upward trajectory in the short to
medium term as investor seek a hedge against
inflation.
According to figures from the Zimbabwe
National Statistics Agency (Zimstats) annual
inflation in March stood at 676 percent, which
market watchers project to continue on an
upward trajectory on trickle down effects from
increase in retail consumer prices. Additionally,
increased electricity tariffs, unplanned costs of
mitigating supply chain disruptions during the
current global pandemic will also contribute
to the rise in inflation.
Although Government announced an
$18 billion stimulus package to recapitalise
industry and cushion them against the effects
of Covid-19 concerns are that this will likely
impact money supply growth triggered as
Government is likely to print money in order
to finance the stimulus package.

Locusts, pandemics, floods: East Africa can’t catch a break

H OW much more calamity can East
Africa take? Already struggling with
the twin crises of the coronavirus
pandemic and a Biblical scourge of locusts,
the region is now being lashed by exception-
ally heavy rainfall, with floods that threaten
life and livelihood from Ethiopia to Tanzania,
and all parts in between.
For the continent’s most economically
vibrant region, the trifecta of tribulations
may well add up to a fourth: food scarcity.
This ghost from East Africa’s past could
hardly have picked a worse moment to return.
The world is distracted by the pandemic, and
traditional sources of succour — the US and
Europe — face their own economic distress.
China, the region’s economic partner of
choice in recent years, has not yet demon-
strated the ability (or indeed the desire) to
fill the vacuum.
Even before the floods, the United Nations
Food and Agriculture Organisation (FAO)
was warning of “an unprecedented threat
to food security” in East Africa. Blame the
emergence of huge new locust swarms. The
Climate Prediction and Application Centre in
Nairobi says locusts are “invading the Eastern
Africa region in exceptionally large swarms
like never seen before.”
The swarms are a product of climate
change: Unusually wet weather over the past
18 months created perfect breeding condi-
tions. The war in Yemen may also have played
a role, by constraining the ability of local
authorities to control the first swarms before
they crossed over into the Horn of Africa.
The voraciousness of the locusts has hit
East African farmers hardest. According to
Gro Intelligence, a privately funded com-
countries may feel they do not have the luxury
of choosing between scourges. Uganda, for
instance, is asking its farmers to go ahead
with crop planting, even though it is strug-
gling to get them face masks — and despite
the risk that locusts will ruin much of the
harvest anyway.
The FAO is calling for $153 million to assist
East African countries, along with Sudan
and Yemen, in fighting the swarms; so far,
more than two-thirds of that sum has been
pledged or received. But combating the food
shortages, now exacerbated by the floods, will
require much larger sums. And still more will
be needed to put East African economies,
until recently the envy of the continent, on
life-support as the world recovers from the
pandemic.
Where will the money come from? East
African countries will compete with their
African neighbours — and the wider devel-
oping world — for emergency funds from
multilateral lenders like the International
Monetary Fund and World Bank, and even-
tually for bigger bailouts.
There will also be competition among Afri-
can nations for the rescheduling, or outright
forgiveness, of payments owed to China, the
continent’s largest creditor. Beijing has agreed
to join other G20 members in a $20 billion
debt moratorium for some poor nations, but
is not committing itself to more. Some Afri-
can governments say China is demanding
Unusually wet weather over the past 18 months created perfect breeding conditions for locusts strategic state assets in return for easing or
erasing debt. Other lenders worry that any
modity data and analysis service, the insects tions may swell new swarms in the summer, the coronavirus pandemic is hampering the tions from the virus, and travel restrictions consideration they give African debtors will,
have damaged more than 25 million hectares just as harvest season begins. effort. It is delaying the delivery of pesticides designed to impede its spread are constraining in effect, benefit Chinese lenders.
of farmland in Ethiopia, Kenya and Somalia. Fighting locust swarms requires pesticides, and equipment, and jacking up shipping costs. efforts against the swarms. Neither man nor nature, it seems, is inclined
Worse is to come. The current wet condi- and an army of people to spray them. But Governments need to protect their popula- But the danger to food security is so great, to give East Africa a break. — Bloomberg.
BusinessWeekly 8 — 14 May 2020 7

ZIMBABWE

CONGRATULATORY MESSAGE
TO HIS EXCELLENCY THE PRESIDENT
ON THE OCCASION OF THE

40TH INDEPENDENCE ANNIVERSARY

40 @40

The Chief Secretary, Deputy Chief Secretaries, Senior Management and staff in the Office of the President join the nation in congratulating His Excellency the President of the Republic of
Zimbabwe, Cde Emmerson Dambudzo Mnangagwa, on the occasion of our nation's historic 40th Independence Anniversary. The occasion affords us an opportunity to, once again, pledge
our loyalty and unflinching commitment to serving the nation under the visionary leadership of a seasoned revolutionary whose patriotic credentials are impeccable. The forty years of Independence
that we celebrate today are the culmination of the grand sacrifice that His Excellency and our heroes, both living and departed, undertook in order that our nation could be counted among the free and
democratic States pursuing the upliftment of humanity.

The advent of Independence in 1980 marked the start of an era of empowerment for the people of our great nation, through a massive transformational programme of rapid expansion in the provision
of education, primary healthcare, housing, water, energy, roads and other critical social amenities. That transformation would have been incomplete unless complemented by the Land Reform
Programme which finally addressed an injustice that had stood in the way of the full emancipation of our people from the shackles of colonial bondage. It shall always remain a fact of history that
subsequently, the years that followed had their own challenges, culminating in the New Dispensation which ushered in the Second Republic. We in the Office of the President and Cabinet draw
inspiration from the exemplary leadership of His Excellency the President, and take pride in leading the process of Government Policy formulation and the co-ordination of national development
initiatives, plans and programmes.

Without doubt, the Tripartite that we have forged with the Public Service Commission and Treasury at the apex of the machinery of Government will drive socio-economic transformation to new
heights. The global health emergency posed by the COVID-19 Outbreak demands that we redouble our support for His Excellency the President's clarion call for the unity of purpose and
resourcefulness required for national survival. The pandemic might shake our foundations and threaten to reverse the gains of our hard-won Independence, but our resolve and collective response
shall bring victory. That victory will enable our beloved motherland to commit more resources to innovation and development for the transformation of livelihoods.

The decade ahead requires acceleration of the migration to digital technologies as we seek to attain the objectives of Vision 2030 of a prosperous upper middle income economy as well as a knowledge
TERY di

and technology-driven society. As such, therefore, we will unequivocally support the Leadership in implementing the Whole-of-Government approach towards sustainable transformation. The
inclusive approach will strengthen the bond of co-operation involving Government, the private sector and other non-State actors, traditional and community leadership, religious organisations and,
indeed, all citizens through the Devolution process as enunciated by the Second Republic.

Once again, we say to His Excellency the President, the First Family and the entire Nation,

Makorokoto! Amhlophe! Congratulations! Long Live Zimbabwe!

Dr. Misheck J.M. Sibanda

CHIEF SECRETARY TO THE PRESIDENT AND CABINET
18 April, 2020
th

Tery DI6502554-F1
8 8 — 14 May 2020
Coronavirus leaves sport
business model offside
E ffects of the corona pandemic on the
world of sport will be long-lasting and
are currently unforeseeable. Perhaps it is
time to rethink the sports model we want for
the future, argues Alberto Carrio Sampedro
from Pompeu Fabra University in Barcelona.
Few cultural fields, if any, have increased
their popularity as much as sports in recent
years. Equally, few such fields face as uncertain
a future.
The short- and medium-term effects of the
Covid-19 pandemic are a big challenge for
sport, at least for the kind of sport that has
been promoted thus far by the international
governing bodies of sport.
It is true that the practice of sport has
become a healthy lifestyle model. It is true
as well that sport is a powerful educational
tool and an excellent means of integration of
socially vulnerable groups.
But it is also true that many of these vir-
tues have developed, deliberately or otherwise,
under the umbrella of elite sport commerciali-
sation. It is now a product marketed on a global
scale, employing a business model of sport
that may become unsustainable in the coming
years, just as it is in these Covid-19 days.
The budgets of billions handled by leading
sport governing bodies: IOC $ 5,7 billion; FIFA
$ 6,4 billions; NBA $ 8,7 billion, just to offer a
few examples, help us depict the scope of the
problem. Almost two thirds of the income of
these organisations comes from broadcasting
rights of major sporting events.
The business model of
sport is under pressure
This model of sport is currently offside.
Obviously, without sports events there is
nothing to broadcast; nothing to sell and no
income; no funds to transfer from interna-
tional to national federations, neither to soli-
darity nor social responsibility programmes.
Disagreements on these issues have already
arisen within the IOC and FIFA, and they will
soon do so in other international sport organ-
isations. While the present is depressing, the
future is worrying. There are no major sporting
events on the horizon in the short term. With-
out profits, businesses usually go bankrupt.
Consequently, leading sports governing
bodies and all industries that trade with sports
events need to adapt quickly to a post-pan-
The league is committed to finish the season by June 30
T
he Bundesliga in Germany is set to
become Europe’s first major football
league to resume playing during the
coronavirus pandemic, with a restart con-
firmed for this month, it was announced
on Wednesday.
Germany’s government and its federal states
have given the green light to start again, with
the date due to be decided when the German
Football League (DFL) meets for an Ordinary
Assembly on Thursday. The earliest possi-
ble return date is May 15, which some clubs
appeared to confirm on Wednesday, with a
May 22 start also considered.
The league has nine matchdays remaining,
and there is a commitment to finish the sea-
son by June 30. Fans will not be allowed into
stadiums, with a ban on mass gatherings in
Germany until August 31. Bayern Munich lead
the Bundesliga by four points.
Christian Seifert, chief executive of the DFL,
said: “Today’s decision is good news for the
Bundesliga and the Bundesliga 2.
“It is associated with a great responsibility
for the clubs and their employees to implement
the medical and organisational requirements
Public support is the most precious muscle in sport
demic scenario. It will not be easy but for elite
sport money means life.
Perhaps we will see a half-way product
between live sports and e-sports which already
generate huge profits and attract investments
from international sports governing bodies. TV
channels and betting agencies that are desper-
ate for content might be ready to accept this
in the near future.
But let us be realistic. Public support is the
most precious muscle in sport. Like musical
concerts and theatre plays, sport is unthinkable
without an audience. The complete silence
and standing ovations are indelible parts of a
sports show. And the show is precisely what
is sold and what makes sport attractive for
global consumption.
Bundesliga to resume soon
in a disciplined manner.
“Games without spectators are not an ideal
solution for anyone. In a crisis threatening the
very existence of some clubs, however, it is the
only way to keep the leagues in their current
form.”
“The eyes of Europe and all of the world
will be on us,” Germany and Bayern Munich
captain Manuel Neuer wrote in an op-ed in
German broadsheet FAZ on Wednesday. The
goalkeeper highlighted the responsibility on
German football’s shoulders and said it has
acted as a role model for society.
Football players’ status as role models came
into question after Hertha Berlin forward Salo-
mon Kalou live-streamed a video of himself
greeting teammates with physical contact and
bursting in on a teammate’s coronavirus test.
The former Chelsea player was suspended by
Nothing else matters: the solitude, the stren-
uous efforts, the injuries, (both physical and
psychological), all these burdens carried by the
athletes are secondary in the media-money
driven model.
The costs of the corona
crisis to athletes
This panorama has perverse effects. The
postponement of sporting events has already
ruined the effort and enthusiasm of a large
number of athletes. Most of these people,
unknown young people who have given the
best of their lives to a practice that is demand-
ing way beyond health concerns, are largely
ignored.
They cannot give up part of their salary
the club on Monday and later apologised.
Some have voiced fears that fans could
gather outside stadiums during the geister-
spiele: the games without fans. But several
leading Ultra and supporter groups have said
they have no plans to do so, even though some
have rejected the idea of football without fans.
Seifert, as well as influential club chiefs
such as Borussia Dortmund’s Hans-Joachim
Watzke and Bayern Munich’s Karl-Heinz
Rummenigge, have warned that cancelling
the league would put around 56,000 jobs in
the industry in danger.
Following negotiations with the broadcast-
ers, Seifert secured crucial payments of around
€280 million from the rights holders as some
clubs feared for their survival amid the pan-
demic. Bundesliga club FC Schalke 04 called
the crisis “existence-threatening”.
because the whole salary barely covers living
costs. Unlike the famous stars, these athletes
are not in the headlines of sport media, but
they appear every day on social media giving
advice to people, helping us to keep fit and
preserve our mental health doing sport at
home during this never-ending quarantine.
But even for those who are part of the sports
elite, the postponement of major sporting
events will have undesirable effects.
It requires new personal sacrifices. And as
if that was not enough, the expected concen-
tration of competitions in the near future is
incompatible with the physical and psycholog-
ical training that top-level sports performance
requires.
Not to mention that some of their most
Bundesliga teams resumed training in small
groups in early April as the DFL worked on
plans to bring back the league with a medical
concept for training and match operations
required by the government and its federal
states. Players and staff have been tested for
the coronavirus, and in a first wave, 1 724 tests
were conducted on all 36 clubs of the upper
two tiers late last week. Ten cases of COVID-19
were identified and reported to health authori-
ties. Not all cases were made public, as the DFL
asked clubs not to report cases individually.
Full results from a second round of testing
have yet to be released, although on the eve of
Wednesday’s decision, second-division club
Erzgebirge Aue put their entire squad in home
isolation after a member of staff tested positive.
Infected people must isolate, but the DFL’s
plan does not require full-squad isolation. The
Professor Leitch
basic rights as athletes are affected here. Above
anything else, athletes are human beings, and
as such they should be respected.
The effects of this pandemic will be
long-lasting and currently unforeseeable.
Perhaps it is time to rethink the sports model
we want for the future.
An unsustainable model from the eco-
nomic, ethical and environmental point of
view, or a humane model, respectful of gender
diversity, diversity of capacities and opinions.
A more democratic model in sports man-
agement and sports practice. In short, a world
of sport committed to the values of effort, social
responsibility and universal ethical principles
as stated in the Olympic Charter. Gold is up
for grabs, the challenge is priceless. — Online.
league has asked clubs to go into the final part
of the season with a squad that can be filled
with reserve or under-19 players.
Political decision-makers have sent mixed
signals on what will happen if a player or staff
member tests positive for Covid-19.
“I don’t know how the season can be finished
if one team is sidelined,” Anja Stahmann, the
chair of the German sports minister confer-
ence, told Sport1. Germany’s first Covid-19
deaths were reported on March 9, and the
league was suspended on March 13.
“Corona is under control,” Bavaria’s minis-
ter-president Markus Soder said on Tuesday
when announcing the lift of several restrictions
in the German federal state hit hardest by the
coronavirus.
According to numbers released by the Rob-
ert Koch Institute on Wednesday, Germany
had 164 807 confirmed cases of the virus,
with over 137 000 people recovered and 6 996
deaths.
Elsewhere in Europe, France, Belgium and
the Netherlands have cancelled their seasons,
and Italy, Spain and England are hoping for a
possible June return.— ESPN.
BusinessWeekly
Scottish
football
in ‘grave
peril’
S
cottish football will “remain
in grave peril” until games
resume in front of paying
supporters, SPFL chief executive Neil
Doncaster has warned.
The heads of key governing bodies
met government ministers to discuss
the resumption of sport across Scot-
land.
The Scottish FA, SPFL, Scottish
Rugby and others were invited to a
virtual summit with sport minister
Joe Fitzpatrick and professor Jason
Leitch.
Doncaster gave an account of the
“existential crisis” facing the game.
The meeting discussed the finan-
cial and economic impact of Covid-19
on sport and how and when sport
can resume safely were discussed.
Fitzpatrick said he was “encour-
aged by today’s constructive initial
talks”.
Doncaster made the distinction
between the challenges facing Scot-
tish and English football.
“We gave the minister a frank sum-
mary of the existential crisis our game
is facing,” he said.
“Gate receipts make up a far higher
proportion of our income than in
England, which benefits from huge
TV deals, so until we get back to play-
ing in front of crowds, our game will
remain in grave peril.
“We have already seen the UK
Government pledging £16m sup-
port to Rugby League in England to
prevent it from being devastated by
Covid-19. The longer we are unable to
play matches in Scotland, the more
essential will be significant financial
support for our hard-pressed national
sport.”
First minister Nicola Sturgeon said
recently sport would not be returning
anytime soon and Fitzpatrick insists
it “can only happen once it is safe to
do so — and the focus at the moment
must be the continuation of meas-
ures to slow the spread of the virus,
protect the NHS and save lives”.
“We have to develop a phased
return for sport, which reflects Scot-
land’s circumstances,” he added.
The prospect of staging sporting
events behind closed doors was
expected to play a key part in the
discussions, with Scottish Rugby due
to provide details of their plan to use
Murrayfield as a bio-safe hub in order
to get players back training and even-
tually stage competitive matches.
The rugby body are also keen on
greater collaboration between sport-
ing organisations in the fight against
the global coronavirus pandemic.
Sportscotland, who have released
£16,4m to struggling governing bod-
ies and clubs, say they “recognise the
financial strain which many organi-
sations, clubs and communities are
under at this time and are commit-
ted to continuing our support to the
sporting system”.
“As such, we will continue to work
with each sport and local partner to
determine what further financial sup-
port may be required,” they added.
— BBC.
BusinessWeekly
BusinessWeekly
A life without oil cash
A
frica’s most populous nation is
getting almost nothing from its mas-
sive oil wealth.
While headline Brent-crude futures have
rallied sharply in the past few weeks — rising
above $30 a barrel on Tuesday — a glut of
Nigerian oil is fetching about $10 less than
that. It’s a level that means fiscal revenue for
the continent’s biggest economy has cratered.
“It’s now dawned on everyone across
the country how severe this threat is,” said
Andrew Nevin, a partner and chief econo-
mist for Nigeria at PricewaterhouseCoopers
LLP.
“There is a possibility that at least for three
to five years, there’s going to be no revenue
flowing to the government from oil.”
Even at deep discounts,
Nigerian oil is selling slowly
Nigeria’s plight is playing out across the
world: from Venezuela to Iraq and Iran, pet-
rostates are grappling with the same bleak
future — one where their prized commodity
is worth a much less than it was, and where
private companies often still want their cut.
Twin challenge
Nigeria is faced with the twin challenge of
dealing with the Covid-19 pandemic itself,
and a slump in the price of crude, Finance
Minister Zainab Ahmed said in a webinar
on Tuesday.
“It’s a double whammy,” she said.
“This has set us back significantly.”
Global efforts to fight the spread of coro-
navirus have driven oil prices so low that
they no longer cover the cost of pumping
barrels for many companies in Nigeria --
let alone providing the government with
crucial cash.
Nevin of PwC said at a webinar on April
30 that when oil prices are at around $20 a
barrel, Nigeria gets very little for its oil. The
commodity normally contributes about half
of fiscal revenue.
Call the IMF
The rout has been so severe that, having
resisted borrowing from the International
Monetary Fund for many years, Nigeria has
secured its first ever loan - $3,4 billion -
from the Washington-based organisation to
help plug some of the holes that appeared
in the country’s 2020 spending plan. It’s also
asked to borrow a further $3.5 billion from
other development institutions, including
the World Bank. Nigeria started this year projecting it
As of late April, the IMF was predicting would sell oil at $57 a barrel, then it revised
Nigeria’s economy would shrink by 3,4 per- that down to $30 a barrel, and then $20.
cent this year. Previously, it was anticipating
Oil revenues will decline by $26.5 billion
2 percent growth. this year, down from $54,5 billion in 2019,
“It is no longer a secret that governmentaccording to the IMF.
revenues have collapsed,” said Clement “This is a period of crisis,” said Fortune
Agba, minister of state for budget and Obi, who works for Shell Nigeria and is a
national planning at the webinar on Tuesday.spokesman of the country’s oil union for
senior workers.
Shale disruption
“Job losses are imminent across the
Even before the coronavirus halted petroleum industry. The impact of this
mass-transportation systems and trashed oil will start reflecting from June and July. The
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Newspapers (1980) Limited
Nigeria is faced with the twin challenge of dealing with the
Covid-19 pandemic itself, and a slump in the price of crude
demand, the rise of US shale oil was already
proving uniquely challenging for Nigeria.
Booming production from shale drastically
cut Nigerian exports to the US - once the
destination for about 40 percent to 50 per-
cent of the country’s cargoes.
Despite near rock-bottom prices, trad-
ers said on Tuesday that about a quarter of
Nigeria’s crude oil cargoes for loading this
month have yet to find buyers. They should
normally have been sold out by now.
US shale took key Nigerian
export market away
At least six tankers carrying about 4,5 mil-
lion barrels of the country’s crude have been
floating off Gibraltar and nearby Ceuta -just
inside the entrance to the Mediterranean Sea
from the Atlantic - since as long ago as the
end of March, according to tanker tracking
data monitored by Bloomberg. A seventh
vessel is about to join them. In normal mar-
kets, those barrels would go straight to oil
refineries for processing into gasoline, jet
fuel and other products.
Lost earnings
Last Word
Speedy
rescue work
needed by
business
BusinessWeekly
Last Word
T
he formal sector is now
allowed to reopen for busi-
ness, but this is not as sim-
ple as just sending text messages
to workers to turn up for duty and
opening the doors.
Just for a start there are complex
logistics. The business, and it might
just be a small affair of three or four
people, has to have one of those
temperature scanners and needs
a supply of an alcohol-based san-
itiser. The staff also need masks,
but that is the simplest problem
to staff; most will have bought one
from a backyard tailor or made one
themselves, and the business owner
can in any case get a tailor to make
up a batch cheaply.
Smaller industrial companies
and smaller shops are often in com-
plexes, so it might be possible to
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pensers found in supermarkets.
The Government now says it can
Weekly Business Zim arrange screening tests. Employ-
ers need to take the statement at
its face value and phone up, and
keep phoning until the clogged
lines clear and they can make the
appointment. Again smaller busi-
nesses might be able to combine so
that they can offer a large block of
staff and thus earn a visit, rather
than having to find transport to
get a hospital.
Workers will be having trans-
port problems. The Zupco fleet is
seriously inadequate for a business
resumption, but arranging com-
pany transport is expensive. Zupco
can take credit for innovation in
finding a way round the fleet short-
age and the kombi ban by putting
their franchised kombis back on
the road.
But then staff have to go through
road blocks, some run by reasona-
ble police officers others by people
not so reasonable, with municipal
security staff being perhaps the
most flushed with new power. This
time we have no standard proce-
dures.
But all these logistics fade into
insignificance when the business
person starts looking at stocks and
cash flows. Almost everyone has
had to pay out on at least one pay-
roll, at the end of April, with zero
revenue flowing in. Even the May
demands look bad, with less than
three weeks of potential business,
and for many just two weeks, and
reality is that some members will certainly risk collapsing if the low prices persist. yet the same overheads.
be impacted. What matters most to us is Rent moratoriums might help
Keep pumping those leasing residential accom-
how to manage the process of any of such
expected exit.” Pressure from the government and banks modation, but the regulations care-
Social unrest will keep oil wells producing to sustain dollar fully excluded business premises,
inflows even if it’s not economic to do so on so those bills have to be paid. And
Another concern in Nigeria is that a paper, said Cees Uijlenhoed, chief financial then there are the sums needed for
period of economic distress could lead to a officer First Exploration & Petroleum Plc, an rates, water and electricity with the
return of social unrest that dogged the coun- independent producer. private water delivery companies
try as recently as 2016. The Niger River Delta, His view, which is more optimistic than
at the heart of Nigeria’s crude production, many, is that prices will reach around $50
charging very large sums to deliver
has suffered bouts of militancy and violence a barrel by year end, and that Nigeria will water that municipalities cannot
send down the pipes.
for years, with oil facilities targeted by people be aided by the destruction of the U. shale
claiming they were unfairly treated by the industry. The Government has promised a
government and big oil companies. The government’s focus will probably be package of support, but no details
Nigeria’s worst outcome would be that its on maximising its revenue by curtailing out- have emerged. Bankers are sup-
prices stay low and production is reduced put from high-cost producers, with deep posed to be the ones making the
by renewed unrest. offshore operators likely to be the hardest low-interest long-repayment con-
Nigerian oil output, flows have hit from such an approach, Uijlenhoed said, cessionary loans, but they seem to
adding that shutting production “leads to be in the dark as well. A task force
been hurt by militant attacks zero cash-flow through the bank accounts is looking into the matter, and has
“A concern is social stability in oil-produc- and adds to the risk profile”. been given instructions to work
ing areas as weaker government support and The real question is how much Nigeria
rising unemployment lead to social discon- can afford to lose as a nation, and how much
quickly, but the bureaucracy still
tent,” said Jeremy Parker, head of business longer it can withstand those losses, said needs to spin a lot faster if many
development for West Africa at Citac Ltd. Kola Karim, CEO of Shoreline Energy, a big employers are going to meet the
May pay date and the May rent
“There is a risk that this could lead to independent producer in the country.
spikes in incidences of politically-motivated payment.
Nigerian economy and oil in Then there is the question of
vandalism or theft, leading to production
disruption.” Niger Delta and Port Harcourt stocks and supplies. The lockdown
Although oil makes up just 9 percent of His view is that there should be manda- was announced with little warning,
the Nigerian economy, crude exports bring tory oil-production cuts in the country so so hopefully most businesses had
in more than 90 percent of foreign exchange that barrels aren’t produced at loss-making enough in place for at least a week
earnings. Non-oil revenues remain one of levels and revenue is deferred instead. or two, but supply chains now need
the lowest in the world, with 65 percent of “It’s going to get worse,” Karim said. to be re-established and for many
GDP largely dependent on “recycling of pet- “The problem is a serious one and it’s not
rodollars,” according to the IMF. something that’s going to go away easily. I’m
that involves being at the end of
an imported cargo chain or rely-
For years, banks have preferred lending not sure what Nigeria is doing but for me
to the lucrative oil sector. With 26 percent this is an emergency that government should ing on small businesses who may,
of their loans to firms producing crude, they be attacking like Covid-19.” - Bloomberg. or may not, reopen themselves.
8 — 14 May 2020 9
Another logistical nightmare and
another cashflow problem since
suppliers want money on delivery,
yet exchange rate volatility has
changed the requirements.
Finally there is the problem of
customers. Many businesses rely on
a wide spread of customers, either
directly or indirectly through their
retailers. Yet with three quarters
of the economically active popu-
lation in the still-closed informal
sector, the total demand for goods
and services will be lower and a
lot depends on what sort of busi-
ness you are in as to how hard this
dearth of customers will hit you.
But all will be hit, with foodshops
and supermarkets being the least
affected and clothing stores, other
suppliers of deferrable purchases,
and the wholesalers for vendors
probably the worst. This leaves
out the restaurants, hospitality
industry, pubs and gyms who stay
locked. They do not even have the
cash-rich groups giving them some
business.
So most business owners face
serious handicaps. Combining, as
we have suggested, can help and
those business organisations are
now going to have to earn their
subscriptions by getting involved
in the processes required.
Government policies are simple
and reasonable. But each requires a
major effort to produce something
that can work, and work quickly.
Fortunately
the ministers in the productive
sectors appear to be willing to react
fast, with Minister of Industry and
Commerce Sekai Nzenzi taking the
winner’s palm for identifying the
testing muddle on the very first day,
finding out that postponement was
the only solution to avert a total
collapse, and then no doubt playing
a leading role in selling this policy
change.
Similar swift activity is needed
in the financial sectors to work
out how the first tranches of basic
support can be moved through the
banks into the business accounts
over the next week. Even modest
support will keep businesses alive
till June, and keep job losses very
low, if given quickly. The bigger
stuff can come later as everyone
takes a deep breath through their
open doors and work out in detail
what is required for 2020.
Military writers have noted that
orders at the top and at the bottom
are simple. Dwight Eisenhower was
ordered before the D-day landings
in the last world war “to enter the
continent of Europe and under-
take operations aimed at the heart
of Germany and the destruction
of her armed forces”. At the bot-
tom Lance Corporal Jones and his
squad leapt out of their landing
craft and Jones screamed “Charge”.
The bit in-between resulted in a
2m stack of operational orders in
the cabin of the senior naval officer
off the coast of Normandy, the per-
son who had to deliver Jones to the
right place at the right time with
the right ships shelling the right
gun emplacements so he could
leap out.
It is the same in civilian life.
The Government can give sim-
ple instructions and make simple
and effective policies. The worker
coming to seep out the premises
can grab a broom. The bit in-be-
tween can be difficult and complex
and in this emergency we do not
have the time for endless debate.
We need to be able to move fast
with Government, banks and busi-
nesspeople working out simple but
highly effective processes to get
everything moving again.
We will make mistakes, but we
can make these small mistakes,
if we move fast but with our eyes
open. It will require a lot of peo-
ple working a lot of hours. But the
achievements of winning through
an emergency can be great.