ZSE Set to Toast More Listings

Chris Muronzi
28 January 2010

ZIMBABWE Stock Exchange (ZSE) chief Emmanuel Munyukwi has already raised the champagne glass once this year, and it looks like the securities boss might have an excuse to take a sip at least three more times before June. A reverse listing by Tawanda Nyambirai's TN Financial Holdings of Tedco Ltd earlier in the month saw the ZSE chief toasting to a successful deal.
Now, with speculation rife that the ZSE, a rather laid-back market in terms of business activity and deals, could see at least three more listings.


People close to the developments say with Imara Capital Holdings, a Pan-African investment banking and asset management group, Telecel Zimbabwe and little-known Aquiver Wireless coming on board, the market might be a hive of activity for stockbrokers too.
While Imara and Aquiver's listing look certain, Telecel International, the controlling shareholders in Telecel Zimbabwe, would have to negotiate carefully around legal and corporate minefields littered in and around the local operation.
Analysts do not see the listing succeeding until Telecel International, 60% shareholders in Telecel Zimbabwe, sell a disputed 11% stake to its local partners.

Under Zimbabwe's laws, foreigners are not allowed to control telecommunications firms.
The international mobile phone operator has been under pressure for years to scale down its shareholding to a minority but the group still calls the shots.
While Telecel Zimbabwe's partners might be happy to go ahead with a listing, little will happen until the group complies with a High Court order to sell the disputed 11%.
Exiled businessmen James Makamba and businesswoman Jane Mutasa own significant shareholding in the mobile phone operator and have pre-emptive rights for the shares should Telecel International opt to sell.

By getting a listing on the ZSE, analysts say, Telecel International shareholders feel they could have princely sleep insulated from ownership headaches should government follow through on plans to compel foreign businesses to own minority shareholding in local companies.
Analysts believe a listing could be a smart business move for the third largest mobile operator's foreign and local shareholders judging by positive investor sentiment on technology and telecommunications shares on the local market and elsewhere.
But that depends entirely on whether Telecel International overcomes "outstanding issues" relating to the 11% stake that could see local investors controlling the mobile operator.
A Telecel International official Marble Mpoli refused to comment on the matter.
Should the Telecel listing fail, Finance minister Tendai Biti has promised at least three other privatisations and listings this year.
Last year, Imara Capital led investor conferences urging foreigners to take the risk and invest in the country.
Mark Tunmore, Imara Capital chief executive officer, could neither deny nor confirm the move when reached for comment this week.
The group has offices in Botswana, Malawi, South Africa, the UK and associate offices in Malawi and Zimbabwe and working relationships with stockbrokers in Zambia, Namibia Equity Brokers and Mac Capital in Dubai.
According to Imara, the group has funds under management and administration close to a billion dollars.
Imara provides corporate finance, advisory and asset management services for institutional and private clients.
Another surprise might be the bounce-back of Kingdom Financial Holdings Ltd on the market after a merger between the banking group and Meikles Africa Ltd ended in tears last year. But KFHL boss Nigel Chanakira will need to shake off sentiment after his rival John Moxon was specified by government.
Moxon believes Chanakira caused his specification.
Analysts say Chanakira could do with a partner, possibly a South African bank without a presence in the local market.
If KFHL attracts a shareholder with deep pockets, analysts see the group clawing back market share.

Zimbabwe FM Biti Warns Unity Government At Risk, Urges Regional Intervention

Finance Minister Tendai Biti warned that if the unity government fails to achieve key objectives including the drafting of a new 'people-driven' constitution, the power-sharing arrangement in Harare could fall apart
Ntungamili Nkomo Washington 26 January 2010

Zimbabwean Finance Minister Tendai Biti warned Tuesday that the national unity government in Harare could collapse if so-called outstanding issues that have been troubling it are not addressed and if its founding principles are not fulfilled, urging regional leaders to intervene to break the impasse.
Biti, also secretary general of the Movement for Democratic Change formation led by Prime Minister Morgan Tsvangirai, told journalists at the National Press Club in Washington that negotiations between his MDC party and President Robert Mugabe’s ZANU-PF had deadlocked in recent weeks and that South African President Jacob Zuma, a mediator in Zimbabwe, should step in.
He warned that if the so-called inclusive government does not achieve its key objectives, including the drafting of a new "people-driven” constitution, the power-sharing arrangement in Harare could fall apart.
But Biti said he was generally optimistic about Zimbabwe's future despite political wrangling and resistance from ZANU-PF hardliners.
“This equation can only work if those fundamental foundational cornerstones which brought the Zimbabwean parties involuntarily together are addressed," Biti said. "If there is a fear that there is arrested development on the things that gave rise to [the government] such as democratization, writing of a new constitution and economic reforms, it will collapse. This is the time for President Zuma to show leadership and intervene."
Appealing to the international community for help raising the estimated US$8 billion needed for national reconstruction, Biti called on Western nations to end their isolation of Zimbabwe and help the country rebuild.
Biti called for the “decimation and elimination” of Zimbabwe's foreign debt of some $6 billion foreign with the help of multilateral creditors including the World Bank and the International Monetary Fund. Asked by VOA to respond to complaints by ZANU-PF that the MDC was not campaigning hard enough for sanctions to be lifted, Biti declined to comment.
The finance minister is in Washington for discussions with the Bretton Woods institutions as well as senior U.S. government officials

World Bank Projects Zimbabwe Economy Will Expand 7.1 Percent This Year

World Bank Projects Zimbabwe Economy Will Expand 7.1 Percent This Year
Finance Minister Tendai Biti, currently in the United States for consultations with the World Bank and International Monetary Fund, projected a comparable 7 percent growth rate this year in his budget for 2010
Ntungamili Nkomo Washington 25 January 2010
The World Bank is forecasting economic growth of 7.1 percent in Zimbabwe this year on a rebound in activity, slowing to 6.3 percent in 2011.
The growth will outpace that of all countries in the Southern African region, the World Bank said in its 2010 Global Economic Prospects report.Finance Minister Tendai Biti, currently in the United States for consultations with the World Bank and International Monetary Fund, projected a 7 percent growth this year in his 2010 budget.
The World Bank projected that the South African economy would expand just 2 percent this year and 2.7 percent in 2011. Neighboring Botswana will register a 4.8 percent growth picking up to 5.6 percent in 2010, the bank said.
But economic analyst Rejoice Ngwenya of the Coalition for Market and Liberal Solutions told VOA Studio 7 reporter Ntungamili Nkomo that the projections are too optimistic as Zimbabwe lacks many essential ingredients for growth.Elsewhere, Prime Minister Morgan Tsvangirai and Deputy Prime Minister Arthur Mutambara departed Monday for Davos, Switzerland, to participate in the World Economic Forum opening on Wednesday.Political sources said the prime minister and his deputy would engage leaders of the world’s largest economies on the sidelines of the forum aiming to drum up aid and investment to rebuild Zimbabwe's economy. President Robert Mugabe did not accompany them because he was not invited, sources said.

Consumer Price Index

Please contact me for a copy of the table
The detailed Consumer Price Index table updated to December is attached. With apologies, I made a typing error in my report yesterday, in which I said that food prices in December 2009 were 15,8% lower than in December 2008. I should have typed 15,08% down. In the table, the figure shown is correct, although rounded off to one decimal place to 15,1%. I have carefully checked the columns in the attachment and believe I have not slipped up again! However, the published table’s calculated monthly or annual percentage changes do occasionally differ from mine in the second decimal place position. Their rounding off from three or four decimal places down to two occasionally results in small gaps.Now that we have the ability to calculate annual changes, we can see that prices have come down for many imported items, but many of these changes stem from the mis-aligned foreign currency values that were firmly in place a year ago and for many months before the end of 2008. Shopkeepers also had to depend on cross-border traders, most of whom were unable to obtain the foods at wholesale prices, so the mark-ups in Zimbabwe were on retail prices and were pushed up further by the relatively less efficient way and means employed by cross-border traders. All of these costs were able to come down when local stores were able to place direct orders with South African wholesalers and manufactures, and all of them were obliged to bring down local selling prices as competition between supermarket chains and other retailers became stronger.For these reasons, the first four months of 2009 might best be seen as periods of adjustment, and when we have put the first four months of 2010 behind us, the year-on-year inflation figures from then will have more meaning. We closed 2009 with an average inflation rate of minus 7,7%, but from April this year it is likely that the negative numbers will start moving quickly into less comfortable positive inflation rate figures. Because of the contrast against the low index numbers reached by June 2009, it appears likely that the rate by June 2010 will reach or exceed 5%.Another of the changes a year ago was that the rand started strengthening against the US dollar, as as most of Zimbabwe’s have been paid for with weakening US dollars, but bought in South Africa, the changes added to Zimbabwe’s import costs. This year the changing relationships between the currencies Zimbabwe has come to depend on could have an important bearing on Zimbabwe’s procurement costs.From the annual inflation figures shown against the individual items in the more detailed breakdown, it can be seen that typical supermarket items came down by significant percentages, as did small tools, hospital services and wine. The increases appear to mostly lie in the areas dependent on local suppliers, the highest being dental services at 141%. Labour costs have caused membership fees at recreational facilities to rise and hairdressers are charging more, but exceptions are imports of fuel and lubricants, which increased by more than 50%, and telephone equipment, which rose by 147%. I hope the table proves helpful.,John

Zimbabwe must clear arrears first

Written by MIRIAM MARUFU
Jan 19, 2010

The African Development Bank (ADB) on Monday said Zimbabwe must clear its arrears with international lending institutions before it can benefit from available funds.
ADB deputy president Aloysius Ordu told journalists that Zimbabwe’s debt of about 6 billion US dollars was too huge to allow the troubled southern African country to access new money.
Harare owes the international donor community about 3.2 billion dollars and owes around 1.3 billion to institutions such as the ADB, International Monetary Fund and the Word Bank.
Zimbabwe, having seen a decade of political turmoil and economic decline, is still largely dependent on donor support

Zimbabwe's Marginalized Central Bank Said Near Collapse as Creditors Press

Zimbabwe's Marginalized Central Bank Said Near Collapse as Creditors Press
Financial sector sources said the Reserve Bank of Zimbabwe faces bankruptcy as it cannot meet obligations to creditors including companies and NGOs whose funds it diverted in years past and never reimbursed.
Gibbs Dube Washington 19 January 2010
Media reports and financial sector sources say the Reserve Bank of Zimbabwe faces bankruptcy as it cannot meet obligations to creditors who include private companies and non-governmental organizations whose funds it diverted under the former government of President Robert Mugabe, and never reimbursed.
The RBZ is said to be underfunded and to lack a substantial board of directors to manage an acute internal crisis, a situation that has also resulted in staggered monthly payments for its staff, sources close to the institution said.The terms of RBZ board members Grace Chella, Clever Mumbengegwi, Mike Ndubiwa and Phineas Chiota ended in 2008 and they have not been replaced.
“The bank is bankrupt as its credit worthiness and credibility was once based on a false currency that was fueled by a system of political patronage,” Harare economist Rejoice Ngwenya told VOA.Ngwenya said that with the replacement of the debased Zimbabwe dollar by a multiple-hard-currency monetary regimen, and with patronage curbed by the installation of a national unity government, "we are not surprised that our noble bank and lender of last resort is facing serious problems.”He said private companies and NGOs reportedly taking the RBZ to court were free to sue the central bank, which diverted billions of U.S. dollars in funds from their accounts to fund quasi-fiscal activities over the past eight years.The RBZ financed a broad range of government programs by printing money, including the Productive Sector Facility Scheme, the Basic Commodity Supply Side Intervention program, the Local Authorities Re-Orientation Program and the Farm Mechanization and Agricultural Support Enhancement Facility.
But for other purposes such as purchasing fuel, electric power and food from abroad, the RBZ dipped into customer accounts to tap hard currency, Reserve Bank Governor Gideon Gono has publicly acknowledged.
The former opposition Movement for Democratic Change formation headed by Prime Minister Morgan Tsvangirai has been pressing for Gono to be removed, but President Robert Mugabe, who reappointed him in late 2008 without consulting his future governing partners, has adamantly refused.Financial sector sources said the RBZ continues to hold monetary reserves from commercial banks as mandated by the country's Banking Act. It was not clear to what extent this function has been constrained by its mounting woes.Despite the bleak picture emerging from the RBZ, Ngwenya told VOA Studio 7 reporter Gibbs Dube that Zimbabwe could function without its central bank. He said the Ministry of Finance, which currently exercises far more financial power than the diminished central bank, would name an interim curator.
“As far as Zimbabwe is concerned, this is the kind of institution that we can do without as it is an institution that symbolizes all the negatives and all the trials and tribulations that this country has gone through,” he said, adding that “we are not going to have any weeping and mourning if it collapses.”

The December 2009 inflation statistics

The December 2009 inflation statistics permit the first calculation of an annual rate of inflation since the adoption of the re-based index. This shows that average prices fell by 7,7% during 2009. The main reason for the decline is that the US dollar exchange rate in December 2008, against which the December 2009 prices are compared, carried a scarcity premium that had elevated prices to levels that could not be sustained when competition between the providers of goods and services began to take effect. Also, in the first months after the previously illegal use of foreign currency was legalised, shopkeepers and others had to pay a substantial registration fee in foreign currency to remain within the law. This had to be passed onto consumers, so prices could be reduced when the registration fees were waived.

As the most active competition was taking place between supermarket chains that had become heavily dependent on imports, the prices of food declined by 15,8%, measured year-on-year, and clothing prices declined by 18,1%. These declines might have been higher, but for the strengthening of the rand in the first half of 2009. In sectors where the main suppliers were local, the trends were often in the opposite direction. Housing costs, which are dominated by rent, rates and power, went up by 13,8%, transport by 8,9% and education by 10,6%.

In December 2009, prices on average rose by 0,48%, following upon relatively minor increases in food, housing costs, transport and alcohol, but larger increases were recorded for education, hotels and restaurants.

The summarised table is attached and the annual figure mentioned is shown at the bottom right. Further negative numbers might be expected in the first months of 2010, but the steep fall in the All Items averages in the months beyond the first quarter of 2009 are likely to result in the year-on-year figures moving above five percent towards the middle of 2010.

I hope to have the more comprehensive table on its way to you by tomorrow.

John

update of Poverty Datum Line Index

The Central Statistical Office was hoping to issue an update of its Poverty Datum Line Index by now, but as yet I have not received figures more recent than those for October. However, as negotiations on wage adjustments are in progress and as the unions are trying to extract unrealistic rates from employers, I am hoping that even the October figures will assist you if you are involved in debates on pay.The index shows that, for the whole of Zimbabwe, the average cost of food and non-food items for a family of five in October was US$451,22. This was lower than the figures for the first three months of 2009, during which prices were trending downwards, and they reached their lowest point at US$418 on May, since when they have been a little erratic. The October average was almost matched by the July average of US$450,22, but in that month the spread around the country was much less pronounced, ranging between US$408 and US$468, depending on which province was being surveyed. In October, the lowest was US$392,29 for Mashonaland Central and the highest was US$553,40 for Matableland North. While the figures do indicate that many breadwinners who are responsible for families of five would struggle on wages of less than US$450 a month, and in certain areas this figure would fall well below requirements, it is also evident that most households in the country would need to have more than one wage earner or more than one source of income. Trades union arguments that minimum wage levels have to be high enough to permit a single wage-earner to meet the families’ entire requirements have already made Zimbabwean goods uncompetitive on export markets and are even making them uncompetitive with goods imported from neighbouring countries.As Zimbabwe’s failure to recover a competitive edge for its own products in Zimbabwe’s shops is already impacting severely on the pace of recovery in the manufacturing sector, Trades unions and workers’ committees should be advised that demands for wages that would make the goods even less competitive are certain to slow the creation of new industrial jobs and are even likely to cause the loss of many jobs now in existence.Zimbabwe’s employers desperately need some respite from steadily rising production costs while the slow recovery progresses. Demands for unaffordable wages now could easily reverse the recovery and force retailers to continue relying on imported goods.Many employers are trying to make direct comparisons between wages paid in neighbouring countries, grade for grade, with those being paid and now being demanded in Zimbabwe. Having come from the highly distorted situation of a year ago, many Zimbabwean packages included allowances that have since been factored into wage demands and the justification for many of these fell away with the adoption of a stable currency. They now appear to be one of the factors that has caused Zimbabwean wages to be higher than those paid in the region and very significantly higher than those paid in India and China, with whose goods Zimbabwean producers have to compete.If you are involved in wage debates, I hope you will be able to introduce some of these issues into your negotiations. John

Zimbabwe inflation at -7.7 pct in December

HARARE- Zimbabwe’s year-on-year inflation stood at -7.7 percent in December, official figures showed on Friday, as the adoption of multiple foreign currencies by the unity government earlier in the year ended hyperinflation.

The Central Statistical Office (CSO), which started calculating price increases in United States dollars last December, published annualised inflation data for the first time on Friday.
Zimbabwe’s inflation peaked at 500 billion percent — according to the IMF — as Zimbabwe’s decade-long political and economic crisis reached its height in December 2008.
The month-on-month inflation rate for December 2009 was 0.5 percent, a 0.6 percentage point increase on the November figure of -0.1 percent, the CSO said.
Zimbabwe’s economy is showing signs of recovery after a decade of decline, following the establishment of a power-sharing government between bitter foes, President Robert Mugabe and Prime Minister Morgan Tsvangirai last year.
Reuters

Economist Says Financial Recovery Programme is Unrealistic

Lance Guma
11 January 2010

Leading Zimbabwean economist John Robertson has argued that the government's Short Term Economic Recovery Programme (STERP II) document deliberately ignores the real cause of the country's economic crisis. Robertson said the recovery plan acknowledged the need for international assistance but fails to show how the mistakes of the past era have been addressed. This he argued will not encourage outside help.

Robertson says the document seeks to blame 'sanctions' for the malaise and yet most of the damage was self inflicted after 'decisions were taken to close down Zimbabwe's biggest business sector (agriculture) and to dispossess the investors who had built this capacity.' He said the importance of farmers who had already transformed agriculture and who used to be relied upon to deliver 'is not acknowledged, not recognised and not admitted.'
Robertson gave the example of the dairy industry saying the STERP II document blamed 'challenges with overall livestock production,' for undermining the industry. He said this is 'simply dishonest.'
'Dairy farming was not undermined by livestock production challenges. It was undermined by the eviction of the owners of nearly all the dairy farms in an acquisition process that destroyed a large percentage of the dairy herds. True enough, "livestock production challenges" did follow, but for reasons carefully avoided in the STERP II document,' he argued.
He said highly skilled dairy farmers used to produce more than 10 times the current volume of milk, and because this was well in excess of national requirements, a wide variety of dairy products could be exported. 'Now that production is about a quarter of the country's requirements, substantial imports are needed.' He said any attempt to revive the sector cannot ignore what got it into trouble in the first place.

Meanwhile a London based think tank, the Economist Intelligence Unit, has also expressed misgivings about the credibility of the economic programmes pursued by the government. They said the STERP II document, which is more detailed than the first one, 'has disappointed many business people and donors, partly because of its generally non-technical approach'.
Different economic turnaround documents published by different ministries have contained conflicting figures on growth and the think tank said this had further discredited government plans. An example used was the projected 40 percent increase in mining output, in the same year that electricity production was predicted to rise by only 3 percent, when power shortages have impacted negatively on the ability of every sector to improve.

UK Urged to Stop Funding 'Failing' Unity Government

Alex Bell
11 January 2010
The British government is set to come under pressure to lead the way in Europe, by not sending developmental aid to the coalition government until the full implementation of the Global Political Agreement.
UK based protest group The Vigil last week sent a letter to the International Development Committee of the British Parliament, which is to review the British government's aid to Zimbabwe.

"The Zimbabwe Vigil wishes to express its opposition to any dilution of the pressure on Mugabe and his cronies until they comply fully with the Global Political Agreement signed with the two MDC factions in September 2008," the letter reads.
The Vigil's spokesman, Dennis Benton, explained that the government would be setting the wrong precedent by 'prematurely' handing over developmental aid to Zimbabwe, where there is no evidence of any real change.
"We believe, in particular, that to give development aid to the coalition government is premature and will send the wrong signals not only to Mugabe and his ZANU PF party but also to members of the European Union and other countries which have adopted measures against Zimbabwe," Benton explained
The Vigil is also running a petition as added weight to the pressure it is putting on the UK government. The petition reads: "We welcome the UK's humanitarian assistance to Zimbabwe but call on the UK government to withhold development aid until it is confident that the money will benefit the people rather than the corrupt Mugabe regime."
GA_googleFillSlot( "AllAfrica_Story_InsetB" );
The petition has been signed so far by some 9,000 people from all over the world who have passed by the Vigil recently. Benton explained that these people are just an example of all those who are not convinced that there has been real change in Zimbabwe. Benton explained that, with the EU set to discuss the renewal of its measures against Zimbabwe next month, that might be the time to submit the petition.
The Vigil's call echoes other concerns about the backward measures being adopted to start rebuilding the country that is fundamentally still in the hands of an oppressive, greedy regime. The land situation is a prime example of the mentality being applied, as more money is being thrown at the flailing agricultural sector, in the guise of assistance to 'new' farmers, at the same time that land invasions are on the rise.
GA_googleFillSlot( "AllAfrica_Story_InsetC" );
The United States Agency for International Development (USAID) has made US$14 million in grants available to 'new' farmers to help them obtain the inputs they need to start growing critically needed food. The USAID grant targets some 52,000 farmers in Zimbabwe and will be distributed through seven NGOs, although it is not clear which farmers are set to benefit from it.
There is justifiable concern that beneficiaries of Mugabe's chaotic and bloody land grab campaign will now further benefit from receiving aid. No comprehensive, independent land audit has yet taken place, and there is no precise record of which farmers are truly entitled to financial grants. The president of the Commercial Farmers Union (CFU) Deon Theron explained that group's like USAID need to carefully examine who is receiving aid, to prevent them directly "rewarding those people who have illegally grabbed land from deserving farmers."
GA_googleFillSlot( "AllAfrica_Story_InsetD" );
The need to start growing food in the country is high and the importance of USAID grants for agricultural development is not being denied. However, with farm invasions once again on the rise across the country, some observers have commented that "lawlessness is now being overlooked and even funded." The land grab campaign has continued to intensify this year, amid growing concerns that the military will be deployed to drive the remaining commercial farmers off their land. Robert Mugabe and Attorney General Johannes Tomana have both said the military will be used against commercial farmers who refuse to leave their land.
Most recently, a South African farming family, meant to be protected by both regional law and a bilateral investment protection agreement, were forced to flee their farm in Rusape last week. Dolf du Toit and his family left the property after more than a week of violence and intimidation. They became the third farming family in the area to be forced off their land in the same number of weeks. The Du Toits eviction from their property also came mere weeks after South Africa and Zimbabwe signed an investment pact that is already proving to be worth little.
Such investment pacts continue to be ignored, along with the law. Zimbabwe's ambassador to Tanzania, Edzai Chimonyo, has been ordered by the High Court to vacate a banana plantation which he occupied over the festive season in Manicaland, but the retired army general has stayed put on the farm. The property, Fangundu Farm near Mutare is owned by a Dutch and Malaysian company and is meant to be protected by an investment agreement.
An official from the Ministry of Lands in Mutare said the invasion of Fangundu Farm was unlikely to be reversed despite the court ruling.
"That ruling is just a piece of paper," the official told the Zimbabwe Independent newspaper. "Almost every new farmer in that area has been served with court orders so there is nothing that Chimonyo can be afraid of."
The comments are indicative of the blatant lawlessness in the country, and court rulings regarding land have done nothing to protect farms against invasion, attack and forced eviction.