Should the world bother about Zimbabwe’s future? New evidence now points to the possibility that it shouldn’t trouble itself about the country’s future, because Zimbabwe’s government, still being run by the party that failed to win the last election, has decided that the country should not have one.
Having rejected concerns that investment would be discouraged by laws designed to force non-indigenous investors to give up controlling interests in local companies that they formed, or helped to create, this government has now published the regulations that are intended to force the changes of ownership the politicians want to see take place.
According to the Indigenisation and Economic Empowerment Act, an indigenous Zimbabwean is “any person who, before the 18th of April 1980, was disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person, and includes any company, association, syndicate or partnership of which indigenous Zimbabweans form the majority of the members or hold the controlling interest”.
The main provisions of the Indigenisation & Economic Empowerment Regulations are that:
Every existing business with an asset value of US$ 500 000 or more, whether foreign or domestic, has to submit, by the 15th April, 2010, completed official forms describing the business and showing its plan for ensuring that, within five years, indigenous Zimbabweans will own at least 51% of the shares.
Failure to submit the forms, after a further 30 days’ reminder, will render the owner of the business, or every director, guilty of an offence and liable to a fine and/or imprisonment for up to five years.
Plans to restructure or unbundle businesses, plans to merge or demerge businesses and investment proposals that require an investment license must be submitted for approval before being carried out. Any failure to comply will render the owner of the business, or every director, guilty of an offence and liable to a fine and/or imprisonment for up to five years.
Companies requiring supplies of goods and services will be obliged to procure these from companies controlled by indigenous Zimbabweans that can offer terms that are no less favourable. Non-compliance will make those responsible guilty of an offence and liable to a fine and / or imprisonment for up to five years;
Empowerment assessment ratings are to be supplied by each company once a year to the Minister within 21 days of being advised of the requirement and failure to comply will render the owner of the business, or every director, guilty of an offence and liable to a fine and/or imprisonment for up to five years.
The Minister may appoint his own Valuator if the valuation figures submitted are suspect. Persons guilty of claiming they are shareholders, but are found to only nominees of actual non-indigenous shareholders, or guilty of submitting information found to be false, will be guilty of committing an offence and liable to a fine and/or imprisonment up to five years.
Sectors that are to be reserved for indigenous Zimbabwean investors include the growing of food and cash crops, the provision of buses, taxies and car-hire services, retail and wholesale trade, barber shops, hairdressing and beauty salons, employment agencies, estate agencies, valet services, grain milling, bakeries, tobacco grading, processing and packing, advertising agencies, milk processing and the provision of local arts and crafts as well as the marketing and distribution of these items.
Business owners wishing to identify suitable indigenous partners will be invited to register their names in a database to be established by the Minister, and the names of indigenous people who wish to become business partners will also be recorded in the Minister’s database.
In trying to assemble useful thoughts on the whole package, I am having great difficulty setting aside the destructive short-sightedness of the proposals.
Some people might believe that the methodical nature of the process, together with the threats of severe penalties for anything other than complete compliance, must automatically lead to that Economic Empowerment that so many have found to be so elusive.
But it won’t. Government’s principal achievement, if all this happens, will be the disempowerment of the country’s most important productive sector investors. They do presently wield influence in the market place and this is mainly because of their success in producing products that the markets are prepared to buy. In creating acceptable goods or commodities, they also generate jobs, export revenues, domestic revenues and tax revenues.
To government, however, all this clearly adds up to rather too much influence. By forcing them to relinquish their majority shareholdings, their power can be reduced, simply because the government’s influence over the new owners of 51% of the shares can quickly be used to change the composition of the boards of directors of every important company.
The idea is destructive for the two main reasons that existing investors will lose interest in their companies, so most of these enterprises will soon start going downhill, and that new investors will be persuaded to take their technologies and their money to almost anywhere other than Zimbabwe.
And the idea is short-sighted because economic growth rates will be slowed, the population will be deprived of the needed improvements and the best Zimbabwean skills will seek their fortunes elsewhere. On top of that, access to credit to carry our infrastructural reconstruction will not be extended while the country so clearly shows the whole world that it is once again deliberately sabotaging its own ability to service debt.
Zimbabwe has so little money that it desperately needs foreign investment. Why has government chosen to turn the country into the least attractive investment destination on Earth? It can only be to recover its political authority, but while that might make a few hundred people feel temporarily smug and content, the other twelve million Zimbabweans will be waking up to what this has cost them and who is really to blame.
Monday, February 15, 2010
ZIMBABWE’S biggest international investment conference opens
ZIMBABWE – HARARE – ZIMBABWE’S biggest international investment conference since the formation of the inclusive Government, the Africa investor (Ai) Pan-African Tourism and Infrastructure Investment Summit starts in Harare today, with 14 African government ministers, international bankers and 32 chief executive officers of international investment financiers attending.
Also represented at the conference, that runs until Thursday, are the United Nations World Tourism Organisation, the World Bank, International Monetary Fund and the African Development Bank.
President Mugabe is expected to officially open the summit while Prime Minister Mor-gan Tsvangirai and his deputies Arthur Mutambara and Thokozani Khupe are expected to give keynote addresses.
Ai, a leading international investment research and communications company, is partnering the Government, through the Zimbabwe Tourism Authority, in hosting the conference which will discuss tourism strategies, investment opportunities and tourism infrastructure development that should make Zimbabwe maximise gains expected to accrue from the 2010 Soccer World Cup extravaganza.
Africa investor is a specialist investment communications firm advising governments, international organisations and businesses on communication strategies for capital market and foreign direct investments in Africa.
Ai is bringing investors, project promoters and city planning officials to discuss the role of the World Cup in supporting tourism investment in Africa.
The conference will include interviews with leading investors, hoteliers, forecasts from top economists, panel discussions on the latest developments, trends and best practices in the tourism investment and city planning industries.
Another key event at the summit is the Ministerial Roundtable that will feature Tourism and Hospitality Industry Ministers from Zimbabwe, Zambia, Sierra Leone, Namibia, Botswana, and Ghana.
Other speakers include American Sister Cities International Global Envoy Nancy M. Huppert, Mr Kevin Teeroovengadum, Director, Actis; and Mr Godfrey Tapela, Senior Investment Officer, International Finance Corporation.
Minister Mzembi said the summit was Zimbabwe’s mega investment event before the 2010 World Cup finals to be held in June in South Africa.
The summit will coincide with the prestigious Africa investor Tourism Investment Awards, which will be announced tomorrow evening during the summit’s gala dinner, organised in recognition of the companies being awarded for their excellence in the industry.
The summit brings together tourism and infrastructure project promoters with private and institutional investors with interests in Africa. Africa investor will also facilitate pre-arranged one-on-one meetings between investors and project promoters.
This year’s summit will be examining major tourism infrastructure investment and privatisation opportunities across Africa. On the second day, Africa investor will host the first Infrastructure and Tourism Investment Roundtable with the Government of Zimbabwe, to showcase their portfolio of privatisation, infrastructure, tourism and mining investment opportunities for the first time.
Commenting on the awards, Professor Geoffrey Lipman, Special Advisor to the Secretary-General of the UN World Tourism Organisation and speaker at the summit, said the awards were recognition of Africa’s most innovative.
“These awards are the only initiative designed to recognise the achievement of those businesses, governments, organisations and individuals who have made an outstanding contribution to the growth of sustainable tourism investment in Africa,” said Mr Lipman.
Summit sponsors and partners include the Government of Zimbabwe, the ZTA, African Export-Import Bank, African Sun, Meikles, Rani Investment Group, Native Investment, Cresta Hotel Group, CNN International, Sister Cities International, the Regional Tourism Organisation of Southern Africa (Retosa), Nepad Business Group, NEPAD, Modern Ghana, United Nations Industrial Development Organisation (Unido), Africa Project Access, Africa Travel Channel, Reconnect Africa and The Standard.
Also represented at the conference, that runs until Thursday, are the United Nations World Tourism Organisation, the World Bank, International Monetary Fund and the African Development Bank.
President Mugabe is expected to officially open the summit while Prime Minister Mor-gan Tsvangirai and his deputies Arthur Mutambara and Thokozani Khupe are expected to give keynote addresses.
Ai, a leading international investment research and communications company, is partnering the Government, through the Zimbabwe Tourism Authority, in hosting the conference which will discuss tourism strategies, investment opportunities and tourism infrastructure development that should make Zimbabwe maximise gains expected to accrue from the 2010 Soccer World Cup extravaganza.
Africa investor is a specialist investment communications firm advising governments, international organisations and businesses on communication strategies for capital market and foreign direct investments in Africa.
Ai is bringing investors, project promoters and city planning officials to discuss the role of the World Cup in supporting tourism investment in Africa.
The conference will include interviews with leading investors, hoteliers, forecasts from top economists, panel discussions on the latest developments, trends and best practices in the tourism investment and city planning industries.
Another key event at the summit is the Ministerial Roundtable that will feature Tourism and Hospitality Industry Ministers from Zimbabwe, Zambia, Sierra Leone, Namibia, Botswana, and Ghana.
Other speakers include American Sister Cities International Global Envoy Nancy M. Huppert, Mr Kevin Teeroovengadum, Director, Actis; and Mr Godfrey Tapela, Senior Investment Officer, International Finance Corporation.
Minister Mzembi said the summit was Zimbabwe’s mega investment event before the 2010 World Cup finals to be held in June in South Africa.
The summit will coincide with the prestigious Africa investor Tourism Investment Awards, which will be announced tomorrow evening during the summit’s gala dinner, organised in recognition of the companies being awarded for their excellence in the industry.
The summit brings together tourism and infrastructure project promoters with private and institutional investors with interests in Africa. Africa investor will also facilitate pre-arranged one-on-one meetings between investors and project promoters.
This year’s summit will be examining major tourism infrastructure investment and privatisation opportunities across Africa. On the second day, Africa investor will host the first Infrastructure and Tourism Investment Roundtable with the Government of Zimbabwe, to showcase their portfolio of privatisation, infrastructure, tourism and mining investment opportunities for the first time.
Commenting on the awards, Professor Geoffrey Lipman, Special Advisor to the Secretary-General of the UN World Tourism Organisation and speaker at the summit, said the awards were recognition of Africa’s most innovative.
“These awards are the only initiative designed to recognise the achievement of those businesses, governments, organisations and individuals who have made an outstanding contribution to the growth of sustainable tourism investment in Africa,” said Mr Lipman.
Summit sponsors and partners include the Government of Zimbabwe, the ZTA, African Export-Import Bank, African Sun, Meikles, Rani Investment Group, Native Investment, Cresta Hotel Group, CNN International, Sister Cities International, the Regional Tourism Organisation of Southern Africa (Retosa), Nepad Business Group, NEPAD, Modern Ghana, United Nations Industrial Development Organisation (Unido), Africa Project Access, Africa Travel Channel, Reconnect Africa and The Standard.
Wednesday, February 10, 2010
New Controversy in Zimbabwe as Black Empowerment Rules Are Published
The regulations promulgated under the Indigenization and Economic Empowerment Act of 2008 say that by mid-April all businesses must give the government details on the racial composition of their shareholdings
Sandra Nyaira Washington 09 February 2010
The Zimbabwean government has published regulations for implementation of a controversial 2008 law obliging white-owned companies to put a majority of their shares in the hands of indigenous Zimbabwean blacks, calling for completion of the cession of control within five years.
The regulations promulgated under the Indigenization and Economic Empowerment Act of 2008 say that by mid-April all businesses must give the government details on the racial composition of their shareholdings.
Based on that the government would determine what stake in the enterprise must be ceded to indigenous Zimbabweans, based on a list of candidates maintained by the Indigenization Minister Saviour Kasukuwere. Managers missing the deadline could face penalties of up to five-years in jail.
Harare economist John Robertson said the publication of the regulations in the official gazette will stop new foreign investment dead in its tracks.
Soon after publication of the regulations, the office of Prime Minister Morgan Tsvangirai issued a press statement saying they were null and void because the rules were published without discussion or authorization by the Cabinet.
The promulgation of the regulations comes on the heels of a speech by Mr. Tsvangirai at the World Economic Forum in Davos, Switzerland, calling for international investors to consider putting their money in Zimbabwe.
Despite the passage of the legislation in 2008, the government had done little since then to signal if it were intent on enforcing the act, and Mr. Tsvangirai's side of the power sharing government had signaled very clearly that moves in this direction would undercut its efforts to revive the economy.
In a statement, Mr. Tsvangirai said that, "I am in charge of all policy formation in Cabinet and neither myself nor the Cabinet were shown these regulations before they were gazetted." The regulations "were published without due process as detailed in the Constitution and are therefore null and void."
Tsvangirai spokesman James Maridadi told VOA: "We are trying to come up with policies that attract investment into the country and the thrust is to portray Zimbabwe as a safe destination for investment. This is counter-productive, it is old thinking."
Maridadi said Mr. Tsvangirai would meet with President Robert Mugabe on the indigenization question, and has also summoned Indigenisation and Empowerment Minister Saviour Kusukuwere for an explanation.
Despite the prime minister's opposition, Economic Planning Minister Elton Mangoma, a member of Mr. Tsvangirai's MDC formation, told VOA Studio 7 reporter Sandra Nyaira that the business community is misinterpreting the regulations which will not affect quest for international capital
Sandra Nyaira Washington 09 February 2010
The Zimbabwean government has published regulations for implementation of a controversial 2008 law obliging white-owned companies to put a majority of their shares in the hands of indigenous Zimbabwean blacks, calling for completion of the cession of control within five years.
The regulations promulgated under the Indigenization and Economic Empowerment Act of 2008 say that by mid-April all businesses must give the government details on the racial composition of their shareholdings.
Based on that the government would determine what stake in the enterprise must be ceded to indigenous Zimbabweans, based on a list of candidates maintained by the Indigenization Minister Saviour Kasukuwere. Managers missing the deadline could face penalties of up to five-years in jail.
Harare economist John Robertson said the publication of the regulations in the official gazette will stop new foreign investment dead in its tracks.
Soon after publication of the regulations, the office of Prime Minister Morgan Tsvangirai issued a press statement saying they were null and void because the rules were published without discussion or authorization by the Cabinet.
The promulgation of the regulations comes on the heels of a speech by Mr. Tsvangirai at the World Economic Forum in Davos, Switzerland, calling for international investors to consider putting their money in Zimbabwe.
Despite the passage of the legislation in 2008, the government had done little since then to signal if it were intent on enforcing the act, and Mr. Tsvangirai's side of the power sharing government had signaled very clearly that moves in this direction would undercut its efforts to revive the economy.
In a statement, Mr. Tsvangirai said that, "I am in charge of all policy formation in Cabinet and neither myself nor the Cabinet were shown these regulations before they were gazetted." The regulations "were published without due process as detailed in the Constitution and are therefore null and void."
Tsvangirai spokesman James Maridadi told VOA: "We are trying to come up with policies that attract investment into the country and the thrust is to portray Zimbabwe as a safe destination for investment. This is counter-productive, it is old thinking."
Maridadi said Mr. Tsvangirai would meet with President Robert Mugabe on the indigenization question, and has also summoned Indigenisation and Empowerment Minister Saviour Kusukuwere for an explanation.
Despite the prime minister's opposition, Economic Planning Minister Elton Mangoma, a member of Mr. Tsvangirai's MDC formation, told VOA Studio 7 reporter Sandra Nyaira that the business community is misinterpreting the regulations which will not affect quest for international capital
Zimbabwe is proposing a new energy bill
Feb. 9 (Bloomberg) -- Zimbabwe is proposing a new energy bill to “open up” the industry to private investors, Energy & Power Development Minister Elias Mudzuri said in an interview in Johannesburg today.
The bill, which will be put before Parliament in the “next few months,” is aimed at “creating an appropriate future legal and regulatory framework to ensure the correct exploitation and access to energy resources in Zimbabwe,” he said.
To contact the reporter on this story: Carli Lourens in Johannesburg at +27-11-286-1915 or clourens@bloomberg.net
The bill, which will be put before Parliament in the “next few months,” is aimed at “creating an appropriate future legal and regulatory framework to ensure the correct exploitation and access to energy resources in Zimbabwe,” he said.
To contact the reporter on this story: Carli Lourens in Johannesburg at +27-11-286-1915 or clourens@bloomberg.net
The December 2009 Monetary Policy Statement:
The December 2009 Monetary Policy Statement:
A comment
In the absence of statistics from most other sources, the Reserve Bank’s assessments of the value of economic activity in broad business sectors provide a useful window on the extent of progress actually achieved in the past year. However, most of the money numbers do not offer much support to official contentions that a recovery is in progress.
These assertions are in phrases such as:
Recovery signs are discernible in the economy, following the implementation of various policy interventions…
The prevailing sound macroeconomic policies have resulted in the restoration of price and macroeconomic stability.
This enabling environment has provided a solid foundation upon which the resuscitation of business operations has been anchored.
It is against this background that industrial capacity utilization has increased appreciably to between 30-45%.
The improvement in the general macroeconomic environment and the consequent increase in capacity utilization have contributed to price stability…
A more accurate description of the changes in 2009 would have to place the emphasis on the Reserve Bank being forced to abandon the Zimbabwe dollar and to legalise the public’s formerly illegal use of US dollars. This permitted the commercial sector to restore supplies of goods to retailers. The price stability is entirely the result of Zimbabwe’s use of relatively stable currencies from other countries, not the claimed increases in local capacity utilisation.
Evidence from other sections of this same Monetary Policy Statement call into question the claim that capacity utilization has improved from below 10% to between 30% and 45%. For example, in the Gross Domestic Product analysis, manufacturing output is said to have increased by 8%, not the several hundred percent implied in the capacity utilization estimates.
As many of the higher volume manufactured goods would normally come from milling companies and those that are carrying out value-adding processes to minerals, recoveries of the extent suggested await the return of large maize, sugar, tobacco and wheat harvests as well as the recovery of Zisco steel production, nickel, ferrochrome and asbestos.
The few details offered on these state that maize increased by 148% and tobacco by 22%, but admit that sugar declined by 4% and asbestos by 56%, while output of nickel and ferrochrome came to a standstill. Steel production also stopped and cement output was slowed by technical problems, but these are not mentioned in the statement. However, mineral exports fell by 4,9%.
Total export shipments fell by 8,9% in 2009 and shipments of manufactured goods in particular fell by 30,9%. For agricultural products, exports declined by 24% and the separately recorded horticultural exports declined by 41,8%. Road freight values for the year fell by 21,8%.
Despite these indicators, the Reserve Bank claims that the Zimbabwean economy “now possesses all the major ingredients for a remarkable take-off”. However, it accepts that the achievement of this will require that the “Inclusive Government stays the course in promoting the spirit of mutual cooperation with a common, Zimbabwe First objective”.
Unfortunately, too many of the signs suggest that the Inclusive Government has not stayed the course and the political change process has stalled. Despite the steady stream of claimed advances, every one of the issues in contention six months ago has yet to be resolved and every proposal that could have a bearing on whether the country might attract inflows of investment funding or external lines of credit has sent discouraging signals to those who might have helped.
The Reserve Bank does accept the need for fiscal and monetary policies that will complement each other and it pledges to fully co-operate with the fiscal authorities to build a prosperous Zimbabwe, but it places emphasis on the claimed need to devise “winning formulae for the removal of sanctions, as these remain a monumental binding constraint to Zimbabwe’s full recovery”.
At a meeting in Harare on February 4, which was intended to discuss the adoption of a debt-clearing strategy for Zimbabwe, government officials attempted to persuade the dozens of delegates that Zimbabwe deserved debt forgiveness. This was based largely on a claim that the debt arrears had arisen because of the imposition of sanctions.
Unfortunately, attempts made by members of the diplomatic community to argue that the sanctions were targeted at known individuals for known indiscretions, and not against the economy as a whole, were not accepted. The meeting also appeared unwilling to consider that Zimbabwe’s difficulties in settling its debts might have arisen from government’s decision to force the closure of the country’s major export earner, its commercial farming sector.
This week, Zanu PF members of Parliament are proposing to debate a motion calling for the lifting of sanctions that MDC members are accused of having instigated. The move is apparently a deliberate attempt to promote further disunity in the already fragile Government of National Unity.
STATUTORY RESERVES POLICY
With effect from 1 February, 2010 the Statutory Reserves Ratio will be cut from 10% to 5% of bank deposits. The Reserve Bank is to hold 2,5% and the other 2,5% will be kept in an offshore bank, authorised by the Reserve Bank.
In the Monetary Policy Statement, the Reserve Bank noted the decisions by some banks to hold on to their deposits, rather than offering the economy meaningful support through well-appraised lending. Some banks have been lending amounts that are less than 20% of their total deposits, but the Reserve Bank’s claimed belief that much more lending is possible is somewhat countered by its own disclosure that short-term deposits in December 2009 made up 97,8% of total deposits.
While exhorting the banks to continue protecting their asset books through rigorous pre- and post lending evaluations of borrowers, the Reserve Bank revealed that broad money continued to be dominated by transitory deposits. In October 2009, the short-term deposits were said to have reflect low income levels and punitive service and administrative charges that discouraged savings and kept people inclined to remain in a cash economy.
Credit to the private sector by banks amounted to US$546,7 million in October 2009, which translated to a loan-to-deposit ratio of 55,1%, compared to 35% recorded in January 2009. By December, total loans and advances had increased to US$639 million, but formed 48,19% of the US$1 330 million deposit base.
The loans-to-deposit ratio, less offshore financing, or loans advanced from locally mobilized funds, increased from 26,1% in January 2009 to 49,3% in October. The Reserve Bank believes this indicated lower risk averseness of banks, while an increase in credit to the private sector is said to have supported the “registered growth” in industrial capacity utilization from below 10% in January to between 30% and 40%.
However, this claim is called into question by a 30,9% fall in total manufactured goods exports from 1 January to 31 December 2009. Manufactured exports in 2009 were valued at US$152,46 million, compared to US$220,74 million in 2008.
EXCHANGE CONTROL CHANGES
Transactions related to investment income, such as the remittance of dividends, profits, capital appreciation proceeds and offshore loan repayments, have been fully liberalised. However, the country’s Capital Account has been only partly liberalized, so offshore Capital Account transactions still have to be vetted. The Reserve Bank says this remains a necessary measure to ensure that the country is cushioned against global economic and financial shocks.
In terms of the current Capital Account policy, institutional investors such as pension funds have not been permitted to invest their funds offshore. However, in order to take advantage of higher investment returns, proposals to invest such funds offshore can be submitted to Exchange Control for consideration.
GOLD BONDS
Gold producers who were obliged to accept gold bonds by way of compensation for funds removed from their Foreign Currency Accounts towards the end of 2008, are finding that the Reserve bank is unable to settle, now that the bonds have reached maturity. “Constructive engagements” are said to be in progress between the Bank, the Ministry of Finance and the bondholders, resulting in the bonds being rolled over for another six months “to allow the engagement process to bear fruit”. Unfortunately, some of the bonds were discounted in the capital markets and the creditors are now international banks.
FARM MECHANISATION LEASE PREMIUMS
Beneficiaries of the Reserve Bank’s Farm Mechanisation Programme in 2007 are reminded in this policy statement that the cost of the agricultural equipment issued still has to be recovered. The Reserve Bank is now finalising procedures for receiving payments for the equipment. Beneficiaries of the programme are to be sent detailed statements and their payment options.
DEFINING RESPONSIBILITIES
In its introductory paragraphs, the Monetary Policy Statement makes the point that, as a survival necessity, virtually all aspects of public sector policy implementation were thrust upon the Reserve Bank during the years from 2004 to 2008. This, it states, has now changed.
The operations of the Central Bank have been streamlined within the generally stable macroeconomic environment, and government ministries and other public institutions are supporting this “by doing what they are supposed to do”. The Reserve Bank insists that it will not interfere in any areas outside its statutory mandate if those responsible for those areas are doing their job.
As Banker to Government, the Reserve Bank confirms it will continue to manage the country’s gross international reserves, including the Special Drawings Rights account at the International Monetary Fund. However, it accepts that the Ministry of Finance is responsible for the actual usage of these funds.
----------------------
While this Monetary Policy Statement does clarify a number of issues, the basic constraints still holding back the Zimbabwe’s recovery remain unchanged. On the economic front, the liquidity shortage is not being overcome quickly enough to help bring about improved production and export volumes.
Equally seriously and very unfortunately, policy decisions, such as the proposals to proceed with the enforcement of the Indigenisation and Economic Empowerment Act will serve only to discourage investment inflows.
The main problems therefore remain political. A focal point in the coming months will be the re-writing of the country’s constitution and every effort should be made to ensure that this task is completed in a professional manner.
----------------------
John Robertson
February 9 2010
A comment
In the absence of statistics from most other sources, the Reserve Bank’s assessments of the value of economic activity in broad business sectors provide a useful window on the extent of progress actually achieved in the past year. However, most of the money numbers do not offer much support to official contentions that a recovery is in progress.
These assertions are in phrases such as:
Recovery signs are discernible in the economy, following the implementation of various policy interventions…
The prevailing sound macroeconomic policies have resulted in the restoration of price and macroeconomic stability.
This enabling environment has provided a solid foundation upon which the resuscitation of business operations has been anchored.
It is against this background that industrial capacity utilization has increased appreciably to between 30-45%.
The improvement in the general macroeconomic environment and the consequent increase in capacity utilization have contributed to price stability…
A more accurate description of the changes in 2009 would have to place the emphasis on the Reserve Bank being forced to abandon the Zimbabwe dollar and to legalise the public’s formerly illegal use of US dollars. This permitted the commercial sector to restore supplies of goods to retailers. The price stability is entirely the result of Zimbabwe’s use of relatively stable currencies from other countries, not the claimed increases in local capacity utilisation.
Evidence from other sections of this same Monetary Policy Statement call into question the claim that capacity utilization has improved from below 10% to between 30% and 45%. For example, in the Gross Domestic Product analysis, manufacturing output is said to have increased by 8%, not the several hundred percent implied in the capacity utilization estimates.
As many of the higher volume manufactured goods would normally come from milling companies and those that are carrying out value-adding processes to minerals, recoveries of the extent suggested await the return of large maize, sugar, tobacco and wheat harvests as well as the recovery of Zisco steel production, nickel, ferrochrome and asbestos.
The few details offered on these state that maize increased by 148% and tobacco by 22%, but admit that sugar declined by 4% and asbestos by 56%, while output of nickel and ferrochrome came to a standstill. Steel production also stopped and cement output was slowed by technical problems, but these are not mentioned in the statement. However, mineral exports fell by 4,9%.
Total export shipments fell by 8,9% in 2009 and shipments of manufactured goods in particular fell by 30,9%. For agricultural products, exports declined by 24% and the separately recorded horticultural exports declined by 41,8%. Road freight values for the year fell by 21,8%.
Despite these indicators, the Reserve Bank claims that the Zimbabwean economy “now possesses all the major ingredients for a remarkable take-off”. However, it accepts that the achievement of this will require that the “Inclusive Government stays the course in promoting the spirit of mutual cooperation with a common, Zimbabwe First objective”.
Unfortunately, too many of the signs suggest that the Inclusive Government has not stayed the course and the political change process has stalled. Despite the steady stream of claimed advances, every one of the issues in contention six months ago has yet to be resolved and every proposal that could have a bearing on whether the country might attract inflows of investment funding or external lines of credit has sent discouraging signals to those who might have helped.
The Reserve Bank does accept the need for fiscal and monetary policies that will complement each other and it pledges to fully co-operate with the fiscal authorities to build a prosperous Zimbabwe, but it places emphasis on the claimed need to devise “winning formulae for the removal of sanctions, as these remain a monumental binding constraint to Zimbabwe’s full recovery”.
At a meeting in Harare on February 4, which was intended to discuss the adoption of a debt-clearing strategy for Zimbabwe, government officials attempted to persuade the dozens of delegates that Zimbabwe deserved debt forgiveness. This was based largely on a claim that the debt arrears had arisen because of the imposition of sanctions.
Unfortunately, attempts made by members of the diplomatic community to argue that the sanctions were targeted at known individuals for known indiscretions, and not against the economy as a whole, were not accepted. The meeting also appeared unwilling to consider that Zimbabwe’s difficulties in settling its debts might have arisen from government’s decision to force the closure of the country’s major export earner, its commercial farming sector.
This week, Zanu PF members of Parliament are proposing to debate a motion calling for the lifting of sanctions that MDC members are accused of having instigated. The move is apparently a deliberate attempt to promote further disunity in the already fragile Government of National Unity.
STATUTORY RESERVES POLICY
With effect from 1 February, 2010 the Statutory Reserves Ratio will be cut from 10% to 5% of bank deposits. The Reserve Bank is to hold 2,5% and the other 2,5% will be kept in an offshore bank, authorised by the Reserve Bank.
In the Monetary Policy Statement, the Reserve Bank noted the decisions by some banks to hold on to their deposits, rather than offering the economy meaningful support through well-appraised lending. Some banks have been lending amounts that are less than 20% of their total deposits, but the Reserve Bank’s claimed belief that much more lending is possible is somewhat countered by its own disclosure that short-term deposits in December 2009 made up 97,8% of total deposits.
While exhorting the banks to continue protecting their asset books through rigorous pre- and post lending evaluations of borrowers, the Reserve Bank revealed that broad money continued to be dominated by transitory deposits. In October 2009, the short-term deposits were said to have reflect low income levels and punitive service and administrative charges that discouraged savings and kept people inclined to remain in a cash economy.
Credit to the private sector by banks amounted to US$546,7 million in October 2009, which translated to a loan-to-deposit ratio of 55,1%, compared to 35% recorded in January 2009. By December, total loans and advances had increased to US$639 million, but formed 48,19% of the US$1 330 million deposit base.
The loans-to-deposit ratio, less offshore financing, or loans advanced from locally mobilized funds, increased from 26,1% in January 2009 to 49,3% in October. The Reserve Bank believes this indicated lower risk averseness of banks, while an increase in credit to the private sector is said to have supported the “registered growth” in industrial capacity utilization from below 10% in January to between 30% and 40%.
However, this claim is called into question by a 30,9% fall in total manufactured goods exports from 1 January to 31 December 2009. Manufactured exports in 2009 were valued at US$152,46 million, compared to US$220,74 million in 2008.
EXCHANGE CONTROL CHANGES
Transactions related to investment income, such as the remittance of dividends, profits, capital appreciation proceeds and offshore loan repayments, have been fully liberalised. However, the country’s Capital Account has been only partly liberalized, so offshore Capital Account transactions still have to be vetted. The Reserve Bank says this remains a necessary measure to ensure that the country is cushioned against global economic and financial shocks.
In terms of the current Capital Account policy, institutional investors such as pension funds have not been permitted to invest their funds offshore. However, in order to take advantage of higher investment returns, proposals to invest such funds offshore can be submitted to Exchange Control for consideration.
GOLD BONDS
Gold producers who were obliged to accept gold bonds by way of compensation for funds removed from their Foreign Currency Accounts towards the end of 2008, are finding that the Reserve bank is unable to settle, now that the bonds have reached maturity. “Constructive engagements” are said to be in progress between the Bank, the Ministry of Finance and the bondholders, resulting in the bonds being rolled over for another six months “to allow the engagement process to bear fruit”. Unfortunately, some of the bonds were discounted in the capital markets and the creditors are now international banks.
FARM MECHANISATION LEASE PREMIUMS
Beneficiaries of the Reserve Bank’s Farm Mechanisation Programme in 2007 are reminded in this policy statement that the cost of the agricultural equipment issued still has to be recovered. The Reserve Bank is now finalising procedures for receiving payments for the equipment. Beneficiaries of the programme are to be sent detailed statements and their payment options.
DEFINING RESPONSIBILITIES
In its introductory paragraphs, the Monetary Policy Statement makes the point that, as a survival necessity, virtually all aspects of public sector policy implementation were thrust upon the Reserve Bank during the years from 2004 to 2008. This, it states, has now changed.
The operations of the Central Bank have been streamlined within the generally stable macroeconomic environment, and government ministries and other public institutions are supporting this “by doing what they are supposed to do”. The Reserve Bank insists that it will not interfere in any areas outside its statutory mandate if those responsible for those areas are doing their job.
As Banker to Government, the Reserve Bank confirms it will continue to manage the country’s gross international reserves, including the Special Drawings Rights account at the International Monetary Fund. However, it accepts that the Ministry of Finance is responsible for the actual usage of these funds.
----------------------
While this Monetary Policy Statement does clarify a number of issues, the basic constraints still holding back the Zimbabwe’s recovery remain unchanged. On the economic front, the liquidity shortage is not being overcome quickly enough to help bring about improved production and export volumes.
Equally seriously and very unfortunately, policy decisions, such as the proposals to proceed with the enforcement of the Indigenisation and Economic Empowerment Act will serve only to discourage investment inflows.
The main problems therefore remain political. A focal point in the coming months will be the re-writing of the country’s constitution and every effort should be made to ensure that this task is completed in a professional manner.
----------------------
John Robertson
February 9 2010
Tuesday, February 9, 2010
Zimbabwe has no money for strikers - minister
Zimbabwe has no money for strikers - minister
February 09 2010 at 12:38AM
Johannesburg - Zimbabwean Public Service Minister Eliphas Mukonoweshuro said on Monday that his government had no money to pay tens of thousands of striking civil servants the salary increases they were demanding.On Friday, the Zimbabwe Public Service Association (ZPSA), which represents about 200 000 civil servants, announced an indefinite strike to press their demands for a hike in pay."It is not unwillingness on the part of the government. It is simply the lack of fiscal capacity on our part," Mukonoweshuro said, expressing sympathy with the workers, most of whom are teachers."Everyone in government knows that what our workers are getting does not meet their daily basic expenses," he admitted.
February 09 2010 at 12:38AM
Johannesburg - Zimbabwean Public Service Minister Eliphas Mukonoweshuro said on Monday that his government had no money to pay tens of thousands of striking civil servants the salary increases they were demanding.On Friday, the Zimbabwe Public Service Association (ZPSA), which represents about 200 000 civil servants, announced an indefinite strike to press their demands for a hike in pay."It is not unwillingness on the part of the government. It is simply the lack of fiscal capacity on our part," Mukonoweshuro said, expressing sympathy with the workers, most of whom are teachers."Everyone in government knows that what our workers are getting does not meet their daily basic expenses," he admitted.
Monday, February 8, 2010
Zim faces crippling strike
Feb 7, 2010 10:53 PM By Moses Mudzwiti
Zimbabwe's civil servants will embark on a nationwide strike for better pay as the unity government staggers towards its first anniversary.
Current Font Size:
Morgan Tsvangirai became prime minister of the country on February 11 last year amid fanfare and hope. But today the situation has changed for the worst.
Trade unions that previously stood shoulder-to-shoulder with him and his Movement for Democratic Change party have gone their own way.
Public Service Minister Eliphas Mukonoweshuro of the MDC admitted at the weekend that last-minute talks with labour had failed to stave off the strike.
He said the government's new offer had been rejected by workers because it was "insufficient".
Teachers, doctors, nurses and other civil servants told the fragile unity government last Friday that they would down tools.
Today marks the beginning of the nationwide strike.
Schools, hospitals, government offices and other state services such as courts were expected to shut down. It is not known how long the strike will last.
President of the Zimbabwe Hospital Doctors Association Dr Amos Chizhande's comment that "we are being ignored" sums up the mood among lowly paid government employees.
The Zimbabwean government has been financing expensive overseas jaunts for politicians, while salaries remained depressed as the country makes half-hearted attempts to mend its broken-down economy.
Last year the government spent $20-million (R156-million) on overseas trips, a far cry from the $4-million (R31-million) it offered civil servants.
At the weekend police and other security forces were addressed by commanders on the impending strike.
Undeterred by the sabre rattling, thousands of underpaid civil servants have decided to join the stayaway - regardless of the consequences. Civil servants earn on average a paltry $150 (R1100) a month. They are demanding as much as $630 (R4900) a month.
The government is the biggest employer in Zimbabwe with about 150000 employees.
The strike comes at time when the unity government was at its weakest. As it is, all outstanding matters will remain unresolved.
President Robert Mugabe and his Zanu-PF party declared that no further concessions would be made until sanctions imposed on them (by the Western countries) were lifted.
Mugabe has blamed Tsvangirai, who enjoys good relations with the West, for the continued sanctions
Zimbabwe's civil servants will embark on a nationwide strike for better pay as the unity government staggers towards its first anniversary.
Current Font Size:
Morgan Tsvangirai became prime minister of the country on February 11 last year amid fanfare and hope. But today the situation has changed for the worst.
Trade unions that previously stood shoulder-to-shoulder with him and his Movement for Democratic Change party have gone their own way.
Public Service Minister Eliphas Mukonoweshuro of the MDC admitted at the weekend that last-minute talks with labour had failed to stave off the strike.
He said the government's new offer had been rejected by workers because it was "insufficient".
Teachers, doctors, nurses and other civil servants told the fragile unity government last Friday that they would down tools.
Today marks the beginning of the nationwide strike.
Schools, hospitals, government offices and other state services such as courts were expected to shut down. It is not known how long the strike will last.
President of the Zimbabwe Hospital Doctors Association Dr Amos Chizhande's comment that "we are being ignored" sums up the mood among lowly paid government employees.
The Zimbabwean government has been financing expensive overseas jaunts for politicians, while salaries remained depressed as the country makes half-hearted attempts to mend its broken-down economy.
Last year the government spent $20-million (R156-million) on overseas trips, a far cry from the $4-million (R31-million) it offered civil servants.
At the weekend police and other security forces were addressed by commanders on the impending strike.
Undeterred by the sabre rattling, thousands of underpaid civil servants have decided to join the stayaway - regardless of the consequences. Civil servants earn on average a paltry $150 (R1100) a month. They are demanding as much as $630 (R4900) a month.
The government is the biggest employer in Zimbabwe with about 150000 employees.
The strike comes at time when the unity government was at its weakest. As it is, all outstanding matters will remain unresolved.
President Robert Mugabe and his Zanu-PF party declared that no further concessions would be made until sanctions imposed on them (by the Western countries) were lifted.
Mugabe has blamed Tsvangirai, who enjoys good relations with the West, for the continued sanctions
Sunday, February 7, 2010
Zimbabwe in bid to woo investors
Feb 7, 2010 12:00 AM By Jim Jones
Zimbabwe's minister of mines Obert Mpofu kept a straight face at the Mining Indaba in Cape Town this week when he said foreign investors in his country's mining industry are "guaranteed security of tenure". It was not clear who was providing the guarantees.
EMERGING: With the recovery in commodity prices, mining can see the light at the end of the tunnel. Picture: ANTONIO MUCHAVE
Minister tells conference that foreign miners are 'guaranteed security of tenure'
In the same breath, Mpofu told delegates that the allocation of mining rights was a "transparent" process and that his country's regulatory environment was efficient, clear, honest and fair.
But when asked about the grab by President Robert Mugabe's military cohorts of the Marange diamond deposits legally owned by African Consolidated Resources, Mpofu became evasive. "I can't discuss the matter as it is sub judice," he pleaded.
Nonsense. Zimbabwe's High Court has confirmed the mining company's rights to the property and ordered the military (which now occupies it) to restore the property to the company.
Mugabe's henchmen claim that what is essentially a commercial matter should be decided by the country's Supreme Court. And Mpofu, a confidante of Mugabe, told delegates that the "inclusive" government is subordinate to the country's courts.
Believe that if you will. But until the Marange case goes before the Supreme Court, the matter is not sub judice.
As for Mpofu, it was only last November that he was threatening NGOs that wanted to bring the Marange issue into the open. He has appointed close family and friends to positions in state organisations and his reportedly close business links to the companies actually mining the Marange deposits are a scandal, even in Zimbabwe.
It gets worse at Marange. A few weeks ago fresh alluvial deposits were found nearby. Artisanal miners scrambled in, but the military responded by driving workers off the new deposits.
The Kimberley Process (KP), which is supposed to ensure that diamonds reaching world markets are not "blood diamonds", has taken a look at Zimbabwe, but has essentially been shown to be a toothless bulldog.
Its latest proposed appointee to oversee a Zimbabwean investigation - an Englishman with years of experience in the diamond industry in the Democratic Republic of Congo - was rejected by the Mugabe regime. A Namibian second choice was vetoed by UK KP members. Result: stalemate, with the flouting of KP blood-diamond rules continuing.
Some parcels of Marange diamonds were recently offered for sale on open tender in Harare. But they were small stones of low quality. The finer and larger gems had been spirited away by the Zanu-PF military brass.
Another company with first-hand experience of Zimbabwe is Caledonia Mining. Two years ago, Zimbabwe's reserve bank failed to pay Caledonia for the company's Blanket mine's gold. Instead, Caledonian was issued with reserve bank bonds that were to have matured on February 1 this year.
In theory, with interest, the payment should have been $3.2-million. No payment was made and Caledonia has been told it must wait for another six months.
Mpofu explained that the reserve bank cannot pay because it has not received funds from the ministry of finance. "No-one has any money. We have explained the situation to the miners and we must all help," he said. "With the multiple currency situation in Zimbabwe, we have all lost our money, pensions and savings."
Meantime, the Blanket mine is running down and cannot fully afford to lift and maintain gold production.
Security risks are high in Zimbabwe as Mugabe fades from the scene. As James Smither of Control Risks security consultancy sees it, Zimbabwe ranks among several African countries where the risks of wholesale changes to regulatory regimes are greatest, as long-standing regimes enjoying highly concentrated power reach their ends.
He warned conference delegates to beware of considerably increased instability as other groupings battle to succeed despots across the continent.
On Africa as a whole, Smither said: "We have identified the following five key risks to watch for in 2010: elections and leadership changes; red tape and regulation; corruption and fraud; infrastructure deficiencies, and kidnap and piracy."
Zimbabwe's minister of mines Obert Mpofu kept a straight face at the Mining Indaba in Cape Town this week when he said foreign investors in his country's mining industry are "guaranteed security of tenure". It was not clear who was providing the guarantees.
EMERGING: With the recovery in commodity prices, mining can see the light at the end of the tunnel. Picture: ANTONIO MUCHAVE
Minister tells conference that foreign miners are 'guaranteed security of tenure'
In the same breath, Mpofu told delegates that the allocation of mining rights was a "transparent" process and that his country's regulatory environment was efficient, clear, honest and fair.
But when asked about the grab by President Robert Mugabe's military cohorts of the Marange diamond deposits legally owned by African Consolidated Resources, Mpofu became evasive. "I can't discuss the matter as it is sub judice," he pleaded.
Nonsense. Zimbabwe's High Court has confirmed the mining company's rights to the property and ordered the military (which now occupies it) to restore the property to the company.
Mugabe's henchmen claim that what is essentially a commercial matter should be decided by the country's Supreme Court. And Mpofu, a confidante of Mugabe, told delegates that the "inclusive" government is subordinate to the country's courts.
Believe that if you will. But until the Marange case goes before the Supreme Court, the matter is not sub judice.
As for Mpofu, it was only last November that he was threatening NGOs that wanted to bring the Marange issue into the open. He has appointed close family and friends to positions in state organisations and his reportedly close business links to the companies actually mining the Marange deposits are a scandal, even in Zimbabwe.
It gets worse at Marange. A few weeks ago fresh alluvial deposits were found nearby. Artisanal miners scrambled in, but the military responded by driving workers off the new deposits.
The Kimberley Process (KP), which is supposed to ensure that diamonds reaching world markets are not "blood diamonds", has taken a look at Zimbabwe, but has essentially been shown to be a toothless bulldog.
Its latest proposed appointee to oversee a Zimbabwean investigation - an Englishman with years of experience in the diamond industry in the Democratic Republic of Congo - was rejected by the Mugabe regime. A Namibian second choice was vetoed by UK KP members. Result: stalemate, with the flouting of KP blood-diamond rules continuing.
Some parcels of Marange diamonds were recently offered for sale on open tender in Harare. But they were small stones of low quality. The finer and larger gems had been spirited away by the Zanu-PF military brass.
Another company with first-hand experience of Zimbabwe is Caledonia Mining. Two years ago, Zimbabwe's reserve bank failed to pay Caledonia for the company's Blanket mine's gold. Instead, Caledonian was issued with reserve bank bonds that were to have matured on February 1 this year.
In theory, with interest, the payment should have been $3.2-million. No payment was made and Caledonia has been told it must wait for another six months.
Mpofu explained that the reserve bank cannot pay because it has not received funds from the ministry of finance. "No-one has any money. We have explained the situation to the miners and we must all help," he said. "With the multiple currency situation in Zimbabwe, we have all lost our money, pensions and savings."
Meantime, the Blanket mine is running down and cannot fully afford to lift and maintain gold production.
Security risks are high in Zimbabwe as Mugabe fades from the scene. As James Smither of Control Risks security consultancy sees it, Zimbabwe ranks among several African countries where the risks of wholesale changes to regulatory regimes are greatest, as long-standing regimes enjoying highly concentrated power reach their ends.
He warned conference delegates to beware of considerably increased instability as other groupings battle to succeed despots across the continent.
On Africa as a whole, Smither said: "We have identified the following five key risks to watch for in 2010: elections and leadership changes; red tape and regulation; corruption and fraud; infrastructure deficiencies, and kidnap and piracy."
Thursday, February 4, 2010
Zimbabwe pharmaceuticals market over 90% generics and OTCs; will expand at 23% CAGR
3 February 2010
While Zimbabwe’s difficulties cover the entire economic and political spectrum, encouraging stabilization and investment in the pharmaceutical industry should be among the government’s top priorities. Self-reliance on medicines will dramatically reduce import dependence and lower costs for patient, notes a new report offered by Research and Markets. The drug market summary indicates that, in the 12 months ending in December 2009, generic drugs will comprise 68.5% of the total drug market followed by the over-the-counter medicines segment at 22.5%. Health care spending is expected to rise from $220 million in 2009 to $650 million by 2014, representing a compound annual growth rate (CAGR) of 23%. The authors caution that a sizable portion of this money will come from foreign aid and, in light of Zimbabwe’s recent political and economic history, may not be entirely realized in the context of actual health care services. Per-capita spending on health care will rise from $17.58 to $46.97 by 2014. There is no operational or national health insurance scheme and therefore doctor fees and prescriptions are all paid for out-of-pocket.
Enjoying this article? Have the leading Biopharma news & analysis delivered daily on email by signing up for our FREE email newsletter here.In further developments during October 2009 aimed at assisting Zimbabwe’s economic recovery, the coalition government revealed that medical staff will be paid more substantial salaries, appropriate to their positions. The health care sector is an urgent priority for the re-establishment of core industrial segments, and one of the factors that contributed to its breakdown was the mass exodus of doctors and nurses. Political violence and general unrest also disrupted the medical supply chain, causing medicine shortages in hospitals and power and water cuts exacerbated by overwhelming demand from patients with traumatic injuries and communicable diseases. Retaining health care professionals and attracting new staff is now imperative to the re-building of functional hospital wards. In a particularly ambitious statement, the Health and Child Welfare Minister revealed an expectation that tourists may return to Zimbabwe as early as 2010, and that they will expect efficient and reliable health delivery. While this claim is bold, and perhaps unrealistic, any improvements to public sector healthcare should nevertheless benefit the local population. Cautious approach by foreign investorsWhile the Zimbabwean coalition government has prompted foreign interest in the country again, the tentative and understandably cautious approach by investors is reflected within the private pharmaceutical industry. Firms are prospecting South Africa in search of a significantly better operating environment with improved long-term outlooks to develop their business strategies for growth. Interest in South Africa is not unexpected, particularly since it has the most developed sub-Saharan African market, with infrastructure and a regulatory environment in place that is attractive to pharmaceutical firms. According to local newspaper the Sunday Mail, a report by the National Economic Consultative Forum (NECF) Health Taskforce said that the capacity of the local Zimbabwean pharmaceutical sector could reach 75% within the next year if the state implements a revised and urgent national drug policy. With nine drugmakers in Zimbabwe, government support would make a significant contribution to retention and long-term economic growth. Difficulties for local drugmakers Granite-side and VarichemZimbabwean drugmaker Granite-side Chemicals is currently struggling to achieve sustainable output. Staff shortages and a lack of adequate funding or credit-lines from the government have been highlighted as a massive part of this problem. According to the Sunday Mail, Granite-side is also listed as a strategic business in need of financial assistance. Seemingly, despite the deteriorating situation, production levels are still not viable. Generic drugmaker Varichem, the sole manufacturer of a combination antiretroviral (ARV) treatment, has closed one its two plants in Zimbabwe. A move to South Africa is likely imminent to protect further cuts. In addition, the protracted time over which domestic production has declined also indicates that the lack of maintenance and low availability of spare parts have caused operational facilities to fall into disrepair. Government long-term loans would significantly reform existing plants, in order for output to realistically meet a meaningful level of demand, the report concludes.
While Zimbabwe’s difficulties cover the entire economic and political spectrum, encouraging stabilization and investment in the pharmaceutical industry should be among the government’s top priorities. Self-reliance on medicines will dramatically reduce import dependence and lower costs for patient, notes a new report offered by Research and Markets. The drug market summary indicates that, in the 12 months ending in December 2009, generic drugs will comprise 68.5% of the total drug market followed by the over-the-counter medicines segment at 22.5%. Health care spending is expected to rise from $220 million in 2009 to $650 million by 2014, representing a compound annual growth rate (CAGR) of 23%. The authors caution that a sizable portion of this money will come from foreign aid and, in light of Zimbabwe’s recent political and economic history, may not be entirely realized in the context of actual health care services. Per-capita spending on health care will rise from $17.58 to $46.97 by 2014. There is no operational or national health insurance scheme and therefore doctor fees and prescriptions are all paid for out-of-pocket.
Enjoying this article? Have the leading Biopharma news & analysis delivered daily on email by signing up for our FREE email newsletter here.In further developments during October 2009 aimed at assisting Zimbabwe’s economic recovery, the coalition government revealed that medical staff will be paid more substantial salaries, appropriate to their positions. The health care sector is an urgent priority for the re-establishment of core industrial segments, and one of the factors that contributed to its breakdown was the mass exodus of doctors and nurses. Political violence and general unrest also disrupted the medical supply chain, causing medicine shortages in hospitals and power and water cuts exacerbated by overwhelming demand from patients with traumatic injuries and communicable diseases. Retaining health care professionals and attracting new staff is now imperative to the re-building of functional hospital wards. In a particularly ambitious statement, the Health and Child Welfare Minister revealed an expectation that tourists may return to Zimbabwe as early as 2010, and that they will expect efficient and reliable health delivery. While this claim is bold, and perhaps unrealistic, any improvements to public sector healthcare should nevertheless benefit the local population. Cautious approach by foreign investorsWhile the Zimbabwean coalition government has prompted foreign interest in the country again, the tentative and understandably cautious approach by investors is reflected within the private pharmaceutical industry. Firms are prospecting South Africa in search of a significantly better operating environment with improved long-term outlooks to develop their business strategies for growth. Interest in South Africa is not unexpected, particularly since it has the most developed sub-Saharan African market, with infrastructure and a regulatory environment in place that is attractive to pharmaceutical firms. According to local newspaper the Sunday Mail, a report by the National Economic Consultative Forum (NECF) Health Taskforce said that the capacity of the local Zimbabwean pharmaceutical sector could reach 75% within the next year if the state implements a revised and urgent national drug policy. With nine drugmakers in Zimbabwe, government support would make a significant contribution to retention and long-term economic growth. Difficulties for local drugmakers Granite-side and VarichemZimbabwean drugmaker Granite-side Chemicals is currently struggling to achieve sustainable output. Staff shortages and a lack of adequate funding or credit-lines from the government have been highlighted as a massive part of this problem. According to the Sunday Mail, Granite-side is also listed as a strategic business in need of financial assistance. Seemingly, despite the deteriorating situation, production levels are still not viable. Generic drugmaker Varichem, the sole manufacturer of a combination antiretroviral (ARV) treatment, has closed one its two plants in Zimbabwe. A move to South Africa is likely imminent to protect further cuts. In addition, the protracted time over which domestic production has declined also indicates that the lack of maintenance and low availability of spare parts have caused operational facilities to fall into disrepair. Government long-term loans would significantly reform existing plants, in order for output to realistically meet a meaningful level of demand, the report concludes.
Latest Food Price Hikes Absurd
4 February 2010
Harare — The cost of food for a family rose an incredible 10 percent last month, the Consumer Council of Zimbabwe found when it did its rounds last week checking prices of the common items that make up the monthly "basket" for a family of six.
Most families had already noticed this post-Christmas surge in food prices but confirmation of the trend allows something to be done about it.
But first we must find out why there was this sudden surge. The Consumer Council blames speculation by retailers and shop-owners on an expected significant increase in civil service pay, an increase that did not happen.
While grateful for the council's research, we feel that they are blaming the wrong people.
The retail trade in Zimbabwe is exceptionally competitive. Four large supermarket chains, backed by several smaller chains, independent supermarkets and small grocery stores mean that the average Harare shopper can usually visit several shops within a short walk of home, place of work or on the route between the two.
We cannot imagine that every single one of the several hundred owners and managers who independently set retail food prices in Harare would simultaneously come to the conclusion that it made sense to jack-up retail prices on a dubious bet. In fact, this business is remarkably price sensitive, as some found last year.
The Consumer Council itself found that in other sectors, where competition is almost always less intense, prices were far more stable yet these should have shown even larger jumps if retail speculation was the reason for food rises.
When we look at the actual products that went up in price we find one appalling fact. Almost all the products that rose in price were made in Zimbabwe.
When Zimbabwe switched to hard currencies at the beginning of last year, most items on supermarket shelves were imported. Within weeks Zimbabwean firms were back in production, and soon were able to undercut foreign suppliers on price or produce better quality for a similar price or do both
The local manufacturers were helped by the mid-year appreciation of the rand against the US dollar. This made South African goods a little more expensive and so opened more opportunities for well-priced Zimbabwean goods.
But, and this is the old problem resurfacing, Zimbabwean food processing is concentrated in the hands of a small number of companies. Some so dominate the market that they are either monopolies, or so close it does not matter, or half a duopoly. But duopolies do not make competition.
Two men playing a game of golf can come to an arrangement that sends factory gate prices soaring while a meeting to raise retail prices without reason would have to be held in the Harare International Conference Centre.
Some previous price rises, such as for maize meal, made sense. The cost of the basic maize rose, because it was imported and the rand had appreciated, or because Zimbabwean farmers obtained parity pricing.
But some of the more recent price rises do not make sense. The rand has been pretty stable against the US dollar for several months so imported raw materials or packaging should have remained constant.
And we see that with packaged food imported from South Africa. That has remained very constant in price with just tiny rises caused by South Africa's inflation, and that is falling.
So there does not seem to be any reason for rises in the price of Zimbabwean products between December and January.
But even if there was a reason we would not know it. These same monopolies and duopolies are still as secretive and arrogant as ever. They dictate without even explaining.
But these times are at least different. The prices cannot spiral. Already we are seeing more packaged food made in South Africa, Zambia, Mauritius and Botswana creeping back onto our shelves. There is imported bacon cheaper than our own major brand; imported cola no more expensive than that canned in Harare; more imported canned foods. The list is long.
Zimbabwean manufacturers need to relearn their lesson. They can, if they try, undercut imports since transport costs are high. With parity pricing they can compete on quality. What they cannot do, if they hope to stay in business, is raise their margins more than their foreign competitors. The consumers will punish them.
We hope the Consumer Council of Zimbabwe will now turn to these errant manufacturers and demand explanations that can be published.
Harare — The cost of food for a family rose an incredible 10 percent last month, the Consumer Council of Zimbabwe found when it did its rounds last week checking prices of the common items that make up the monthly "basket" for a family of six.
Most families had already noticed this post-Christmas surge in food prices but confirmation of the trend allows something to be done about it.
But first we must find out why there was this sudden surge. The Consumer Council blames speculation by retailers and shop-owners on an expected significant increase in civil service pay, an increase that did not happen.
While grateful for the council's research, we feel that they are blaming the wrong people.
The retail trade in Zimbabwe is exceptionally competitive. Four large supermarket chains, backed by several smaller chains, independent supermarkets and small grocery stores mean that the average Harare shopper can usually visit several shops within a short walk of home, place of work or on the route between the two.
We cannot imagine that every single one of the several hundred owners and managers who independently set retail food prices in Harare would simultaneously come to the conclusion that it made sense to jack-up retail prices on a dubious bet. In fact, this business is remarkably price sensitive, as some found last year.
The Consumer Council itself found that in other sectors, where competition is almost always less intense, prices were far more stable yet these should have shown even larger jumps if retail speculation was the reason for food rises.
When we look at the actual products that went up in price we find one appalling fact. Almost all the products that rose in price were made in Zimbabwe.
When Zimbabwe switched to hard currencies at the beginning of last year, most items on supermarket shelves were imported. Within weeks Zimbabwean firms were back in production, and soon were able to undercut foreign suppliers on price or produce better quality for a similar price or do both
The local manufacturers were helped by the mid-year appreciation of the rand against the US dollar. This made South African goods a little more expensive and so opened more opportunities for well-priced Zimbabwean goods.
But, and this is the old problem resurfacing, Zimbabwean food processing is concentrated in the hands of a small number of companies. Some so dominate the market that they are either monopolies, or so close it does not matter, or half a duopoly. But duopolies do not make competition.
Two men playing a game of golf can come to an arrangement that sends factory gate prices soaring while a meeting to raise retail prices without reason would have to be held in the Harare International Conference Centre.
Some previous price rises, such as for maize meal, made sense. The cost of the basic maize rose, because it was imported and the rand had appreciated, or because Zimbabwean farmers obtained parity pricing.
But some of the more recent price rises do not make sense. The rand has been pretty stable against the US dollar for several months so imported raw materials or packaging should have remained constant.
And we see that with packaged food imported from South Africa. That has remained very constant in price with just tiny rises caused by South Africa's inflation, and that is falling.
So there does not seem to be any reason for rises in the price of Zimbabwean products between December and January.
But even if there was a reason we would not know it. These same monopolies and duopolies are still as secretive and arrogant as ever. They dictate without even explaining.
But these times are at least different. The prices cannot spiral. Already we are seeing more packaged food made in South Africa, Zambia, Mauritius and Botswana creeping back onto our shelves. There is imported bacon cheaper than our own major brand; imported cola no more expensive than that canned in Harare; more imported canned foods. The list is long.
Zimbabwean manufacturers need to relearn their lesson. They can, if they try, undercut imports since transport costs are high. With parity pricing they can compete on quality. What they cannot do, if they hope to stay in business, is raise their margins more than their foreign competitors. The consumers will punish them.
We hope the Consumer Council of Zimbabwe will now turn to these errant manufacturers and demand explanations that can be published.
Tuesday, February 2, 2010
Jindal Steel in race to buy Zimbabwe's ziscosteel
Ishita Ayan Dutt / Kolkata February 02, 2010, 0:22 IST
ArcelorMittal is the only other bidder for the state-run company.
The Naveen Jindal-controlled Jindal Steel & Power Ltd (JSPL) is in the race to acquire a majority stake in Zimbabwe Iron & Steel Company (Ziscosteel) — the largest steelworks in the African country.
JSPL is pitted against ArcelorMittal, the only other suitor for the company. According to JSPL sources, the qualifying round has concluded. Following this, due diligence will be done and then the bids will be submitted.
Ziscosteel is 89 per cent owned by the government of Zimbabwe, which is looking to divest a 60 per cent stake as part of its privatisation programme. It is not clear how much the deal would fetch the government of Zimbabwe.
Ziscosteel has a capacity of a million tonnes and is a facility for long products (used in the construction sector). Industry sources said a greenfield facility of the same capacity would cost anywhere from $600 million (Rs 2,782 crore) to $1 billion (Rs 4,638 crore), depending on the nature of integration.
However, Ziscosteel has a debt of around $300 million (Rs 1,390 crore). The plant stopped operations in 2008 once the economic crisis broke out, as it was operating at less than break-even capacity.
Apart from the steelworks, Ziscosteel also owns an iron ore mine in Zimbabwe. JSPL has been scouting for raw material assets.
The company will be investing $2.1 billion (Rs 9,736 crore) on building plants for steel, pellet and sponge iron, as well as a power plant in Bolivia, where it acquired development rights for 20 billion tonnes of iron ore in 2007. In Mozambique, the company is engaged in coal and chromite exploration and in Madagascar for limestone.
The company was also in the fray for Australian coal firm, Rocklands Richfield. While some of the raw material would be used for independent projects close to the mines, a part of it could be used to cater to Indian plants’ needs.
Plans are afoot to set up a seven-million-tonne steel plant and a 1,600-Mw power plant in Chhattisgarh, an 11-million-tonne steel plant and a 2,600-Mw power plant in Jharkhand, and a 12.5-million-tonne steel plant and a 2,600-Mw power plant in Orissa. The combined investment in the three states would be around Rs 96,000 crore.
Spiralling raw material costs and delays in mine allocation in India have pushed most of the companies to scout for resources overseas. India has approximately 23.59 billion tonnes of iron ore scattered across states like Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa. Of this, only 6.3 billion tonnes is proven reserves.
Proven reserves of coking coal — which accounts for 50 per cent of raw material costs for steel producers — stand at 4.6 billion tonnes, but the quality of Indian coking coal is not suitable for making steel.
ArcelorMittal is the only other bidder for the state-run company.
The Naveen Jindal-controlled Jindal Steel & Power Ltd (JSPL) is in the race to acquire a majority stake in Zimbabwe Iron & Steel Company (Ziscosteel) — the largest steelworks in the African country.
JSPL is pitted against ArcelorMittal, the only other suitor for the company. According to JSPL sources, the qualifying round has concluded. Following this, due diligence will be done and then the bids will be submitted.
Ziscosteel is 89 per cent owned by the government of Zimbabwe, which is looking to divest a 60 per cent stake as part of its privatisation programme. It is not clear how much the deal would fetch the government of Zimbabwe.
Ziscosteel has a capacity of a million tonnes and is a facility for long products (used in the construction sector). Industry sources said a greenfield facility of the same capacity would cost anywhere from $600 million (Rs 2,782 crore) to $1 billion (Rs 4,638 crore), depending on the nature of integration.
However, Ziscosteel has a debt of around $300 million (Rs 1,390 crore). The plant stopped operations in 2008 once the economic crisis broke out, as it was operating at less than break-even capacity.
Apart from the steelworks, Ziscosteel also owns an iron ore mine in Zimbabwe. JSPL has been scouting for raw material assets.
The company will be investing $2.1 billion (Rs 9,736 crore) on building plants for steel, pellet and sponge iron, as well as a power plant in Bolivia, where it acquired development rights for 20 billion tonnes of iron ore in 2007. In Mozambique, the company is engaged in coal and chromite exploration and in Madagascar for limestone.
The company was also in the fray for Australian coal firm, Rocklands Richfield. While some of the raw material would be used for independent projects close to the mines, a part of it could be used to cater to Indian plants’ needs.
Plans are afoot to set up a seven-million-tonne steel plant and a 1,600-Mw power plant in Chhattisgarh, an 11-million-tonne steel plant and a 2,600-Mw power plant in Jharkhand, and a 12.5-million-tonne steel plant and a 2,600-Mw power plant in Orissa. The combined investment in the three states would be around Rs 96,000 crore.
Spiralling raw material costs and delays in mine allocation in India have pushed most of the companies to scout for resources overseas. India has approximately 23.59 billion tonnes of iron ore scattered across states like Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa. Of this, only 6.3 billion tonnes is proven reserves.
Proven reserves of coking coal — which accounts for 50 per cent of raw material costs for steel producers — stand at 4.6 billion tonnes, but the quality of Indian coking coal is not suitable for making steel.
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