Tuesday, November 15, 2011

De Beers Retail Arm Says Will Avoid Zimbabwe's Marange Diamonds

The Marange fields have been mired in controversy since the military took over operations from African Consolidated Resources in 2006 with rights defenders saying the army perpetrated abuses on ordinary people, killing some in the process

Forevermark, the high-quality diamond retail arm of diamond giant De Beers, says it will not sell any diamonds from the controversial Marange fields in eastern Zimbabwe citing inferior quality.

De Beers and Harare are currently embroiled in a war of words over the diamond giant's activities in Marange between 2000 and 2005. Harare alleges that De Beers siphoned rough stones worth millions of dollars while telling government it was just prospecting.

But De Beers denies the charges saying its operations in Marange were above board and they left after realizing the diamonds were not up to their standards.

Speaking at the launch of the exclusive brand in Johannesburg, South Africa at the weekend chief executive Stephen Lussier said Marange diamonds were generally too small and low in quality for the brand to sell.

He added that Forevermark’s selection process goes well beyond adherence to the minimal standards of the Kimberley Process, which recently gave Harare permission to sell Marange diamonds on the international markets after a three year stalemate in the diamond watchdog group.
Lussier said today’s consumers are now more interested in the source of their luxury purchases.

“The Forevermark carries a guarantee that the diamonds used for our products have contributed positively to communities, the environment and supply chains along the way," said Lussier.

“In a diversifying and maturing industry, consumers seek more from their luxury purchases. Not only do they demand value for money, but there is increasing interest in the source of their purchase and the journey it has traveled."

He added that less than one percent of the world’s diamonds are eligible to be branded Forevermark.

The Marange fields have been mired in controversy since the military took over operations from African Consolidated Resources in 2006 with rights defenders saying the army perpetrated abuses on ordinary people, killing some in the process.

Studio 7 was unable to reach De Beers to check if the diamond giant’s other operations would handle Marange diamonds.

Mines Minister Obert Mpofu said Harare is not surprised by Forevermark’s statement.

He repeated his accusations that De Beers had already unlawfully benefited from Marange diamonds during the 10 years the company held prospective rights for the fields.

Diamond activist Farai Maguwu of the Centre for Research and Development in Mutare said for as long as there’s no consensus amongst the governing parties in Harare over Marange, the world would find it difficult to accept Marange diamonds.

Research Director Allan Martin of Partnership Africa Canada commented that Forevermark has done the right thing, adding more international companies could follow suit.

Zimbabwe to have no electricity for another 4 years

Published: November 15, 2011

(Harare)Zimbabwe which has struggled with electricity supply in recent years, is to yet brace up for a gruelling additional 4 years without adequate supply of electricity resulting in little or no electricity for many areas as load sheddings’ frequency is increased, Zesa’s chief executive officer Engineer Josh Chifamba revealed yesterday.
The reasons for the shortages are still to be made fully known with ZESA at present blaming what it termed ‘an array of challenges among them vandalism that destroys property worth US$810 000 per month’.
Last year in June, ZimEye revealed that power outages would continue into 2014 as ZESA was struggling to raise a whooping US$125 million needed to repair the outdated Hwange Power Station generators, with US$8 billion needed for the country to restore optimum power production levels.

Zimbabwe Electricity Transmission and Distribution Company’s systems development manager Ikhupuleng Dube told a business forum in Harare on Thursday that ZESA needs US$125 million to repair Hwange thermal power station adding that Zimbabweans should brace for more power outages till 2014 because of the problem.

ZESA power lines

Zesa chief executive officer Engineer Josh Chifamba said the challenges that include a huge debt overhang, low installed capacity and general dip in the availability of power in the region will see the power utility load-shedding to share the limited resources.
Eng Chifamba was giving oral evidence before a Parliamentary Portfolio Committee on Mines and Energy
The committee, which was chaired by Uzumba MP Cde Simba Mudarikwa (Zanu-PF), wanted to know the challenges faced by Zesa. Eng Chifamba said the recent tariff increase, coupled with new projects currently being implemented both at Hwange and Kariba Power Station should be a source of hope for improved electricity supply in the next three years.
“When are we going to see improvement? Obviously what Honourable Members and the rest of the country are expecting to hear is the time when we will not be load shedding.
“That time is not very close, the time we need to commission new projects is about three years.”
He said two more projects are being implemented at Hwange and Kariba.

“At Hwange, we will be putting two extra machines to give us 600 Megawatts and Kariba 300 MW, that’s 900 MW, we expect to finish Kariba in 2015 and Hwange 2016,” he said.

Eng Chifamba said the completion of these projects would not see loading shedding easing.

“When that happens, it will alleviate our situation but we will still not be out of the woods.”

He said Botswana was currently working on a new project and Zesa hopes to tap into it when it is completed.

The deal was, however, subject to the two countries agreeing terms.

Eng Chifamba said consumer debt had been reduced from US$450 million to US$427 million owing to payment arrangement Zesa has entered with customers.

The delay in approving a cost reflective structure has seen Zesa failing to repair and maintain equipment while affecting operations.
The Zesa boss implored legislators to come up with a legal instrument that would punish consumers who continue to use old bulbs instead of energy savers once new bulbs have been introduced.

On tariffs, Eng Chifamba said the approved structures though coming late had gone a long way in stabilising operations.
“The tariffs are meant to address these challenges. It will simply allow us to operate our business normally,” he said.
It was critical, said Eng Chifamba, for stakeholders to realise that electricity was not cheap.

He said the price of coal has also threatened the viability of their business.

Eng Chifamba called for a good operating environment conducive to draw investors.

“We need all forms of stability in the country,” he said.

On independent power producers, Eng Chifamba dismissed indications that they were blocking them.

He said Zesa wished to see more stakeholders coming in to assist them deliver electricity

Tuesday, November 8, 2011

PARLIAMENTARIANS want to be exempted from paying Zesa utility bills

PARLIAMENTARIANS want to be exempted from paying Zesa utility bills saying they cannot afford the tariffs amid serious fears of disconnections.

Zesa has however, stood firm saying the request was untenable as it would result in consumers subsiding the legislators.

Mberengwa East MP, Cde Makhosini Hlongwane (Zanu-PF), said the power utility should consider either a full or a partial exemption for legislators in light of their poor remuneration.

He said this during a pre-budget seminar for parliamentarians in Victoria Falls.

"Can MPs have an exemption, even a partial exemption from paying electricity? If that is not done, most of them might suffer the embarrassment of having their power disconnected," he said, drawing applause from fellow legislators.

Zesa Holdings chief executive officer Engineer Josh Chifamba who was a participant on a topic "Measures to Address National Energy," shot down the proposal.

"We do not have that dispensation.

"Tariffs should be cost reflective. When we make that exemption, there have to be transparent otherwise the poor people in high density suburbs might end subsiding the rich in Borrowdale," he said.

Eng Chifamba said legislators might probably consider approaching Finance Minister Tendai Biti with their plight and discuss how Treasury could assist them.

Uzumba MP, Cde Simba Mudarikwa (Zanu-PF), proposed that Zesa debit the money owed by the Grain Marketing Board to cover for unpaid farmers' bills since both of them were State entities.

Eng Chifamba dismissed the proposal since Zesa has its own balance sheet.

Energy and Power Development Deputy Minister Hubert Nyanhongo said there was nothing Zesa could do to assist those consumers who had made advance payments for their electricity during the Zimbabwe dollar era but were not credited when the country switched to the multi-currency system.

Gokwe MP, Cde Dorothy Mangami (Zanu-PF), had complained that several people especially farmers had made advance payments covering almost a year but were not credited in the United States dollar terms.

"I want to say tough luck. We don't have replacement in terms of those who had deposited their Zim dollar in advance.

"When we dollarised we lost out everything in Zim dollar, so tough luck for those people," Deputy Minister Nyanhongo said.

On load shedding, Eng Chifamba said there was nothing the power utility could do to avert it until there is sufficient power generation.

He said one way of dealing with load-shedding and billing challenges was the impending pre-paid system.
The Zesa boss was however, quick to say they would be levying 10 percent of money paid for those owing Zesa prior to the commencement of the pre-paid system

Tuesday, November 1, 2011

Zimbabwe's Mugabe Threatens Swiss Holdings in 'Reciprocity' for Visa Denials

Swiss companies in Zimbabwe include food giant Nestlé, which temporarily shut down a Harare processing plant in December 2009 due to pressure brought when it stopped buying milk from a Mugabe-owned dairy
Ntungamili Nkomo
News Updated: 8:06 UTC Monday 31 October 2011 RSS Feed 31 October 2011

Zimbabwe's Mugabe Threatens Swiss Holdings in 'Reciprocity' for Visa Denials

Although Mr. Mugabe had received a visa, he canceled the trip and headed to Singapore for treatment of what credible reports say is metastatic prostate cancer.

Arriving home at Harare International Airport late Sunday, Mr. Mugabe told journalists he was saddened by the Swiss visa denials, adding, “now they are showing that they are vicious and we will reciprocate because they have properties here. We are not without means to reciprocate.”

Mugabe, 87, brushed aside lingering concerns about his health saying he is fit.

Swiss companies operating in Zimbabwe include food giant NestlĂ©, which temporarily shut down a Harare milk processing plant in December 2009 amid threats from ZANU-PF after it stopped buying milk from Grace Mugabe’s Gushongo Dairy Farm.

The Swiss embassy in Harare refused to comment.

Switzerland imposed sanctions on Mr. Mugabe and hundreds of ZANU-PF officials in 2002, accusing them of human rights abuses and ballot-rigging.

Economic analyst Walter Nsununguli Mbongolwane commented that Mr. Mugabe’s threats could handicap economic growth by scaring away investors. "When they decide to seize Swiss companies, they will hide behind indigenization,"he said, referring to the ZANU-PF-inspired drive to claim a controlling black stake in foreign enterprises.

Political analyst Bhekilizwe Ndlovu told VOA Studio 7 reporter Ntungamili Nkomo that Mugabe’s threats do not bode well for economic recovery.

Zimbabwe Government Principals Block Payment of Legislator Arrears

October 2011

Zimbabwean President Robert Mugabe, Prime Minister Morgan Tsvangirai and Deputy Prime Minister Arthur Mutambara have barred payment of back allowances for members of Parliament saying the state of government finances does not permit it.

Sources said the three unity government principals said such allowances, which in some cases amounted to US$40,000, will only be paid going forward.

The Standard newspaper said angry lawmakers nearly manhandled ZANU-PF Chief Whip Joram Gumbo and his counterparts in the two Movement for Democratic Change formations - Innocent Gonese and Edward Mkhosi - when they announced the decision.

The unity government principals did not specify a reason for blocking the payments, but sources said it was due to a lack of funds. The three ordered Parliament to pay only US$75 per sitting to the members beginning Tuesday, November 1.

Constitutional Affairs Minister Eric Matinenga said Parliament had completed calculating outstanding allowances last week and was preparing to pay them.

Independent political commentator George Mkhwanazi said legislators should be paid what is due to them as cabinet ministers have received hefty travel allowances.

Monday, August 29, 2011

August 28 2011 at 12:28
Independent Newspapers

Impala Platinum may invest as much as $10 billion (R72bn) in Zimbabwe to expand production if the government backs down on a demand that its business there be controlled by the black citizens of the country.
Zimbabwe, which has the largest platinum reserves after South Africa, passed a law earlier this year to force foreign companies to cede at least 51 percent of their local assets to black Zimbabweans.
Anglo American Platinum and Aquarius Platinum also mine the metal in the southern African country.
“It would run into the billions of dollars, probably between $5bn and $10bn,” chief executive David Brown said in an interview in Johannesburg on Thursday, where the company is based.

“Fifty-one percent equity just does not work.”

Impala first invested in Zimbabwe in 2001 when it bought 30 percent of Zimbabwe Platinum Mines for the equivalent of $47 million and later took control of the company. It is now the biggest investor in Zimbabwean mining, with the country in the third year of recovery from a decade-long recession sparked by the seizure of white-owned commercial farms for redistribution to black subsistence farmers.

The unit, now known as Zimplats Holdings, produced 182 100 ounces of platinum in the year to June and is in the midst of a $460m expansion of its Ngezi mine – southwest of the capital Harare – which will boost output to 270 000 ounces in 2014, according to a company statement.

“We could begin to look at phase three and beyond but this requires stability,” Brown told investors at a presentation.

The company has until Wednesday to revise its May proposal to satisfy ownership rules, after it was rejected over a week ago.

Impala also owns the Mimosa mine in the country in a venture with Aquarius.

Impala, which produces about 25 percent of the world’s platinum used to cut car emissions and make jewellery, is spending R35 billion over the next five years to expand production as rising demand drives up prices.

While most of its deposits are in South Africa, 11.3 million ounces, or almost a third of its total platinum reserves, are in Zimbabwe. That’s worth about $21bn at the current platinum price.

“It’s a huge disappointment that we find ourselves in this position – we’ve been a model investor in this country,” Brown said.

Impala believed that “an appropriate level of ownership will be the final result” of talks with the government, Brown told investors. The ownership rule could “retard” investment in mining and other industries at a time when it’s needed.

Economic expansion has been “largely confined to the mining and agriculture sectors”, the London-based Economist Intelligence Unit said in a report earlier this month.

Power shortages, uncertainty over the likely election timetable, as well as the “continued confusion about legislation requiring 51 percent local ownership of all enterprises, are likely to prevent more rapid gross domestic product expansion”, it added.

Zimplats signed an agreement with the government in 2006 to release a portion of its mining claims in exchange for a combination of black empowerment credits and cash.

Impala announced in a June statement that year the area contained 99 million ounces of platinum, palladium, rhodium and gold.

The area could support open-pit mining and “could be turned into quite a profitable concern”, Brown told investors on Thursday.

“They gave that ground to people who weren’t necessarily interested in mining it.”

The country also has the world’s second-biggest chrome reserves, as well as deposits of coal, gold and iron ore.

Impala gained 2.1 percent to R168.95 at 9.18am on Friday in Johannesburg, giving it a market value of R106bn. At 5pm, shares gained 1.81 percent to close at R168.50.

Meanwhile, Gold Fields said Peru’s decision to base a new mining industry windfall tax on operating profit rather than revenue was in line with the industry’s preference.

“The new tax, we believe, will retain Peru’s competitiveness and will guarantee the government’s support for the growth of mining investment,” Gold Fields said on Friday. – Bloomberg

Thursday, August 25, 2011

Choice in Currency Saved Zimbabwe

August 24, 2011 by Jeffrey Tucker

The country’s new finance minister, Tendai Biti, declared that the Zimbabwean dollar had ceased to exist: “Our currency,” he said, “is moribund.” On April 12, Zimbabwe suspended the use of its currency as legal tender.

“At first covertly, then in openness, and finally with the consent of the government,” Mr. Noko writes, “foreign currencies – the rand, the euro, the pound, the U.S. dollar, the [Zambian] kwacha – replaced Zimbabwe’s dollar.” Precisely as Mr. Hayek had imagined, Zimbabwe’s inflationary spiral ended. Within weeks, the country’s economy showed dramatic improvement. Businesses began to open. Banks began to function. Unemployment began to fall. GDP began to rise. Private credit began to increase. Foreign investment began to return. The human exodus ended.

Out of sheer necessity, Zimbabwe adopted the fiscal discipline known as “cash budgeting,” which meant that the government could spend and lend only the money it had in cash. Mr. Biti, the finance minister, said simply: “We will eat what we have gathered.”

ElectraCard Services signs agreement with Zimbabwe`s bank

BS Reporter / Mumbai/ Pune August 25, 2011, 0:21 IST

Pune based ElectraCard Services (ECS), a provider of software solutions for electronic payment systems, has signed an agreement with FBC Bank, Zimbabwe to provide an end to end processing for its MasterCard debit and prepaid cards.

With this, FBC Bank will be the first domestic bank to issue MasterCard prepaid card in Zimbabwe, since the introduction of multi-currencies.

"The FBC Bank MasterCard debit and prepaid cards will help the customers of FBC Bank to securely and conveniently transact anywhere in the world. ECS will not only assist the FBC Bank to provide more convenience to its customers but also help them strengthen their position as a market leader in electronic payment solutions," said Ramesh Mengawade, CEO, ElectraCard Services speaking on this occasion.

ECS is a preferred processor for prepaid for MasterCard in whole of Africa, Middle East and Asia-Pacific. As technology partners to FBC bank, ECS will handle complete processing of the debit and prepaid cards right from applications, card and accounts, transactions, billing, statements, payment and dispute resolution. It will host the solution from its World Class PCI-DSS certified data centre in Mumbai, India.

"We are committed to deliver value-added solutions to our customers in Zimbabwe and we are very excited about the partnership with ECS, which we believe has further strengthened our payment services to our customers. Through this partnership we are now able to deliver global convenience and security to the market. This will further assist us to constantly innovate and deliver the best for our valued customers," said Agrippa Mugwagwa executive director, retail banking and e-Commerce at FBC Bank.

Wednesday, August 24, 2011

Zimbabwe’s Biti in Bid to Create Separate Black-Ownership Rules for Banks

QBy Godfrey Marawanyika - Aug 23, 2011 5:52 PM GMT+0200 .

Zimbabwe Finance Minister Tendai Biti said he is in talks with Youth Development, Indigenization and Empowerment Minister Saviour Kasukuwere to develop separate ownership rules for banks operating in the country to those of mines.

His ministry is trying to agree a minimum ownership threshold for banks, where for mining companies it is 51 percent, Biti told reporters in the capital, Harare, today. The ministry is also consulting banks regarding the ownership law, Biti said.

To contact the reporter on this story: Godfrey Marawanyika in Johannesburg at gmarawanyika@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

Zimbabwe’s finance minister says rising food prices have driven up inflation

HARARE, Zimbabwe — Zimbabwe’s finance minister says rising food prices have driven up inflation in the ailing southern African economy.

Tendai Biti said Tuesday the inflation rate has risen from 2.9 percent in June to 3.3 percent in July. He blamed local businesses for inflating prices on basic foodstuffs.

Zimbabwe has experienced food shortages and record inflation since 2000 after President Robert Mugabe, the longtime ruler, ordered farmland seizures.

Mugabe formed a shaky coalition government with former opposition Morgan Tsvangirai in 2009 after disputed elections in 2008.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Monday, August 22, 2011

Kasukuwere vows to grab companies

Sunday, 21 August 2011 15:00


YOUTH Development, Indigenisation and Empowerment minister Saviour Kasukuwere on Friday vowed to go ahead with plans to seize foreign-owned companies despite a stern warning by Reserve Bank of Zimbabwe governor Gideon Gono to refrain from disrupting economic revival.

State media had reported that 11 companies that failed to comply with the government’s empowerment laws, including Barclays and Standard Chartered banks had been given a 14-day ultimatum to do so or risk losing their licences.

Gono, in an uncharacteristic attack on a Zanu PF minister, warned against “irrational exuberance during these times of necessary soberness.”
Kasukuwere’s ministry is trying to enforce the controversial indigenisation regulations that seek to force foreign-owned companies to cede 51% of their stakes to locals over the next five years.

Caledonia Mining Corporation also threatened a legal showdown with Kasukuwere after he reportedly wrote to Mines and Mining Development minister Obert Mpofu instructing him to withdraw Blanket Mine’s licence.

The Canadian firm owns Blanket Mine, one of Zimbabwe’s top gold producers, which was named among the 11 companies that were on the verge of losing their licences.

“Caledonia believes the Minister of Indigenisation has exceeded his legal powers, both in terms of his assessment of Caledonia’s proposal and his request to the Minister of Mines,” the company said in a statement.

“Caledonia is seeking urgent clarification from the relevant ministers and is also consulting with its legal advisors regarding appropriate legal action.”
But Kasukuwere remained defiant, vowing to follow through his threats that have already given investors jitters at a time when the economy is desperate for foreign capital injection.

“As far as we are concerned, we are going ahead with the process and we shall effectively use the laws to empower our people,” Kasukuwere told Standardbusiness.

“They (foreign companies) have taken us for a ride for too long, we have tried to be accommodative and understanding so we shall deal with those that don’t want to co-operate.”

The minister announced recently that he had thrown out proposals by mining companies on how they intended to comply with the empowerment law.

On Friday Kasukuwere said Caledonia and other companies were free to consult lawyers from “heaven” and appeal to whoever they wanted, but his ministry was not going to look back.

Gono pointed out that the minister’s proposal flew in the face of the Southern Africa Development Community proposals of stabilising the banking sector, at a time when the world was facing a double dip economic recession. “To this end, therefore, the timing of any move that we may take or intend to take is important,” Gono advised. “May all stakeholders please be guided accordingly and take heed before it’s too late.”
He said he was issuing the statement in order “to avoid fly-by-night, reckless and excitable flexing of muscles and decisions that overlook certain fundamentals that could irreparably harm the nerve-centre of our recovering economy.”

2006 empowerment deal binding: Zimplats

21/08/2011 00:00:00
by Gilbert Nyambabvu

Contract binding ... David Brown

IMPALA Platinum – which owns Zimbabwe Platinum Mines (Zimplats) -- has insisted that the government honour the terms of an empowerment deal reached in 2006 as a cabinet minister threatened to cancel the company’s operating licence.

Empowerment Minister, Saviour Kasukuwere has given Zimplats and a number of other foreign firms operating in Zimbabwe 14 days to submit indigenization proposals complaint with the country’s laws or risk having their local assets seized by the government.

Foreign firms operating in the country are no required by law to give up at least 51 percent of their equity as part of measures aimed at economically empowering the historically disadvantaged black majority.

However, Impala, which owns 87 percent of Zimplats and has a 50 percent interest in Zvishavane-based Mimosa Platinum Mine – insists the three-part plan it has already submitted is compliant with the law.

Implats chief executive, Dave Brown said the plan involves a 26 percent equity transfer with the balance (to reach 51 percent) made of social investment projects and a prior agreement with the government.

“We reckon that’s somewhere between 25 percent and 26 percent – we’re quite happy with that. Still, people should understand there are real cost associated to that. If people give you a cheque up front there would be no cost associated,” Brown told mining publication, miningmx.com.

“But in reality that’s not going to happen. Such a deal would usually entail some deferred payment method, using dividends or methodology to repay the purchase price. There is a cost associated to that. Us bearing that cost is part and parcel of our commitment to empowerment.”

He also insisted that a 2006 deal under which the company gave up 36 percent of its mineral resource in Zimbabwe in return for so-called credits should be honoured.

“There was a lot of emotion about those agreements. But we have a valid contract, we have a binding contract and that contract is in essence what I’d like to see honoured," he said.

“Because if that contract is honoured I’d certainly believe it would create a great faith that contracts and promises would be honoured. At the time when we discussed these matters it was accepted it would be taken into account.”

Still, Kasukuwere has said previous empowerment deals will not be considered adding offers for so-called social investments were also off the table.

However, Brown says he is not overly worried by what he considers political rhetoric.

"I think at the end of the day politicians will always indulge in populist rhetoric. I get that. I understand that’s their job mandate," he said.

“The President (Robert Mugabe) himself said on several occasions we are a model investor. He’s appreciative of our involvement in the social fabric of the country. That’s providing jobs, trying to enhance infrastructure and also various social projects in the areas we mine.”

A second phase expansion of Zimplats expected to cost US$450 million is already under way and involves building a third underground mine and a second concentrator at Ngezi, which will lift output to 270 000oz/year when the project reaches steady-state production levels in 2014.

“The sooner we can get clarity and finality (on indigenization) the better it is for investment,” Brown said.

“We have phases. We’re almost at full production at phase one. At phase two we’d ramp up by 2014. And then we’d be looking at phase three. And phase three would be quite a considerable investment. We’d be talking potentially of a $1bn capital injection.”

Tuesday, August 16, 2011

Zimbabwe to Use Special Drawing Rights Facility to Pay Off IMF Debt

Finance Minister Tendai Biti said Zimbabwe hopes for the release of US$93 million that was withheld by the IMF when the country got its share of global economic crisis adjustment funds in 2009

Gibbs Dube
.....Finance Minister Tendai Biti says Zimbabwe will use US$140 million of a US$500 million Special Drawings Rights facility to pay down debt to the International Monetary Fund which is preventing the country from obtaining any new loans.

Biti said in a statement that the payment will allow Zimbabwe to tap development funds under the global lender’s Poverty Reduction and Growth facility.

He said Zimbabwe hopes for the immediate release of US$93 million that was withheld by the IMF when the country got its share of crisis-adjustment funds in 2009.

But economists doubt the IMF will release the funds due to other debts.

Zimbabwe owes the African Development Bank some US$400 million and the World Bank US$1.2 billion, plus more than US$5 billion in other international loans.

Economist Daniel Ndlela said Biti has made the right decision to settle the debt to the IMF using the 2009 global crisis funds. “But as long as we still owe other institutions, we are still not out of the woods,” Ndlela said.

Economist Eric Bloch said Zimbabwe is not likely to receive financial support from international organizations until it has gotten current on its payments.

Biti said the SDR equivalent of US$150 million has so far been used for the purchase of agricultural inputs for the 2009-2010 crop season and infrastructural projects, and US$20 million for lines of credit for Zimbabwean industry under the Zimbabwe Economic and Trade Revival Facility administered by Interfin Bank.

The funds were spent to overhaul the Hwange Thermal Power Station, National Railways of Zimbabwe track and rolling stock, and Bulawayo City Council’s sewer and water distribution system, to upgrade broadcasting equipment, to resume construction of a Matabeleland water pipeline and for housing in Kwekwe and Harare.

Biti said SDRs equal to US$215 million are held at the IMF as national reserves

Tuesday, August 2, 2011

New VAT Refund Procedure - Beit Bridge Border Post


New VAT Refund Procedure - Beit Bridge Border Post
Effective 3 June 2011

With effect from 3 June 2011 there will be a new procedure for claiming a VAT refund for movable goods exported through Beit Bridge Border Post.

Qualifying purchases must comply with the following procedures:

The goods against which a VAT refund is claimed must be declared to RSA Customs in accordance with the Customs and Excise Act and relevant procedures.

• The goods must also be declared to the Customs authority in the country to which the goods are exported in accordance with that country's customs and excise formalities.

• After the movable goods have been declared to both customs administrations and exported, only then can the qualifying purchaser apply for a VAT refund.

The following documents must be lodged when making application for a VAT refund:

• The original tax invoice/s for which the VAT refund is claimed.

• Proof that the goods were declared to RSA Customs authorities

• Proof that the goods were declared in the country to which they were exported.

• A copy of the qualifying purchaser's passport reflecting entry and exit from the RSA.

• An address to which the VAT refund payment should be sent once approved.

In the case of claims by a foreign enterprise the following documents must also be lodged:

• The certificate of incorporation, trading licence or similar proof of registration.

• A letter of authorization on the foreign enterprise's letterhead authorizing an individual person to lodge the claim on its behalf.

• A copy of the authorized person's passport.

Refund claims may be posted to:
VAT Refund Administrator (Pvt) Ltd P O Box 107
O R Tambo International Airport, 1627, South Africa,
Physical address: 206/1 High Road, Bredell, Kempton Park 1619
Telephone: +27 873 100 200
Email: info@taxrefund.co.za

Duty on food stuffs restored

Subject: Duty on food stuffs restored - http://www.herald.co.zw/index.php?option=com_content&view=article&id=16551:duty-on-food-stuffs-restored&catid=37:top-stories&Itemid=130

Business Reporters

FINANCE Minister Tendai Biti yesterday restored import duty on some food stuffs to protect local industry, as he expressed optimism on the economy achieving the targeted 9,3 percent growth figure by year-end.

Presenting the Mid Year Fiscal Policy Review Statement, Minister Biti said the re-imposition of duty has been necessitated by improved supply of basic goods and also the need to protect local producers.

He did not announce a supplementary budget preferring to go by the status quo.

For basic commodities such as maize meal and cooking oil, the proposed import duty will take effect from next month while for other food stuffs such as potato chips, baked beans and mixed fruit jam, the rates will start applying from the beginning of September.

The proposed duty will range between 10 percent and 25 percent.

Duty on salt, rice and flour will remain suspended until end of this year.

"Government will continue to monitor the supply of cooking oil and maize meal in order to ensure the availability at competitive prices," said Minister Biti.

He expressed optimism that the country would achieve the projected 9,3 percent economic growth rate this year. The growth would be largely supported by agriculture and mining sectors which are expected to expand by 19,3 and 44 percent respectively.

Inflation is expected to end the year at 4,5 percent on the back of improved production and fiscal discipline.

"I am pleased to report that economic growth remains on course, driven by robust performance in agriculture and mining, with moderate contributions from tourism and manufacturing," said Minister Biti.

He announced a US$40 million fund for distressed and marginalised areas in partnership with a local pension house. Government will avail US$20 million with the remainder coming from the partner.

Government is also putting together a US$40 million insurance and pension sectors housing fund from resources mobilised from the pension and insurance industry.

On the budget performance, Minister Biti projected a deficit of about US$700 million due to increased wage bill and huge cost of importing grain.

He said budgetary pressures compounded by unbudgeted employment costs were likely to reach US$404 million by year end.

Government had provided the wage bill of US$1,3 million under the US$2,7 billion 2011 budget.

"While the 2011 National Budget provided expenditure of US$2,7 billion, indications remain that, as pointed out above, the revenue performance to date shows a half year shortfall of US$65 million," he said.

"This is at a time when we face additional expenditure pressures totalling about US$550 million related to critical priority programmes in a number of areas.

"I have to appeal to my colleagues in the Cabinet committee on resource mobilisation to assist in raising this money."

Zimbabwe is set to import about 300 000 tonnes of maize to meet an impending shortfall.

Minister Biti said proceeds from diamond revenue have been earmarked to meet the additional employment costs for State workers.

He said there was a need for transparency over diamond revenue "as non-performance" of this sector poses serious budgetary and wage payment challenges.

Minister Biti expressed concern at the low uptake of funds by the private sector in the face of the existing liquidity crunch in the country.

He said during the first six months of the year, disbursements from approved facilities of about US$1,6 billion amounted to US$613,9 million.

About US$13 million was disbursed under the US$70 million Zimbabwe Economic Trade Revival Facility.

"The low uptake of lines of credit can be attributed to capacity issues, protracted approval process by the lenders and the delays in fulfilling conditions by the local banks," said Minister Biti.

In the six months to June this year, the country registered a trade deficit of US$1,4 billion with imports coming at US$3,4 billion against exports of US$2 billion.

On foreign direct investment, Minister Biti said the ability of the country to attract investment was being undermined by the perceived high profile country risk.

Government was finalising importation of coins from the US.

The coins are likely to be unveiled before end of this year.


• Duty on foodstuffs re-introduced

• 9,3 percent economic growth projection maintained

• US$40 million Distressed and Marginalised Areas Fund for industry

• US$20 million for SME support

• ZETREF to be democratised

• US$700 million budget deficit forecast

• Duty on raw material to be reduced by September 1

• Rebate of duty on prepaid meters granted

• No supplementary budget

• US$40 million housing fund from insurance and pension industry

• Rebate on duty for motor vehicles and capital goods for tourism sector reinstated

US dollar coins likely to be unveiled in Zimbabwe before end of the year

US dollar coins likely to be unveiled in Zimbabwe before end of the year

by Nare Msupatsila
2011 July 27 07:39:45

Presenting the Mid Year Fiscal Policy Review Statement, Minister Biti said
the Zimbabwe government was finalising importation of coins from the US. He
indicated that the coins are likely to be unveiled before end of this year.

Earlier this year there were some reports that the US govt agreed to supply
coins to Zimbabwe. The United States Federal Reserve is said to have agreed
to supply coins and replace soiled notes to Zimbabwean banks in a bid to end
change problems in the economy.

According to sources, representatives Bankers Association of Zimbabwe led by
its president and FBC Bank boss John Mushayavanhu met Finance minister
Tendai Biti sometime back to map a way forward in dealing with change
problems in the economy.

The sources, said the US Federal Reserve have "formally" agreed that
Zimbabwe's economy is now dollarised and will now supply Zimbabwe with coins
and replace notes.

Officials from the Finance ministry are said to have finalised all the nuts
and bolts to the US dollar coins with the Fed and will soon depart for the
US to airlift the coins to Zimbabwe.

Banks and government, according to the sources have agreed to charter an Air
Zimbabwe flight to pick up the coins in the US. The flight costs will be met
by both government and banks.

Zimbabwe has been saddled with change problems since the introduction of
multi-currencies in February 2009.

Retailers are offering consumers credit notes, tokens and even sweets to
settle small change.

Mushavanhu declined to comment on the matter referring all questions to Biti
who was unreachable at the time of going to press.

In his 2011 Mid Term Budget Policy statement, Biti yesterday said government
had engaged the United States Federal Reserve over possible provision of
coins and replacement of soiled notes to ease small change problems in the

Biti said: "I am pleased to advise on the fruitful interactions with the US
Department of the Treasury which stands ready to facilitate access to
acquisition of smaller denominated coins and replacement of soiled notes
through the US Federal Reserve and commercial banks. I will, therefore, be
finalising on this in conjunction with the banking system, that way
resolving the matter of challenges with change and coins."

"The availability of both US dollar and rand coins will do away with the
challenges posed by the current need to apply cross rates in giving change
in rand coins for transactions undertaken in US dollars," Biti said. "Whilst
this problem should be alleviated by electronic payment systems, the large
size of the informal sector and the lack of infrastructure for electronic
payment systems in rural areas necessitate the availability of large volumes
of small denominations".

Monday, July 25, 2011

Miners in Zimbabwe who don’t submit an approved plan by Sept. 30 on how they will meet local ownership laws will see the government “kick them out,” said Indigenization Minister Saviour Kasukwere.

Miners in Zimbabwe who don’t submit an approved plan by Sept. 30 on how they will meet local ownership laws will see the government “kick them out,” said Indigenization Minister Saviour Kasukwere.

The government has rejected 175 proposals from companies on how they will comply with the legislation, Kasukwere said in the capital Harare today. Units of Impala Platinum Holdings Ltd. (IMP), Aquarius Platinum Ltd., Rio Tinto Plc and Anglo-American Plc. are among companies mining in the country.

Zimbabwe’s new Indigenization and Empowerment Act gave foreign and white-owned mines until June 2 to show how they would cede or sell 51 percent of their companies to black Zimbabweans or “state entities.” The law doesn’t make it clear what a state entity is, or how payment would be made to companies whose assets are acquired.

Kasukuwere said June 27 that all foreign miners had submitted plans, adding that they “fell short” of government expectations.

Mwana Africa Plc. and closely held Metallon Corp. also operate in the country, which has the world’s second-biggest reserves of platinum and ferrochrome after South Africa.

Gold, nickel, diamonds, coal and emeralds are also mined in the southern African nation, where political conflict led to economic recession between 1998 and early 2009.

Investors Discouraged
Harare-based RioZim Ltd., subject to the 51 percent law, said May 31 that foreign investors it had been courting to fund expansion by the gold, nickel and coal producer had withdrawn because of the ownership rules.

Bob Gilmore, a spokesman for Impala Platinum in Johannesburg, said he was unable to comment immediately on the the minister’s comments.

Calls to Pranhill Ramchander, an Anglo American spokesman in Johannesburg, weren’t immediately answered. Tony Shaffer, a spokesman for Rio Tinto, also didn’t immediately answer calls to his office or mobile phones in London.

Friday, July 15, 2011

No supplementary budget this yr: Biti

No supplementary budget this yr: Biti

Posted by By Our reporter at 14 July, at 09 : 46 AM Print

FINANCE Minister Tendai Biti says there will be no supplementary budget this year when he presents his mid-term fiscal policy statement this month.

He said the country’s economy did not have the capacity to fund any extra budget since it was already struggling to raise money to finance this year’s budget.

He was responding to a question from Mbire MP Paul Mazikana (Zanu-PF) during a question-and-answer session.

Mazikana had asked him whether he would present a supplementary budget to cater for the civil servants’ salary increment.

“The position is that on July 26, I will present a mid-term fiscal policy review. There will be no supplementary budget. A supplementary budget presupposes that there is a capacity to increase your budget. There is no capacity,” said Minister Biti.

He said Treasury had only recorded a significant inflow of money in March and June, while the rest of the other months, revenue inflows were subdued.

He said this painted a gloomy picture in terms of financing the 2011 national budget of US$2,7 billion.

“We were able to break the US$230 million monthly revenue collection target for these two months because they are the quarterly payment dates on corporate tax,” he said.

There will be a US$500 million budget deficit arising from the January salary increment, purchase of grain to complement strategic reserves, constitution-making process and travelling costs.

“We have spent over US$30 million on travelling and this US$500 million deficit does not include the cost of the referendum the country will hold,” he said.

Minister Biti urged people to brace for a “collapse of fiscal space and gnashing of teeth as people should tighten their belts.”
Any additional expenditure outside the budgeted programmes would mean other allocations or areas would suffer, Minister Biti said.

He said Government ought to get rid of 75,000 “ghost workers” and improve transparency and accountability on diamond sale proceeds.

He slammed the International Monetary Fund, which he said did not accord small and poor nations equal treatment, yet the United Nations treated all nations equally.

Responding to another question, Prime Minister Morgan Tsvangirai, expressed concern at ministers who failed to attend the question and answer session.

Nyanga South MP, Willard Chimbetete (MDC-T) had implored the PM to take “restrictive measures” (sic) against ministers who failed to attend the sessions.

“We are seized with this issue; in fact every Cabinet meeting on Tuesday we table all questions that are on the Order Paper. I will ensure that we give focus to the business of this House. I, however, see that there has been some improvement today,” said the PM.

Industry and Commerce Deputy Minister, Mike Bimha, said Government was now in its final stage before the operationalization of the deal it signed with Indian company, Essar for the joint venture to revive Zimbabwe Iron and Steel Company.

He said the loose ends that needed to be tied related to other ministries that dealt with power generation (Ministry of Energy), railway (Ministry of Transport) and Mines Ministry.

“The hope is that by the end of this month we should see the finalisation of the agreement with these other ministries.

“We would then not only see the payment of salaries but the payment of debts, locally and externally,” said Deputy Minister Bimha.

He said there were a number of issues that ought to be discussed and some of the activities would entail Essar making extra investments in other areas such as power generation and improvement of the railways.

He had been asked when salaries for workers would be paid and whether it was true that Government had surrendered 80 percent of its iron ore reserves to Essar.

Constitutional and Parliamentary Affairs Minister Eric Matinenga said the Constituency Development Fund for this year would only be paid to those legislators that had properly accounted for the US$50 000 given to them in last year’s budget and submitted returns.

He said only 60 MPs had submitted returns.

Tuesday, May 31, 2011

Air Zimnbabwe

Zimbabwe – GOVERNMENT no longer has capacity to run Air Zimbabwe alone and urgently needs an equity partner to salvage the national flag airline, analysts and aviation experts have said.

The experts and analysts also say besides an equity partner, there was an urgent need to appoint a business strategist as chief executive to usher in a new business model, de-politicise its workforce from its current combative and confrontational approach and turn it into a team of professionals that take instructions from management.

This, the analysts said, includes pilots, who have of late, tended to “talk too much outside professional parameters.”

Aviation and tourism expert Mr Karikoga Kaseke said with a strategist as chief executive and a new business model in place, the airline needed three years to turn around.

“Get me right, I don’t want to be chief executive of Air Zimbabwe because I have my own airline, Royal Zimbabwe Airline Holdings, which takes off, God willing, by the end of this year. “At the moment, Government has no capacity to run Air Zimbabwe alone, it needs an equity partner. The equity partner will probably provide money for retrenchment, because I don’t see us raising the needed amount yet the workforce is too big.

“Every expert in aviation will tell you that Air Zimbabwe needs a new business model, a new chief executive who is a strategist and who should seriously de-politicise the workers and put them in their right position.

“From experience, every chief executive at Air Zimbabwe retrenched workers or tried to retrench workers except for (Dr) Tendai Mahachi.

“(Dr) Peter Chikumba was right in trying to retrench because the worker-plane ratio there is too much. Air Zimbabwe does not need to downsize but to right-size. Chikumba was right, he was right-sizing.

“At the moment Air Zimbabwe has no business model, do you know it yourself? I don’t know it. They need a business model that is compatible with modern trends and sustainable and it is such a model that will direct operations. Ask them what is directing their operations right now?” said Mr Kaseke.

Asked to expand on the business model, Mr Kaseke said it was abnormal for everyone to afford an air ticket at Air Zimbabwe. “There should be a business model which defines operations, pricing regime, salaries, flight routes, profit margins and so on.

“Flying should be expensive . . . it is not for every Jack and Jill. It is for the filthy rich. Why should we subsidise the rich? Airlines are a means of transport not for everyone but for the rich. “Air Zimbabwe has killed itself by refusing competition. We allow even our own children to compete with other children, if you don’t allow them to compete what happens? They fail,’’ he said.

“Air Zimbabwe needs a strategist probably from the service industry, I did not say from the military but from airline, tourism and hospitality industry that is the service industry. “It will take that strategist three years or so to turnaround the fortunes.’’

Asked on the type of planes Air Zimbabwe should require, Mr Kaseke said the business model should determine that. “That is for the business model but if I were to advise them, they don’t need the (Airbus) A340 being talked about, because it is too big for them.

“I would prefer they start with Boeing 767-300 or 400. A340 is too big and costly as it carries more than 300 passengers, the 767-300 will carry around 230 passengers depending with configuration. You must know that growth will not be rapid, it will be steady, so they should later graduate into triple sevens, later,’’ said Mr Kaseke.

Mr Moses Mutengweni, a student at Singapore Aviation College, said it was clear that Air Zimbabwe was a victim of sanctions and other problems and that it could still be turned around.

“A new business model is unavoidable at this stage and I agree with Mr Kaseke that the only way out is doing things differently.

“It is for the Government to accept that it has no resources to revamp air Zimbabwe alone because Government has too many things to sort out in trying to make things work under sanctions for everyone.

“Air Zimbabwe is strategic for Government and it must not be let go, but should be remodeled together with a business partner, probably along the lines of the indigenization model of 51-49 percent.

“It must function like business and everyone must pay. I am glad that President Mugabe pays for all his trips but there are some Government officials and members of Parliament who don’t want to pay. “Air Zimbabwe must be run on profit lines. Government must make payments on time, any delays affect business. Competition is healthy and so is a new thinking,’’ said Mr Mutengweni.

Another Aviation analyst, who declined to be named, said the airline should have changed its business model long back.

“The situation has become untenable and the workers have become the masters there, Government departments do not pay on time, others don’t want to pay at all. Get me right, this is the inclusive Government and not one part of Government.

“Their spouses want to travel for free and yet this is an airline that should be run like a business. Here and there, people get free ticket but not always.

“If President Mugabe pays upfront why can’t others do the same? During their strike, pilots agreed to fly President Mugabe because they all know that he pays upfront.”

Other observers said without financial discipline at the airline, turnaround was difficult to achieve. The observer who declined to be named for professional reasons argued that the salary structures at the company also contributed towards the company’s inevitable demise.

Government has indicated that it had no money to bail out the troubled national airline although once in a while it released money to rescue the company. When the workers first went on strike last year, the official records revealed the following as the salaries some of the workers were earning.

While the lowest paid worker at the airline last year earned a basic salary of US$255, housing US$110 and fuel allowance of US$45, the chief executive officer earned US$3.500 per month, housing of US$110, fuel of US$420 and cellphone allowance of US$88.

As for the pilots and engineers, their salaries were as follows: A captain earned US$567 per month, monthly retention allowance of US$11 258.80, housing allowance of US$110, while first officer (also pilot) earned US$541 per month, retention allowance of US$5 942.14 and housing allowance of US$110.

The highest paid engineer at the airline got US$619, retention allowance of US$3 831.12 and housing allowance of US$110. The pilots and engineers also received a maximum school fees allowance of US$3 000 per term.

The official records indicate that as of August 31 2010, Air Zimbabwe owed 184 engineers about US$5.3 million, 44 pilots US$4.4 million, its 33 managers US$1.1 million, 729 active employees US$1.6 million and 343 employees on retrenchment list US$1.2 million before taxation.

However, these figures have ballooned because the company has also been failing to clear the salary backlog, while some of the workers’ allowances are reported to have been increased.

Tuesday, May 17, 2011

Thumbs up to gold-backed Zim dollar

May 17, 2011 04:00
By Gilbert MupondaBudget, Money Last updated on: May 17, 2011

RESERVE Bank Governor Gideon Gono’s proposal this week for the introduction of a gold-backed Zimbabwe dollar is an idea whose time has come. If implemented properly, the gold-backed local currency will resolve the liquidity crisis currently ravaging the sanctions-hit economy
In light of the global financial crisis and sanctions, Zimbabwe is effectively barred from accessing any meaningful lines of credit and the liquidity crisis will persist if the domestic capital market is not re-activated with the introduction of a local currency backed by a precious metal.

There is no shortage of reasons for the collapse of the Zimbabwe dollar, but it is now universally agreed that quasi-fiscal activities by the central bank and excessive printing of money accelerated the demise of the local currency. But the country has started to generate meaningful revenues with Zimbabwe Revenue Authority regularly outperforming revenue collection targets. Previously, the government had been forced to print money to finance everything. This is no longer necessary given the economic recovery and the discovery of diamonds.

The revenue from diamonds can be used to build the six months import cover and stock up gold reserves to support the Zimbabwe dollar as proposed by the Governor.

The gold-backed currency is anchored on the premise that the central bank holds a large amount of gold (or other precious metal) in relation to the paper money that they issue. That means if the country doesn’t have any gold reserves, no money can be issued, effectively eliminating the normal inflationary pressure that comes from modern FIAT money.

Zimbabwe has systematically been excluded from the international credit system, specifically because of the ZIDERA Act passed by the United States in 2001. The Act makes it illegal for any US national or entity do transactions with certain companies or individuals in Zimbabwe. This affects various institutions such as the World Bank, IMF, IFC and ADB where US representatives cannot vote in favour of any credit to Zimbabwe. This creates a huge political risk premium which makes international banks hesitant to grant lines of credit to Zimbabwe and Zimbabwean institutions.

This situation effectively blocks these institutions from doing any meaningful business with Zimbabwe as the country’s political risk is magnified. This lack of access to international credit markets has become very clear throughout the economy with banks failing to grant any medium to long term loans. This is partly causing the mini-financial crisis rocking Zimbabwe’s banks as they fail to access reasonably-priced funding.

It is widely-reported that banks are lending at 40 to 60 % per annum which is way too high an interest rate to give to a legitimate business transaction. This has created a very high default risk and forced banks to avoid lending. This illiquidity needs to be addressed through the introduction of a gold-backed currency.

Modern currency is basically paper money backed by the country’s revenue generation capacity and assets. The United States is the largest holder of gold reserves. How much of this is still in Fort Knox PHYSICALLY and not just on paper is another question as much gold is loaned out for the whopping sum of 0.20%! In essence, the US has sold a lot of its gold into the market through gold leasing (even though it still shows up on the central bank’s books as an asset (accounts receivable)).This partly explains why the US$ is still the world’s reserve currency since the USA holds the largest amounts of gold even though its exact quantity remains a subject of speculation.

In foreign exchange, no major currency is considered to be as safe and stable as the Swiss Franc. The country’s centuries-long policy of political neutrality as well as the fact that 40% of its currency reserves were previously backed by the precious metal, contribute to Swiss’s image as “liquid gold”. The proposed gold-backed Zimbabwe dollar can in fact be based on the same model.

Canada and Australia possess large reserves of precious metals and both countries have very strong, well-developed mining sectors. Australia is the world’s third largest exporter of gold with mining accounting directly for approximately 8.5% of its GDP. Canada is the world’s third largest producer of gold. These two countries have strong economies and currencies. Whilst Zimbabwe has huge gold and other mineral reserves, these have been properly leveraged out to create liquidity in the country’s economy. There is need for Zimbabwe to move away from total dependency on a foreign currency whose economy has nothing in common with Zimbabwe’s.

The economy and industry is currently reportedly operating at approximately 45 -50 % of capacity. This is significantly higher than the 10-20% capacity utilisation before the introduction multiple currencies in 2009. Now the multiple currencies have achieved their main intended purpose which was to stabilise the economy. The next phase, which is growth, requires the use of a softer currency which closely mirrors the country’s macro and micro economic conditions and the US$ can be used in its traditional sense as a foreign currency but not to permanently replace the Zimbabwe dollar.

Gilbert Muponda is CEO of GMRI Capital .He can be reached at gilbert@gmricapital.com or on Skype: gilbert.muponda

Sunday, May 15, 2011

$100 trillion bill finally has value

Sunday, May 15, 2011 12:00 AM

Scripps Howard News Service

Zimbabwe’s $100 trillion bill is finally worth something. The Wall Street Journal reports that it is selling as a curiosity in this country for $5, far more than it was ever worth in real life.

The bills, it is reported, are popular with financial doomsayers, who brandish the bank-note as a warning of what’s in store for the U.S. if we don’t follow the doomsayers’ economic prescriptions. House Budget Committee Chairman Paul Ryan, R-Wis., carries one to underscore his demands for more and more spending cuts.

After independence, Zimbabwe in 1980 introduced a new dollar to replace the old Rhodesian dollar. The government of Zimbabwe’s first — and so far only — president, Robert Mugabe, proved not only brutal and corrupt, but also singularly incompetent, and the nation’s dollar began its long slide toward being the world’s least valuable currency.

The Mugabe government’s answer to money problems was to print more money, leading to hyperinflation. Periodic devaluations and other measures failed to halt the out-of-control spiral. Price controls only made matters worse.

In 2008, the last people to exchange their old currency for new currency did so at the rate of 1 trillion to 1. In 2009, Zimbabwe abandoned its currency altogether. Business is now done in U.S. dollars, South African rands and British pounds.

Collectors and dealers began buying up the $100 trillion notes and the unlikely happened: Uncirculated dollars, the kind collectors value most, are hard to come by. Even more unthinkable, considering how worthless the money was, there are rumors it’s being counterfeited.

The Journal cites estimates that the Mugabe government printed somewhere between 5 million and 7 million of the $100 trillion bills, but that only a few million were released.

That means Zimbabwe’s financial wizards, having wiped out the value of their currency as actual money, now have it within their power to wipe out its value as a novelty item, too.

Monday, May 9, 2011

Indaba Tourism Fair in South Africa

Zimbabwean tourism stakeholders exhibiting at Indaba Tourism Fair in South Africa have revealed that they have clinched a number of business deals after just two days of exhibition, state controlled ZBC News reported on Sunday.

This development has raised optimism that Zimbabwe's tourism sector is on the path to recovery as seen by the interest and bookings by international buyers.

After two days of exhibiting at the Indaba 2011, which officially opened in Durban on Friday, more than 27 Zimbabwean private and public sector tourism stakeholders said this year's Indaba marks a change in the country's tourism sector as seen by a lot of interest in what Zimbabwe has to offer by international buyers.

Wild Zambezi Operator, Ms Sally Wynn, Cresta Hospitality representative, Rusununguko Tairoodza and Khanondo Safaris and Tours representative, Forward Mutero among other operators all concurred that the Zimbabwe stand at the Indaba is buzzing with international buyers from America, Europe, China and Russia, who have a keen interest to re-introduce the spectacular diverse tourist attractions inherent in the country to the world as a destination of choice.

Zimbabwe Tourism Authority Chief Executive, Mr Karikoga Kaseke said it is clear that Zimbabwe has made a strong come back to the market as the second best tourism destination in the region after South Africa.

He added that Zimbabwe's thrust of exhibiting at Indaba this year is to increase its market share globally, increase the number of foreign tourist arrivals, the number of domestic trips, increase tourism's contribution to Gross Domestic Product, promoting growth and job creation in the country.

Mr Kaseke went further saying Zimbabwe would like to establish a strong international presence in support of becoming a global tourism player.

The Indaba Tourism Fair is Africa's biggest travel and tourism show.

This year's event, which runs from the 7th to the 11th, was officially opened on Friday by the South African Tourism Minister, Mr Marthinus van Schalkwyk under the theme "Playing globally, winning locally.

The theme encapsulates the ideals of shared and inclusive growth, job creation as well as marketing Africa's tourism products as a region and not as individual countries.

Source: ZBC

Sunday, April 17, 2011

From John Robertson

Annual inflation went down to 2,67% in March from 3,04% in February, according to the latest Consumer Price Index table from Zimstat. However, the monthly rate went up from 0,49% in February to 0,75% in March. The biggest monthly increases were recorded by Education at 3,57%, Transport at 2,5% and Restaurant & Hotels at 1,44%. Of the annual increases, the biggest was for Transport at 8,44% and Education at 4,9%. The education figures do not include school fees, the line for which has been left blank ever since the rebased index was re-launched with the base set at December 2008 = 100.

Wednesday, April 13, 2011

From John Robertson

Mining output reached a value of US$1 381 005 628 in 2010, which compares very well to the US$671 593 936 earned in 2009. In the first two months of 2011, the not yet complete set of figures show earnings at US$240 million.

I have attached a table showing the 2010 monthly production figures for the principal minerals other than gemstones. Some production volumes are not recorded as systematically as in previous years, such as black granite and limestone, but hopefully the records for these will be restored in due course.

I have received two legal opinions on the demands made in the recent Government Gazette Extraordinary. One of these ends with this comment:

The mining notice is legally unenforceable and unintelligible.

However, ZANU PF supporters will threaten to use extra legal means to

enforce whatever interpretation they decide to put on it.

This threat will be sufficient for most companies to feel compelled to cut a deal.

The notice thus aids and abets this extortion. It is little more than racketeering by regulation.

The other concludes:

Finally, it is noted that there has been substantial criticism of the indigenisation legislation on a number of occasions by business leaders, the Zimbabwean Chamber of Mines, the Zimbabwe Congress of Trades Union, the Zimbabwean Reserve Bank Governor, the Zimbabwe Chamber of Mines, business leaders, economists, diplomats, potential foreign investors, the South African Reserve Bank Governor, the US Chamber of Commerce, the International Monetary Fund, European Union representatives and others.

The criticisms levelled include the following: that the legislation places the burden of empowering indigenous Zimbabweans on current owners of businesses irrespective of whether or not those owners benefited from past privileges; that the legislation aims to achieve empowerment through the transfer of ownership of assets rather than through the creation of an environment which enables indigenous Zimbabweans to earn for themselves; that devoting scarce funds to empowerment acquisitions will reduce the funds available for the much- needed capitalisation and expansion of existing businesses and for starting-up new businesses; that the programme is not going to empower ordinary indigenous Zimbabweans, as opposed to those who are well-off or well-connected; and that the programme is deterring foreign investment, to the prejudice of the national economy.

If you would like to receive copies of these two statements, please let me know.

It is my belief that the legislation is so flawed that mining companies have many sound reasons to challenge any demands made upon them. The best option would be to argue for the laws to be rescinded rather than amended. However, in the event of no progress being made on that course, the government’s belief that compensation for the 51% it is claiming of every company is met in full from its “contribution” of the minerals being mined, or yet to be mined, deserves to be challenged in the strongest terms. If this is not successfully challenged, new mining investment will very nearly disappear.

Tuesday, March 29, 2011

From John Robertson

The Government Gazette Extraordinary published on Friday revises the indigenisation demands being placed on the mining industry. In essence, the changes are that:

(1) The disposal of 51% of the shares in mining companies to indigenous Zimbabweans will apply to all companies with a net asset value of more than one US dollar (US$1)

(2) The disposal of the shares to indigenous Zimbabweans must be completed by September 25 2011

(3) Affected companies must submit indigenisation plans by May 9 2011.

Previously, the indications were that companies with a net asset value of less than US$500 000 were exempt from the indigenisation legislation and that the disposal of the shares had to be accomplished within five years of the publication of the regulations.

The single-page publication is attached. Without referring to the earlier definitions of Indigenous Zimbabwean, this document adopts the phrase “designated entity” to describe the authorised recipients of the shares that companies must relinquish. The former definition, “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 persons” is now replaced by these “designated entities”, which include:

(a) the National Indigenisation and Economic Empowerment Fund
(b) the Zimbabwe Mining Development Corporation
(c) any company formed by the Zimbabwe Mining Development Corporation
(d) a statutory wealth fund
(e) an employee share ownership scheme, or trust, or community share ownership scheme

Paragraph three refers to the valuation of asset values having to take into account the State’s sovereign ownership of the minerals, which requirement is clearly an attempt to reduce the amount that will have to be paid for the shares by the designated entities. However, no commitment is imposed on the designated entities to actually pay for the shares by September 25 or even to meet the bill for these by the end of the further three months that “on good cause” might be granted as an extension. Non-payment for what is being purchased would normally be considered very good cause for not parting with the asset, but it appears that government has no intention of offering the mining companies the right to cancel the sale of their shares on such grounds.

However, in most, if not all cases, the creation of shares that can be sold will involve the company in doubling the number of shares in issue and thus halving the nominal value of all existing shares. This is simply because the current shares are the property of the individuals who bought them and these individuals have no obligation to halve their own holdings. The simplest approach for each company might be to hold a special shareholders’ meeting at which they would have to seek the approval of all shareholders for a share split or a one-for-one rights issue. This would have to be accompanied by a request that the existing shareholders do not exercise their rights. The new shares thus created could then be offered to designated entities in exchange for the appropriate payment.

Finding the sums needed to pay for 51% of the mining industry will be quite a challenge. Not many of the mines are listed on the Zimbabwe Stock Exchange, so a market capitalisation calculation on the quoted shares adds up to a very small part of the answer. Allowing for the mines that are already in indigenous hands, half the value of the balance could easily come to more than a billion dollars. Apart from the proposed impractical indigenisation levy, nobody in government has offered a single suggestion on where a sum of that size that might be found, even if a further allowance is made to “account for the State’s sovereign ownership of the mineral”.

In respect of that sovereign ownership value, the State might be forced to accept the practical position that minerals under the ground have no value at all. Finding them, reaching them, extracting them and processing them for sale at prices that exceed all the costs involved is what mining is all about. Burdening the mining companies with huge theoretical costs for yet-to-be realised assets before the process starts is certain to ensure that the minerals remain locked in their buried ore-bodies. It won’t be long before people stop even trying to find them.

The publication of these new regulations is certain to lead to considerable debate and government can be expected to show increasing impatience with companies that appear to the authorities to be trying to undermine the indigenisation process. While the increasing antagonism and inevitable delays in resolving issues will certainly slow the levels of activity in the mining sector, the much more serious longer-term effect of these regulations will be the almost complete arrest of new mining investment inflows.

Even the Chinese investors, who appear to have been assured that the regulations will not apply to them, are likely to continue showing reluctance to commit funds. Part of the reason for this is the fact that the terms and conditions included in each of the Bilateral Investment Promotion and Protection Agreements include clauses that prohibit the Government of Zimbabwe from offering preferential terms to countries with which each BIPPA country might be competing.

I will do my best to keep you up to date with developments.

Kindest regards,


Zimbabwe gets heavy on indigenisation

Brendan Ryan Mon, 28 Mar 2011 17:36
[miningmx.com] -- SHARES in Impala Platinum (Implats) and Aquarius Platinum (Aquarius) fell sharply on Monday as investors took fright over the seriousness of the Zimbabwe government’s indigenisation demands.

Both groups have significant investments in Zimbabwe’s fledgling platinum sector, where Implats has just committed to spend $450m on the Phase 2 expansion of its Zimplats operations.
The two have been in discussions with the Zimbabwean authorities for the past two years over the proposed indigenisation requirements.
The belief until now was that a “reasonable” outcome was likely, which would reduce the official demand for a 51% controlling indigenous equity stake to the 26% level ruling in South Africa.

That may have changed on March 25, when a notice was gazetted stating every mining company had to “submit an indigenisation implementation plan complying with this notice within 45 days of the date of publication of this notice”.

The real kicker was in the final clause, which specified the way in which the value of the shares or other interests to be acquired by the indigenous partner would be calculated.

According to the notice, this valuation would take into account “the state’s sovereign ownership of the minerals or minerals exploited or proposed to be exploited by the non-indigenous mining business concerned”.

That raises the spectre of nationalisation of assets and the issue of compensation for companies already operating in the country and paying royalties to the government on ground to which they had been granted mining rights.

According to a platinum analyst: "You can interpret that clause any number of ways, but it’s serious. The platinum boys are engaging with the Zimbabwe government as a matter of urgency.”

Implats CEO David Brown told Miningmx: "From our point of view, we don’t see a material impact at this point in time and we remain in discussions and negotiations with the Zimbabwe government.

“Our understanding is that the 51% indigenisation requirement will be made up through a number of elements. These will include our investments in the country’s infrastructure and recognition of the mining ground that we gave back to the Zimbabwean government to secure title to the ground we now hold. “

A statement by Aquarius said that its Zimbabean subsidiary - Mimosa – “is engaged in discussions with the relevant authorities in order to establish a position that will be compliant with the act and beneficial to stakeholders”.

The writer owns shares in Implats and Aquarius.

Bennett, party at odds over investment in Zimbabwe

Old Mutual’s Zimbabwean subsidiary receives support for its investment in Zimbabwe from the main MDC-T opposition party.
Published: 2011/03/29 07:26:56 AM

OLD Mutual ’s Zimbabwean subsidiary yesterday received unlikely support for its investment in Zimbabwe from the main MDC-T (Movement for Democratic Change) opposition party.
This is after the party distanced itself from calls by one of its senior members, Roy Bennett, who wants the insurer to disinvest from two companies he says represent the face of alleged repression taking place in the embattled country.
Mr Bennett, who is in self- imposed exile in SA, has mounted a campaign to force Old Mutual to cut its ties with Zimbabwe Newspapers (Zimpapers) and Mbada Diamonds.
The two firms are directly owned by the state. Old Mutual has an indirect stake in Mbada Diamonds of 1,5% via its stake in New Reclamation Group. It also owns about 18% of Zimpapers.
Mr Bennett last week accused Old Mutual in Cape Town of investing in companies that are associated with the former Zimbabwe ruling Zanu (PF) party.

This is despite the fact that MDC-T is a partner with Zanu (PF) in the same government that he is critical of . The other partner is a smaller splinter party formed by disgruntled members from the original MDC party.

Mr Bennett wants Old Mutual to disinvest from the two firms, particularly "its blood-stained investment" in the diamond mine. The mine has been at the centre of controversy over allegations of rights abuses of villagers near the mine in eastern Zimbabwe. But the global diamond trade watchdog, the Kimberley Process , has given Zimbabwe the green light to export Chiadzwa diamonds.

Mr Bennett says some of the newspapers owned by Zimpapers are "spewing hate speech".

A spokesman for Mr Bennett’s party, Nelson Chamisa, yesterday said the public spat between Old Mutual and Mr Bennett did not represent the party’s official position. "That is Bennett’s view, not the position of the party," said Mr Chamisa, who is also minister of information and communications technology.
Mr Bennett was unavailable for comment at the time of going to press. With Dumisani Muleya

Friday, March 18, 2011

RSS Feed Nephew of Zimbabwe's President Mugabe in Move to Take Over Mobile Provider

Sources said President Mugabe’s nephew, Leo Mugabe, has approached the president and asked him to issue a new Telecel license to his group, the Zimbabwe Wealth Creation and Empowerment Council. That’s an umbrella for the Affirmative Action Group, the Indigenous Business Women’s Organization, the National Miners Association, the Zimbabwe War Veterans Association and several other organizations.

Sources informed on the situation said Leo Mugabe claims that this group has a right to purchase a majority stake in Telecel Zimbabwe as agreed when the company was set up. At present, Telecel Globe of Egypt holds a 60 percent stake.

Ousted Telecel Chairwoman Jane Mutasa told Parliament today that Telecel is operating without a license and many top Telecel officials, including James Makamba, another former chairman, are based outside Zimbabwe at present.

Telecel Chief Commercial Officer Anwar Soussa said the provider is doing business as usual despite the wrangle. “I cannot say anything about Telecel shares but in terms of conducting business, we are operating and exploring more opportunities,” he said.

Economic commentator Walter Mbongolwane said Leo Mugabe is trying to seize Telecel from its rightful owners through manipulation of Zimbabwe's indigenization laws.

“We are waiting to see what will happen to this company which is being targeted by indigenous groups that are fully aware of the huge benefits of a telecommunications entity in the mobile phone sector,” Mbongolwane told reporter Gibbs Dube.

Thursday, March 17, 2011

Inflation falls in February

17/03/2011 00:00:00
by Reuters

ZIMBABWE’S annual inflation slowed to 3 percent in February from 3.3 percent in January, the National Statistical Agency said on Wednesday.

Monthly inflation dropped to 0.5 percent from 0.9 percent previously.

Finance Minister Tendai Biti said early this month inflation would end 2011 at 4.5 percent year-on-year and reiterated that the economy would grow as much as 9.3 percent.

Zimbabwe’s economy was battered by hyper-inflation which reached 500 billion percent in 2008. The price index has since dropped to single digits following the adoption of multi-currencies in 2009.
Inflation quickened to 3.3 percent year-on-year in January.
Biti said growth this year would be driven by agriculture and mining.

"We have a bumper crop this year and I believe that in terms of maize production we will be second only to South Africa in the region.”

Monday, March 14, 2011

Zimbabwe investment conference allays fears

By Southern Times Writer 14-03-2011 E-mail this article to a friend

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Harare - THE Zimbabwe Investment Conference held in Harare last week helped dispel misconceptions that foreign investors had about Zimbabwe, with strong emphasis on the need for the country to effectively communicate its policies to attract foreign direct investment.

At the end of the conference delegates felt progress had been made in correcting misconceptions and in highlighting main issues of concern to investors.

The meeting established indigenisation, political developments and policy predictability as major concerns investors wanted a clear position on. The conference was co-hosted by Euromoney Conferences and the Government of Zimbabwe.

The two-day event, which ended in Harare on Wednesday, was attended by over 300 local and foreign delegates, demonstrating the level of investor interest in Zimbabwe as a leading emerging market in Africa.

German Ambassador to Zimbabwe Mr Albrecht Conze said the conference managed to clarify issues that had been of concern over the past year.

He said the issue that raised most misconceptions was centered on indigenisation and economic empowerment.

European investors and their media perceived the indigenisation drive as an initiative which could result in the incarceration of non-compliant firms.

The conference has gone a long way in clarifying issues that were of concern that have been around for a year now. It has been over a year since regulations on implementing indigenisation were gazetted and I can tell you on very blunt terms how they were received by foreign investors.

'You don't give us 51 percent otherwise you go to jail! That was the message that was not intended, but otherwise arrived at. But I think everybody has come a long way now. Thirteen (sectoral) committees were set up and are now due to present their results to the Government.

He said the Government should articulate its position well and indicate that in special cases, such as in the Essar-Zisco deal, it was ready to negotiate.

Ambassador Conze said issues such as community ownership schemes, empowerment credits and sovereign wealth fund that were not part of the original indigenisation regulations needed to be explained.

'I think the Government is now able to present its position much better, but they must also communicate to the foreign investor what it is and only then can someone like me tell German investors the conditions and risks.

'I will be able to say in spite of these risks you can be able to come and invest. I need to be enabled together with my European colleagues as well to propose Zimbabwe as a foreign investment destination,' he said.

He said Zimbabwe had been out of the African investment context for a decade and needed to put special effort to rebuild the lost investor confidence.

'That is why Zimbabwe has special obligation to show to the outside world that conditions are now ripe for investment,' said Ambassador Conze.

Dwelling more on empowerment as opposed to indigenisation would help the country achieve much, he said.
Europe reportedly already had a position on how they felt the country could deal with its US$7,1 billion debt to the Paris Club lenders.

Commenting on the same issue Euromoney Conferences director Mr Christopher Garnet said the event had succeeded in achieving its objective.

'The two principal things that Zimbabwe needed to take away from this conference are the need to address the question of the debt, that is, negotiate together and restructure together. Secondly, it needed to be transparent with local and international investors and ensure certainty,' he said.

He added the Government needed to ensure clarity on the indigenisation law, equal treatment in application of the equity law and ensure that its laws and policies were consistent and predictable.

'Investors hate unpredictability,' he said.

Mr Garnet said there was misunderstanding on what had been achieved in Zimbabwe in terms regenerating the economy considering certain media houses in Britain were still talking about hyperinflation in Zimbabwe.

These sentiments were shared by Lord Paul Boateng, non-executive director of Aegis Advisory, a global risk management and mitigation firm and former British Member of Parliament and Minister of Health and Social Services.

He said there were a lot of negative information on Zimbabwe among investors, which formed misconceptions that needed to be corrected urgently.

'It is these misconceptions, formed due to lack of correct information, that we need to get out there and correct,' said the Aegis Advisory non-executive director.

Invictus Investment Management managing director Mr Ritesh Anand said Zimbabwe needed to create investor-friendly conditions to attract foreign investment.

There was need for practical action to create the right conditions as touting about potential things such as good climate were not good enough.

'Zimbabwe has tremendous potential. It has potential to become a US$100 billion economy, but do the investors feel confident?' said Mr Anand.

In interjection, Indigenisation Minister Saviour Kasukuwere said some of the investors' concerns were unfounded, considering Zimbabwe was probably one of the safest investment destinations on the African continent.

'If you are investing in a country where the people do not articulate their needs then that country is not the right place for investment,' he said.

Indigenisation and economic empowerment regulations compel foreign firms with a net asset value of above US$500 000 to sell at least 51 percent to locals.

Minister Kasukuwere explained that all empowerment transactions would be carried on a commercial basis where the equity value would be fully paid for.

He stressed that the EU and the US needed to lift their economic embargo which was suffocating business..

Finance Minister Tendai Biti and Economic Planning and Investment Promotion Minister Tapiwa Mashakada said Zimbabwe was ready for FDI and would abide by international rules to build a genuinely free market and modern economy.

Tuesday, March 8, 2011

From John Robertson

Reserve Bank of Zimbabwe’s claims

Zimbabwe seems to stumble from one self-inflicted crisis to another, led by politicians who demand the right to be taken seriously. In the continuing debates outside the country, the behaviour of these politicians has generated lots of sympathy for Zimbabwe’s long-suffering population, but it has qualified the country’s leaders for nothing but ridicule.

Some of the ridicule has come from deeply flawed official interpretations of events, mostly characterised by demands that the results achieved be defined as resounding successes. These claimed successes are accepted by the few who argue that the destruction of most of the country’s productive capacity was intentional.

This tiny fraction of the population claims that Zanu PF can achieve its absolute control mission only by breaking down the physical and financial structures built since the country was colonised. Their view seems to be that success can be permitted to survive only if the people who brought it about are supporters of the party. And although the party does not publicly admit to supporting this thinking, it repeatedly demands respect for its “sovereign right” to confer impunity upon those commissioned to purge the country of political opponents.

The inevitable and massive human rights violations that were soon being documented led directly to restrictions being imposed from abroad on senior Zimbabwean officials who were identified as participants or promoters of these crimes. Zanu PF was quick to claim that sanctions applied to such important people were sanctions against the whole nation. In its repeated and increasingly impassioned calls for the restrictions to be lifted, in effect it has been asking that the international community should also grant impunity to Zimbabweans accused of crimes against humanity.

Every item on Zimbabwe’s long list of difficulties since 1997 is now being blamed on the countries that denied travel visas to these officials, or stopped them from drawing money from bank accounts opened in these countries.

While such claims are absurdly fictitious, the difficulties are real enough. But they can all be linked directly to odious policy decisions, and despite these clear linkages, the policy decisions are still being vigorously defended.

In remaining determined to stick with ideas that caused severe losses, the party protests that nobody is entitled to challenge its right to make such choices. However, its defence of bad ideas partly accounts for the unwillingness of international financial organisations to extend further loans. It is not in the mandate of these institutions to make up for huge losses caused by destructive ideas that are still being followed.

However, even if they wanted to offer tangible help, they couldn’t. These institutions have rules, all of which are well known to Zimbabwe’s authorities. One of these is that further loans may not be granted to borrowers who are in default in their repayments of previous loans. Knowing this, but deliberately misinforming the population that world development institutions are applying sanctions to shorten the lives of Zimbabwe’s poorest is simply and disgracefully dishonest.

Tuesday, March 1, 2011

Banks to return SA coins

Monday, 28 February 2011 20:18

Herald Reporters

LOCAL banks are set to return R8 million worth of coins to South Africa that they have been holding onto since last year because retailers have resisted buying them to ease change shortages that consumers have long complained about.

President of the Bankers Association of Zimbabwe Mr John Mushayavanhu yesterday said they had been sitting on the coins for nearly eight months now.

A shortage of rand and US coins in circulation means people often spend more than they intend to in shops so that their bills can become round figures.

Shops also give out credit notes indicating how much change customers are owed, but these are only redeemable in the specific branches where they are given.

The Consumer Council of Zimbabwe has said this has contributed to the high cost of living in Zimbabwe as people spend more than they want to.

Banks had sought to ease the problem by buying coins in South Africa, which they offered retailers at prevailing rand-US dollar exchange rates, but the latter appear not to be interested.

Said Mr Mushayavanhu: "We have already received app-roval from the South African Central Bank and we will be returning the coins anytime now."

Mr Denford Mberi of the Retailers Association of Zimbabwe is on record as saying the banks were trying to profit from the coins by selling them higher than the exchange rate.

Many Harare retailers have maintained an artificial rand-US coins exchange rate of 10:1.

This means R5 is equivalent to 50 US cents.

The actual rate would have R5 at around 71 USc as the South African currency has long since gained on the greenback.

Oddly, Harare's informal traders apply more realistic rates and even commuter omnibus operators have tried to give people value for their money in coin terms by charging a normal trip at R4 or 50 USc.

Street vendors also have coins and these are easily changing hands, a development that has stoked people's fury as to why formal establishments cannot give them a fair deal as well.

Harare retailers have failed to explain why they can apply the prevailing rate quite easily on notes, but not on smaller denominations and for change purposes.

AfroFood Julius Nyerere Way branch said they only applied prevailing rates to amounts of R50 or more, but would not explain why this was so.

TM Mbuya Nehanda Street, OK Robson Manyika and Spar Joina City also had no reason as to why they undervalued South African coins.

Some of these retailers have branches in Bulawayo where similar problems are not being experienced.

Mr Mberi referred all questions to a Mr Ndebele at Truworths' headquarters in Harare, who was not available for comment.

Finance Minister Tendai Biti has for months said Zimbabwe will soon get US coins, but these have not been seen.

People have also questioned why the finance minister is prepared to bring in coins from across the Atlantic Ocean when the South African option is readily available much closer home.

The public has called for legislation to be put in place to force retailers to be fair.

"The Government must make it illegal for this daylight profiteering which these shops are practising.

"They are forcing us to buy useless things like sweets and if you add up all the money that people are forced to use, you will find that they have extra sales of over US$100 in each shop a day," railed Mr Cosmas Dumba of Warren Park who had been forced to take lollipops as change after buying a cough mixture in OK First Street.

The situation is much better in Bulawayo where the actual exchange rate is applied.

For instance, kombis in Bulawayo generally charge R3 per trip and coins are readily available as change in just almost every shop.