Zimbabwe: Banks in Panic Mode

Most commercial banks in Zimbabwe are believed to have plunged into panic mode after Finance Minister Tendai Biti announced plans to introduce measures that could eat into a substantial chunk of the financial institutions' income. Sources in the banking sector said the Bankers Association of Zimbabwe has since engaged Reserve Bank of Zimbabwe Governor Gideon Gono for a Memorandum of Understanding around a number of burning issues. Discussions are likely to revolve around the issues of lending, interest and savings rates and bank charges among a host of other matters.
Treasury also wants banks to agree with the RBZ on a framework for lending rates, but with a 10 percent cap above cost of funding. But the most contentious aspect of discussions is likely to centre on the directive that banks should not levy deposits below US$800.
Minister Biti also directed that all deposits above US$1 000 held for over a month should attract interest of a minimum of 4 percent per annum.
"The measures will do more than harm the banks' income. But the banks have engaged the Reserve Bank of Zimbabwe on the Memorandum of Understanding the minister announced," a source said.
"But if you look at the incomes of most people you realise that very few earn more than US$800. It means banks will provide banking services for free and that will cripple banks," the source added.
Efforts to get comment from the Bankers Association of Zimbabwe president Mr George Guvamatanga failed as he did not answer his mobile phone.
Both Minister Biti and Dr Gono have in the recent past expressed strong reservations over "usurious" lending rates, bank charges and commissions banks levy clients yet they offered negligible interest on deposits. Expectations are that the fiscal and monetary authorities will enforce the planned measures through amendments to the Banking Act next year.
Announcing the 2013 Budget Minister Biti also lamented a situation where banks made more than 40 percent of their income from fees and commissions instead of their core business of lending.
However, sources said, BAZ has been lobbying for moderation of some of the directives that Minister Biti plans to introduce next year.
Banking institutions have often defended their actions arguing they were only following the macro-economic fundamentals of the economy.
After a decade of economic instability banks and most other corporates have found it difficult to gain access to affordable lines of credit.
But this spawned a vicious lending rate regime for the little funding banks could mobilise, with lending rates as high as 30 percent per year.

Zimbabwe threatens to prosecute firms flouting ownership law

(AFP)–12 hours ago

HARARE — Zimbabwe warned on Wednesday that foreign companies that fail to cede majority stakes to locals as required by a controversial law risk being prosecuted.
The Minister of Indigenisation and Economic Empowerment Saviour Kasukuwere said some businesses had ignored the law and reminded them to "realise the folly of what they are doing."
"I wish to make it clear that the law will take its course in such matters of deliberate disregard of the rule of law," said Kasukuwere during an economic conference in the capital Harare, attended by President Robert Mugabe.
Kasukuwere said anyone who "does not want to comply with the laws of this country or associate themselves with the aspirations of black Zimbabweans has no place in the affairs of our country."
The two-year-old law forces foreign companies to cede 51 percent of their shares to indigenous Zimbabweans.
"This programme is irreplacable as it is founded on the ideals of our independence struggle."
Several companies like Zimplats, the Zimbabwean unit of South African's Impala Platinum, have submitted their plans to hand over majority shares to local people.
The programme is at the centre of a dispute between Mugabe and Prime Minister Morgan Tsvangirai, who formed a coalition government three years ago after disputed polls.
Tsvangirai has said the law will drive away foreign investment, as the country is recovering from a decade-long economic collapse.

Copyright © 2012 AFP. All rights reserved.More »

IMF and Zimbabwe

Last night, The Executive Board of the International Monetary Fund (IMF) released a
press statement on its relaxation of restrictions on technical assistance to Zimbabwe
which opens the way for future staff monitored programs. Below we provide extracts
from the press statement.
The restrictions on technical assistance were a result of Zimbabwe’s protracted
financial arrears to the Poverty Reduction and Growth Trust. In relaxing the
restrictions, the IMF took into account a significant improvement in Zimbabwe’s
cooperation on economic policies, the authorities’ efforts and renewed commitment to
address its arrears problems, and Zimbabwe's severe capacity constraints in the IMF’s
core areas of expertise that represent a major risk to the implementation of the
government’s macroeconomic stabilisation program. The relaxation of the restrictions
opens the way for Zimbabwe to agree on an IMF staff monitored economic program.
Such a staff-monitored program (SMP) would mark another significant step toward
normalisation of Zimbabwe’s relations with the IMF.
SMPs are informal agreements with IMF staff whereby IMF staff provide advice to the
authorities on the design of their economic program, and monitor the implementation
of such a program. SMPs do not entail endorsement by the IMF Executive Board nor
financial assistance.
Effectively the IMF will resume technical assistance in certain new areas to support
Zimbabwe’s formulation and implementation of a comprehensive adjustment and
structural reform program that can be monitored by the staff. The current and new
areas for IMF technical assistance to Zimbabwe are in the fields of:
i) tax policy and administration;
ii) public financial management and expenditure policy;
iii) financial sector reform;
iv) central bank reform;
v) monetary and exchange policies;
vi) macroeconomic statistics;
vii) anti-money laundering and combating the financing of terrorism; and
viii)any other area that would support the formulation and implementation of a
comprehensive adjustment and reform program that can be monitored by the
staff.
This is a positive development for Zimbabwe especially in light of the recent
moderation in the economic recovery. The country needs certainty regarding policy
implementation and further reforms for the growth rates to accelerate again. The
country remains vulnerable to external shocks as the useable international reserves
remain very low at approximately 0.3 months of imports. The Minister of Finance is
due to present his 2013 National Budget on Thursday 15 November 2012.

Zimbabwe: Settling Scores Under Guise of Indigenisation

 

By MuckRaker, 21 September 2012

MEDIA, Information and Publicity minister Webster Shamu last week gave what he said was his final warning to the private media for criticising President Robert Mugabe.
"There is no need of attacking the president or the leadership for no reason," Shamu said. "This is an abuse of the freedom that has been given to them.
"We will work together with the Zimbabwe Media Commission to revoke those licences because we cannot watch while the country's leadership is assaulted," he warned.
It seems Shamu's self-righteous indignation is unhelpful considering we have heard no complaints from him when the state-controlled media goes into overdrive in its coverage of Prime Minister Morgan Tsvangirai's love life and other things.
The Saturday Herald and Sunday Mail should have carried X-rated content warnings considering the obscene torrent they spewed on Tsvangirai. Without doubt Nathaniel Manheru and Jonathan Moyo's mudslinging will have given H-Metro scribes a good run for their money.
So much for "family" newspapers!
Most of what they wrote cannot be repeated in the private media lest the Zimbabwe Media Commission comes knocking. Indeed some animals are more equal than others.
Meanwhile, it seems Zanu PF central committee member and former Chitungwiza executive mayor Joseph Macheka has been downgraded from a comrade to a mere "mister" after giving away his daughter, Elizabeth, to Tsvangirai on Saturday.
Before that, the Sunday Mail and other state-controlled media prefixed Macheka's name with "Cde". All this changed on Saturday, with the Sunday Mail settling for the less revolutionary title of "Mr" Macheka.
That's the way it is now.
There is no end in sight to the wrangle pitting Tsvangirai and his ex-lover Locardia Karimatsenga-Tembo. Despite Tsvangirai's earlier claims that he never paid bride price for Locardia, a video showing what looked like marriage negotiations between the Tembo and Tsvangirai families suggests otherwise.
This week Lorcadia took a dig at "playboy" Tsvangirai, saying she is still pursuing her US$15 000 a month maintenance bid and insisting she remains the PM's wife until he officially divorces her.
Conspiracy theories aside, the premier got himself in a morass for which only he should shoulder the blame.
Even bunga bunga maestro, former Italian prime minister Silvio Berlusconi would be green with envy at Tsvangirai's "sexcapades" as alleged by his ex-lovers.
Clearly, Tsvangirai has not learned any lessons from the days of Ari Ben-Menashe where it became manifest he was under surveillance from state agents wherever he goes.
Muckraker was amused by Zanu PF apologists who opted to take the moral high ground over Tsvangirai's love saga. No women's rights groups, "analysts" whined, have condemned Tsvangirai's actions. Curiously, some notorious wife-bashers and womanisers also joined the fray crying louder than the bereaved.
Indigenisation minister Saviour Kasukuwere has made another about turn, this time saying Chinese companies involved in agriculture are immune from the indigenisation law that requires foreign-owned firms to cede 51% of their shareholding.
According to the Standard, Kasukuwere said the companies had made "cash injections and this is the kind of investment that I want and I don't apologise".
Yet Kasukuwere has been shouting himself hoarse saying even investors from countries with friendly relations with Zimbabwe will not be exempted from disposing majority shareholding to locals.
"The Act will be implemented without fear or favour," Kasukuwere said in August in response to Reserve Bank Governor Gideon Gono's call for a more flexible approach to indigenising the banking sector.
"Where foreign investors bring in clear long-term benefits to the country, a reasonable degree of flexibility ought to be exercised in allowing investors to hold at least in the initial stages, majority shareholding so as to deliberately accord them escalated dividends that enable them to plough back their initial investments outlays," Gono had said.
Gono has accused Kasukuwere of arbitrarily applying the indigenisation law.
But Kasukuwere hit back at Gono's "profane language" declaring: "Individual views should remain so, but the law of the land should remain supreme."
Now Kasukuwere is singing a different tune. He has decided to exempt Chinese companies because "they have brought in millions of dollars, (and) sub-contracted our small-scale farmers in this country".
The millions of dollars invested and jobs created by other foreign companies are inconsequential in Kasukuwere's book. Undeterred by this glaring case of double standards, Kasukuwere took another opportunity to threaten foreign-owned banks.
"If they are thinking that one day they will get out of this problem, then they are like ostriches hiding their heads in the sand thinking that nobody is seeing them," he said.
"Can Barclays Bank tell me how many farmers they have supported? Can Standard Bank tell me how many farmers they have supported?" Kasukuwere wanted to know.
Maybe it's because the farmers have leases, not title deeds, which are not bankable and have led to banks like Agribank hitting hard times after politicians masquerading as farmers defaulted on their loan repayments.
Kasukuwere's crusade against foreign-owned banks is relentless despite being a significant shareholder in the ill-fated Genesis Investment Bank before its demise. He now wants to mastermind the failure of the entire financial sector by indigenising banks when most of the institutions are already under the control of locals.
Said Kasukuwere before Genesis went bust: "Here is a company (Genesis) which has gone under not because of mismanagement, but purely because of sanctions."
He recently declared that "foreign banks whose parentage in any case continues to attack and affect our people with illegal sanctions cannot be defended by any logical Zimbabwean".
So it is all about fixing the West for the "illegal" sanctions then, not applying the law.
Developing countries have been urged to unite and speak with one voice in order to be heard in a world dominated by the West which invests heavily in its propaganda machinery, ZBC reports.
This was said by China's Director of the Information Office of the State Council, Hu we Ping at the closing ceremony of a seminar for media officers from Zimbabwe in Beijing.
Only last year, the United States poured in excess of US$10 billion in its mouthpiece, Voice of America, to "drown" voices of the majority poor in the world, Hu said.
Does he not mean it the other way round considering listeners run away from such archaic and partisan broadcasters as ZBC to tune in to the so-called "pirate" radio stations which offer an alternative to Zanu PF propaganda?
Ironically Chinese radio jamming equipment is used to drown out the "pirate" radio stations' signal.
The fallout over President Robert Mugabe's comment on Jamaicans continued unabated in the island nation. The Jamaican Observer opined that Mugabe's tirade against Jamaican men might have been stirred by comments made in July by former Jamaican Prime Minister P J Patterson.
Patterson, who bestowed the honorary Order of Jamaica title on Mugabe in 1996, made some not so flattering remarks about Mugabe and his government in response to questions by journalists.
The former premier made the trip to Zimbabwe with reggae superstar Bob Marley for the Independence celebrations in 1980. He was recently asked to give his opinion on Mugabe.
"We feel, certainly the rest of the world that has supported Zimbabwe all along in the struggle, we would wish that even at this late hour we would see some sort of shift back towards the fundamental principles of freedom, particularly for the press, and respect for the judicial process," Patterson said.
Patterson also spoke about allegations Mugabe had rigged the 2002 presidential elections which brought about Zimbabwe's 12-month suspension from the Commonwealth. Harare then pulled out of the grouping after refusing to accept its decision to maintain an indefinite suspension.
The former Jamaican prime minister chaired that meeting in the Nigerian capital Abuja in December 2003.
"We actually were doing everything to afford Zimbabwe some opportunity of getting back in line with the principles that govern membership of the Commonwealth. We were very disappointed, quite frankly, that President Mugabe chose not to respond to our overtures," he said.
According to the Observer, Jamaica is now awaiting a clarification or apology from Mugabe for broad-brush criticism of Jamaican men.
The Zimbabwe Development Party (ZDP), of the elections-should-be-held-this-year without-a-new-constitution fame, has sent a letter to South African President Jacob Zuma imploring him to end the impasse between the parties in the GNU.
Fronted by Kissnot Mukwazhi, the ZDP sent a lengthy but typo-ridden letter asking Zuma to "help us to stop gossiping, (and) cooking stories about each other".
"We don't want in strongest terms bombs to enhance power transfer," the ZDP asserted.
"This is not a call for interference to our home affair, but a call to help your needy small brother Zimbabwe to be economically, political and socially stabilise."
The ZDP also asks Zuma to help Zimbabwe become "a member of the gold Brick just like yours", referring to the acronym Brics; an association of leading emerging economies comprising Brazil, Russia, India, China and South Africa.
They go on to appeal for Zuma to remind his "counterparty (sic) our President Cde RG Mugabe that he has done a lot of good to us as his children as Zimbabweans, but his further stay in power will erode more of our independency (sic) gain".
With such poor communication skills, Mukwazhi can kiss any chances of being taken seriously goodbye!
Finally The Zimbabwean reports that President Robert Mugabe has urged the nation to embrace Western music. Speaking at the official opening of the Research and Intellectual Expo where he also made the now infamous Jamaica comments Mugabe said:"I was watching TV and saw people in DRC having an orchestra while here we still like to play our marimbas. But we used to have such music here and I remember very well that I was a conductor of an orchestra during my school days."
That surely cannot be a vote of confidence for the rump-shaking Mbare Chimurenga Choir or the Born Free Crew. Clearly the president expects better and we hope Cdes Shamu and Amos Mahendere have taken a cue.
And when the president says orchestra he is not referring to Alick Macheso's Orchestra Mberikwazvo!

Zimbabwe: Country Under Pressure Over IMF Debt

By Tendai Marima, 21 September 2012

GOVERNMENT will today come under increasing pressure to settle its debt with the International Monetary Fund (IMF) amid indications three countries, including Sudan, Somalia and Zimbabwe, as at June-end owed the international financial institution Special Drawing Rights (SDR)1,3 billion (US$2,007 billion at the rate of SDR1:US$1,54228 yesterday) in overdue arrears collectively.
The IMF will meet authorities today to discuss the Zimbabwe situation at a time when Harare's cooperation on policies with the Bretton Woods institution has weakened.
The IMF says three members Somalia, Sudan and Zimbabwe remain in protracted arrears to the fund. Somalia and Sudan have accumulated arrears dating back to the mid-1980s, accounting for 18% and 76% of the total US$2 billion arrears, respectively. Zimbabwe, which has been in arrears to the Poverty Reduction and Growth Trust (PRGT) since February 2001, accounts for the remaining 6%.
The IMF executive board reviewed Zimbabwe's overdue financial obligations to the PRGT in September 2011 and subsequently in April this year.
It said Zimbabwe's cooperation with the fund on policies had weakened. The board said the authorities must align the execution of the 2012 budget with realistic revenue forecasts in order to return to a path towards medium-term fiscal and external sustainability and to increase economic resilience to shocks by improving expenditure management, further strengthening financial sector prudential regulations and their enforcement and improving the business climate.
The directors underscored the importance of refraining from incurring non-concessional liabilities, including using SDR resources, to prevent the further exacerbation of debt distress and unsustainable widening of external imbalances.
They also emphasised the need to demonstrate the capacity and commitments to implement strengthened policies under an IMF staff-monitored programme, including continuing timely data reporting, adopting remedial measures to resolve irregularities in employment practices, controlling the payroll, improving transparency in diamond revenues and taking additional actions to reduce financial sector risks.
An IMF report Review of the Fund's Strategy on Overdue Financial Obligations released last week shows that by June-end, Zimbabwe owed the IMF's PRGT SDR85,9 million (US$132,6 million). Most of the debt overdue to the PRGT facility is held by Sudan and Somalia who owe SDR983,3 million (US$1,5 billion) and SDR233,1 million (US$359,3), respectively.
Although the IMF noted a slight reduction in Zimbabwe's arrears, it said the country has a poor record of repayment. The report, prepared by directors from the IMF's finance, legal and policy strategy departments, also stresses the urgency of Zimbabwe settling its outstanding arrears.
"Zimbabwe's arrears to the PRGT have declined slightly. Cooperation with the fund on payments remains poor and Zimbabwe was strongly encouraged to make regular and timely payments to the fund and to increase them as the payment capacity improves," it said.
Minister of Finance Tendai Biti said yesterday Treasury, IMF and World Bank officials would meet today to discuss the situation. Biti held a video conference call on Wednesday with IMF officials to discuss the issue.
"Zimbabwe is not in arrears with the IMF. Zimbabwe owes money to the IMF, the World Bank and other creditors. We are up to date with our payments to the IMF," Biti said.
"The Ministry of Finance is in intense discussions with the IMF and the World Bank and we going to have a meeting with them tomorrow. We are going have another one next month."
Apart from its US$132,6 million IMF debt at June-end, Zimbabwe also owed SDR614,6 million (US$947,9million) to the World Bank and SDR376,2 million (US$580,2 million) to the African Development Bank.
The IMF says Zimbabwe could be eligible for debt relief under the Highly Indebted Poor Countries (HIPC) initiative, but Harare has refused to accept HIPC approach, claiming it would be used to interfere in internal affairs.
As an alternative, the Ministry of Finance launched the Zimbabwe: Accelerated Arrears Clearance, Debt and Development Strategy in March this year, a plan detailing how the country intends to pay off its liabilities through a combination of debt relief and concessional loans or grants from its development partners. Zimbabwe's total debt is currently US$10,7 billion.
On re-engagement with the IMF, Biti said Zimbabwe does not have the means to settle its debt and alternative sources would have to be found. "Zimbabwe does not have the capacity to pay off the IMF from its own resources.
In this regard, the country will need to request cooperating partners for a concessional bridging loan or a grant to settle arrears to the fund," he said.
"Clearance of Extended Credit Facility arrears will unlock new financing arrangements from the IMF, within the context of a fund-supported financial arrangement, which will then be used to repay the bridging loan obtained from the co-operating partners."
The IMF said Zimbabwe would need international assistance, but the country must find ways of resolving problems of ghost workers on the payroll, opaqueness in diamond revenues and taking effective steps to minimise exposing the financial sector to systemic risks.
"Zimbabwe faces an unsustainable debt situation, and may at some point need comprehensive debt relief from the international community," it said.

Zimbabwe: Govt Admits No Money Coming From Army Controlled Diamond Firm

Zimbabwe's government has admitted that it is not receiving any money from an army controlled diamond firm in Chiadzwa, which was meant to be a joint venture cash-cow for the state.
The Anjin mining company was formed in 2009 on a joint agreement between Zimbabwe and China, after the original claim owners in Chiadzwa were booted off the site. The agreement was theoretically meant to ensure that a sizeable portion of profits from the lucrative alluvial mine went to the Finance Ministry, through the state owned Zimbabwe Mining Development Corporation (ZMDC).
The ZMDC also entered into other joint ventures in Chiadzwa, and the possibility of billions of dollars saw Finance Minister Tendai Biti peg the national budget on potential remittances. Biti said in his 2012 budget that he had been promised US$600 million from diamond sales by the Mines Ministry, with most of the money already allocated to various infrastructure development projects.
But half-way through the financial year, the Prime Minister has said that only US$25 million of diamond money has been remitted to treasury. In Cabinet Morgan Tsvangirai told legislators on Thursday that funds received to date had been very disappointing and far short of budgetary estimates.

Biti has now also admitted that Anjin is not remitting anything to treasury despite making a serious profit. In an interview with The Independent newspaper this week, Biti said nothing was coming from the company, "not even a single cent."
Biti last month raised these same concerns in Parliament, while also expressing concern that the ZMDC was not a shareholder, as the government originally thought it was.
"We, in the Ministry of Finance, now fear that there may be a parallel government where these monies may be going and not coming to us," Biti told parliament last month.
These concerns have also since been justified, after the Country's Deputy Mines Minister confirmed that the Zimbabwe Defence Industries (ZDI) owns 40% of the Anjin mining firm. Although the ZDI is, on paper, a private company, all the shares in the company are held by the ZANU PF controlled Ministry of Defence.
Chimanikire insisted that the government still had a stake in that mine, saying that 10% of the Anjin shareholding was still held by the ZMDC. But Biti told The Independent that the ZMDC is not involved, suggesting the 10% shareholding is held by another suspect military group, called Matt Bronze.
Dewa Mavhinga from the Crisis in Zimbabwe Coalition told SW Radio Africa on Friday that the army's strong involvement in the mining sector was "unacceptable, wrong and not good for Zimbabwe's security." He said that the military's strong allegiance to ZANU PF was particularly worrying, amid growing concern of a return to violence when a fresh election is called.
"Zimbabwe's military appears to be entrenching itself firmly in political circles and with elections nearing, we are worried. If the diamond revenue is not going to the Treasury and it's not going to the public, then where is it going and who is benefiting? These are questions that need urgent answers," Mavhinga said.

Zimbabwe Revenue Authority Surpasses First Quarter Tax Collection Targets

The Zimbabwe Revenue Authority (ZIMRA) says it surpassed its first quarter revenue target by eight percent due to improved local industrial capacity utilization and upward review of salaries of workers by some companies.


ZIMRA chairman Stanford Moyo said in a statement, total gross revenue collections stood at $774 million against a target of $714 million.

Moyo said the largest portion of the revenue was realized from Value Added Tax (VAT) which contributed 38 percent of the total collections followed by individual tax.

VAT contributed $292.7 million while individual tax accounted for 19 percent of the total revenue and total collections from Customs duty amounted to $88.9 million.

He said indications are that industrial capacity utilization currently estimated at 57 percent boosted individual incomes and the purchasing power of Zimbabweans resulting in remarkable VAT and individual tax collections.

“The outstanding performance of this revenue head (VAT) can be attributed to improved local industrial capacity utilization which enhanced performance of VAT on local sales,” said Moyo.

Individual tax collections were $145.5 million against a target of $160.2 million, resulting in a negative variance of 10 percent.

He said this can be attributed to the tax-free threshold which was reviewed upwards from $225 to $250 per month in the 2012 by Finance Minister Tendai Biti. “The upward trend had the effect of increasing disposable income for employees while reducing the taxable portion.”

Moyo said the quarterly Customs Duty revenue target was missed because the local industry has experienced significant improvements in terms of capacity utilization resulting in the economy dumping most imports.

He further said by the end of the quarter, about 30 million kilograms of tobacco had been auctioned at an average price of $3.70 per kilogram and this translated to $135 million worth of tobacco sales.

Economic commentator Masimba Kuchera of the Zimbabwe Coalition on Debt and Development said the significant tax collections are being dampened by diminishing diamond revenues

Zimbabwe’s largest platinum producer reaches deal to turn over 51 percent to government

Zimbabwe’s largest platinum producer reaches deal to turn over 51 percent to government


By Associated Press, Published: March 13

HARARE, Zimbabwe — Zimbabwe’s biggest platinum producer said Tuesday it has reached an “acceptable” agreement with the government under empowerment laws demanding it yields 51 percent ownership to blacks.

South Africa’s Implats, majority owner of the Zimbabwe producer, said in a statement that the government agreed “in principle” on Tuesday to its proposals for the transfer of a 51 percent shareholding that will be overseen by a joint technical team of experts from both sides.

It said the hand over will be at an “appropriate value.” It was not clear how long the transfer will take.

The announcement ends a tense standoff over Zimbabwe’s threatened takeovers of foreign-controlled businesses and mines.

A Tuesday deadline had been set for the miner to meet “indigenization” laws.

Implats chief executive David Brown said that after lengthy disputes and delays over Zimbabwe’s empowerment laws “essentially we have found each other.

“It is pleasing to submit a plan that complies with the law ... this augurs well for the mining industry,” he told reporters. “It creates some certainty and a more stable investment environment.”

Earlier Tuesday, Zimbabwe empowerment minister Saviour Kasukuwere met with Implats board chairman Khotso Mokele.

Kasukuwere said the miner’s proposals “basically comply” and he agreed that in principle they met Zimbabwe’s expectations.

“We are going to work out details of the transfer later,” he told reporters.

The Implats statement said the platinum producer addressed the minimum requirements of Zimbabwe’s Indigenization and Economic Empowerment Act and other regulations passed over the past two years.

The technical team will be made up of officials of Implats, the empowerment ministry and a state regulatory board on empowerment, it said.

Last year, Zimplats became the first foreign-owned company to cede 10 percent of its holdings to a local community trust. Then it offered another stake of about 10 percent of its mining claims.

But Zimbabwe accused the company of delaying tactics and ordered it to hand over another 30 percent by mid-March. South African-based Implats owns 87 percent of existing shares in Zimplats.

Kasukuwere had said there would be no compromise over taking local control and vowed he would seize the mine and its assets if the owners defaulted on those demands by March 13.

Zimbabwe and South Africa are the world’s largest suppliers of platinum, a corrosion-resistant metal with a wide range of industrial uses that is priced higher than gold.

The former opposition party of Prime Minister Morgan Tsvangirai has cautioned that the prospect of hefty business and mining takeovers scares off much-needed investment.

Foreign cash inflows have dwindled in recent months amid uncertainty over the security of possible investments.

Last year, Kasukuwere announced that he had canceled the Zimplats mining license but backed down after Zimbabwe’s mining minister ruled the cancellation void.

Critics of the empowerment drive point to a possible repetition of land seizures since 2000 that have seen many of the best former white-owned commercial farms allocated to politicians and Mugabe party loyalists who have left them to lie idle.

Zimbabwe, once a regional breadbasket, now relies on imported food.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Zimbabwe’s inflation still favourable - Gono

Posted on Wednesday 1 February 2012 - 11:00

Zimbabwe's annual headline inflation still compared favourably with economies in the region, Reserve Bank of Zimbabwe Governor Gideon Gono said on Tuesday, adding that the projected stabilisation of international oil prices this year might also help in lessening price pressures.

But Gono expressed worries over the state of the balance of payments, saying it remained “precariously difficult” at a time when growth in manufactured exports was slow while the country had insufficient foreign currency reserves at its disposal to finance the current account deficit.

He said consumer prices remained low and stable in much of last year and at a rate below 5 percent, within the government’s target band.
Inflation rate accelerated to 4.9 percent year-on-year in December 2011, pushed up by higher food and beverage prices as well as second round effects from communication and utility tariffs, according the latest national statistics agency's figures.
“Zimbabwe’s annual headline inflation compares favourably with regional economies and is aligned with the SADC macroeconomic convergence target of 5 percent,” the central bank chief said in a monetary policy statement.
He warned that the country was exposed to external shocks due to the fragile global economy and decried heavy reliance on commodities, adding that the dampening effect of the Eurozone debt crisis on international commodity prices, Diaspora remittances, and capital inflows will likely have a negative impact on Zimbabwe.
“… declines in global activity and commodity prices will have inescapable consequences for the country’s export earnings, and hence its output, incomes, and fiscal revenues. Diaspora remittances and investment flows are likely to weaken, with knock-on effects on domestic demand, banking sector liquidity and loan quality, resulting in more difficult credit conditions."
Zimbabwe has in recent years struggled to finance its yawning current account deficit, estimated at 23.4 percent of gross domestic product (GDP).
Exports and reserves have remained subdued, while the government had to go cap in hand to the International Monetary Fund (IMF) for support only to be snubbed due to non payment of outstanding arrears.

Five Zimbabwe banks risk closure

Five Zimbabwe banks risk closure


(AFP) – 14 hours ago

HARARE — Zimbabwe's central bank said on Wednesday it has given five undercapitalised banks two weeks to raise cash or face closure, after several banks were forced to shut because of the economic crisis.

At the end of last year five of the country's 25 banks did not have the minimum capital required by law, central bank governor Gideon Gono said.

"Accordingly, all non-compliant institutions... have up to 14 February 2012 to finalise their recapitalisation initiatives or consummate their mergers and acquisitions," he said.

Central bank regulations require commercial banks to have a minimum capital of $12 million (nine million euros), while merchant banks must have at least $10 million and asset management companies $500,000.

Three commercial and two merchant banks currently lack the required capital, and one of the merchant banks is under curatorship, or administration.

"By no later than 29 February 2012, the Reserve Bank shall engage those institutions that would have failed to identify credible partners and conclude the recapitalisation transactions," Gono said.

The bank will act by March 31 against the institutions which fail to raise the capital.

Zimbabwe's economy is showing signs of recovery from a nearly decade-long downturn following a power-sharing deal after disputed 2008 polls.

Long-time political rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai currently navigate the shaky unity government.

The economic crisis forced several banks to close while others merged or were placed under curatorship.

Finance minister Tendai Biti has been forced to take steps to slash the shock 25 percent hike of surtax on imports of food and other basics.

Biti admitted at a news conference in Harare yesterday that he had come

under withering pressure from “various stakeholders” after publication of

the new import tariff regime in the January 14 edition of the Daily News.

The new tax regime came into force on January 1, 2012.

The 25 percent surtax was imposed across the entire range of goods from

basics to luxuries, with the new import regime affecting almost everything

from second-hand vehicles to food, even beer and cigarettes.

The new duty regime was announced in the 2012 national budget presented by

Biti to Parliament in November last year as a measure to support increased

domestic production and level the playing field with regards to some of the

imported commodities.

When the new tariff regime was gazetted last week by the Zimbabwe Revenue

Authority, they torched a storm, which has forced the minister into a

dramatic climb-down.

“Concerns have been raised by stakeholders over some of the tariff measures

government implemented from the 1st of January 2012,” Biti told reporters

yesterday.

“Here there are two things. First is the expanse of those tariffs, the

expanse of the goods that are affected by those tariffs, there have been

concerns about those.”

The 25 percent surtax covers literally everything from beauty products to

electrical household appliances such as refrigerators, ovens, cookers and

other reception apparatus for TVs.

The surtax more importantly affects a wide array of basic foodstuffs such as

fresh as well as frozen whole chickens, frozen cuts and offal, milk and

cream, yoghurt, fermented milk, buttermilk, cheese, bird’s eggs, potatoes,

tomatoes, onions and shallots, garlic, carrots and turnips, mixtures of

vegetables, peas, beans, sausages, uncooked pasta, jams, fruit jellies,

marmalades, soup and broth preparations, sweet biscuits, tomato ketchup and

other tomato sauces.

The new regime also affected alcoholic beverages such as malt beer, wine,

ciders, brandy, whiskey, vodka, spirits as well as Virginia flue-cured

tobacco and burley tobacco.

Biti said he had taken heed of concerns from economists and other

stakeholders that the hike will trigger a massive inflation surge and that

it could ignite shortages of basics given depressed local supply side

constraints.

“We have listened to the way they are affecting basic commodities and so

forth,” Biti said.

The tough-talking minister blasted the manner in which the new tariff

measures were being implemented by tax collector Zimra.

“We have women being asked to put on new shoes, bags being opened (at the

border) and so forth. We don’t accept that, it is not the law,” Biti said.

“Public servants, parastatals, have got a duty to respect the public; they

have got a duty to respect citizens of this country. We will not accept

that.”

The inhuman treatment of travellers by Zimra officials at several border

posts including Harare International Airport was exposed by the Daily News

through a series of articles.

Biti admitted there was overwhelming national condemnation of the 25 percent

hike in surtax of second-hand cars and basics.

“Given the huge representations that have been made to us as a ministry, we

have embarked on the process of stakeholder consultation so that we review

or adjust those statutory instruments, the appropriate measures to review,

and some of the measures therefore will be instituted in the next few weeks

or few days if we are lucky,” Biti said.

“But I want to appeal to the Zimbabwe Revenue Authority, I want to appeal to

all government bodies that provides services to the people whether it’s the

passport office, whether it’s the death certificate office, whether its VAT,

the government is there to serve the public, public servants are there to

serve and not to be islands of fascism where we harass people and so forth.

“So we don’t accept what certain officials at the Zimbabwe Revenue Authority

have been doing.”

Biti said he had received several complaints from trans-border traders and

other stakeholders of intrusive searches and other bizarre methods of

enforcing his new regulations at the border.

“That is not the policy of this ministry, that is not the policy of this

government,” he said. “The long and short of it is that we will review and

adjust following a process of consultation. We will make announcements

through the relevant statutory instrument.”

Biti has also introduced a controversial ban of imports of second-hand

underwear that has also attracted massive criticism.

New Taxes

HARARE - Food prices and other basic commodities are set to increase

following an announcement by the Zimbabwe Revenue Authority that a 25
percent surtax would be charged on the commodities starting January 1.

The development follows disclosures that government officials, including
ministers, were bringing commodities into the country without paying duty.

This includes luxury motor vehicles and even food.
The surtax, according to Zimra, will be charged on things such as food
stuffs, second-hand light passenger motor-vehicles which are more than five
years old from the date of original manufacture, and many other commodities.

Reads the notice in part: “...Surtax of 25 percent of the value for duty
purposes shall be charged and paid in respect of the importation into
Zimbabwe.
“Included in the goods to be taxed are double cab vehicles for the transport
of goods, foodstuffs such as fresh, chilled as well as frozen whole
chickens, frozen cuts and offals, milk and cream, yoghurt, fermented milk,
buttermilk, cheese, bird’s eggs, potatoes, tomatoes, onions and shallots,
garlic, carrots and turnips, mixtures of vegetables, other vegetables, peas
(excluding garden peas and marple peas), beans, sausages and similar
products, uncooked pasta, jams, fruit jellies, marmalades, soup and broth
preparations, sweet biscuits, tomato ketchup and other tomato sauces,” the
notice added.

Alcoholic beverages such as malt beer, wine, cider, brandy, whisky, vodka
and spirits will also attract surtax.
Smokers will not be spared either as virginia type flue-cured tobacco,
burley tobacco as well as all other tobacco types will be taxed.

Other products that will be attracting surtax range from beauty products to
electric household equipment such as refrigerators, ovens, cookers and other
reception apparatus for television sets.
Economic analyst John Robertson said the move by Zimra will trigger massive
price increases which will increase inflation.
Robertson said; “It will add to the cost of those things unless if we can
produce them ourselves.
A lot of these goods are not being made in the quantities needed by the
country and in most cases we can’t find them in our local shops because we
do not have the machinery to make them.

Power cuts are also negatively affecting our manufacturing industry and we
have experienced a loss of skilled people.”
He added: “We will see an increase in the price of buying these goods and it
is going to affect inflation first and in the next two years we might see a
positive result in that we might be able to produce our own products but
this will be in the long run.”

Air Zimbabwe

Zimbabwe’s national airline is in the headlines again this week after the only plane still operational was grounded, due to technical faults. This continues a very troubled season for the management who are facing strong criticism for the financial failings at Air Zim.


Flights from Harare to Bulawayo and Victoria Falls were reportedly cancelled on Monday when the Boeing 737 aircraft developed a “glitch” in one of the engines, leaving passengers stranded.

Air Zim’s acting chief executive officer, Innocent Mavhunga, and board chairperson Jonathan Kadzura, have so far made no comment regarding the airline’s future. It is believed debts of at least $140 million are outstanding.

According to Newsday newspaper, the broken down plane could not be fixed because workers are currently on strike over unpaid salaries. A source reportedly said that most workers had not been paid for nearly six months.

Political and economic analyst Bekithemba Mhlanga told SW Radio Africa that blame for the airline’s demise “should be placed squarely on Robert Mugabe and the board of directors”. He referred to Mugabe’s constant use of the airline for personal trips and mismanagement by the board as the major reasons.
“We’ve reached a point where there should be either civil action or criminal liability against the management for their part in terms of how we got to this position,” Mhlanga explained. He added that the board never had a plan of action and should have forced privatization of the airline years ago.

A crisis developed a week before the holidays last month when creditors seized a plane at Gatwick Airport in London because Air Zim had failed to pay $1.5 million owed to an American spare parts company. Hundreds were stranded for over a week at the airport.

Earlier in the week Transport Minister Nicholas Goche ordered all its regional and international flights to be suspended, fearing seizure of the remaining aircraft by creditors.