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Zimbabweans suffer from 'import mania' - Chinamasa
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News Update as @ 1530 hours, Wednesday 6 August 2014
By Rumbidzayi Zinyuke
The problem of Zimbabwe’s ballooning
trade imbalance is being exacerbated by
businessmen who are importing goods
that can be manufactured locally thus
rendering the industry inefficient, Finance
Minister Patrick Chinamsa has said.
Speaking at the Buy Zimbabwe Public
Procurement conference, Minister Chi-namasa
said Zimbabweans are import-ing
goods such as bottled water, soap,
sugar, cooking oil, cell phones and vehicle
parts among other things.
“Our import bill is unsustainably high,
with a current account deficit for the first
half of the year at US$1,7 billion.
The nature of the imports is worrying,
we are importing consumptive products
that account for at least 70 percent of our
import bill. When you are always eating,
eating, eating and not saving for your
house or to buy a bike, that is 'import
mania'. You are crazy, it’s always diffi-cult
to counteract craziness on a national
scale.
It means you are not thinking about
tomorrow, about your children because
you are eating everything.
“Why are we destroying our country and
then look to other countries for imports,
let alone blame lack of capacity to do
things that we have capacity to do?
I am reluctant to intervene legislatively
all the time. Generally, I always want to
take considered steps.
We should never get to a point where we
have to legislate to stop imports of water
when we have Tingamira, Schweppes
and a host of water bottling companies,”
he said.
He said as long Zimbabwe remains a net
exporter of raw materials, the country
will always be poor as it transfers its skills
and wealth to other countries.
Minister Chinamasa also said Govern-ment
would prioritise investment in infra-structure,
especially power generation.
“And our priority is power. As long as
we continue to have load shedding it
becomes difficult to attract foreign direct
investment and to keep you in business
if you have interrupted supply.
But we must know that it is not an over-night
thing. At the end of the day we
have to make sure we have enough
power supply for our industries,” he said.
The country currently has an energy
deficit averaging 600 megawatts (MW)
due to obsolete machinery and limited
investment in the energy sector.
However, expansion works which com-menced
this year at Kariba South Power
Station are expected to be completed
in 2017, adding 300MW to the national
grid. •
Zimbabweans suffer from 'import mania': Chinamasa
Minister Chinamasa
2. 2 NEWS
Fastjet to boost tourism and trade: Minister
By Funny Hudzerema
The arrival of low-cost airline, FastJet, is
set to boost Zimbabwe’s tourism as well
as trade with Tanzania where the major-ity
of local traders travel to buy goods for
resale, an official said yesterday.
Speaking soon after the low cost airliner
landed its maiden flight at the Harare
International Airport yesterday, Trans-port,
Communication and Infrastructure
Development minister Obert Mpofu said
FastJet’s entry demonstrates Govern-ment’s
commitment to improving the
aviation industry.
“The Government of Zimbabwe is
delighted that fast jet is expanding its
international route network to include
Harare and that in doing so it is bringing
its low cost reliable and safe service to the
people of Zimbabwe. This demonstrates
full competence to the Zimbabwean air-port
as a safe destination. We expect the
airline to have a positive impact to the
country,” he said.
He said the relaxation of visa and less
documentation for travelling will also
stimulate business through trade and
tourism between Zimbabwe and Tan-zania.
The airline will service the route three
times weekly with prices starting from
$50 plus Government taxes one way, to
more than $200 for late bookers.
Speaking at the same event, FastJet
chief executive Ed Winter said affordable
air travel is a key to the growth of econo-mies
across Africa.
“It is expensive and time consuming to
build roads and connect cities, inconven-ient
for people to travel over land and if
there is existing airlines flying any par-ticular
route, they still exclude the major-ity
of a country’s citizens due to high cost
of those flights,” he said.
He said the airline will increase frequency
of flights as demand increases.
Previously, traders and car dealers wish-ing
to travel to Dar es Salaam had to
spend at least three days travelling the
approximately 2200km by road or they
had to fly via Nairobi or Johannesburg.
Winter said the flights will stimulate both
business and tourism for Tanzania and
Zimbabwe. •
4. 4 NEWS
Protect cooking oil manufactures, Govt told
By Lynn Murahwa
Zimbabwe is importing more than $220
million worth of cooking oil and this is
hurting local manufacturers who have
to compete with the imports, an official
said.
Speaking at the Buy Zimbabwe public
procurement conference, Olivine Indus-tries
chief executive Jonas Mushangari
said the country is importing more cook-ing
oil than is necessary. He said Govern-ment
should further reduce the amount
of cooking oil being imported into the
country and protect the local producers.
“This is too much oil and Government
should come in and support the local
cooking oil producers.
The army has over 60 000 people and
where are they getting their cooking
oil? They alone can consume 400 000
litres of oil a month,” he said. The rev-eletaion
comes as Zimbabwe’s import
bill is ballooning with the current account
deficit for the first halfof 2014 standing
at $1,7 billion. At least 70 percent of
the imported products are consuma-bles.
Mushangari added that the current
challenges that are rocking the industry
could be addressed with investment
secured locally instead of relying on for-eign
Zim tech entrepreneur tells Obama sanctions are hurting startups
direct investment should not be the
only channel for the resuscitation of local
industries.
“We cannot rely on foreign investment,
we should have funding coming from
within our country as well,” he said. Oli-vine
has been struggling to attract an
investor to help resuscitate its flounder-ing
operations. •
In a rare one-on-one stage interview he
held with US president Barack Obama,
Zimbabwean technology entrepreneur,
Takunda Chingonzo, told Obama that the
supposedly targeted sanctions against
some political leaders in Zimbabwe were
actually hurting ordinary people.
Chingonzo said technology entrepre-neurs
looking to get technology or fund-ing
from US-based companies often hit a
brick wall because of the sanctions.
“In our work, we got to a point where
we needed to import a bit of technology
from the United States. And so we were
engaging in conversation with these US
based businesses, and the response we
got time and time again was that unfor-tunately
we cannot do business with
you because you are from Zimbabwe. I
was shocked. This doesn’t make sense,”
explained Chingonzo to Obama.
In response, Obama said that the US is
facing the challenge of balancing helping
the people of Zimbabwe with what he
termed "repeated violation of basic dem-ocratic
practices and human rights" in the
country. Obama agreed with Chingonzo
that what was was needed were initia-tives
that enhance as opposed to retard
the progress of the Zimbabwean people.
The US president then suggested that
projects be explored by Zimbabwean
entrepreneurs together with the US to
ensure Zimbabweans are not affected.
He was adamant, however, that the US
is set on sending the strong message
about good governance in Zimbabwe.
Chingonzo is in the US on the Young Afri-can
Leaders programme. The founder of
wireless internet startup, Saisai, had the
one-on-one with Obama on stage yes-terday
at the US-Africa Leaders Summit
in the US.
Whether anything comes out of his
promise or not is ofcourse something
else. He is after all a politician and he
had to have a response. It is, however,
great that Chingonzo was able to artic-ulate
something that some doubt – that
in supposedly targeting a couple of pol-iticians
with sanctions, the US actually
doesn’t hurt politicians but ordinary peo-ple
that just want to do business.
Chingonzo and Obama also discussed
issues of net neutrality as well as access
to funding for small business in Africa
especially as at the summit investment
pledges by US companies seemed to
target large established companies and
governments. ― Techzim •
6. 6 ZSE REVIEW
Heavyweights rally equities market
The equities market has maintained
its positive run for a third consecutive
day this week rallied by gains in most
heavyweight counters.
The industrial index gained 1.86
points to close at 192.32 points after
BAT and Old Mutual went up 5 cents
each to trade at 1330 cents and 270
cents respectively.
Innscor added 4 cents to close at 80
cents while Radar doubled to 4 cents
and Masimba rose by 1.15 cents to
trade at 3.50 cents.
On the downside, NMB lost 2 cents
to close at 4 cents, Meikles retreated
0.50 cents to 18 cents and Colcom
went down 0.41 cents to close trade
at 26 cents. The mining index shed a
further 6.75 points to close at 83.27
points as Bindura was 0.90 cents
lower trading at 7 cents.
RioZim was unchanged at 25 cents
while Falgold added 1.01 cents to
close at 4.01 cents and Hwange
had a firm bid at 6 cents. ― BH24
Reporter •
8. 8 BH24 COMMENT
Why the Buy Zimbabwe Campaign is not working
Can you think of a reason why the Buy
Zimbabwe campaign has not lived up
to expectations after years in exist-ence?
Maybe it’s because Zimbabweans
have been caught up in this frenzy to
buy stuff from across the border at
whatever cost.
They are pulling in different direc-tions
with one side saying we should
buy local stuff and the other saying
imports are cheaper, thus rendering
the campaign ineffective.
The Buy Zimbabwe Campaign has
been ongoing for almost three years
now and despite its intention to mar-ket
local goods and services, industry
is still suffering.
We still have low capacity utilisation
and our import bill keeps growing. But
the same campaign has been effective
in many countries like China, India
and closer to home, South Africa. So
the question to ask is: where are we
getting it wrong?
The problem is that we have become
"import maniacs" as the Finance Min-ister
Patrick Chinamasa rightly put it.
According to the minister, Zimbabwe-ans
have been caught up in the craze
to import even ridiculous stuff and this
has practically killed our industry.
“We are importing consumptive
products that account for at least 70
percent of our import bill. When you
are always eating and eating and not
saving to buy a house, or to buy a
bike, that is 'import mania'. You are
crazy, and it’s always difficult to coun-teract
craziness on a national scale.
It means you are not thinking about
tomorrow, or next month or next year.
It means you are not thinking about
your children because you are eating
everything,” he said.
And he couldn’t have said it better.
Despite all the problems we have
been facing, we have been making
them worse all by ourselves. f we can
import trivial goods such as water and
sweets, then we are definitely crazy.
And we will not see the importance of
buying local products.
What is lacking on the part of Govern-ment,
however, is the necessary con-trol
of goods that are coming in.
The fact that Government is aware
that people are bringing in water and
sugar and other goods we now pro-duce
in sufficient quantities means
that is where the problem is. People
think they are allowed to do that.
We cannot say people are smug-gling
these things but they are going
through the border posts (and maybe
these people even paying duty for
them) and we only realise it when the
accounts fail to balance. Government
should immediately ban import of
such products. Even those that come
in with individuals who do not declare
them at the border because they are
classified as groceries.
Of what significance to the economy
is it to bring mineral water from South
Africa? If that businessman is a Zim-babwean,
then he needs a basic edu-cation
on patriotism.
People need to be educated on the
effects of importing such goods; on
themselves and on the economy.
Maybe it might take long to work but
it will get there eventually. We might
end up getting in right in the end.
And maybe Buy Zimbabwe will not be
a futile campaign. •
10. 10 REGIONAL News
Nedbank Capital set to raise energy exposure to cater for baseload
The investment banking business of
Nedbank, which has a R20-billion expo-sure
to South Africa’s renewable-en-ergy
market, expects to significantly
increase funding limits in the South
African energy space to create capacity
for involvement in the upcoming coal
and gas baseload programmes.
Nedbank Capital head of infrastructure,
energy and telecommunications Mike
Peo tells Engineering News Online that
the success of the Renewable Energy
Independent Power Producer Procure-ment
Programme (REIPPPP) has raised
confidence among lenders and that
Nedbank is among those institutions
keen to see the model replicated across
other sectors.
The bank has been involved as a lender
or lead arranger in about a third of the
65 renewables projects that have been
approved by the Department of Energy
(DoE) and the National Treasury over
the past three years. It is also gearing
up to participate in the fourth bid win-dow,
which is set to close on August 18.
Peo says the interest being shown
by large institutional investors in the
renewable-energy programme has
made it easier for the banks to recycle
capital and, in so doing, release finan-cial
resources for additional projects.
“We now have the institutional invest-ment
market waking up to infrastruc-ture,
including the [State-owned] Pub-lic
Investment Corporation. I believe
that, if we are able to procure public
infrastructure with the same consist-ency
and certainty that we have seen
under REIPPPP, we will be able to start
tapping into a multitrillion-rand funding
base that’s almost entirely untapped,”
Peo enthuses.
However, the dearth of bankable pub-lic–
private partnership (PPP) projects
remains a major constraint. It is a far
larger bottleneck than the capacity of
lenders to participate in PPPs, or the
availability of finance.
“South African banks are historically
underexposed to long-term infrastruc-ture
assets,” Peo avers, noting that this
asset class has always been dwarfed,
for instance, by the various banks’
mortgage-bond books.
“So, there is still much more capacity
than there have been projects coming
to market.”
For this reason, Peo also believes that
the Presidential Infrastructure Coor-dinating
Commission (PICC) should
begin focusing on the preparation of
bankable projects around the 18 Stra-tegic
Infrastructure Projects (Sips),
which range from new transport cor-ridors
and power stations through to
accelerated school- and hospital-build-ing
programmes.
During this process, the PICC should
identify which subcomponents of the
Sips could be set aside for PPPs and
which should be developed by govern-ment.
Once such a determination has been
made, transparent programmes, sim-ilar
to the REIPPPP, could be set up to
ensure that projects are implemented
in a way that balances affordability with
investor returns.
“Success breeds success,” Peo avers.
“The principles applied to REIPPPP of
having proper advisers upfront, struc-turing
the programme well and stick-ing,
by and large, to schedules, should
be deployed in other infrastructure sec-tors.”
– Mining Weekly •
12. 12 DIARY OF EVENTS
THE BH24 DIARY
Seed Co Limited 19th Annual General Meet-ing
Venue: Seed Co Administration Block at Sta-pleford
Date: Wednesday 20 August Time: 12:00
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
5 August 2014
Energy
(Megawatts)
Hwange 498 MW
Kariba 720 MW
Harare 38 MW
Munyati 25 MW
Bulawayo 26 MW
Imports 0 MW
Total 1307 MW
hours
National Tyre Services Limited 52nd Annual
General Meeting Venue : Boardroom, Stand
4608, Corner Cripps/Seke Roads, Granite-side,
Harare Date: 20 August 2014 Time: 14:30
hours
15. 15 AFRICA StockS
African stock round up Commodity Prices
Botswana 8,664.65 -11.96 -0.14% 12July
Cote dIvoire 246.37 +2.18 +0.89% 07Mar
Egypt 7,949.60 -75.68 -0.94% 06Mar
Ghana 2,301.05 +0.70 +0.03% 01Aug
Kenya 4,943.28 +37.19 +0.76% 01Aug
Malawi 12,662.47 +0.00 +0.00% 07Mar
Mauritius 2,074.51 -3.51 -0.17% 07Mar
Morocco 9,544.10 +21.01 +0.22% 07Mar
Nigeria 41,801.51 -132.89 -0.32% 04Aug
Rwanda 131.27 +0.00 +0.00% 24Oct
Tanzania 2,018.97 +25.40 +1.27% 07Mar
Tunisia 4,624.39 -39.32 -0.84% 07Mar
Uganda 1,503.90 +0.81 +0.05% 10Sep
Zambia 4,242.74 +14.95 +0.35% 10April
Zimbabwe 189.52 +0.21 +0.11% 04Aug
Name Price
Crude Oil 1,300.91 -0.21%
Spot Gold USD/oz 1,292.63 -0.26%
Spot Silver USD/oz 19.38 -0.46%
Spot Platinum USD/oz 1,421.25 -0.33%
Spot Palladium USD/oz 798.50 -0.64%
LME Copper USD/t 6,770 -0.18%
LME Aluminium USD/t 1,780 -1.17%
LME Nickel USD/t 18,230 -1.73%
LME Lead USD/t 2,095 -1.41%
Quote of the day — "Develop
success from failures. Dis-couragement
and failure
are two of the surest
stepping stones to suc-cess."
- Dale Carnegie
Globalshareholder.com
16. 16 INTERNATIONAL NEWS
Geopolitical risks weigh on Germany’s factory orders
German factory orders (GRIORTMM)
dropped by the most in more than 2
1/2 years in a sign that geopolitical ten-sion
with Russia is leaving its mark on
Europe’s largest economy.
Orders, adjusted for seasonal swings
and inflation, slid 3.2 percent in June
from May, when they fell a revised
1.6 percent, the Economy Ministry in
Berlin said today. Economists forecast
an increase of 0.9 percent, according
to the median of 30 estimates in a
Bloomberg News survey. The decline
is the steepest since September 2011.
The European Union agreed last week
on its widest-ranging sanctions yet
over Russia’s backing of rebels in east-ern
Ukraine and Germany is feeling
the pain, with the Bundesbank citing
geopolitical concern as contributing to
a probable stagnation of the economy
in the second quarter. Russia counts
Germany as its biggest trading part-ner
in Europe. “Sentiment in Germany
deteriorated, companies think twice
before investing, and the engine of the
economy is stuttering a bit,” said Hol-ger
Sandte, chief European analyst at
Nordea Markets in Copenhagen. “As
long as the situation in Ukraine doesn’t
escalate the impact should be limited.
We expect to see growth again in the
third quarter.”
German Vice Chancellor Sigmar
Gabriel this week blocked a deal for
Rheinmetall AG to build a military train-ing
center east of Moscow in light of the
sanctions. The contract has a value of
more than 100 million euros ($134
million) and the Dusseldorf-based
company had planned to build more
facilities in Russia.
ECB Meeting Export orders dropped
4.1 percent in June from the previous
month, including a 10.4 percent slump
in the euro area, and domestic orders
fell 1.9 percent, today’s report showed.
Orders for investment goods slid 6.4
percent and those for consumer goods
were down 0.4 percent. Basic-goods
orders climbed 1.6 percent. Total
orders dropped 4.3 percent from a
year ago.
“Geopolitical developments and risks
more than anything led to a clear reti-cence
in orders,” the Economy Ministry
said. “It is therefore to be expected that
industry develops rather moderately in
coming months.” ― Bloomberg •
17. 17 Feature
Black tobacco farmers flourish in Zim
Forget, for a moment, all the problems
Zimbabwe’s economy faces; forget the
unemployment rate, and never mind
the ever-widening gap between the
rich and poor.
Out of this economy in a country where
various currencies are accepted as
legal tender, a new breed of entrepre-neurs
is steadily emerging.
With domestic banks lacking the
capacity to lend money for productive
industries, many Zimbabweans have
taken up tobacco farming to stave off
the spectre of unemployment. It has
become an impressive opportunity
to earn the cash necessary for other
investments. Moses Chibaya is a uni-versity
graduate with a degree in Eng-lish
and Communications.
His dream of becoming a journalist
has taken a hit as Zimbabwe’s media
industry contracts. Newspapers have
had to cut down on staff as advertis-ing
revenue declines, and Chibaya’s
freelance work hardly pays enough to
sustain him and his parents.
Last year he altered his course, starting
a tobacco farming venture in his rural
area of Karoi, about 200 kilometres
north of Harare. For most small-holder
tobacco farmers like Chibaya, one
hectare of a good crop is worth about
$10,000 dollars.
Chibaya is expecting to make no less
than $30,000 this season, an amount
he says will cover the pressing obli-gations
that his journalism earnings
barely stretched to meet. “Tobacco has
transformed my life in a big way,” he
says. “I am now able to look after my
family.”
What started as a detour for Chibaya
looks set to grow into a diversified
business. This year he plans to grow
potatoes and do piggery and poultry
after auctioning his tobacco in Febru-ary.
Having endured years of economic
decline, most
Zimbabweans have become cri-sis-
hardened. But thanks to the
golden leaf, fortunes for the general
populace have started to change. In
the early 2000s, Zimbabwe was the
second-largest exporter of flue-cured
tobacco – a high-quality, lucrative crop.
Recent steady gains by black Zimba-bwean
tobacco farmers, in the wake
18. 18 Feature
of the land reform programme, have
raised production of the crop closer to
pre-reform levels and may help sal-vage
the country’s struggling export
sector.
In 2013, tobacco earned Zimbabwe
almost $770 million – some 10 percent
of the country’s GDP.
The trend will continue: this year, the
country is expected to produce 171
million kilogrammes of tobacco, signifi-cantly
up from last year’s 166.5 million
kilogrammes.
Zimbabwe’s Tobacco Industry and Mar-keting
Board says most communal and
smallholder farmers have now moved
into tobacco farming.
About 16,755 of the country’s 40,000
overall registered tobacco producers
are farmers in these categories.
Tendai Chikodzi lost his job when a
local clothing and textile company ran
into financial problems and cut back its
workforce. He spent two years trying to
eke out a living from piece jobs (part-time
jobs), but could hardly make ends
meet.
He tells of difficult times struggling to
pay school fees and hospital bills for
his son, who was often ill. Chikodzi
has planted five hectares with tobacco
in Zimbabwe’s Mashonaland East
province and is expecting to make as
much as $60,000 this year. Economists
in Zimbabwe say that ventures like
Chikodzi’s and Chibaya’s have begun to
reduce the country’s un- employment
rate, although official statistics make
this claim difficult to verify.
“Zimbabwe’s economy has increasingly
become mostly informal and we are
seeing more and more people venture
into agriculture, mostly tobacco, in a
bid to raise money for themselves.
"The Government has failed to provide
formal jobs, the private sector is strug-gling
for viability, and most compa-nies
are scaling back,” said economist
Johannes Kwangwari.
According to Rudo Boka, the chief
executive officer of Boka Tobacco Auc-tion
Floors, one of the biggest tobacco
auctioning companies in Zimbabwe,
the crop has registered “tremendous
recovery” in the past four years.
“Tobacco pays cash on the spot. We
have seen the opportunity to utilise
land; to get a value from it and still be
able to participate in other sectors. It’s
a 10-month crop.
After selling the tobacco, farmers do
other things such as chicken- and
pig-rearing,” Boka said. Her company
handles 15 percent of Zimbabwe’s
tobacco crop. In 2013, it handled
$92-million worth of tobacco. Expecta-tions
are high that a good season could
result in a significant increase on this
figure.
“People should embrace tobacco farm-ing
as a business. Your inputs will
determine the output,” she said.
Despite struggling for liquidity, some
Zimbabwean banks have started get-ting
in on the action.
George Guvamatanga, the president of
Bankers Association of Zimbabwe, said
the number of individuals borrowing to
finance tobacco growing has increased.
Most of the tobacco auctioning com-panies
and cigarette manufacturers
in Zimbabwe have contract-farming
arrangements with farmers.
These are proving to be lucrative, and
even those growers not on contract
arrangements are looking to expand
into the area as a source of additional
revenue.
“There are a number of people now
in tobacco who have an interest else-where,”
said Chibaya, adding that it
is a seasonal crop, a cash crop, and
you are paid soon after auctioning
your harvest. While the growth of the
tobacco sector is a relief for many Zim-babweans,
some experts believe the
boom could be better and that issues
of resources, inputs, knowledge and
machinery are holding farmers back
from their full potential.
After years of dire unemployment and
bad economic news, the rise of tobacco
farming, unglamorous though it may
be, could spark ambitions that go well
beyond the humble crop.
At a time when few other institutions
can, tobacco sales provide entrepre-neurs
like Chibaya with crucial start- up
capital for business ventures – agri-cultural
or otherwise – that could see
them become millionaires.
If there is one good thing about starting
from a low base it is the vast potential
that exists for growth. ― VENTURES
AFRICA •