LEADING financial advisory firm Tetrad Securities Ltd (Tetrad) says of major concern this year is that there are low stock levels and poor harvest prospects which implies that there will be an u
nsatisfied need of between 40% to 60% of total domestic food requirements.
In his chairman’s statement for the year ended September 30 Zed Rusike said a late start to the rains, a shortage of inputs and unattractive crop prices in local currency terms suggested that output from the former commercial farming sector would almost certainly not show any significant increase.
“On the contrary, production of tobacco, maize, wheat and cotton all look likely to be substantially down on last season,” Rusike said. “A major concern is that low stock levels and poor harvest prospects for 2003/2004 imply an unsatisfied need of between 40% and 60% of total domestic food requirements.”
He said to reverse the fall in output not just in agriculture but in other productive sectors as well as from the public sector providing essential services would require a very substantial rise in investment spending.
“Few businesses, even within the financial sector, are able to achieve anything near that rate (100%) in the current climate of sharply negative real interest rates which are a major discouragement to saving,” he said.
“Experience in other countries shows that in an environment such as the one which we now have credit quality comes under threat and the capital base of banks is eroded due to under provisioning. Our growing separation from international capital markets was also a feature common to other countries’ hyperinflationary experiences.”
He said he hoped the banking sector would be further tightened.
Tetrad did extremely well during the year despite the country’s poor macro-economic fundamentals.
Profitability in 2003 represented a significant increase on the 2002 performance, spurred by enhanced revenue generation across all divisions.
Rusike said market gains were made in the wholesale sector in particular where the volatile nature of the money market during the latter half of the financial year allowed the company to take advantage of the opportunities presented while of course taking due cognisance of the accompanying higher levels of risk.
Profit after tax for the year ended September 30 amounted to $958 million, up from the $138,1 million achieved previously.