Home Blog Page 2

Work cut out for AirZim board… as Mhona taps hard on accelerator

FREEMAN MAKOPA
AIR Zimbabwe (AirZim)’s new board has been given the tough mandate to explore the Southern African Development Community (Sadc) region for new routes by February 2023, according to Transport and Infrastructural Development minister Felix Mhona.

Mhona, who this week spoke exclusively to businessdigest about the government’s new vision for the bleeding airline, said route development plans were at the heart of his immediate strategy.

He said groundwork for route expansion started when the government announced plans to acquire short-range aircraft, which would soon be delivered.

The aircraft will complement three planes currently servicing domestic and two regional destinations, but are said to be inadequate.

The airline has just come out of a four-year-long administration phase, in which the government debts hit over US$300 million.

“There is room for increasing our route network, especially with the anticipated acquisition of another aircraft,” Mhona said.

“I am expecting the launching of at least two regional routes in the first six months of the tenure of the substantive board. As a matter of fact, plans are already afoot for this development.”

Mhona was not at liberty to say which routes the airline would be targeting.

However, before being overwhelmed by problems at the turn of the century, AirZim was among a league of a few state run airlines that dominated regional markets, with frequencies into Lusaka, Lilongwe, Nairobi, Kinshasa, Dar es Salaam and Johannesburg and Cape Town from Harare and Bulawayo.

It also had a presence in several other African destinations.

But a passenger exodus to airlines with modern aircraft, along with inability to run flights on schedule, over a period spanning many years, has forced the airline to trim its network to concentrate on domestic routes.

The airline currently flies to Johannesburg and Dar es Salaam from Harare, complementing domestic destinations.

Mhona said protracted efforts to turn AirZim around had been scaled up.

“Among the deliverables that I am expecting from the new substantive board is the finalisation of the procurement of an aircraft that was initiated by the interim board,” he said.

“This is with a view to ease plane challenges that we sometimes encounter,” he added.

Sadc’s airlines landscape is increasingly being dominated by a fleet of privately-owned airlines that have moved to snatch opportunities surrendered by collapsing state run carriers.

The aggressively expanding Airlink in South Africa, and Fastjet in Zimbabwe have invested in modern aircraft that have attracted today’s dynamic passenger.

AirZim will be fighting for market share with these, but analysts said last week, a lot of work would have to be done to address the lack of confidence among passengers.

Silvanos Gwarinda, the new AirZim board chairperson, said  while he was optimistic, the airline required a lot of work to ride over its myriad crises, including the effects of Covid-19.

Covid-19-induced lockdowns, which grounded the global aviation system, only compounded a decades-long loss-making patch at AirZim, which turned an airline once described by the United Nations as Africa’s most promising carrier into one of the region’s worst.

Gwarinda himself acknowledged the grave state of affairs at Zimbabwe’s crumbling aviation empire that he and his six-member board inherited.

He disclosed that out of AirZim’s eight aircraft fleet, a “number of these are not serviceable”.

But Gwarinda was more worried about deteriorating capacity utilisation levels within the fleet.

Vowing to put all hands on the deck, the new AirZim chairperson still warned that low load factors would be a “recipe for disaster” for the airline.

“We have the air assets, eight aircraft in total (B777 x 2, B767 x 2, B737 x 3 and EMB-145 x 1), but we have lost a number of pilots to the global airlines and a number of these aircraft are also not serviceable,” Gwarinda noted in his acceptance speech.

“Utilisation levels of our air assets are also below comparable benchmarks. Due to the perishability of the airline product – the seat – more will have to be done by AirZim in order to achieve reasonable seat factors for operational viability.

“This is the current scenario: Aircraft utilisation levels are extremely low, there is reliance on operating short sectors only, and low passenger load factors are being achieved. This is a recipe for disaster in the aviation world,” the AirZim chair warned.

Remove the 20% forex retention SI

Jacob Mutisi
FROM information, communication and technology, manufacturing and motor vehicle importing companies or any business that imports and receives their payments in their accounts in USD, it is now over 14 years since the Zimbabwean government has been trying to contain black market trading.

The only sector that has suffered the most is the business community. History will tell you that it is the black government that was behind the death of Olivine, Willowvale Motor Industries, Cottco, NRZ, Barbican, just to name a few. We do not want the same to happen to the last surviving listed, large-to-small enterprises or any other business that is operating in Zimbabwe.

The Minister of Finance, Mthuli Ncube and the Governor of the Reserve Bank of Zimbabwe (RBZ), John Mangudya should realise the problem is not externalisation; it is survival.

Zimbabwean businesses have been operating in a very difficult environment and how they managed to survive is not only a miracle but something out of this world.

Following a directive from the RBZ on August 24, 2020, under an Exchange Control Directive RV176/2020, Zimbabwe is now a dollarised economy and there is no need for the government to liquidate the 20% foreign currency of the funds returned in a Zimbabwe’s bank account.

The Exchange Control Directive RV176/2020 (2.3.1) of August 24, 2020, reads: “With effect from 21 August 2020, 20% of the foreign currency receipts of providers of goods and services shall be liquidated at the point of depositing in the domestic FCAs, at the prevailing auction rate in order to support the foreign exchange auction system from domestic resources. These liquidations shall be transferred to the Reserve Bank daily. The remaining 80% shall be retained indefinitely in the domestic FCA for own use by the concerned provider of goods or services.”

Zimbabwean companies are struggling and need the foreign currency to survive. Do your maths, the government takes 20%, Zimra takes 14,5%, that is already 34,5%. Do your Maths again, on how much are Zimbabwean companies making in profits?

There is a need for the government to protect the last surviving companies and businesses in Zimbabwe’s difficult economic challenges. How on earth does the Government of Zimbabwe expect e.g. National Foods and Zimoco Motors to survive yet the business they run requires a lot of foreign currency and their only source of forex is the foreign exchange auction yet the system has no capacity to satisfy this market.

Imagine taking away US$200 000 from a deposit of US$1 million and above that takes away 4% of cash transactions from the bank. Surely, how do you expect a business to survive when you are taking away 34,5% of the business transactions that a company receives in a country that is battling to secure foreign currency in any form?

Diaspora remittances are one of Zimbabwe’s key benefits that migration brings to originating countries. Zimbabweans abroad send money and goods back to their country of origin. These remittances are contributing to national development and are driving our national economy.

If our diasporans are driving Zimbabwe’s economy just by sending money to their home land, why is it difficult for the Zimbabwean government to remove the 20% deductions on all foreign currency received and also remove the 14,5% foreign currency tax in an economy that does not have the foreign currency?

It is on record that we have done it before during the late Mugabe’s era when we targeted indigenous banks killing some of the best and well run banking institutions like Barbican Bank, ran by none other than Ncube, who is now our Finance minister and his only crime was he was trading in the foreign currency black market and should be protecting businesses that are operating in this difficult economy and require every penny they receive in foreign currency.  The problem is not the companies that operate in Zimbabwe, the problem is about dysfunctional government policies in general and on the fiscal and monetary arenas in particular. The time has come to call a spade a spade.

The problem is not the black market or externalisation, it is the central bank which is not doing an Open Market Operation.

Open Market Operations involve the purchase or sale of securities, such as Treasury Bills or government bonds, by the Central Bank in order to influence the money supply. When the bank sells (purchases) these securities to (from) a bank or an individual, money is withdrawn from (added to) the flow of money in the economy.

The RBZ has become a law unto itself which punishes businesses that operate in a difficult environment? The 34,5% is definitely going to kill Zimbabwe’s indigenous companies which are supposed to be protected.

Where does our government expect to cover the 20% foreign currency shortfall that is required for our businesses to operate? Zimbabweans need the foreign currency to survive, import fuel, buy cars and spare parts when the banks are not offering them any foreign currency.

The issue is Zimbabwean companies see opportunities in warped government policies and they use them to their benefit just as any rational human being would do.

The government needs to review its policies. This is the same government that requested our local companies and institutions to stop charging any of Zimbabwe’s products and services in foreign currency yet they are doing the same charging forex on the importation of vehicles and paying for goods.

We are a nation that is losing money in a five-year cycle, meaning they introduce a US dollar and abolish it and the cycle is back again. Let us face the facts, are 34,5% regulations affecting our all-weather friends the Chinese and other players? It is time to protect our indigenous players who have kept this economy moving and employing hundreds of employees who still have jobs.

Remove these 20% foreign currency deductions and give us a tax break on the 14,5% that are killing local companies. The government has done it for civil servants who can now import vehicles duty free. Do the same for the struggling business community.

  • Mutisi is the CEO of Hansole Investments (Pvt) Ltd. He is the current chairperson of Zimbabwe Information & Communication Technology, a division of Zimbabwe Institution of Engineers.

CEOs tell RBZ hard truth

KUDZAI KUWAZA
THE Reserve Bank of Zimbabwe (RBZ) will need to get out of its “denial mode” if it is to present a monetary policy statement that will effectively tackle currency volatility and galloping inflation, the CEO Africa Roundtable said this week.

RBZ governor John Mangudya will soon present the mid-term monetary policy statement, which comes after the mid-term budget presented by Finance and Economic Development minister Mthuli Ncube last month.

It comes at a time the economic crisis is deepening characterised by foreign currency shortages, a depreciating Zimbabwean dollar on both the official and parallel markets and runaway inflation, which soared to 256,9% in July from 191,6% in June.

In an interview, CEO Africa Roundtable chairperson Oswell Binha said the current instability in the economy will worsen unless the governor accepts reality and addresses what is causing the chaos.

“The mid-term monetary policy is obviously expected to tackle the two evident elephants in the living room; the challenges of exchange rate instability and inflation,” he said.

“Judging from previous experiences, the central bank naturally refuses that the exchange rate is overvalued and needs immediate drastic correction.

“The governor will continue with his narrative that the reserve money is under control and central government borrowing from the central bank is zero. However, the instability will remain due to this denial mode,” Binha added.

He said the mid-term monetary policy statement will be a golden opportunity for Mangudya to inject the much-needed confidence into the market with concrete measures.

“I believe the governor is presented with a unique opportunity to target confidence-boosting factors, the principle of which is the need to admit that infrastructure financing has been a major source of exchange rate volatility,” Binha said.

“Secondly, it is (good) to review interest rates again; effectively they are now negative real interest rates despite being reviewed a few weeks back.”

He warned that repeated denials will sustain perceptions of the central bank playing a role in causing market instability and weak institutional capacity in dealing with monetary problems that haunt the whole economy.

Binha said inflation will worsen in the absence of substantive measures by authorities.

“Inflation has always been a monetary phenomenon. We are in this because of the government’s propensity for excessive money supply growth,” he pointed out.

“Without real commitment and action to reduce money supply growth, especially from the fiscal front, containing inflation will remain an elusive dream and inflation might get to four digits before year-end.”

Binha dismissed government’s accusations that business was responsible for profiteering, which has contributed to the rapid weakening of the local unit.

“The Zimbabwe government, unfortunately, is both an irrational regulator and an unreasonable player in the business sector. Many of the economic enablers are a serious drain on the fiscus, a position which undermines business viability,” he said.

“Business is not charity. The government’s role is to provide an environment for businesses to thrive. Developmental states grow their business sector’s productive throughput.”

Binha said the country has “grave political problems” which are undermining the survival of all national stakeholders, industry being a soft target.

High costs hit BNC

MTHANDAZO NYONI
BINDURA Nickel Corporation (BNC) is in the process of acquiring new underground mining mobile equipment to replace old technologies that have been pushing up operating costs, the firm said in an update to shareholders for the second quarter ended June 30 2022.

BNC, which is part of the Kuvimba Mining House, said the high cost of maintaining the aged underground equipment, coupled with the lower nickel in concentrate production resulted in an increase in unit costs.

“The cash cost per tonne for the quarter was 58% up on the cost for the same period in the prior year, while the all-in-sustaining cost per tonne increased by 55%,” BNC company secretary Conrad Fungai Mukanganga said.

“As a result of the disproportionately high operating costs, the company incurred a loss for the quarter. The acquisition of new underground mining mobile equipment to replace the old and unreliable units is under way.

“In addition, while awaiting delivery of new equipment, the company is complementing the current fleet by hiring equipment from different service providers. Both the new and hired mobile equipment is expected to increase the availability of equipment and ultimately increase production,” Mukanganga said.

The Victoria Falls Stock Exchange-listed firm said tonnes of ore mined for the quarter increased by 13% in comparison to production for the same period in the previous year mainly due to the delayed commissioning of the re-deep project attributable to unforeseen technical challenges.

“Ore head grade was 28% lower than the grade achieved in the same period last year, due to the declining massives strike length, which led to a reduction in the volume of massives, coupled with constraints on the rate of development due to underground mining mobile equipment challenges,” he said.

Tonnes of ore milled increased by 16% in comparison to the corresponding period last year. This marks the transition to the low-grade high volume mining strategy which has been occasioned by declining massive volumes, he said.

Nickel in concentrate produced was 24% lower than for the same period last year, reflecting the lower grade of ore processed.

Mukanganga said the average London Metal Exchange (LME) nickel price of US$29 029 per tonne was 67% higher than the price of US$17 343 per tonne, which was achieved in the comparative period in the previous year. The price improvement was attributable to the global high demand for nickel.

He said nickel in concentrate sales for the period was 14% lower than for the same period last year.

“The sales decreased due to a delay in the renewal of the off-take agreement, which expired in early March 2022. A new two-year contract was signed in early April 2022 and export shipments resumed in the following month,” Mukanganga said.

He said the LME average nickel prices are expected to strengthen due to optimism surrounding the easing of lockdowns in China and an anticipated resultant improvement in economic activity, as well as the increasing demand for battery grade nickel in electric vehicles.

Nickel prices are, therefore, expected to be bullish for the remainder of calendar year 2022, he said.

Old Mutual intensifies forays into unlisted equities

ONE of the country’s biggest financial services firms, Old Mutual Zimbabwe (OM), says it is intensifying investments into unlisted equities, although due diligence was critical in deciding where to deploy funding.

OM invested an equivalent of US$27,8 million into unlisted assets in 2021, according to the firm’s annual report for the period.

The firm was suspended from the Zimbabwe Stock Exchange (ZSE) two years ago together with cement maker PPC and Seed Co International.

The firms, which had dual listings, angered ruling Zanu PF officials who blamed their fungible stocks for fuelling exchange rate fragilities.

However, two years after being booted out of the ZSE, Zimbabwe’s currency has been further battered by a string of headwinds, which have forced authorities to scour for ad hoc measures to cool off the protracted depreciation.

The firms’ departure from the ZSE has come at a cost.

According to official reports, market capitalisation on the ZSE rose to over ZW$3 trillion (about US$6,44 billion) in June.

At this rate, suspended firms may have suffered billions in Zimbabwean dollar potential earnings.

In an interview with businessdigest, OM group chief executive officer Samuel Matsekete said investments into non-quoted assets had also been underpinned by the fact that there had been a listing drought in Zimbabwe.

“We are conscious of the need to invest in unlisted equities because we see, for example, that new listings are very few and far between,” the OM CEO said.

“So you will see increasing participation in alternative investments as an asset class. (But) alternative investments, because they are not listed, require that we spend more time to understand the projects, to understand the businesses, to value it and know that we are buying at the right value or investing at the right value,” he said.

It is a concern that cuts across all markets that find it difficult to evaluate non-listed shares.

“What we also do as a role, as Old Mutual, among other financial services, is that we intermediate. We seek to gather assets then we pool those resources and deploy them into sectors of the economy where we make the biggest impact,” Matsekete added.

Commenting on currency stability, he said a currency plays a big part in giving investors confidence to have their money harnessed into long-term projects.

According to the OM 2021 annual report, the firm invested into such sectors as renewable energy, agriculture and tourism.

The group also invested in infrastructure, with projects, such as student accommodation and buildings for the manufacturing and distribution sectors, among the targets.

In total, OM increased its investments and securities by 122,32% to ZW$140,74 billion (about US$1,3 billion) in 2021, from a 2020 comparative of ZW$63,3 billion (about US$774 million).

Matsekete said listed equities would still play a part in the firm’s investment strategy.

— Staff Writer.

Nedbank ‘pivots’ on USD lending to ride out crisis

TATIRA ZWINOIRA
FINANCIAL services outfit, Nedbank Zimbabwe Limited said on Wednesday it had “pivoted” on United States dollar-indexed lending to navigate headwinds stemming out of the country’s troubled currency.

Managing director Sibongile Moyo told analysts during a presentation of the Nedbank Group’s half-year financial results in South Africa that the bank was also affected by directives for banks to briefly suspend lending in May.

Nedbank Zimbabwe, a unit of the Johannesburg-headquartered Nedbank Group, will release full financial statements for the period at the end of this month.

In May, Zimbabwean authorities directed banks to suspend lending, as they investigated firms that they blamed for fuelling inflationary pressures and turbulence on the exchange rate front.

The suspension lasted only two weeks.

Authorities backtracked following a market revolt.

“The brief stop to lending which probably lasted two weeks did send shockwaves in the market,” Moyo said.

“Of course, Nedbank would have been very concerned. What that did was maybe reduce the momentum of our day-to-day operations in lending because operationally, ourselves and clients were not sure what to do. So that would have delayed our processes or our credit writing, budgets or targets in the year just because of the uncertainty,” the Nedbank Zimbabwe boss said.

However, she said the bank managed to get back on track after the Reserve Bank of Zimbabwe (RBZ) hiked lending rates by significant margins.

In June, the RBZ raised its policy rate to 200% — a 120 percentage point rise from 80% previously — as it moved to protect lenders from hyperinflation and exchange rate related volatilities.

“Initially, because of the repricing of current facilities on our books or current credit running facilities on our books we would have seen quite a significant positive impact on the more than doubling of interest rates,” Moyo said.

“However, the big impact is going to be in reduced credit uptake. We are probably not going to see much growth in Zimbabwe dollar lending, which is why we have pivoted more to United States dollar lending.

“Our short-to-medium- and long-term outlook for Zimbabwe remains robust. I think there are some immediate challenges with hyperinflation mentioned and some of the runaway costs.

“Our cost base is repriced at the alternative market rate, a price that is a moving target on a weekly basis whereas the income is being translated at the official or the Reserve Bank auction rate. Escalating costs are a huge concern market wide and we need to look at how we can manage these in the context of inflation,” she added.

Nedbank Group managing executive of African Regions Terence Sibiya said the firm was intervening in Zimbabwe to defend its market share.

“As management, we have a few interventions that we are doing to protect our market share and grow our financial services business in Zimbabwe,” he said.

“We do see sectors that still present opportunities. Be it in infrastructure, energy, agro-processing, obviously tobacco goes without saying,” Sibiya added.

He said these sectors would contribute meaningfully to the recovery of the Zimbabwean economy.

The Nedbank Group delivered a good financial performance for the six months as headline earnings (HE) increased by 27% to R6,7 billion (about US$413 million), driven by strong revenue growth, a flat credit loss ratio, an improved performance from associate ETI and a well-managed expense base.

Nedbank CEO Mike Brown said the group’s performance in the first half of 2022 reflects improvements across key metrics in a complex and difficult operating environment.

“The group’s return on equity (ROE) increased to 13,6% (June 2021: 11,7%), and all frontline business units generated ROEs above the group’s cost of equity (COE),” he said.

The group’s balance sheet remained strong.

“On the back of strong earnings growth and robust capital and liquidity positions, the group declared an interim dividend of 783 cents, up by 81% year-on-year and back above the 2019 pre-Covid-19 interim dividend,” Brown said.

Electricity critical for import substitution industrialisation

WHEN confronted with a consistently underperforming and depreciating currency, it is imperative to review the balance of payment position, which looks at imports and exports and the resultant difference.

A fiat/paper currency, as opposed to a Gold Standard backed by gold, means its impacted by various factors including inflation, interest rates, investor confidence and the level of imports compared to exports, which is the subject of this write up and ways to stabilise the currency through Import Substitution Industrialisation (ISI) in the Zimbabwean context.

ISI is an inward looking strategy aimed at self-reliance through developing local industrial capacity leading to reduced imports and requirements for foreign currency.

Any modern currency’s strength and stability is derived from the productive capacity of the issuing country. The industrial utilisation capacity comes into play as a country, whose industrial utilisation is low, cannot expect its currency to be strong and stable. As such it is critical for a nation to properly assess its strengths and build on them.

Zimbabwe’s economy is built on mining and agriculture and there is a need to increase investment in those key areas to reduce relying on imports.

An effective import substitution industrialisation strategy firstly should assess what is being imported and the required investment to replace imports with locally produced items. Zimbabwe imports goods worth US$7,6 billion and exports US$6 billion worth, showing a deficit of US$1,6 billion for the 2021 financial year.

The main imports are fuels, electricity, machinery, food and medicines. The composition of the import bill indicates that ISI could be effectively implemented within the short-to-medium term.

This is possible considering that energy and food make up a significant portion of imports at more than 30% of the import bill.

The oil and gas prospecting Mukuyu-1 oil well, Muzarabani, in the Zambezi valley in the medium term can significantly reduce the energy import bill and possibly turn Zimbabwe into an energy exporter.

A clear strategy is required rather than a make as we go on the road policy, which lacks general fit into the overall game plan of being self-reliant in all aspects in the long run.

An ISI strategy has three main participants which are the government, state-owned enterprises and private players. The government’s main role is to direct policy and create conducive conditions for ISI to succeed.

ISI is based on the government making the policy decision in that direction then backing it up with the required rules and regulations and interventions, such as tariffs, taxes and subsidies targeted at the areas.

There is Bikita Lithium and Arcadia Lithium, which uniquely position Zimbabwe as a significant supplier of lithium. However, this opportunity needs to be converted beyond simple provision of raw lithium for clean batteries and electric cars. We could structure more meaningful and profitable deals to become a central hub for lithium-based batteries and related technology.

Zimbabwe possesses Africa’s largest lithium reserves and should not be just content with raw exports but rather become a significant player in the full value chain of the lithium-based products.

Zimbabwe’s economy is already structured for an effective ISI backed by already well-established state-owned enterprises such as Arda, National Oil Infrastructure Company (Noic), Zimbabwe Electicity Supply Authority (Zesa), Grain Marketing Board (BMB) and Cottco, which can play a leading role in strategy implementation.

This infrastructure and system was inherited from the UDI era (1965 to 1980). It now requires minor adjustment to suit today’s scenario whereby the country is importing more than it is exporting, resulting in unsustainable pressure on the local currency. The management of these state-owned enterprises needs to be aligned to the ISI and remove inefficiency and the corruption tag and perception.

Zimbabwe can take a leaf from the Chinese who have managed to use state-owned firms to spur import substitution and effectively convert it into an export-led growth strategy.

Private sector projects such as the Mashava Iron and Steel Smelting Company with capacity of 500 000 tonnes of chrome annually are such clear examples of building local capacity with the need to do  further value addition to avoid exporting raw chrome but importing chrome-based products.

Projects such as the Manhize Iron Steel Plant in Chirumanzu District points in the right direction as Zimbabwe seeks to revive its steel industry, which is the backbone for any serious industrialisation and value addition effort.

The plant with potential to produce more than two million tonnes represents one key project which can anchor other related industries and reduce the import bill whilst boosting exports.

Zimbabwe has been importing electricity for the last few years due to reduced generation and increased demand. Increased electricity usage shows a growing economy and needs to be managed well to remove avoidable bottlenecks.

Electricity imports should be a short-term concept not a long-term strategy as such this is one clear area whereby ISI can successfully be implemented.

Currently, Zimbabwe is importing electricity from neighbouring countries resulting in foreign currency requirements, which could be avoided.

The electricity and energy sector represents a low hanging fruit which could easily be turned into a huge foreign currency earner with the right effort, political will and investment.

Any effective ISI requires reliable and well-priced electricity and energy. Whilst there are some efforts to build greater electricity generating capacity there is more emphasis that is required to make Zimbabwe a net exporter of energy not an importer.

The same situation with electricity is present in the food sector whereby Zimbabwe imports dairy products, maize, wheat, edible oils, fertiliser, fruits, chickens etc.

Importing items which can be grown or made locally indicates lack of a coordinated approach to the overall import bill as various players need to push in one direction and redirect resources from imports into building local capacity to produce the imported products. Any excess electricity has a ready market in the Sadc power pool.

The agricultural sector potential in reducing the import bill needs to be fine-tuned to mirror the success of the tobacco sector where Zimbabwe has reached top producer level within a short period of time. Wheat, maize, chicken and dairy products imports should assist in showing direction on where import substitution is urgently required since the country is well endowed with fertile arable land and significant water sources to support irrigation based production.

The implements, tools and requirements for the agricultural sector are fairly simple and local foundation capacity is there but requires deliberate policy shift to improve both quality and capacity to produce and supply the sector.

A critical sector, such as agriculture cannot rely on imports for its main requirements.

Local capacity and ability needs to be developed and nurtured as the sector has great export potential which can go a long way in reducing imports but instead contribute towards exports to generate foreign currency and help stabilise the local currency.

The investment in irrigation-driven agriculture will ensure that agricultural production is weather-proofed as current farming seasons are too dependent on rain fall seasons, which have become erratic hence the need to increase electricity generation which is a key driver in any irrigation based agricultural sector.

A solid agricultural sector would then anchor production through value-addition of primary commodities, which need further beneficiation to improve export earnings and narrow the current balance of payment position deficit of US$1.6 billion.

  • Muponda is an investment banker, economist and entrepreneur. He holds a B.Comm (Finance) and an MBA. He is a PhD candidate — gilbertmuponda@gmail.com

Africa excellent for developing smart cities

IN terms of natural resources required for infrastructure and commercial activities, African cities have the potential to become centres for a wide range of activities, including avenues for study opportunities, jobs, and services. Almost three-quarters of Africans live in or have links to cities, and this percentage is anticipated to climb to over 90% by 2050-2060.

Due to high population density, urban areas consume the most energy and have the highest amounts of greenhouse gas emissions. Cities should be well-positioned to show leadership in the clean energy transition. This can achieve significant benefits through the early adoption of policies aimed at achieving climate neutrality, as the fight against climate change increasingly involves the deployment of solutions at all levels and citizen participation.

To that end, the African Union is putting smart cities at the centre of its efforts to realise components of the “smart city” idea through the African Union’s Agenda 2063.

What is a “smart city”?
A smart city is a location that combines physical, digital and human systems into existing networks and services to improve energy efficiency and reduce emissions for the benefit of inhabitants and companies.

A “smart city” includes more energy-efficient buildings, integrated renewable energy sources, sustainable heating and cooling systems, smarter urban transportation networks, upgraded water supply, and better waste disposal facilities to address the city’s economic, social and environmental challenges. To offer sustainable and inclusive solutions to make cities more resilient, smart cities rely on government commitment and wide and inclusive public involvement.

AU 2063 policy initiatives and cities
The African Union (AU) Agenda 2063 emphasises the need for integration as one of the pillars for ensuring Africa accomplishes its goals for equitable and sustainable growth and development. Agenda 2063 Aspiration 2 emphasises the importance of Africa developing world-class infrastructure that criss-crosses the continent and improves connectivity through newer and bolder initiatives to connect the continent by rail, road, sea and air; and developing regional and continental power pools, as well as ICT.

Modderfontein New City in Johannesburg, South Africa; Kigali Innovation City in Rwanda; and Konza City in Kenya are among the smart cities now being created in Africa. Zendai, a Chinese corporation, created Modderfontein City for R84 billion (US$5,06 billion).

To achieve smart city status, the local administration should construct a four-pillar initiative that includes digital infrastructure, digital inclusion, e-governance, and digital economics. The following are some of the primary reasons why Africa is the ideal continent for developing smart cities:

Limited Urban Infrastructure: Because many African communities have not previously been urbanised and have little to no infrastructure, there is little need for replacing outdated utilities, making creating smart cities in Africa cheaper and faster.

An expanding African middle class: Around 170 million of Africa’s 1,3 billion inhabitants are now middle-class. For instance, according to World Data, in Ethiopia alone, the middle class is expected to rise by almost 1 200% over the next decade, from roughly 716 000 individuals now to over 9,6 million by 2030.

Rapid urbanisation: Africa is officially the world’s fastest urbanising continent, particularly in East Africa. Between now and 2050, the continent’s population is expected to quadruple.

Africa’s entrepreneurial spirit: African entrepreneurship is critical to the continent’s future development.

  • Enos Denhere
  • WhatsApp +263773894975

Food security sustainability

ZIMBABWE has vast tracks of land with an area of 390 757 square kilometres as of June 2022. Unused or unallocated land is 2,684 million hectares.

Indigenous black people own 96% of land, which excludes corporate estates, private land property for multinational companies, churches, schools and related private entities. Land needs to be utilised for national production to boost the gross domestic product (GDP).

Revival of industries, especially in the three main sectors, agriculture, mining and manufacturing, is vital for job creation. This alone decimates the poverty cycle. Preparatory ecological land use management supported by perennial land tenure results in maximum harvest, enough to boost the economy.

On March 30 2022, Lands and Agriculture minister Anxious Masuka pointed out that Zimbabwe has been repossessing idle land from black farmers who benefited from land reform.

He told journalists that people whose farmland was lying idle and unused and multiple farm owners will lose land.

Zimbabwe has finite geographic space according to his statement. Masuka said 99% of land is allocated.

The land being allocated is given to those who can produce. However, it is important to note that the government will not repossess productive land.

Recently it has been said that government is on an agricultural transformation exercise.

This is aimed at transforming A2 farmers to become business people through an enhanced security of tenure. It means then government has simplified the 99-year lease application process.

Farmers can apply for the lease using their annual production forms. This is a measure to enable easing of doing business in the agricultural sector. Simplifying the lease application process accelerates agribusiness.

Masuka’s deputy Vangelis Haritatos was quoted as saying the government has no set criteria. He said there will be fairness. The country must be taken for self-sufficiency in food and nutrition.

Abundant land put to full utilisation reduces food insecurity through implementation of nutrition programmes with stakeholder interventions.

The Zimbabwe Resilience Building Fund (ZRBF) of the United Nations Development Programme has helped the country surpass issues pertaining to food insufficiency.

Such civil society developments and strategic initiatives set the ball to score on food security and goal attainment.

In fighting nature and its resilient forces, it is important to take a closer look at climate change.

Zimbabwe is following guidelines and policies of the United Nations Framework Convention on Climate Change.

It followed on the outcome of Montreal protocol, which looked at phasing out ozone depleting substances (ODS’s) like chlorofluorocarbons and methane.

This is an addition to good management of greenhouse gases.

Zimbabwe may score on goal number seven of the sustainable development goals (SDGs) of the United Nations if more environmental interventions work out.

Farmers might have utilised land better by growing crops that salvage the country out of drought effects.

These can eradicate ripple effects of climate change. However, other ways would be growing fast season crops, which are known as pulses. They relate to beans, peanuts and nuts.

Zimbabwe can produce more if there is more resource mobilisation for agriculture and production is done transparently.

Regarding this, a tracking mechanism is needed to follow up on production from export processing zones and agro-based centres of food production.

Imagine out of 4 130 000 hectares of arable land, 25% is cultivated using animal power. Production out of this is just below that percentage.

Economically, this creates a contribution of gross domestic product (GDP) of 5,8% as of 2021 from 6,2% in 2020. GDP is projected to grow by 3,7% in 2022, according to the World Bank.

There is a downward revision.

This is based on worsening agriculture conditions (output set to contract by 1,5% in 2022 from double digit growth in 2021 based on failing rain levels and rising prices of key inputs and global price increases amid supply side disruptions).

Climate change is such an enormous challenge.

The government’s commitment to conservation farming known as Pfumvudza is a sustainable way of farming, which promotes crop production intensification.

In this regard, farmers use less resources and energy on a small piece of land, and reduce labour force, cutting costs and inputs. The result is low input and high output harvest.

If the government feels it is on the right direction, it is imperative to come up with a new strategic reflective practice that has a new focus, vision, goal, clear objectives and mission towards a new Zimbabwe different from the Robert Mugabe era.

The country has made improvements since 2018. For now it is imperative to make new inter-woven comity of economic ties and relations, as it has done with China, Russia and Belarus.

Sustenance of relations with the Commonwealth sets a new footing into a realm on economic stabilisation.

Land compensation to those, who lost property during land reform, is key moving forward.

Zimbabwe must up its anti-corruption drive and emulate China and Japan in taking drastic measures to deal with the scourge.The government must implement the Extractive Industry Transparency Initiative in its management of natural resources, like land and minerals.

Communities must know what has been produced out of their natural wealth.

Mpofu is a multi-awarded winning Journalist, Community Development Lecturer who works with private University and college students carrying out studies, dissertations and writing examinations..

Be sure to network at investor forum

Batanai Matsika
STATE-OWNED Enterprises (SOEs) have long provided crucial infrastructure, goods and services across different economic sectors in Zimbabwe.

At their peak, parastatals SOEs formed the engine of the Zimbabwean economy with a combined contribution of about 40% to Gross Domestic Product (GDP).

Historically, these companies raised money directly from governments, or with the benefit of government guarantees. Increasingly however, state-owned enterprises are accessing commercial financing not backed by any sovereign guarantee – leaving private equity or debt investors exposed to risk.

It should be also highlighted that achieving meaningful growth in the broader economy will require high levels of investment flows into Zimbabwe.

On another note, one of the key problems being experienced by individuals, households and small-to-medium businesses in Zimbabwe relates to financial exclusion and a low savings rate.

This of course is largely due to low financial literacy levels, amongst many other factors.

According to the Bankers Association of Zimbabwe (BAZ) Economic Bulletin, Zimbabwe’s savings rate as a percentage of GDP is estimated at 10% which shows that there is a low savings culture in the country.

Of the estimated 15 million people in Zimbabwe, only 20 000 are active investors (representing less than half a percent). Another important point to note is the problem of income disparity, which is a global one, that is, it is not specific to Zimbabwe.

According to the World Economic Forum (WEF) Global Risks Report, the risk that is most likely to manifest over the next 10 years is severe income disparity.

It should be highlighted that human capital is the largest contributor to income inequality. Wealthy people tend to have access to good education, implying that they have better chances of securing the best jobs.

With a good education also comes exposure to financial and investment information. It is a fact that many people struggle with knowing how to manage personal finances, reduce debt, invest in the stock market, and even plan for their retirement.

The Zimbabwe Independent (Zimind Publishers) in partnership with PiggyBankAdvisor will host its inaugural annual investor forum at the Harare International Conference Centre (HICC) on August 24 2022 themed, “Sustainable Long-term Investments Options”.

The forum is targeted at policy makers, parastatal executives, insurance firms, individuals, development finance institutions and financial service providers.

The objective of the forum is to improve public utilities investments options, financial literacy levels while increasing the participation of individuals on local and global investment markets.

The forum will also cover economics, parastatal reforms, and corporate governance in the public sector, stock market investing and personal finance issues.

The Investor Forum will be the largest annual event bringing together investors, accounting firms, financial services providers, regulators and pension funds in Zimbabwe.

The Forum will also be entirely focused on bringing together C-level business leaders, investors and investment firms and will showcase investment opportunities in Zimbabwe.

Networking and focused meetings at the forum will provide an unparalleled opportunity to discover and develop a robust network of the highest quality of business leaders.

Further, there will be focused specific sessions showcasing new investment products and insights into investment opportunities. The following are the broad focus areas to be covered by the Forum:

Economic and Investments Outlook

The Chinese Investment Philosophy in Zimbabwe

Gold Coins and Value Preservation Strategies

Investment: To privatise or not?

Reforming Zimbabwe’s Parastatals and State-Owned Enterprises

Innovative investment options into Utilities

Corruption and Corporate Governance Issues in the Public Sector

Derivatives & Cryptocurrencies

Art as an alternative investment option

Exchange Traded Funds and Real Estate Investment Trusts

The Investment 101 Handbook

Investing and trading on the ZSE, FINSEC and VFEX

The 2022 Zimbabwe Annual Investor Forum will recognise individuals and corporates that have been instrumental in promoting domestic and international investment flows in the country.

The event is expected to attract delegates from different spheres of the economy and this should include policymakers, parastatals executives, insurance firms, pension fund managers, local authorities executives, development finance institutions, private equity investors, legal practitioners, bankers, property developers, regulators and academia. For registrations, sponsorships, and exhibitions, email events@alphamedia.co.zw or call +263 773 417 267/+263 78 358 4745.

  • Matsika is the head of research at Morgan & Co and founder of piggybankadvisor.com. — batanai@morganzim.com / batanai@piggybankadvisor.com or mobile: +263 783 584 745.