President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa’s new administration faces its first stern test when it presents the 2018 National Budget next week.
Tackling hostile investment laws, a growing current account deficit, a revenue draining civil service and a crippling bank note crisis are just the tip of what Mnangagwa is up against, going into 2018 as the economy fast deteriorates.
Acting Finance Minister, Patrick Chinamasa, presents the 2018 National Budget next week on the back of intensified economic turbulence, which Mnangagwa’s administration has to address if the new man at the helm is to entertain any hope of victory in next year’s elections.
The budget will be the first real test of Mnangagwa’s commitment to address 17 years of crisis, coming only two weeks after his shock rise to power, promising a basketful of positive changes, including a crackdown on rampant corruption and restoration of normalcy in the bloated civil service.
Under previous administrations, the civil service wage bill was gobbling 80 percent of fiscal revenues.
Out of every dollar received by the Zimbabwe Revenue Authority, 80 cents were paying government workers, with 20 cents going towards critical social commitments such as sanitation, roads, clinics and schools.
Chinamasa, who was Finance Minister until he was dropped in an October 9 reshuffle, returns to Parliament on Thursday to present a much anticipated fiscal statement.
The vexing puzzle that government has to fix is how to arrest dwindling tax revenues in order to align its budget with spending demands.
But at stake in next week’s budget would be the measures that Mnangagwa’s administration would unveil to address an unsustainable debt burden, which is now over US$13 billion.
The need to restore stability of the banking system has remained paramount, while dealing with a growing fiscal deficit and rebuild failing industries and arresting the rot in State enterprises has become urgent.
Ahead of next week’s highly anticipated spending plan, key business lobbies had demanded that Chinamasa deals with the “long overdue” privatisation of State firms to reduce pressure on the fiscus and stop leakages by adequately supporting the implementation of the auditor general (AG)’s reports, which have been swept under the carpet for many past years.
“We seem to be violating our own rules,” said researchers at the Confederation of Zimbabwe Industries (CZI)’s economics department in a note seen by The Financial Gazette this week.
“We have had multiple reports by the auditor general, but little movement on implementation of reports’ recommendations. Work by the AG has to be respected. The minister should respond and give feedback on findings and recommendations by the auditor general,” CZI said.
But how government plans to eliminate the budget deficit would be under the spotlight, given that since dollarisation, bureaucratic profligacy has seen consumptive spending average 112 percent of the country’s $14 billion gross domestic product (GDP).
Savings have been nil, and import cover was also zero.

Acting Finance and Economic Development Minister Patrick Chinamasa.

Investment has averaged about 16 percent of GDP, which is enough to sustain growth of a maximum four percent per annum, according to industry statistics.
In a frank paper presented to Chinamasa in October, the Zimbabwe National Chamber of Commerce (ZNCC) said 90 percent of the increase in domestic spending had been deployed to consumption, such as senior civil servants’ bookings in expensive hotels, airlines, foreign travel and all terrain cars.
This has seen government’s consumptive spending trebling to $3,5 billion last year, from $900 million in 2009.
Mnangagwa needs the Civil Service Commission to cooperate in rooting out hundreds of ghost workers that have been kept on the wage bill to prop up ZANU-PF party’s political expediencies.
“The wage bill needs to be addressed as a matter of urgency and government needs to act on ghost workers,” ZNCC said in its note to Chinamasa.
Some economists fear that fiscal imbalances could lead to a real risk of a recurrence of hyperinflation, which reached 500 billion percent in 2008, before government moved to adopt the multicurrency system.
“We strongly recommend that the government overdraft with the RBZ should be eliminated, we also need to respect the statutory cap on overdraft (which is) 20 percent of previous year’s revenue,” say CZI researchers.On Monday, Mnangagwa read the riot act against laxity in government when he addressed permanent secretaries.
It was too early to measure him at the time.
But Zimbabweans in the coming week will be waiting to see if his government would act on his threats. In October CZI said 30 percent of the country’s manufacturing sector companies were on the brink of collapse due to a vexing foreign currency crisis and a pervasive lack of confidence that is hurting new investment.
Signals of hope had started to appear since Mnangagwa’s dramatic rise to power last week, with pockets of the financial system increasing the amount of money that depositors can withdraw per day.
Across the world, fund managers and investment advisors said they were hopeful of positive developments in Zimbabwe.
The London based Equities Development Limited (ED), which tracks counters quoted on the London Stock Exchange’s Alternative Investments Markets, said high risk factors associated with Mugabe’s regime were likely to ease.
“We view the end of the Mugabe regime as positive for the mining sector, as it will help to shrug off the heavy risk discount attached to Zimbabwe assets,” ED said.
Years of economic mismanagement have pushed 5,7 million people to the informal sector, into the absence of a stimuli.
Zimbabwe last received international support in 2009, and its budget has not been supported by offshore funding since then.
“The story goes back to the structure of the budget,” says Kingstone Kanyile, chief executive officer at Mtilikwe Financial Services.
“He must minimise on recurrent expenditure and maximise social and capital expenditure. You cannot take US$0,80 from every dollar you have and fund recurrent expenditure and leave US$0,20 to fund capital expenditure as well as other expenditures. It can’t just work,” he said.
During the 2015 World Bank and International Monitary Fund spring meetings in Lima, Peru, Chinamasa unveiled a plan to repay the debt, now estimated at US$11,6 billion.
The plan is off track, explaining why the country risk has remained high, forcing investors to sit on the fence.

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CZI president, Sifelani Jabangwe

PRESIDENT Emmerson Mnangagwa has a tough task ahead of reviving the country’s comatose economy he inherited from his predecessor Robert Mugabe, industry has observed.
Mugabe, who had been at the helm of the southern African country since independence from Britain in 1980, stepped down last week under pressure from his own party, the military, as well as angry citizens grappling with high unemployment, endless cash shortages and crumbling infrastructure.
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe said Mnangagwa should prioritise the revival of key companies such as the National Railway of Zimbabwe (NRZ) and the Zimbabwe Iron and Steel Company (ZISCO) in line with his clarion call for job creation.
In his acceptance speech Mnangagwa said his government is committed to “create jobs, jobs and jobs” for the majority of Zimbabweans who are wallowing in poverty.
“If the President can expedite the resuscitation of NRZ and ZISCO, which should have a dramatic short-term effect on unemployment, can benefit the economy through the stimulation of downstream industries,” Jabangwe told The Financial Gazette.
At its peak, NRZ employed about 20 000 workers and moved 18 million tonnes of freight annually. The struggling parastatal now moves less than 100 000 tonnes per week showing the devastating effects of industry collapse and poor rail infrastructure.
ZISCO – arguably the heartbeat of the Midlands province – was the largest integrated steel works in Africa with a capacity to produce one million tonnes of the commodity annually and employed over 6 000 workers, but failed spectacularly in 2008 due to government’s chronic mismanagement, corruption and maladministration of the economy, analysts say.
The Zimbabwe Congress of Trade Unions says Zimbabwe’s unemployment is now more than 90 percent.
Jabangwe said it was also crucial for Mnangagwa, who has been in government for the past 37 years and was at one time a finance minister, to immediately address the current cash shortages and help industry to retool.
According to the CZI manufacturing survey, capacity utilisation in the country’s manufacturing sector declined from 47,4 percent last year to 45,1 percent in 2017, as a result of high production costs and shortages of foreign currency.
“He should implement policies that can help businesses to have easy access to finance at the right costs and right tenure,” said Jabangwe, adding that the multicurrency system should be maintained for the foreseeable future.
For nearly 20 years, Zimbabwe has been in default on US$9 billion worth of international debt, resulting in the country failing to access cheap capital due to its high political risk profile — a situation that has resulted in industries operating archaic and inefficient machinery.

Zimbabwe National Chamber of Commerce CEO, Chris Mugaga

That debt needs restructuring, probably with the assistance of the International Monetary Fund and the World Bank.
Zimbabwe National Chamber of Commerce chief executive officer Chris Mugaga said the new president must deal decisively with corruption — a scourge that has seen the country losing billions of dollars annually.
“He should stamp out corruption across the board regardless of who has committed it,” he said adding that Mnangagwa must rise above party politics and do what is right for the economy.
“The president must not recycle deadwood in his Cabinet, but should infuse technocrats who do not have votes to lose but only care about reviving the economy. However, acting Finance Minister Patrick Chinamasa should also be given another chance at the helm of Treasury as he has done a good job of reengagements with the International Monetory Fund and the World Bank,” Mugaga said.
Businessman Shepherd Kembo said Mnangagwa, an admirer of Chinese reformist leader Deng Xiaoping, should instigate economic reforms which will, among other objectives, address issues of investment, production, the ease of doing business and the controversial indigenisation policy.
“The economic cluster ministries should have business-minded people running them and the country must draw a line from the previous regime and start respecting bilateral agreements and property rights,” he said.
Economist Jonathan James believes that Mnangagwa cannot isolate job creation in his bid to improve the country’s economy. Instead, a more holistic approach and concerted effort on all areas of the struggling economy is necessary to make Zimbabwe prosperous.
“Job creation is one thing, but in order to be able to do so, there has got to be a material change in economic plan and structure that invites investment to come in, where they feel that the government is going to operate materially different than they have previously; and that is yet to be seen,” James said. newsdesk@fingaz.co.zw

President Emmerson Mnangagwa

INDIVIDUALS and companies that illegally externalised significant amounts of money from the country are known and will be prosecuted if they do not heed a three-month amnesty extended by President Emmerson Mnangagwa this week, a senior government official has said.

Zimbabwe is currently in the grips of a serious foreign currency crisis blamed by the authorities on a wide trade deficit as well as the smuggling of cash to offshore havens. Last year, the central bank said as much as US$1,8 billion has been funneled out of the country in 2015 alone.
Mnangagwa, sworn in as president last week after former president Robert Mugabe stepped down under pressure from his party and the military, has promised economic reforms and tough action against graft.
On Tuesday, the new president announced a three-month amnesty under which illegally externalised funds could be brought back into the country with no risk of prosecution for those involved.
Misheck Sibanda, the chief secretary to the President and Cabinet, told reporters that the expiry of the moratorium would be followed by arrests and prosecution of culprits.
“After February, legal action will be taken and arrests will be made. The looters are known,” Sibanda said.
Sources with knowledge of the matter told The Financial Gazette yesterday that the net could catch high-profile individuals, many with political links and some with close ties to the new president.
Mnangagwa’s statement also hinted at the political profiles of targeted offenders.
“Activities linked to Operation Restore Legacy have, among other issues, helped uncover cases where huge sums of money and other assets were illegally externalised by certain individuals and corporates,” Mnangagwa said.
The military operation, which eventually forced Mugabe’s resignation after a week-long stand-off that saw the army effectively taking control of government, targeted the former president’s closest allies.
Announcing the operation on State television in a pre-dawn statement, major general Sibusiso Moyo said the military was targeting “criminal elements” around Mugabe.
The former president was, however, granted amnesty from prosecution, in a deal that eventually secured his exit.
However, former finance minister Ignatius Chombo, taken into captivity by the military in a nocturnal raid on his Harare home, has since been arraigned in court and faces charges of corruption, fraud and criminal abuse of office.
In June, then finance minister Patrick Chinamasa told Parliament that government had commissioned a probe into externalisation of forex.
“We are in touch now with the authorities in countries where our money is being externalised. So, sooner or later, we should have information on who is externalising money,” Chinamasa said.

Acting Finance Minister Patrick Chinamasa.

Mnangagwa, a veteran of successive Mugabe governments, has used his first week in power to strike a different tone from his long-time boss. Critics have long accused Mugabe of condoning graft, especially among his top officials, during his 37 years in power.
Mindful of another criticism leveled at Mugabe, whose governments were typically big, Mnangagwa has also promised to run a leaner, more efficient administration.
“I am currently in the process of putting together a new government structure, which should essentially be leaner,” Mnangagwa told senior government officials in a meeting on Tuesday.
“This, of course, will entail the merging of some line ministries in order to remove functional duplications as well as contain unnecessary expenditures, so as to enhance productivity and efficient delivery of service.”
Mnangagwa is believed to be working on a Cabinet that could halve his predecessor’s. Mugabe’s last administration had 29 Cabinet ministers, three ministers of state, 25 deputy ministers, 10 provincial ministers and 24 permanent secretaries. This could see the downgrading of some current ministries to departments headed by directors-general, while some, such as the two education ministries, would be combined.
Similarly, the agriculture, land and environment functions look set to be under one ministry. Other portfolios targeted for radical changes, or outright abolition, include foreign affairs, information, information communication technologies, transport and infrastructure development, small to medium enterprise development, youth and indigenisation, women’s affairs, water, cyber crime mitigation, arts, sport and culture as well as local government.
“I want to assure you that no one will be laid off, except those who have reached retirement age. Those whose ministerial posts will be abolished will be re-skilled and reassigned to other areas in the public service,” Mnangagwa said on Tuesday.
“Our people have endured economic hardships for over two decades, and now expect this new government to turn things around, within the shortest time possible.”
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Air Marshal Perrance Shiri was appointed Minister of Lands, Agriculture and Rural Resettlement

PRESIDENT Emmerson Mnangagwa last night announced a new 22-member Cabinet in a move that saw some line ministries with functional duplications being merged. The appointments take immediate effect.

Cabinet Ministers

Patrick Chinamasa: Minister of Finance and Economic Planning  

Obert Mpofu: Minister of Home Affairs and Culture  

Air Marshal Perrance Shiri: Minister of Lands, Agriculture and Rural Resettlement

Lazarus Dokora: Minister of Primary and Secondary Education 

David Parirenyatwa: Minister of Health and Child Care 

Kembo Mohadi: Minister of Defence, Security and War Veterans

Ziyambi Ziyambi: Minister of Justice, Legal and Parliamentary Affairs

Major General Sibusiso Moyo: Minister Foreign Affairs and International Trade

Kazembe Kazembe: Minister of Sport, Arts and Recreation  

Mike Bimha: Minister of Industry, Commerce and Enterprise Development 

July Moyo: Minister of Local Government, Public Works and National Housing

Sithembiso Nyoni: Minister of Women and Youth Affairs 

Professor Amon Murwira: Minister of Higher Education, Science and Technology Development 

Supa Mandiwanzira: Minister of Information Communication Technology and Cyber Security

Professor Clever Nyathi: Minister of Labour and Social Welfare

Joram Gumbo: Minister of Transport and Infrastructural Development  

Winston Chitando: Minister of Mines and Mining Development

Oppah Muchinguri-Kashiri: Minister of Environment, Water and Climate

Priscah Mupfumira: Minister of Tourism and Hospitality Industry  

Ambassador Simon Khaya Moyo: Minister of Energy and Power Development  

Chris Mutsvangwa: Minister of Information, Media and Broadcasting Services

Simbarashe Mumbengegwi: Minister of State for Presidential Affairs and Monitoring Government Programmes.

Deputy Ministers

Terence Mukupe, as Deputy Minister for Finance and Economic Development

Davis Marapira, as Deputy Minister of Lands, Agriculture and Rural Resettlement

Professor Paul Mavima, as Deputy Minister of Primary and Secondary Education

Victor Matemadanda; as Deputy Minister for War Veterans

Pupurayi Togarepi, as Deputy Minister for Youth Affairs

Joshua Malinga, as Deputy Minister for Social Welfare

Ministers of State for the Provinces

Angeline Masuku, as Minister of State for Bulawayo Metropolitan

Miriam Rutendo Chikukwa, as Minister of State for Harare Metropolitan

Monica Mutsvangwa, as Minister of State for Manicaland

Martin Tafara Dinha, as Minister of State for Mashonaland Central

Webster Shamu, as Minister of State for Mashonaland West

David Musabayana, as Minister of State for Mashonaland East

Ndabazekaya Giyilitshe Cain Mathema, as Minister of State for Matabeleland North

Abednico Ncube, as Minister of State for Matabeleland South

Josiah Dunira Hungwe, as Minister of State for Masvingo

Owen Ncube, as Minister of State for Midlands.

Christopher Mushohwe, as Minister of State for Government Scholarships in the President’s Office.

President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa has replaced two ministers, two days after announcing his cabinet.

Critics said the original line-up showed Mnangagwa had no plans to bring real change to the country despite hailing a “new democracy”.

The education and labour ministers have now been replaced, ostensibly to comply with a constitutional provision.

But military chiefs remain in charge of the foreign affairs and land portfolios.

Ten days ago Mnangagwa returned from exile following the military coup against Robert Mugabe, promising to serve all citizens equally.

There was uproar when instead of creating a cabinet that included opposition figures, he appeared to reward the military for its role in bringing him to power.

On Saturday, the government announced that two positions were being replaced to “ensure compliance with the constitution and considerations of gender, demography and special needs”.

Reports suggest the initial list did not comply with a constitutional provision which limits the number of ministers who are not members of parliament.

Some opposition supporters celebrated the most high profile decision – the removal of the education minister Lazarus Dokora – arguing that he was responsible for the decline in educational standards over the last few years.

He is being replaced by his own deputy, Paul Mavima.

Meanwhile Zanu-PF deputy Petronella Kagonye becomes labour and social welfare minister in place of Clever Nyathi, who becomes a special adviser to the president on national peace and reconciliation.

Following the news, Zimbabwean media mogul and commentator Trevor Ncube tweeted that the quick change meant the president was either “listening to the public” or “he rushed through this important task”. -bbc

Foreigners were net buyers in all of the ZSE’s trading sessions since Thursday last week.

TURNOVER was low on the Zimbabwe Stock Exchange this week as investors exercised caution while waiting for the 2018 National Budget amid signs that foreign interest in local stocks was being rekindled.
Weekly turnover since Thursday last week amounted to $24 million which is way below the market’s standard as seen over the past 10 weeks. The rough average for weekly turnover over the past 10 weeks was $40 million.
An analyst with a MMC Capital, Kudzanai Samudzi, said the low turnover this week was a result of investors taking a wait and see approach as the nation waits for the 2018 budget set to be presented by the Minister of Finance today.
“Trading activity was relatively lower, with trades being concentrated in a few blue chip stocks. Our view is that a lot of investors were seeking further policy direction from the 2018 National Budget, hence the wait and see approach. Pronouncements will likely be very material and the direction of the market will hugely depend on the outcome of the policy measures. Key inputs in equity valuations, in order to ascertain whether to buy or sell stocks, are driven from such,” said Samudzi.
Foreigners were net buyers in all of the ZSE’s trading sessions since Thursday last week. Foreigners bought shares worth $5,22 million during the period under review and disposed of holdings amounting to $1,93 million equating to net purchases of $3,3 million. This could be a sign of foreigners’ confidence in the new political dispensation.
The industrial index lost 7,79 percent to close yesterday at 342,15 points following weekly losses in major counters. Delta lost 21,4 percent week on week since Thursday to close yesterday at $1,5569. Econet shed 6,95 percent to settle at $1,0975. Old Mutual was down by 19,76 percent during the week to close at $4,7974 while Innscor dropped 0,39 percent to close at $1,0957.
Offsetting the losses were gains in selected counters. SeedCo gained 18,66 percent week on week to close at $2,0937. Larfarge picked up 10,38 percent to trade at $1,3798 while Barclays was up by 7,62 percent to trade at $0,065. The mining index gained 4,54 percent during the week to close yesterday at 132,46 points following gains in Bindura Nickel Corporation and Riozim of 20 percent and 0,16 percent to settle at $0,0426 and $1,1999 in that order.
Market capitalisation decreased by $800 million during the week to closer yesterday at $9,82 billion.
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Prospect Resources chairman, Hugh Warner said a new exploration programme had revealed further increases in the ore reserve to 26,9 metric tonnes.

AUSTRALIAN Stock Exchange listed lithium miner, Prospect Resources this week increased reserve estimates by 58,7 percent at its multimillion dollar Zimbabwe based asset, Arcadia, after fresh exploration revealed major discoveries.
Prospect Resources chairman, Hugh Warner said a new exploration programme had revealed further increases in the ore reserve to 26,9 metric tonnes (Mt), after a pre-feasibility study announced on July 3, 2017 had declared estimated ore reserve at 15,8 Mt.
In a statement to shareholders yesterday, the miner said its ambitions to build one of Africa’s largest lithium operations, expected to last 20 years, had been bolstered by positive signals from the incoming new President Emmerson Mnangagwa’s administration that is working on reforms to improve investor relations.
“These are exciting times for Zimbabwe and for Prospect,” said Warner.
“During the past 10 days we have seen a peaceful transition of leadership in Zimbabwe and we have all read the positive remarks that the new President has made with respect to welcoming foreign investment. Harry Greaves (Executive Director) and I believe that Prospect is well placed to participate and contribute to the rejuvenation of Zimbabwe. This is another great result for our shareholders. Part of the reason for such a massive increase in our ore reserve is the effectiveness and detail of our exploration programme,” he said.
He spoke as other miners had also signaled prospects for robust growth in Zimbabwe in the aftermath of ex-president, Robert Mugabe’s exit mid last month.
The last decade of Mugabe’s 37 year rule had been hard for the mining industry.
There were threats of forced takeovers under difficult laws enacted specifically to make it difficult for foreign investors who were seen then as the forces behind what Harare saw as attempts to topple the man seen across Africa as a liberator, but viewed as one of the worst dictators in the West.
But Mnangagwa’s new regime has promised to open up the country to investment including mines, sparking a flurry of hope for the industry.
Last week, researchers at the London-based Equities Development Limited (ED) said the exit of Zimbabwe’s longtime ruler heralded a positive turn for the country’s mining industry,
ED, which tracks counters quoted on the London Stock Exchange’s Alternative Investments Markets (AIM), has noted that the high risk factors associated with the ex-president’s regime would most likely improve.
In its brief dispatch to clients, the advisory firm gave an investment case for the AIM-quoted Vast Resources, which controls 25 percent shareholding in the Zimbabwe-based Pickstone-Peerless gold mine and 100 percent shareholding in Manaila polymetallic mine in Romania. Zimbabwe’s mining sector underpins the country’s economic performance.
Industry data indicates that export dollars from the mining sector accounted for half of total receipts generated by the country in the past nine years, with 145 000 workers directly and indirectly benefiting from the resources sector.
The mining industry has been riding on aggressive expansion at the country’s three platinum mines, which reorganised after being ravaged by hyperinflation in 2008. The mines brushed aside the threats of expropriation and harsh taxes to build the base on which government says could generate US$2,6 billion in mineral exports this year. Total export revenue has been averaging about US$2 billion in the past five years.
But the industry has failed to reach its full potential due to a plethora of problems, among them a power supply crisis during much of Mugabe’s 37-year long grip on power; a punitive tax regime; and investor fatigue caused by unfriendly laws imposed on investors by the ex-leader who relinquished power three weeks ago following days of a standoff with the military.
The Chamber of Mines of Zimbabwe says the country’s 800 mines have capacity to earn US$18 billion per annum.
This represents about a tenth of the sector’s full potential and translates to a loss of potential revenue amounting to US$16 billion annually, or US$144 billion in eight years.
However, ED’s analysis of the post Mugabe economic and political climate indicating that there was a silver lining on the mining industry.
“We view the end of the Mugabe regime as positive for the mining sector, as it will help to shrug off the heavy risk discount attached to Zimbabwe assets,” it said in its commentary.

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President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa’s government faces a herculean task to restore economic and political relations between Zimbabwe and its erstwhile coloniser, the United Kingdom.
Trade relations between the two countries are at an all-time low.
In the 10 months to October this year Zimbabwe imported goods worth $100 million from the UK and exported products valued at a paltry $1,175 million to the former world super power, according to figures from the Zimbabwe National Statistics Agency.
For a country that imports more than 50 percent of its food and spent about $625 billion in imports last year alone, Zimbabwe is barely scratching the surface on what it can gain by increasing trade with the UK.
The two countries enjoyed cordial relations in the two decades after Zimbabwe’s independence in 1980, but things came to a head at the turn of the millennium when the southern African country embarked on a controversial land reform programme to address colonial land imbalances.
The UK — together with the European Union — suspended direct financial aid to Zimbabwe citing human rights abuses by former president Robert Mugabe’s ZANU-PF-led government.
Several British companies such as Tesco, BP and Shell and Waitrose, among others, stopped trading with Zimbabwe — sparking a diplomatic tiff between London and Harare.
Britain’s Foreign Secretary Boris Johnson has, however, hinted that his country was ready to offer support to Zimbabwe’s new government as long as Mnangagwa lives up to his promises of crucial socio-economic reforms.
“Recent events in Zimbabwe offer a moment of hope for the country and its people. This is a time to look to the future and to make clear that Britain shares the common vision of a prosperous, peaceful and democratic Zimbabwe,” he said. Nonetheless, market watchers said the southern African country has to prove itself before trade with Britain starts to grow again.
“If Zimbabwe had kept pace with African average growth since 1998, it would produce three times its current output,” economic analyst Francis Mukora opined.
“To realise its potential government needs to do more to improve the business environment. Investors are keen to support empowerment, but need assurances that their assets are secure, and that profits can be repatriated,” he said, adding that the promised clarification of the indigenisation policy is welcome and if handled properly it could help attract investment.
Philip Murphy, director of the Institute of Commonwealth Studies at the University of London, said Zimbabwe’s decision to engage the UK to be readmitted to the Commonwealth, as the new government attempts to burnish its international reputation, was a step in the right direction.
“It doesn’t involve them in any real commitments except agreeing to the principles of the Commonwealth. For a lot of States, it’s a kitemark of respectability,” he said.
Commonwealth membership brings both economic and political support.
For example, the Commonwealth secretariat assists member States with election monitoring, and there are immigration privileges to the UK.
Zimbabwe hopes that the membership would open the way to more trade and investment, especially loans.
Commonwealth countries — most but not all of which were once British colonies ­— each have an equal say at the heads of government meetings, which takes place every two to three years.
The 52 Commonwealth States would all have to endorse an application for Zimbabwe to be readmitted. Three other members have re-entered in the past three decades— Pakistan in 1989, South Africa in 1994 and Fiji in 1997.
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Zimbabwe Republic Police commissioner general Augustine Chihuri

By Phillimon Mhlanga/Freedom Mashava

EMBATTLED Zimbabwe Republic Police commissioner general Augustine Chihuri’s Harare mansion in Greystone Park yesterday caught fire after a police officer randomly opened fire at the premises.
The top cop is, however, believed to have long stopped living in the house, having relocated to a newly constructed palatial house in the Chishawasha area on the outskirts of the capital.
The Financial Gazette crew arrived at number 47 Binton Road in Greystone Park, Chihuri’s residence, around 1500 hours and witnessed two fire brigade vehicles and an army truck moving out of the premises.
There were also several top police officers inspecting the damage.
The Financial Gazette successfully gained entry into the premises but was asked by a police officer not to proceed to mansion which sits on a vast estate.
Among the top police officers who had come to assess the damage were deputy commissioners general, Innocent Matibiri and Godwin Matanga.
A neighbour who visited Chihuri’s mansion told The Financial Gazette: “An armed police officer who guards the police commissioner general tried to set the house on fire by opening fire randomly. Luckily there was no one nearby, otherwise lives could have been lost. We really don’t know what the motive was. Fire started in a few rooms, destroying property but luckily the fire brigade and the army responded quickly.”
Another neighbour said: “There was a mystery shooting by one police officer manning the commissioner general’s house and that caused the fire which destroyed some rooms. As you can see the fire brigade and the army responded quickly.”
The army, which forced former President Robert Mugabe to resign after a row over dismissal of then vice president, Emmerson Mnangagwa, are currently involved in police activities.
Mnangagwa replaced Mugabe as president on November 24, capping a month of unprecedented political upheaval in the country.
Police spokesperson Charity Charamba could not be reached for comment. Her phone continuously went unanswered.
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Chihuri’s residence at number 47 Binton Road in Greystone Park

ZIMBABWE’S Finance and Economic Planning Minister, Patrick Chinamasa (right) shakes hands with China’s ambassador to Zimbabwe, Huang Ping (left), following the signing of loan and grant agreements amounting to US$218 million in Harare on Wednesday. — Picture By Freedom Mashava

Shame Makoshori/Phillimon Mhlanga

CHINA yesterday became the first global power to offer financial support to President Emmerson Mnangagwa’s new administration, unveiling US$218 million in grants and loans and committing more funding as the international community starts to engage with a post-Mugabe Zimbabwe.
Announcing the deal, Zimbabwe’s Finance and Economic Planning Minister Patrick Chinamasa signaled that the country’s new administration, led by the sinophile Mnangagwa, was looking to pursue a China-inspired economic development plan.
The Chinese model’s key characteristics include robust State involvement in key sectors of what remains an essentially capitalist economy, led by a strong ruling party and often at the expense of political liberalisation.
“We look forward to China in terms of our development plan,” Chinamasa told reporters. “They have taken about 300 million people out of poverty, and we have no choice but to look to them in our development plan. At this point, China is the second largest economy in the world after the United States of America.”
“They have phenomenal growth rates, averaging seven to eight percent in the past 30 years. It is a model we should look to. They are the only source of infrastructure financing on the African continent. They have supported infrastructure projects in Ethiopia, Kenya, the Democratic Republic of Congo and Cote d’Ivoire,” the Finance Minister said.
Mnangagwa, a former vice president and long-term close ally of former president Robert Mugabe, succeeded Zimbabwe’s founding leader on November 24.
Mugabe, 93, had resigned on November 21 after the military took over his government a week earlier, ending a tense showdown with military generals and bringing the curtain down on his 37-year rule.
Zimbabwe’s ally China immediately embraced Mnangagwa’s administration, with President Xi Jinping sending a special envoy to Harare within days of his inauguration. Former coloniser Britain, whose Africa minister was in Harare shortly after Mugabe’s exit, has offered support and rapprochement after more than a decade of frosty ties following the Zimbabwe government’s oft-violent seizure of white-owned farms to resettle landless blacks.
Resource-rich Zimbabwe has gone through an extended economic crisis, but is widely acknowledged as one of Africa’s most promising economies.
Mnangagwa’s ascent has renewed international interest in Zimbabwe, especially after he promised to reform and break away from his predecessors policies, which have been blamed for the country’s economic woes and isolation by key powers.
While China has provided succour to Zimbabwe after the southern African country was frozen out of Western-dominated multilateral financial institutions, Beijing had itself grown impatient with Harare’s inability to service loans reported to amount to US$1,7 billion, extended since 2000.
However, on Wednesday, China indicated its intentions to reset ties with Mnangagwa’s administration.
Chinamasa and China’s ambassador to the country, Huang Ping, signed a US$153 million loan agreement for the upgrade of Harare’s international airport and a US$50 million grant for the construction of a new Parliament building on the outskirts of the capital. Another US$15 million grant was also signed for the upgrade of a high performance computing centre at the University of Zimbabwe.
“The Chinese government has committed to assist our good friends through thick and thin,” Huang told reporters during the signing ceremony, at the Finance Ministry’s offices in Harare on Wednesday.

President Emmerson Mnangagwa

“We will continue to assist the Government of Zimbabwe’s economic development plans, and more deals will be signed.”
China’s commitment to Zimbabwe is despite the country accumulating debt arrears to Beijing.
Yesterday, Chinamasa told The Financial Gazette yesterday that Harare had defaulted on Chinese debt about two years ago.
“We have run into difficulties,” Chinamasa told The Financial Gazette.
“We have not been able to service our debts in the past one or two years. This is where our friendship with China comes in. We are happy that the Chinese understand our difficulties. This is why we call them all-weather friends. With the Chinese, the umbrella is always there, whether it is raining or not. But we want to honour our debts,” said Chinamasa, who presents his first budget under Mnangagwa’s government this afternoon.
He said the 2018 National Budget would “show that we are back and we mean business”.
“We want to honour our debts, not only to China, but to the rest of the world,” Chinamasa told The Financial Gazette.
The US$153 million airport upgrade deal to expand the terminal building, rehabilitate the runway, install a new communication system and satellite station as well as refurbish the fire station has a seven-year grace period within its 20 year tenure, and a two percent interest rate.
The deals signed yesterday were agreed by Mugabe and Xi in December 2015, during the Chinese leader’s visit to Zimbabwe.
Last year, Zimbabwe completed the US$150 million Chinese-funded expansion of the Victoria Falls International Airport and is on the verge of completing the US$553 million Kariba south power plant, largely bankrolled by Beijing.
The first phase of the power plant upgrade, to add 300MW to Zimbabwe’s grid, was due to be commissioned this month.
“We have completed the Victoria Falls International Airport, and we have seen a quantum leap in arrivals, and hotels are full. We want to replicate this in Harare,” Chinamasa told reporters.
Zimbabwe has struggled to access funding for its capital-starved economy, mainly due to its inability to service old loans. The country has, however, recently undertaken to implement an arrears clearance plan with global lenders and last year paid off US$110 million to clear its arrears with the International Monetary Fund (IMF).
The plan, which did not enjoy the categorical support of Mugabe, had been put on ice, but now appears to have been revived under Mnangagwa and Chinamasa’s direction.
Under a deal agreed two years ago in Lima, Peru, Zimbabwe undertook to clear arrears to the IMF (US$110 million), WB (US$1,15 billion) and AfDB (US$601 million) by the end of April last year.
In October, the IMF’s Zimbabwe country manager, Christian Beddies, told The Financial Gazette that after a promising start, the strategy had run into problems.
“Nothing has changed since Lima,” Beddies said.
Yesterday, Chinamasa said the debt repayment plan to be unveiled in today’s budget would be part of a broad plan to revive the country’s failing economy and rebuild struggling industry.
Thirty percent of these are teetering on the brink of collapse, according to the Confederation of Zimbabwe Industries.
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Finance Minister Patrick Chinamasa

GOVERNMENT has removed the local ownership requirement for foreign investment into the country, save for the diamond and platinum sectors, Finance Minister Patrick Chinamasa announced on Thursday, in a major policy change by the new administration.

President Emmerson Mnangagwa, who has made job creation one of his priorities, had telegraphed his radical policy shift by dropping the indigenisation portfolio when he named his Cabinet last week.

The indigenisation law, which requires 51 percent control by locals in the major sectors of the economy, has been blamed for Zimbabwe’s inability to attract significant foreign investment and create empolyment. The country has an estimated 90 percent jobless rate.

Chinamasa, presenting the 2018 national budget under President Emmerson Mnangagwa’s new government, said the law would be relaxed through an amendment soon to be tabled in Parliament.

Government would amend the Indigenisation and Economic Empowerment Act through the Finance Bill carrying the 2018 budget, with the changes coming into effect from April 2018

“Diamonds and platinum are the only sub-sectors designated as extractive. Accordingly, the proposed amendments will confine the 51/49 indigenisation threshold to only the two minerals,” Chinamasa said.

“The 51/49 threshold will not apply to the rest of the extractive sector, nor will it apply to the other sectors of the economy, which will be open to any investor regardless of nationality.”

Announcing a $5,8 billion 2018 budget themed: “A new economic order”, Chinamasa declared that Zimbabwe was open for business.

“Zimbabwe is now open for business, and is putting in place supportive measures that seek to rebuild confidence and compete for investment, and enhance the economy’s competitiveness,” he said.

Projecting a 4,5 percent gross domestic product (GDP) expansion in 2018, up from a forecast 3,7 percent his year, to be driven by agriculture and a raft of reforms, Chinamasa expressed concern over a $1,7 billion budget deficit for 2017, abou 11 percent of GDP. He expects the deficit to narrow to $700 million in 2018, about 4 percent of GDP, with forecast revenues of $5,1 billion.

Chinamasa, whose austerity measures were frustrated by former President Robert Mugabe, announced spending curbs that would see government maintaining a freeze on new recruitment to fill vacant posts and the retirement of officers aged above 65 years. Government will also introduce a voluntary retirement scheme.

He also said government would press on with the abolition of nearly 4,000 youth officer positions, saving nearly $20 million annually in the process.

Chinamasa said the reduction of ministries from 27 to the current 21 would also result in the reduction of government staff.

Revealing that government had requests amounting to $140 million for senior officials’ vehicles, Chinamasa announced new restrictions on car allocations. Permanent secretaries and commissioners of constitutional bodies would now have one personal issue vehicle, while principal directors, directors and deputy directors would procure vehicles through loan schemes.

Government has also revised rules on foreign travel, limiting trips and delegation sizes.

“Experience has shown that Zimbabwe delegations to regional and international fora being among the largest from the region at such gatherings,” Chinamasa said.

“In this regard, the following requirements now apply: Strict reduction in the size of delegations to levels that are absolutely necessary and, where there is diplomatic presence, taking advantage of this to realise representation in outside meetings.”

Zimbabwe’s diplomatic missions, which cost an average $65 million annually, will also be reduced, Chinamasa said.

He also promised parastatal reforms, with those which cannot be rehabilitated being privatised or shut down.

2018 National Budget Highlights

• 4,5 percent GDP growth projected
• Inflation to average 3 percent throughout 2018
• Total 2018 revenues, minus statutory and retention funds, at $5,071 billion
• Total expenditure $5,743 billion
• Recurrent expenditure at $4,6 billion, while the capital budget is $1,2 billion, or 21 percent
• Budget deficit projected at $672 million, about 4 percent of GDP, down from $1,7 billion in 2017
• Majority local ownership scrapped for most sectors, except for diamond and platinum sectors
• 15 percent tax on unprocessed platinum deferred to January 2019
• When implemented, platinum export tax to be reduced to between 1 percent and 5 percent
• Spending cuts will restrict foreign travel, delegation size, fuel and vehicle allocation for senior officials
• Diplomatic missions, which cost $65 million annually, to be reduced
• $3,3 billion, or 65 percent of 2018 revenues, to go towards wage bill
• A provision of $176 million for 2017 civil servants’ bonus payments, to be paid in phases next year
• Nearly 4,000 youth officer posts abolished, saving $19,3 million annually
• $132,2 million allocated for 2018 election, much lower than ZEC’s $274 million budget
• Power projects exempted from corporate tax for 5 years, after which a 15 percent tax rate applies

President Emmerson Mnangagwa

AT least 630 of the country’s 800 mines are projecting strong growth in 2018, riding on anticipated policy reforms under President Emmerson Mnangagwa’s new administration and aggressive expansion by “bullish” investors, according to a new Chamber of Mines of Zimbabwe (CoMZ) report.
Utilisation of installed plant capacity in the industry would rise to 79 percent next year in tandem with higher activity, from 71 percent this year, the 2017 State of the Mining Industry Survey released last week said.
Positive signals from the new administration have inspired renewed impetus to revisit frozen projects even as price related headwinds continue to ravage global markets.
And operators are seeing most mines returning to profit in 2018, as the industry turns a fresh page following decades of State-inflicted losses and closures amplified by factors including high power tariffs and takeover threats.
Ten of the 12 variables measured under the mining business confidence index projected growth in 2018, with 90 percent of sector leaders (about 630 respondents) anticipating positive prospects in the post Robert Mugabe era.
“The new index shows that respondents are bullish about the prospects of the mining industry in 2018 given the new political dispensation, with the majority of the respondents (90 percent) optimistic that the new government will endeavor to resolve all legislative and policy bottlenecks affecting the mining industry,” the CoMZ said.
Leading analysts also projected positive spinoffs after the swift changes in government.
“The profitability prospects confidence indicator of +18 percent, compared to +11 recorded for 2017, indicates strong optimism of profitability of mining businesses in 2018,” said Albert Makochekanwa, chairman of the economics department at the University of Zimbabwe.
Survey consultants had to re-interview respondents in the aftermath of dramatic developments on the political front late November, when Zimbabwe’s military drove battle tanks to ex-president Mugabe’s mansion, deployed artillery to strategic points and asked their long time commander-in-chief to step down.
In the political drama that followed, the 93-year old ruler capitulated in a shock decision, sparking widespread celebrations countrywide.
The country has now been repositioning to repair its shattered industries, mines and agricultural facilities, as the next revolution.
Mugabe had been blamed for the grinding poverty afflicting 70 percent of the country’s 16 million people.
Mnangagwa, generally seen as a pro business reformer, took his oath as new President late November and immediately promised to attract back elusive capital, reform taxes and fees, and revisit harsh laws that had undermined business.
The mining sector, considered to be one of four sectors to drive economic recovery, is currently facing problems in the payment of foreign suppliers of critical materials that have hampered production.
This is despite the fact that mining is currently the single largest foreign currency earner in the country.
The survey acknowledged that the cash-strapped country was losing substantial amounts in potential revenue and that this boiled down to poor investment policies.
Mining experts said the hostile environment had been fostered by a punitive tax regime, unfriendly legislation that proscribed foreigners from controlling their investments and high royalties and fees.

Minister of Mines, Winston Chitando

These have combined with uncertainty created by the State’s threats to seize foreign controlled mining firms to destabilise the sector.
“All respondents indicated that the new government position on compliance with indigenisation law (spending 75 percent of revenues locally) was a positive move and brought confidence in the sector,” the report said.
“However, all respondents expressed concern over delays in amending the law to align with the new policy position. Ninety percent of the respondents were of the view that the equity threshold should be reduced to realistic levels,” said the report.
Mnangagwa has already been applauded for drafting in former CoMZ president, Winston Chitando, as Mines and Mining Development Minister to help him implement reforms that he fought for as a miner.
Last week, Chitando reiterated the President’s resolve.
“The mining industry contributes around 13 percent of gross domestic product and about 68 percent of total exports. This is encouraging, but we would like to create a more enabling environment for the sector to thrive and provide a positive return on investment,” Chitando told mining executives at the launch of the survey.
Analysts said the industry was likely to give him an ear.
Indications were that mines had jumped on the bandwagon of the revolution, promising leaps in growth prospects through expansion programmes expected to cost US$392 million next year, after sinking US$211 million this year.
With Mugabe out of the picture, the mining industry restated previous growth forecasts, telling survey consultants that they were sharpening their drill bits and repositioning dynamites to blast away more ore, in a rare show of confidence.
“These are exciting times for Zimbabwe and for Prospect,” said Prospect Resources chairman, Hugh Warne, whose firm has invested in lithium mining.
“We have seen a peaceful transition of leadership in Zimbabwe and we have all read the positive remarks that the new President has made with respect to welcoming foreign investment. Prospect is well placed to participate and contribute to the rejuvenation of Zimbabwe,” he said.
“We are ready to make out contribution to the growth of the Zimbabwean economy,” Batisai Manhando, managing director at the Zimbabwe Stock Exchange listed Bindura Nickel Corporation (BNC), told financial analysts last week.
After deploying US$22 million in expansion projects this year, gold mines projected fresh commitments worth US$100 million next year and to increase output by between 20 and 100 percent.
The diamonds subsector, known for its lack of transparency and which authorities believe to have siphoned out of the country at least US$14 billion, would inject US$100 million as it kick starts new projects following radical policy shifts.
This would be a rise from US$65 million this year, which would increase output to 4,6 million carats, from 2,6 million carats this year, the CoMZ said.
The chromium industry spent in excess of US$4,4 million in expansion projects in 2017, which is projected to rise to US$13 million next year, while BNC is to spend US$2,1 million on expansion projects next year, after sinking US$643 634 this year.
Still, the pace and scale of the growth projected by mines would hinge on whether banks would perceive the sector’s potential in the same way the mining executives see it, and whether Mnangagwa is ready to implement the reforms as promised, and as demanded by investors during the lockdown decade charaterised by project freezes and capital flight.
However, a significant number of mines still believed political risk remains high, while lenders remain sceptical about extending loans until the dust settles.
Exactly when the dust settles will depend on the speed at which government springs into action.
Perception on risk is still negative, with 30 percent of the mining sector saying ‘political risk will remain high in 2018, while 10 percent were of the view that government should do more in addressing industry (policy) concerns”.
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Zimbabwe Republic Police commissioner general Augustine Chihuri

THE Zimbabwe Republic Police (ZRP) collected $38,28 million in fees and fines in the nine months to September 2017, a revenue statement by the Ministry of Home Affairs and Culture has shown.
Police officials have always been cagey about how much they collect on the roads and, three years ago, reacted angrily to former tax chief Gershem Pasi’s estimation that the ZRP was collecting between $3 million and $7 million monthly. In June, former Home Affairs Minister Ignatius Chombo told Parliament the figure was between $12 million and $15 million annually.
The ministry’s statement, signed by permanent secretary Melusi Matshiya on December 6, 2017, however, shows police on course to collect $51 million by year-end.
For the first time, Finance Minister Patrick Chinamasa incorporated income from statutory and retention funds, such as ZRP fines, in the National Budget statement.
The minister has promised greater transparency in the management of the retention funds, created during the hyperinflation phase when government allowed certain departments to retain cash and avoid the rapid loss of value that took place when the money was remitted to Treasury for subsequent disbursement.
The statutory and retention funds collect almost $1 billion annually.
The police’s aggressive revenue-collection methods, marked by a pervasive presence on the roads, have irked the travelling public.
The police have also been accused of hurting key economic sectors such as tourism, transport and distribution through the maintenance of too many road blocks.
Police presence has been dramatically scaled down, however, since mid November when the military took over key points on the country’s major highways as part of its intervention that eventually forced former President Robert Mugabe out of office.
Consistently ranked as one of the most corrupt public institutions in the country, the ZRP is currently being shadowed by army details. Obert Mpofu, the minister in charge of police, has undertaken to reduce the number of police roadblocks, while acting against corruption in the force.
A revenue statement by the ministry, carried in the 2018 budget estimates of expenditure, shows that the ZRP is on course to collect $51 million this year. The figure is expected to come down to $41 million in 2018, according to the statement.
Treasury data also shows that the Zimbabwe National Road Fund (ZINARA), which has also been plagued by allegations of abuse and fraud, collected $203 million between January and September 2017. ZINARA has a $285 million year-end target. The fund is expected to raise $300 million in 2018. A fund created to pay off fuel supply debts owed by the now defunct National Oil Company of Zimbabwe (NOCZIM), financed through a levy on petrol and diesel sales, had raised $26,4 million in the nine months to September this year.
The fund is expected to raise $35 million in the full year to December, and the same amount in 2018. Motorists pay 6,7 cents for petrol and 1,3 cents for diesel per litre towards the debt redemption levy, which was introduced more than a decade ago.
The fund is estimated to have collected more than $300 million since dollarisation in 2009, but is somehow yet to fully pay off the NOCZIM debt.
An August 2010 policy document prepared by the World Bank in close consultation with government put the debt at $158 million, with $93 million of that due to foreign suppliers.
The Number Plates Revolving Fund, financed through the sale of number plates to motorists, raised $11 million between January and September 2017. The fund is projected to collect $14,1 million this year and $14,8 million in 2018. It costs about $7 million to produce the plates, annually.
Zimbabwean motorists pay $160 for number plates, significantly higher than their regional peers who pay an average $20. Government, which has in the past used the number plate fund to bail out Air Zimbabwe, has undertaken to reduce the costs of acquiring number plates.
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ZIMRA acting Commissioner General (left) Happiness Kuzvinzwa 

ZIMBABWE’S tax collector, the Zimbabwe Revenue Authority (ZIMRA) has entered into an agreement with all regulatory authorities in the country to gain access into their databases.
ZIMRA’s acting commissioner general, Happias Kuzvinzwa said the synergy will see regulatory bodies submitting names of their newly registered clients to the tax collection agency. ZIMRA will then make follow ups on these clients.
“As we try to collect more revenue, we have entered into an arrangement with regulatory authorities in the country for us to get information of those who have registered so that we can make follow ups on tax obligations. We know they are registered somewhere, so this arrangement will help us collect more,” Kuzvinzwa said.
Kuzvinzwa also said ZIMRA has registered about 19 000 small to medium enterprises between January and November this year as part of efforts to broaden the tax base adding that the businesses have contributed about $15 million.
ZIMRA has also intensified tax audits and these are going as far back as six years.
The tax collector has also heightened efforts to force companies to fiscalise, a move which is expected to assist in curbing transit fraud, smuggling and illegal dumping of goods on the Zimbabwe market.
Zimbabwe’s economy has become largely informal, making it difficult for ZIMRA to collect taxes.
Many companies have closed and many more continue to shut down due to operational challenges, reducing the tax base.
In the first half of the year, gross collections stood at $1,789 billion, some eight percent above the $1,656 billion target.
Zimbabwe is targeting $3,7 billion revenue inflows for year end, but ZIMRA said with increased levels of compliance, revenues have the potential to reach $6 billion annually.
The bulk of Zimbabwe’s revenue collections come from individual tax, followed by excise duty.
Companies are the highest defaulters accounting for a huge chunk of the $3,12 billion tax debt as at June 30, 2017.

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Finance and Economic Development, Minister Patrick Chinamasa

THE $400 million National Railways of Zimbabwe (NRZ) recapitalisation deal will be finalised in the first quarter of 2018, Finance and Economic Planning Minister Patrick Chinamasa has said.
A consortium of non-resident Zimbabwean professionals, the Diaspora Infrastructure Development Group (DIDG) partnered South Africa’s Transnet to win the contract to revive the NRZ in August this year. The deal received Cabinet approval in October.
“Following government approval, negotiations to recapitalise NRZ, in partnership with a Consortium of Diaspora Infrastructure Development Group (DIDG) and Transnet of South Africa, are at an advanced stage,” Chinamasa told Parliament during his 2018 national budget presentation last week.
“The ‘Framework Agreement’ has been finalised, paving way for the development of a Model Agreement, which will be submitted to Cabinet for approval, with all the processes expected to be concluded by the first quarter of 2018.”
The recapitalisation of the NRZ will restore the key economic role of rail transport, an affordable mode for bulk transportation which eases the cost of doing business and, hence, domestic production competitiveness, Chinamasa added.
“The recapitalisation programme targets refurbishment and replacement of NRZ rolling stock, signaling, ICT and track infrastructure, among others, under a joint venture partnership model estimated to cost US$408 million,” the Finance Minister said.
“This will raise NRZ’s capacity to move cargo from the current 3,8 million tonnes to its peak of 18 million tonnes per annum. Meanwhile, a budget provision of US$10 million has been set aside to cater for required emergency works on the rail network.”
Meanwhile, the Johannesburg-based DIDG this week donated sanitation chemicals, equipment and promotional material worth thousands of dollars towards the typhoid awareness and environmental health action initiative.
Speaking at the handover event held at The Immaculate Conception & Our Lady of Lourdes church in Harare’s Highfield suburb on Tuesday, DIDG’s chief financial officer Washington Mashanda said the group would also consider investing in water and sanitation infrastructure.
“We should never underestimate the importance of sanitation, and hygiene in our communities. As DIDG it is our firm belief that good health and sanitation services are an essential part of the country’s critical infrastructure,” Mashanda said.
“Adequate drinking water, wastewater management, sanitation, and hygiene are all essential ingredients to ensure a sustainable human health system. DIDG’s investment focus includes targeting investments that provide sustainable solutions for the country and improve the capacity of the country to deliver safe and reliable clean water supply that is accessible all the time. As DIDG, we are exploring various projects aimed at building a preventive and efficient water infrastructure which is critical for ensuring the effective functioning of the economy while protecting its citizens from such water-borne diseases like typhoid.”
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Reserve Bank of Zimbabwe, deputy governor, Kupukile Mlambo

FUNDS held by Zimbabweans in offshore banks rose to US$1 billion last year, having declined to US$300 million four years ago, following escalating political risk and uncertainty at home, Reserve Bank of Zimbabwe (RBZ) deputy governor, Kupukile Mlambo, has disclosed.
This amount was exclusive of billions of United States dollars, now subject of a government ultimatum for repatriation, spirited into safe havens through foreign currency externalisation.
Mlambo, who reinforced the RBZ’s warning that authorities must tackle the slide in confidence, said the funds held offshore by Zimbabweans reflected lack of confidence in the local economy.
Savings held by Zimbabweans in offshore banks were estimated at about US$800 million on dollarisation in 2009, the central bank deputy chief said.
During the period when the country’s inflation rates dropped to less than one percent in 2009, from the record breaking levels of 500 billion percent in December 2008, Zimbabweans repatriated their savings back home after confidence had been restored by economic and political stability.
As a result, funds held in offshore accounts dropped to US$300 million in 2013, said Mlambo, noting that this was also in tandem with double digit economic growth achieved at the time.
He said by the end of last year, deposits in foreign accounts had crept back to about US$1 billion.
In his address to mining industry executives on Friday, Mlambo blamed mounting economic headwinds characterised by the banking sector fragility, as well as the painful liquidity crisis that has heightened fears of a return to the 2008 debilitating crisis.
“Everything comes down to confidence,” Mlambo said in his comments at the launch of the 2017 State of the Mining Industry Survey report on Friday.
“If confidence returns on the market, foreign currency shortages will disappear. Bank queues worry us, but what we are facing is a shortage of foreign currency, not a shortage of cash. Our US dollar in Zimbabwe is (not) used for importing equipment, but it is also used for buying tomatoes on the roadside,” he said.
“The amount of money held by Zimbabweans in foreign banks was about US$800 million in 2009. But by 2016, it had gone back to just under US$1billion. This was the time when we were beginning to have foreign currency shortages,” he said.
The situation highlights the extent of the challenges that President Emmerson Mnangagwa’s new administration faces.
The mining sector survey said while Mnangagwa’s unexpected rise to power had helped calm market fears of a deteriorating economic and political crisis going into 2018, pockets of uncertainty remained.
The Chamber of Mines of Zimbabwe (CoMZ) called on the new administration to swiftly address risk factors to bolster the industry’s recovery prospects.
Central bank authorities have refused to acknowledge that the banking system has been paralysed by lack of confidence.
But scenes of long queues at the doorsteps of every banking hall point to a deepening crisis.
Thousands of depositors, including pensioners, have had to sleep in banking queues countrywide to access their savings during a crisis that intensified at the end of 2016, and is also blamed on foreign currency externalisation.
Last year, the RBZ said about US$1,8 billion was being externalised every year, although other reports placed the figure at US$2,4 billion per annum.
Banking money offshore is equivalent to surrendering vital liquidity to the countries of recipient banks.
The US$700 million reported to have been moved offshore represents almost twice the US$392 million in fresh capital that the mining industry said it requires to stimulate exports and unlock the vital foreign currency to rebuild the economy.
Savings have virtually dried up and import cover which has deteriorated to perilous levels of less than a month was below the recommended three months, according to the International Monetary Fund.
This has placed the country at risk of failing to import vital requirements including fuel and medicine. Government has given individuals and organisations that have externalised foreign currency a three month window to return the funds or face prosecution.
But those who have not been able to open offshore accounts still prefer not to deposit their savings in banks but keep it at home.
This has fuelled the liquidity crisis, whose genesis can be traced to the 2007/2008 financial crisis.
When banks closed, savings were trapped inside, and people failed to access them.
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New Zimbabwe Defence Forces Commander, General Philip Valerio Sibanda

THE Zimbabwe Defence Forces (ZDF) on Monday brought to finality Operation Restore Legacy which began on November 13 handing over all policing duties to the Zimbabwe Republic Police (ZRP). 

Addressing a press conference before being appointed Zimbabwe Defence Forces Commander later in the day at Josiah Magama Tongogara Barracks,  General Philip Valerio Sibanda said Operation Restore Legacy had achieved its purpose to apprehend criminals around the former President Mugabe and there is now change of guard in the country’s leadership. Before his appointment, Sibanda was Zimbabwe National Army Lieutenant.
The operation  had been launched by the security services “to remove criminals that had surrounded  former president (Robert Mugabe) resulting in anxiety and despondency amongst our people.”
“While some of the individuals have been accounted for, others skipped the country. This notwithstanding, the objectives of the operation have to a large extent been achieved. Besides the above-mentioned objective, Operation Restore Legacy has had wider implications on the political, economic and social activities of our people. In this regard a new political dispensation has been ushered-in to take Zimbabwe into its rightful place with SADC and the world at large,” he said.

“Today as the defence forces handover all normal day to day policing duties to the Zimbabwe Republic Police, we urge all our citizens to allow for a smooth transition. Members of the public are urged to respect, support and cooperate with the police as they execute their constitutional mandate. “On the other hand, the Zimbabwe Republic Police are expected to fully take over their responsibility and perform according to their constitutional mandate and Client Service Charter,” said Sibanda.

Constantino  Guveya Chiwenga

ZIMBABWE Defence Forces (ZDF) commander Constantino Guveya Chiwenga and Zimbabwe Republic Police commissioner general Augustine Chihuri have retired.

Chihuri went on leave last Friday pending his retirement while Chiwenga has retired pending redeployment, a move that is seen as confirming reports that he will be appointed the country’s vice president this week

According to a statement by Chief Secretary to the President and Cabinet, Mischeck Sibanda, Godwin Matanda will take-over from Chihuri while Valerio Sibanda is the new ZDF commander.

Sibanda said Chihuri began his leave on 15 December 2017 pending his retirement from the force.

Ambassador Major General Edzai Absolom Chimonyo has been promoted to the rank of Lieutenant General and assumes the post of Commander, Zimbabwe National Army.

Before this latest promotion and appointment he was on secondment to the then Minister of Foreign Affairs as Zimbabwe’s Ambassador to Tanzania.

Air Vice Marshal Elson Moyo has been promoted to the rank of Air Marshal and assumes the post of commander, Airforce of Zimbabwe. Before this latest promotion and appointment, he was chief of staff, joint Operations and Plans at the Zimbabwe Defence Force headquarters.

Mnangagwa also appointed four Brigadier Generals to the rank of Major Generals. The four are David Sigauke, John Chris Mupande, Paul Chima and Hlanganani Dube.  Air Commodore Jasper Garikayi Marangwanda was promoted to the rank of Air Vice Marshal.

Foreigners have been net buyers in all of the trading sessions during the week.

THE Zimbabwe Stock Exchange (ZSE) continued on a free fall this week, on the back of losses in some heavyweights, despite signs of returning foreign interest in local stocks.
The Zimbabwe Defence Forces’ “operation restore legacy”, which was declared on November 15 and ended on Monday this week, effectively ended a ZSE bull run which persisted for almost a year, running from November last year and ending on November 14.
During the 12 months leading up to November 14, the ZSE industrial index gained 326,76 percent and was the best performing equities index globally.
However, since November 14, the market has been in free fall, losing close to $6 billion in market capitalisation. The losses persisted during this past week from Thursday last week up to yesterday.
The losses seen in the local stock market since November 14 are being viewed by analysts and commentators as overdue normalisation. The losses have been attributed to improved confidence in the broader economy.
“The main driver of the just ended bull run was currency uncertainty and inflationary fears. The end of the bull run can only mean market optimism,” an analyst said.
The benchmark industrial index lost 4,22 percent during the week to close yesterday at 318,43 points. The losses were driven by losses in selected blue chips. Delta lost 0,17 percent week on week to close yesterday at $1,4975.
Econet shed 13,78 percent during the week to trade at $0,86. British American Tobacco shed one percent to settle at $35,7005 and Innscor dropped 8,02 percent to trade at $1. Old Mutual, however, added 1,02 percent during the week to trade at $4,5461.
The mining index gained a marginal 0,79 percent during the week to close yesterday at 141,47 points following gains of 2,66 percent in Bindura Nickel Corporation which closed yesterday at $0,054.
Meanwhile, foreigners were net buyers in all of the trading sessions during the week.
Foreigners have now been net buyers in three consecutive weeks. During the year, foreigners dominated the disposal of stocks. During the 10 weeks (50 trading sessions) prior to November 29, when foreign interest in local stocks seemed to have kicked in, the ZSE had only 14 sessions in which foreigners were net buyers.
In contrast, foreigners have been net buyers in 14 of the last 15 trading sessions on the ZSE.
Analysts say the renewed foreign interest in local stocks as evidenced by activity on the market over the past two weeks, has been driven by the anticipation of an improvement in the economy following the resignation of Robert Mugabe on November 21.

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President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa yesterday disclosed that government will unveil a programme of State enterprise reforms during the first quarter of next year.
In his state of the nation address, Mnangagwa said parastatals have undermined economic recovery through perennial dependence on the fiscus, with most of them failing to make meaningful contribution to the economy.
He said the firms were grappling with high overheads, inter-parastatal debts, mal-administration, under-capitalisation, corruption and lack of good corporate governance which had negatively impacted on their operations.
“Government has taken the bold decision to reform, commercialise or wind up some State enterprises and parastatals, which have been for a long time an albatross around the government’s neck owing to, inter alia, poor corporate governance, undercapitalisation, unsustainable salaries and allowances and excessive borrowing. A full programme of the reforms shall be unveiled during the first quarter of 2018,” said Mnangagwa.
“In the same vein, local authorities are expected to transform themselves into engines of economic growth and meaningfully contribute to improving the quality of life of our people.
“Government will insist on the return by local authorities to proper town planning practices and strict adherence to business and building by laws. The corrupt parcelling out of land to land barons and the construction of houses on undesignated areas and in a haphazard manner must stop.
“I exhort councils to ensure orderly settlement of people, provision of water and sanitation facilities together with other infrastructure required for decent habitation,” he said.
In 1980, Zimbabwe inherited about 20 parastatals. But the number has since increased to 107. Of this number, about 43 are commercial enterprises that operate on a cost-recovery or for profit basis.
Commercial entities include those in the energy, transport, communications and agricultural sectors, where they both provide essential public services and implement government policies.
Parastatals have over the years failed to make any meaningful contribution to the economy. They are grappling with high overheads, inter-parastatal debts, maladministration, undercapitalisation, corruption and lack of good corporate governance. These factors have negatively impacted on their operations.
Consequently, they have failed to contribute to Zimbabwe’s economic development.
Parastatals are currently contributing about 6,9 percent to gross domestic product, according to a study done by the World Bank and released this year.
The absence of effective oversight has allowed State enterprises to accumulate liabilities through extensive financial linkages and complex cross-debt, which intensify systemic fiscal risks.
Aggregate annual expenditures averaged US$3,5 billion during 2011 to 2015, according to the World Bank.
State enterprises, collectively, moved from close to the breakeven point in 2011 to reporting combined losses of just under US$340 million in 2015.
In general, the aggregate working capital position is precarious, the World Bank report said.
Twenty five of the 43 commercial State enterprises have become illiquid, with current liabilities exceeding current assets and seven are insolvent, according to the World Bank.
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