Deputy Finance Minister Terrence Mukupe

DEPUTY Finance Minister Terrence Mukupe yesterday said individuals and companies that externalised millions of dollars into safe havens are in panic mode and trying to curry favour with President Emmerson Mnangagwa to evade arrest.
“The President is inundated with calls from people who want to buy vehicles for the party (ZANU-PF) and make donations. The (ZANU-PF) conference is over; we don’t need your donations,” Mukupe told delegates attending an investment conference in Harare.
The Harare East legislator said it would be prudent for those who externalised funds “to do the right thing and return the money”.
Mnangagwa last week revealed that he has a list of companies and individuals who externalised money and assets during former president Robert Mugabe’s reign and warned he would not hesitate to expose those who defied his 90-day amnesty to repatriate the money by February next year.
“I have a list of those who took money out. I did not give the moratorium without knowledge. In March, when the moratorium ends, I will name and shame those who do not respond,” Mnangagwa told a recent ZANU-PF central committee meeting in Harare.
Statistics from the Reserve Bank of Zimbabwe show that the country lost over $1,8 billion in illicit financial inflows in the last two years, while over 280 Zimbabweans were last year cited in Panama papers for stashing funds outside the country.
Central bank governor John Mangudya has also said the repatriation of funds into Zimbabwe would vastly improve the country’s liquidity position.
“The amnesty granted by the President in respect of illegally-expatriated cash and assets is expected to increase cash availability once the funds start to flow into the economy.
“Government, through the Reserve Bank, is working on a similar amnesty to deal with cases of in-country hoarding of cash at homes. Hoarding of cash is counter-productive as it reduces the circulation of money. Hoarding has a cash-haemorrhaging effect on the economy,” he said.
Economist Ashok Chakravarti called for an investigation into the externalisation of funds, after it emerged that $5 billion could have been siphoned out of the country since dollarisation in 2009.
“There is need for an inquiry into what has been happening in the last few years. So many resources have gone out of the country. It cannot just be swept under the carpet. It has to be looked at carefully and addressed,” said Chakravarti.
Zimbabwe is currently experiencing acute cash shortages with government blaming unscrupulous individuals and corporates for not banking their money to allow for circulation.
Market analysts, however, blame excessive government expenditure, lack of confidence and low exports for the cash crisis.

newsdesk@fingaz.co.zw

Augustine Chihuri, who led the county’s police force since 1994 began his leave on December 15, pending retirement from the service.

ACTING commissioner general of police Godwin Matanga yesterday admitted that there was rampant corruption within the police force and pledged to resolve the problem.
Matanga was appointed to the post of acting commissioner general on Monday following the retirement of Augustine Chihuri, who led the county’s police force since 1994. Zimbabwe Defence Forces (ZDF) commander, General Phillip Valerio Sibanda issued a statement on Monday announcing that the former commissioner general of police had “started his leave on December 15, pending his retirement from the service”.
Matanga addressed officers commanding police provinces, chief staff officers and directors for the first time as acting commissioner yesterday. In his address, Matanga said the local police force has been tarnished by corruption.
“The Zimbabwe Republic Police has been tarnished through continued acts of corruption by unscrupulous elements in our midst,” said Matanga.
The former deputy commissioner general said corruption in the force has been caused by indiscipline and lack of supervision adding that the public had lost confidence in the force.
“Our challenges emanate from lack of or inadequate supervision and unbecoming actions by some of our members, which have no doubt eroded public trust, faith and confidence in the Police Service,” noted Matanga.
He pledged that the police force would do better going forward, saying measures would be put in place to deal with corruption within the organisation, and that supervisory arms such as the national force development committee could be asked to help reign in the situation.
“The Zimbabwe Republic police shall never again work in manners that will make it lose the confidence and trust of the people it serves.
“More stringent measures will be undertaken to rid the organisation of corruption. We will not hesitate to resuscitate the national force development committee and to empower the inspectorate unit to enhance supervision of police activities at all levels,” Matanga said.
Following general Sibanda’s statement on Monday announcing the end of “Operation Restore Legacy”, ZDF members have been withdrawn from policing operations. Police and the defense forces had been in joint operations since the inauguration of President Emerson Mnangagwa last month. newsdesk@fingaz.co.zw

CZI president, Sifelani Jabangwe

THE Confederation of Zimbabwe Industries (CZI) has proposed radical measures to mop up excess liquidity on the electronic Real Time Gross Settlement (RTGS) platform, while calling for more bond notes to restore transactional convenience for the public.
The country’s largest business organisation contends that it is the RTGS platform, more than the much-maligned bond note parallel currency, that is fuelling market distortions and price instability.
Zimbabwe introduced bond notes in November 2016 in a desperate bid to ease the shortage of bank notes, but $200 million worth of the parallel currency failed to solve the crisis.
In the meantime, RTGS balances have grown from between 10-15 percent of total deposits in 2014 to about 30 percent, currently.
The CZI plan, presented to President Emmerson Mnangagwa on December 11, seeks to proffer solutions to the bank note crisis, price instability and foreign currency shortages.
Zimbabwe has, since the end of 2015, experienced a foreign currency crisis, reflected in part by the shortage of bank notes in an economy which informally dollarised in 2009 after hyperinflation destroyed the country’s currency.
Lately, inflation has quickened, moving from -0,65 percent in January to 2,94 percent in November, according to official statistics.
Independent estimates put the figure significantly higher.
Analysts blame government for the resurgent inflation, which they say is largely driven by unrestrained borrowing.
Government has issued billions of dollars worth of Treasury Bills to fund its budget deficits, releasing a deluge of virtual money into the banking system.
A key measure of the CZI proposal, is a sterilisation plan meant to mop up excess liquidity and impose a cap on RTGS funds.
“One option that we might consider is a pre-announced programme of ‘quantitative squeezing’,” CZI wrote in a paper titled Short Term Stabilisation-Basket of Policy Options.
Using government’s projected 2018 funding gap of $672 million as an example, CZI proposed a formula:
“So in the example of $672 million, we have 14 months which implies we need financing of $48 million a month. Announce to the market that over the next 14 months there will be a compulsory issue of Treasury Bills of $48 million each month allocated among the banks in a predetermined fashion. We might require each bank to subscribe according to the average percentage of RTGS liquidity that the particular bank has held over the last 12 months.”
“Support this with an initial mopping up of say $300 million to 500 million to kick start the process. Enforce liquidity ratios requirement (for) banks to keep a percentage of money in the RTGS account related to total deposits to ensure that RTGS money remains tight.”
As part of the plan, government borrowing for deficit financing would be strictly on an open market basis, with banks and other players with excess funds participating freely. Government would also stop borrowing from the Reserve Bank of Zimbabwe.
On its part, the central bank would complement the sterilisation process using monetary tools such as statutory reserve requirements or liquidity ratios to manage excess liquidity.
“What the sterilisation programme outlined above achieves is a de facto cap on overall money supply. The benefit of a cap cannot be overstated. This becomes the source of market confidence. While there has been growth on RTGS, the real value of the RTGS has gone down significantly. While the value of the bond has declined, it has not declined at the rate of decline of the value of the RTGS because the bond has been capped,” CZI said.
“So what we are recommending specifically is that the cap on bond is replaced by a cap on RTGS PLUS bond and that enough bond is then released to meet the cash requirements in the economy. This solves the problem of the shortage of cash as a medium of exchange in the economy,” CZI added.
“As people withdraw bond from the banks, this will reduce the RTGS balances, further tightening monetary policy as when the bond is in someone’s pocket the money multiplier impact is not felt. In other words, cash money is much less inflationary than electronic money.”
In August, central bank governor John Mangudya announced plans to issue an additional $300 million worth of bond notes.
newsdesk@fingaz.co,zw

Constantino Chiwenga is now one of Zimbabwe’s vice presidents

PRESIDENT Emmerson Mnangagwa appointed retired army boss Constantino Chiwenga and veteran politician Kembo Mohadi as the ruling party’s vice presidents, a spokesperson said on Saturday.

The appointments paved the way for the two to ascend to similar positions in government, officials said.

Mnangagwa, who took over last month from 93-year-old Robert Mugabe after the intervention of the military, is under pressure from opposition parties and the public to implement political reforms.

Under Mugabe’s 37-year rule political space was limited, with the latter part of his reign marked by the emergence of a ZANU-PF faction aligned to his wife Grace that threatened to usurp the army’s central role in government.

Chiwenga, who retired from the army on Monday, is the latest in a string of senior military figures appointed by Mnangagwa to important political posts.

Presidential spokesman George Charamba said Chiwenga and Mohadi’s appointments as vice presidents of the country could only be made by the Chief Secretary to the Government and Cabinet, Misheck Sibanda, who is out of the country. reuters

President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa said 2018 will be a year for progress, credible, free and fair elections and for all Zimbabweans.

In his New Year message yesterday, Mnangagwa, said Zimbabwe needs a peaceful and stable social economic environment during and after elections to enable the country to be a prosperous nation and realise its full potential.  “As we enter into the new year, I commit to continue being a listening and responsive President. I urge you fellow Zimbabweans to engage with government and its institutions for more transparency, just and accountable governance. Noone has a monopoly of ideas,” he said.

“Let us commit to honesty, transparency, accountability and discipline to ensure we achieve national acceleration and development, collectively we can build a new and democratic and prosperous Zimbabwe,” said Mnangagwa.

Former foreign affairs minister, Walter Muzembi.

TWO former Zimbabwean cabinet ministers who served under ex-president Robert Mugabe have been charged with corruption, their lawyers said on Saturday, the latest sign of a crackdown on officials loyal to Mugabe.

Mugabe, 93, stood down in November after 37 years in power following a de facto military coup, making way for his former deputy Emmerson Mnangagwa to take over.

When the military seized power they arrested key allies of Mugabe and his wife, Grace, who was vying with Mnangagwa to succeed her husband.

Former foreign minister Walter Mzembi and ex-energy minister Samuel Undenge were charged on Friday with “criminal abuse of office”, their lawyers said. They both deny wrongdoing.

Undenge is accused of issuing a $12,650 contract without due tender to a company that did no work, according to a charge sheet seen by Reuters.

Mzembi and Undenge were both granted bail on Saturday, asked to surrender their passports and remanded until Jan. 22 when their cases will be heard.

“We are going to make an application for an exception to the charge because the charges that my client is facing are ridiculous,” Job Sikhala, Mzembi’s lawyer, told reporters outside the court.

Undenge’s lawyer Alex Muchadehama described the case against his client as a “circus”.

Former finance minister Ignatius Chombo is on bail after being charged in November over accusations he tried to defraud the central bank over a decade ago. Chombo denies wrongdoing. – Reuters

Former first lady Grace Mugabe

ZIMBABWE’S  anti-corruption agency is investigating whether the former First Lady Grace Mugabe fraudulently obtained a doctorate.

Lecturers at the University of Zimbabwe filed a petition last week asking to investigate.

She was awarded the PhD just months after enrolling at university in 2014 even though doctorates typically require years of full-time research.

Mrs Mugabe has previously defended her academic record.

In September, she told a governing party rally that she had earned her PhD despite her detractors’ scepticism.

She was awarded a PhD by the University of Zimbabwe.

But lecturers at the same institution are behind the petition to investigate how she obtained the qualification.

Zimbabwe Independent, a privately owned newspaper, quotes the academics’ petition as saying they had no knowledge of her 2014 graduation until they heard media reports:

“This was a shock to many members of the department as most members never [saw] or heard about the proposal, progress reports, thesis examiners and outcome of such a study by the candidate.”

Local media report that Mrs Mugabe doctoral thesis has not been made public, breaking with usual practice.

Mrs Mugabe was personally capped by her husband and then-president Robert Mugabe, who was also the chancellor of the University of Zimbabwe.

She had hoped to replace her husband as leader, but antagonised a faction of the ruling Zanu-PF party which led to a fallout within the party.

The military then stepped in and forced President Mugabe to end his 37-year rule and installed his former deputy, Emmerson Mnangagwa, as president. – bbc.com

President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa’s upcoming State visit to the People’s Republic of China will seek to upgrade economic ties with the Asian giant, building on an excellent political relationship.
China stood by Zimbabwe, ostracised by Western funders which fell out with former President Robert Mugabe at the turn of the century, offering stout political support and limited economic succour.
Zimbabwe has, however not explored the relationship to its full economic potential and last month, deputy finance minister Terrence Mukupe revealed that Beijing was unhappy about Harare’s patchy debt repayments.
China has also expressed unease over Zimbabwe’s indigenisation policy championed by the former president, requiring local majority control of all major businesses.
There is hope, however, that things could change under the business-minded sinophile Mnangagwa’s leadership.
Using reasoning familiar to the Chinese – Deng Xiaoping’s cat’s colour theory – the new president has moved to repeal the local ownership requirement, except for diamond and platinum mining ventures.
As if to strengthen his resolve and as a constant reminder of Deng’s dictum  “It doesn’t matter whether a cat is black or white, as long as it catches mice” , Mnangagwa keeps an artefact bearing Deng’s now fabled cats in his office.
Although China does not offer direct budgetary support, expectations are that it could raise the level of investment in Zimbabwe, which lags behind what the Asian country has committed to other parts of Africa, particularly in infrastructure and energy.
Mnangagwa’s planned visit was confirmed this week by China’s ambassador to Zimbabwe, Huang Ping, when he paid a courtesy call on Energy and Power Development Minister, Simon Khaya Moyo at his offices in Harare.
Ping, who last month handed over US$220 million from Beijing to Harare, suggested Mnangagwa’s meeting with his counterpart, President Xi Jinping, would yield more financial support to Zimbabwe.
“We are enjoying good relations with Zimbabwe,” Ping said. “Soon after smooth transfer of power, China was the first country to send a special envoy to Zimbabwe to congratulate His Excellency (Mnangagwa). The special envoy carried a letter from President Xi Jinping, demonstrating that whatever happened, China was in full support and want to continue to further strengthen the relationship in future. The President has invited His Excellency (Mnangagwa) to visit China. We are happy to see our two leaders meet to map out the blue-print for
future development of our two countries.”

Beijing has also expressed some interest in financing solar power projects in the country.
“We are interested in the solar energy in this country where we want to generate power from new technology,” Ping said, adding: “Zimbabwe has enough sunshine and we think we can make use of this to generate more power to help jump-start this economy. We are looking forward to fund such and more projects to generate power to strengthen our relationship.”
Moyo said: “We have of course entered into a new political dispensation and era and this has not changed the relationship between the People’s Republic of China and Zimbabwe. If anything, it has solidified the relationship.”
After failing to pay international creditors, Zimbabwe has struggled to access funding for its capital-starved economy, mainly due to its inability to service old loans.
Zimbabwe has, however, recently undertaken to implement a US$1,8 billion arrears clearance plan with global lenders. Last year, the country 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 former president Robert Mugabe, had been put on ice, but now appears to have been revived under Mnangagwa and Finance Minister, Patrick Chinamasa’s direction. Under a deal agreed in 2015 in Lima, Peru, Zimbabwe undertook to clear arrears to the IMF (US$110 million), World Bank (US$1,15 billion) and African Development Bank (US$601 million).
After Mnangagwa took over power from long-serving leader, Mugabe, who resigned under pressure from the military and his party — the new administration has inherited an economy in deep trouble.
Zimbabwe has been witnessing a massive rise in prices of all basic consumer goods in recent weeks, a situation which has compounded the misery of crisis-weary Zimbabweans.
This comes as foreign currency shortages persist and suppliers are forced to source the elusive greenback from the black market at high premiums.
The worsening economic conditions have resulted in a significant number of companies closing, rendering thousands of workers jobless. More than 90 percent of the country’s employable people have no formal jobs.
The manufacturing sector, which contributed about 26,9 percent to the economy annually at its peak in 1992, is now a shadow of its former self.
Industrial capacity utilisation shrunk from 35,8 percent in 2005 to only 18,9 percent in 2007 and below 10 percent in 2008 before improving to 33 percent in 2009; 43,7 percent in 2010; 57,2 percent in 2011; and slowing down to 44,2 percent in 2012. It declined further to 39,6 percent in 2013; 36,3 percent in 2014 and 34 ,3 percent in 2015. The Confederation of Zimbabwe Industries said the figure increased to 47,4 percent in 2016, before declining to 45,1 percent in 2017.
This demonstrates the failure of the cash-strapped government and private sector efforts to arrest de-industrialisation, mainly due to the absence of affordable funding to bailout struggling local companies.
The Confederation of Zimbabwe Industries, in its latest state of the manufacturing sector survey, observed that industries were “under serious threat”. newsdesk@fingaz.co.zw

Finance and Economic Development Minister, Patrick Chinamasa

THE World Bank (WB) has forecast Zimbabwe’s economy to grow by 0,9 percent this year, significantly lower than the 4,5 percent projected by Finance and Economic Planning Minister Patrick Chinamasa.
In the 2018 National Budget statement released in December, the minister said his ambitious projections would be underpinned by a wave of optimism that has been precipitated by positive signals coming out of President Emmerson Mnangagwa’s new administration, which shot to power in November.
The WB’s report entitled Global Outlook, Broad-Based Upturn, Will it last?, differs with a string of other reports from influential organisations that have predicted a swift recovery in the country, projecting, instead, that GDP growth would slip to 0,9 percent this year, after expanding by 2,8 percent in 2017.
Growth would remain tepid in the coming two years, the WB said, noting that in 2019 and 2020, the economy would continue to expand at less than one percent.
It places Zimbabwe as the only economy out of 26 low income countries to battle a sharp slowdown during the period, with Harare’s predicament compounded by the fact that while it would grow by 0,2 percent in 2019 and 2020, other weak economies would expand at rates well above two percent.
Growth would be generally flat in the other low income markets, including Afghanistan, Somalia, Haiti, Niger, Burundi and Malawi, the report said.
However, it noted that some of these countries would grow by as much as 7,8 percent (Ethiopia), 4,2 percent (The Gambia) and 5,4 percent in Malawi, between 2019 and 2020.
In the latest report, the Breton Woods institution has demonstrated the reality of the hurdles awaiting Zimbabwe’s new administration, which is already struggling to provide vital social services to its growing population.
Growth in sub Saharan Africa is now projected to soften to 2,5 percent during the period, which represents 0,2 percentage points lower than an earlier forecast made by the WB in June last year, “partly reflecting a softer than expected recovery in Nigeria”.
Mnangagwa replaced long time ruler, Robert Mugabe, who was unpopular for leading the country through 37 years of hardships especially from 2000, and was blamed for stifling vital foreign direct investment inflows through harsh laws that threatened to expropriate private assets.
Mnangagwa’s arrival on the scene heightened expectations of Zimbabwe’s economic revival after years of crises blamed on Mugabe’s disastrous policies. Many experts, including the Havard Business Review, have, however, placed Zimbabwe’s growth in the same league with some of sub Saharan Africa’s high growth markets.
“Mnangagwa’s first actions in office underscore how important he views economic recovery,” the Havard Business Review said in a report released on December 28, 2017.
“Even before announcing his new Cabinet, Mnangagwa installed a key reformist, Patrick Chinamasa, as acting finance minister, tasked with tackling corruption and re-engaging with international institutions to unlock funds to ease liquidity shortages,” it said.
“The President also announced the indigenisation ministry will be disbanded and the programme scaled back. He has proposed reforms, such as tax breaks for mining firms and commercial farmers, aiming to assist export-oriented businesses and earn Zimbabwe much-needed hard currency. Mnangagwa is also taking steps to shift the culture in government towards assisting, rather than inhibiting business,” noted the Havard Business Review.
Commenting on growth in low income countries, the WB said: “An uptick in metals prices, along with a recovery in the agricultural sector, supported a modest rebound in metals exporters, while growth was stable in non resource-intensive countries as infrastructure investment continued. Despite these improvements, regional growth remained negative in per capita terms in 2017. The region is projected to see a moderate pickup in activity, with growth rising to 3,2 percent in 2018 and an average of 3,6 percent in 2019-20, turning slightly positive in per capita terms. These forecasts assume that commodity prices will firm and reforms to address economic imbalances will be implemented. Downside risks include lower commodity prices, inadequate fiscal adjustment, and a faster tightening of global financing conditions.”
newsdesk@fingaz.co.zw

Simon McDonald

THE permanent under-secretary in the Foreign and Commonwealth Office, Simon McDonald, arrived in the country this week, the second high-profile British government representative to visit Zimbabwe inside three months, in another sign of thawing relations between Harare and Whitehall.
This follows indications that Zimbabwe, which withdrew from the Commonwealth in 2003 over sharp differences arising from its 2002 elections as well as land redistribution programme, might have some representation at the grouping’s April summit to be held in London. This would be a precursor to Zimbabwe’s eventual readmission.
The immediate past Britain’s Africa Minister, Rory Stewart, who was changed in this week’s Cabinet reshuffle, visited Zimbabwe last November and met President Emmerson Mnangagwa, successor to the UK’s bête noire Robert Mugabe, whose 37-year reign was forcefully ended by the military.
Despite warm early ties, Mugabe’s relationship with Britain soured in 2000 when he oversaw the seizure of white-owned farms, which his government parceled out to landless blacks.
McDonald, whose position makes him the head of the UK’s diplomatic service, visited South Africa and Botswana before heading to Zimbabwe.
“I planned my tour of Southern Africa months ago. After the events of November, I added Zimbabwe to the itinerary,” McDonald revealed on Twitter.
On Tuesday, McDonald met a handful of Zimbabweans over dinner at British ambassador Catriona Laing’s residence, before having a breakfast meeting with business leaders yesterday.
Yesterday, McDonald also met Foreign Affairs and Trade Minister, Sibusiso Moyo, tweeting afterwards:”Good discussion with Foreign Minister Moyo about reintegrating Zimbabwe into international community and normalising relationship with UK – new dispensation, new possibilities.”
Details of the meetings have not been made public, but recent developments point to a desire by the UK to change its stance on Zimbabwe in line with the change of guard in Harare.
Mnangagwa has indicated his intention to end Zimbabwe’s estrangement from the West and will this month attend the World Economic Forum annual meeting in Davos later this month. He has also undertaken to deliver a free and fair election this year while implementing economic reforms, key Western benchmarks.
Britain, on the other hand, has hinted at supporting efforts to stabilise Zimbabwe’s currency system and providing a bridging loan to help the country clear its arrears with international lenders, on condition that Zimbabwe shows “democratic progress”.
“Those are indeed the things that we would try to do to help Zimbabwe forward, but we’ve got to see how the democratic process unfolds,” British Foreign Secretary Boris Johnson told Reuters on the sidelines of an African Union-EU summit in Abidjan, days after Mugabe’s ouster.

newsdesk@fingaz.co.zw

DIDG executive chairman Donovan Chimhandamba

A DELEGATION from South Korean firms, Dong Ah Construction Industrial Company, Korean Engineering and Construction Group (Kenca) and Trapeace Holdings is in the country to explore water, roads and energy projects worth over a billion dollars.
The South Korean firms’ foray into Zimbabwe is in partnership with the Diaspora Infrastructure Development Group (DIDG), a grouping of over 1 000 non-resident Zimbabwean professionals targeting infrastructure investments in the country.
DIDG has partnered Transnet in a joint venture that won the $400 million tender to recapitalise the National Railways of Zimbabwe.
The Seoul-headquartered Dong Ah Construction Industrial Company has undertaken major civil engineering projects in its native South Korea, Saudi Arabia, Libya and Dubai.
Its areas of focus include roads and bridges, harbours, tunnels and subways, water supply and drainage projects as well as architectural projects, such as general buildings and housing construction.
Dong Ah’s energy portfolio includes nuclear and thermal power plants.
DIDG executive chairman Donovan Chimhandamba told The Financial Gazette that the delegation seeks to explore opportunities in the water, roads and energy infrastructure space.
“As DIDG, we are following through on our strategy of converting our global partnerships and networks to focus on investing into specific infrastructure projects in Zimbabwe,” Chimhandamba said.
“Our partnership with the South Koreans was established quite a while ago, but now we are actively acting on our partnership agenda. There are more than 1 000 members in the DIDG’s Diaspora professional formation. You can imagine with such a global professional Diaspora network, the funding and skills resources we call pull into our infrastructure development agenda.”
He said the investors would also be looking at water treatment, distribution, metering, billing and collection on a concession basis for some Zimbabwean municipalities.
In energy, they would also consider exploiting the coal-bed methane in the western region of the country.

newsdesk@fingaz.co.zw

President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa will mark his first appearance at the World Economic Forum (WEF) in Davos, Switzerland in a fortnight’s time, presidential spokesman, George Charamba told The Financial Gazette yesterday.
Mnangagwa’s invitation to attend the elite summit is a significant step towards Zimbabwe’s reintergration into the international community.
His predecessor, former President Robert Mugabe, never made it to the annual summit, although he attended a regional WEF meeting in Durban last year.
Described as the world’s most high powered networking event, the WEF takes place in the resort town in the Swiss Alps from January 23 to 26, and is expected to bring together more than 3 000 members of the global elite, drawn from politics, business and academia.
Among those who will attend the WEF are journalists and columnists, Hollywood celebrities, researchers, corporate chief executive officers, global tycoons, and some Heads of State.
“The President has an invitation from Mr Klaus Schwab to attend Davos,” Charamba told The Financial Gazette.
“We are busy preparing for the forum right now. Mr Mnangagwa is going to Davos representing Zimbabwe,” said Charamba, the permanent secretary in the Ministry of Media, Information and Broadcasting Services.
Referencing Mnangagwa’s stated commitment to avoid travel to countries where diplomats or lower level officials could be sent at reduced cost, Charamba said the president was going to meet high-level investors.
“That is not delegated because it is an interface between the investment community and Heads of State and Governments,” Charamba said.
Economist John Robertson said the WEF is an opportunity for Mnangagwa to present Zimbabwe’s investment case to the world.
He said Davos presents a rare chance for the President to rebuild Zimbabwe’s bad image.
“People have an image of Zimbabwe that is low at the moment,” Robertson said.
“He will have the opportunity to change this image. Countries like Rwanda have successfully done that. If the people around him keep his diary well, he will have an opportunity to speak to the world’s leaders and establish ground for future engagement. He has to impress, if he impresses, his stature will grow,” said Robertson.

Professor Klaus Schwab, Founder of the World Economic Forum in Geneva

Davos will be the first major global economic conference that Mnangagwa will attend as President.
He took over as President in November last year following a dramatic military intervention that led to the resignation of former president Robert Mugabe, blamed by many for crippling a once prosperous economy.
Top on Mnangagwa’s agenda has been establishing policies to rebuild an economy that has declined by over 50 percent since 2000 and continues to confront headwinds including cash shortages and firm closures.
Several challenges within the economy require his urgent attention, and his to-do list has been growing by the day as Zimbabweans, including industrialists, present their problems.
“Both domestic and foreign investment is key for the growth of the economy,” the Confederation of Zimbabwe Industries said in a letter to the President in December.
“There is need for confidence building measures especially in the financial sector in order to attract local investors. For foreign investment, the major cloud hanging is the Indigenisation and Economic Empowerment Act. There is need to urgently bring clarity; and key issues that investors look at are fairness, the return on investment, and investor protection,” it said.
And if he fails to resolve them, the problems could continue to propel the economy down the abyss.
Zimbabwe’s manufacturing sector has virtually collapsed and a poor infrastructure network requires billions of dollars in new investment.
Tourist arrivals have remained subdued due to hostile policies under his predecessor, while the mainstay agricultural sector remains undermined by lack of finance and equipment to till vast tracts of farmland that have been taken over by indigenous Zimbabwe under the controversial agrarian reforms of 2000.
Hospitals are in distress and schools and universities are underfunded, while sanitation is deteriorating due to poor funding.
Mnangagwa hopes to leverage on his interactions with the world’s investment community and other leaders to build the foundation on which Zimbabwe would attract capital to reverse the problems that have been undermining overall socio-economic development.
Founded in 1971 by Schwab, a German economics professor, the forum has become an annual meeting that includes dinners and over 400 panel discussion sessions, largely about world social and economic trends.
Officially, it is an academic conference; unofficially it is a global meeting for the rich and powerful.
The WEF is dominated by the private sector, but also attracts world leaders who use it as an avenue to hold bilateral discussions.

newsdesk@fingaz.co.zw

President Emmerson Mnangagwa with Mozambique President Filipe Nyusi in Maputo.

MOZAMBIQUE and Zimbabwe today expressed plans to strengthen bilateral cooperation in political, economic and diplomatic areas.

This was expressed by the presidents of the two countries Filipe Nyusi and Emmerson Mnangagwa, at a press conference after the two held closed door bilateral talks for three hours.

“Our countries must continue to work together to advance the path of progress,” said Mozambican President Filipe Nyusi. He said “proven sectors” of both countries should be more active in exploring opportunities and potential that exist to improve both countries economic perfomance.

“We need to be bold in finding partnerships to exploit existing opportunities,” said Nyusi, citing natural resources as an example.

The two countries have shared historic, political-diplomatic relations for over four decades. 

President Emmerson Mnangagwa said that the two countries need to raise their level of cooperation, anchored on a partnership that produces results.

The Zimbabwean statesman spoke, without elaborating, on signed agreements which, however, did not materialize and called for the new phase of cooperation to be different from the previous one.

“We will demand results, we do not want more ministerial work that does not bring tangible results, we want our ministers to be proactive and bring us results,” said Mnangagwa.

Parallel to bilateral cooperation, Mnangagwa spoke of the transition process that pushed Robert Mugabe out of power. He said the transition was and would continue to be peaceful and his predecessor’s legacy will be preserved and treated with due consideration.

Regarding the general elections scheduled for this year, at an unannounced date, Mnangagwa said they will be abide by the democratic standards and transparency and freedom envisaged by the SADC and African Union principles. – opais.sapo.mz

Finance and Economic Development Minister, Patrick Chinamasa

FINANCE minister Patrick Chinamasa says government’s top priority is to normalise relations with its erstwhile coloniser, the United Kingdom, as Zimbabwe moves to end its costly two-decade isolation by powerful western nations.
Relations between the two countries went sour in 2000 when former President Robert Mugabe’s government seized white-owned farms for redistribution to landless blacks in a drive often marked by violence.
This was followed by bloody elections disputed by the opposition, resulting in the European Union imposing targeted sanctions on the then President Robert Mugabe, his inner circles as well as the State’s economic interests, citing human rights abuses.
Chinamasa said, following the ouster of Mugabe in November, Zimbabwe was particularly keen on re-engaging with Britain to show the international community that the country is now open for business.
“We consider normalising relations with the United Kingdom as the key because our problems are bilateral — between us and the United Kingdom — and I am very confident now that we have begun the first steps towards that normalisation and there’s willingness on both sides to put on the table issues that were dividing us over the past years,” he said at a business breakfast meeting in Harare yesterday.
In his inauguration speech, President Emmerson Mnangagwa, who replaced Mugabe two months ago, spoke of the need to engage the international community and rebuild the country’s economy.
The involvement of the international community is expected to open the country up for investment and job creation in a country with an estimated 90 percent unemployment rate.
Since Mnangagwa’s inauguration, the United Kingdom has sent two top envoys, Rory Stewart, the now former Minister for Africa, as well as Simon McDonald, permanent under-secretary in the Foreign and Commonwealth Office, to engage the new Zimbabwean government.
Chinamasa said the country will soon engage the European Union and the United States of America among other countries once it cements relations with Britain.
The former colonial power has already hinted at supporting efforts to stabilise Zimbabwe’s currency system and providing a bridging loan to help the country clear its arrears with international lenders, on condition that Zimbabwe shows “democratic progress”.
“Those are indeed the things that we would try to do to help Zimbabwe forward, but we’ve got to see how the democratic process unfolds,” British Foreign Secretary Boris Johnson told Reuters on the sidelines of an African Union-EU summit in Abidjan, days after Mugabe’s ouster.
Mnangagwa will next week travel to Davos, Switzerland, for the influential World Economic Forum’s annual summit, the first time a Zimbabwean leader has been invited to the elite meetings, in yet another sign that the West is slowly warming up to Harare’s new administration.
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Sydney Gata

By Alois Vinga

FORMER ZESA Holdings executive chairman, Sydney Gata, has approached the Ministry of Labour and Social Welfare seeking an additional retrenchment package of $10 million.
Gata is requesting a recalculation of his exit package because his initial severance payments were eroded by ZESA’s lack of salary records, hyperinflation and continuous adjustments of exchange rates during the period in question.
He is also citing the absence of board resolutions confirming terms and conditions of his retrenchment as well as an undocumented part payment by ZESA over the disputed period.
Details contained in submissions made through his legal representatives, Sinyoro and Partners, indicate that Gata received ZW$18 313 477 606 on December 18, 2007 and ZW$59 615 494 451 934 on May 30, 2008 as part of his severance package.
Despite the earlier payments, he was given a further US$292 723 between 2015 and 2016 over and above two Mercedes Benz vehicles, one utility vehicle and a house in Umwinsdale.
Gata is now arguing that he was short-changed and needs his exit package reviewed.
“ZESA’s policy on the sale of company houses to executive staff, who are entitled, is to charge 75 percent of market value. I paid ZW$500 billion against a market valuation of ZW$480 billion. In terms of benchmarking, the discount of 99,992 percent extended to senior executive management should also be applied in my case,” he said.
He also lodged an outstanding insurance claim of fire accident amounting to $157 000.
The total claim of $10 395 656,42 has two interest  percentage rates on delayed payments; a five percent fixed rate per annum on payments deriving from severance packages since July 2007 and 10 percent per annum for current market rate of interest on all commercial debts.
He alleges that he served as chairman of ZESA Holdings from July 1, 2006 to June 12, 2006 before being forced to leave office through forced retrenchment.
“I was denied a contract of employment, by construction, due to salary offers well below my subordinate and also lower than my predecessor and former ZESA chief executive officer, Mr (Simbarashe) Mangwengwende and even lower than that of (an 11th grade supervisor under) the 2006 salary structure,” he said.
He noted that there was no board resolution confirming the retrenchment as well as the salary conditions and the package offered in May 2006 was below the standard. He noted that the package was not implemented leading to protracted engagements, with litigation until a new agreement was reached on January 25, 2016 to settle the package in full and in sthe originally prescribed manner.
“Ad hoc and incomplete and undocumented payments were made in February 2016, but these were stopped. I was advised then of a new board resolution to declare a dispute before the Labour Ministry,” reads the submissions in part.
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Zisco stopped operations in 2008.

GOVERNMENT will this week gazette a debt assumption bill for the Zimbabwe Iron and Steel Company (Zisco), to clear the way for its takeover of $500 million obligations owed to both local and international creditors, Finance Minister Patrick Chinamasa said yesterday. 

Chinamasa said the move was meant to expedite the takeover of Zisco by Chinese firm R&F. In terms of an agreement reached by government and the investor, Zimbabwe would retain some shareholding in Zisco’s mining assets, while R&F, through the Hong Kong-registered Tian Li, would take full control of the steelworks.
President Emmerson Mnangagwa, who took over from Robert Mugabe in November last year after a military intervention that forced him to resign, this week vowed to take concrete steps towards Zisco’s resuscitation within 100 days of his presidency.
“As far as I am concerned, the Chinese investor is fully committed to this venture,” Chinamasa told a business breakfast meeting in Harare yesterday.
A highly placed source at Zisco said although all workers, including the chief executive officer, Alois Gowo, had been retrenched with effect from August 31, 2016, Gowo and a few executives were still working for the steel producer “on a month to month basis” to facilitate the handover to the new investor.
“Understandably, the new investor is working with the Zisco board and the retrenched executives until a hand over is made,” said the source.
An extraordinary general meeting (EGM) of shareholders will be held on February 8 to discuss the debt assumption, which will pave way for takeover of the company by R&F, which will invest $1 billion into the company.
R&F will assume control of the company through a subsidiary called Tian Li, which is registered in Hong Kong, according to officials familiar with the transaction.
This week, Zisco sent out a notice to shareholders, announcing the EGM at which minorities’ consent for the takeover of the company’s debt by government, in return for the cancellation of their shares and any pre-emptive rights will be sought.
Zisco’s minorities hold about 11 percent shareholding in the steelmaker.
Should that resolution be voted for by shareholders, directors of the Zisco board, chaired by former banker Nyasha Makuvise, will immediately cancel 22 011 261 ordinary shares held by minority shareholders in the company.
The shareholders will also be asked to ratify an agreement entered into for the sale of Zisco’s entire assets to Tian Li, with tagged assets, which include coke ovens, being sold to ZimCoke.
Government holds an 89 percent stake in Zisco, and the balance is held between Lancashire Steel, Stewart & Lloyds and Tanganyika Investments.
Zisco, once one of the largest integrated steel companies in Africa, stopped operations in 2008 after failing to secure cash for the refurbishment of its antiquated plants.
A highly placed source said government was taking over a debt of $500 million under the deal.
“The debt has obviously gone up because it is not being paid,” said the source who is familiar with the transaction. The debt includes outstanding salaries to workers, as well as statutory obligations to the National Social Security Authority and the tax collector, the Zimbabwe Revenue Authority.
A significant part of the debt is owed to international creditors.
In 2009, the Zisco debt to creditors stood at $300 million and was a major talking point in an abortive takeover of the company by Indian conglomerate, Essar Africa Holdings Limited (EAHL) in 2011.
EAHL had committed to investment approximately US$750 million into Zisco, relieving government and Zisco of all their liabilities, which included guaranteed foreign debt; historic liabilities in respect of trade and other creditors, including unpaid salaries and associated benefits owed to the employees; fixed capital investment for reviving the plant to 1,2 million tonnes per annum steel production; and working capital requirements for operations.
EAHL withdrew from the project in 2015 due to bickering within government, which stalled its development plan and frustrated bankers.
Under the latest plan, R&F is planning to invest US$1 billion to revive the company, Industry, Commerce and Enterprise Development Minister Mike Bimha told this newspaper in August last year. He indicated that steel output was expected to start within 18 months of negotiations being completed.
“We are looking at an initial injection of over US$1 billion and it will probably come to US$2 billion when we proceed but it’s not a small project; it’s a huge project and a lot of work to be done,” Bimha said after introducing R&F founder Zhang Li to Mugabe.
This week, Bimha declined to reveal details on the transaction, saying: “Just wait for an announcement very soon. It’s part of our 100-day plan.”
Makuvise, the Zisco board chairman, confirmed the deal was proceeding, and that Tian Li was a unit of R&F.

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Finance and Economic Development, Minister Patrick Chinamasa

DEPOSITORS will be stuck with bond notes for the foreseeable future until economic fundamentals improve, Finance Minister Patrick Chinamasa has said.
The southern African country introduced bond notes in November 2016 in a desperate bid to ease the shortage of bank notes, but the $500 million worth of currency has failed to solve the crisis.
The surrogate currency, which was initially pegged at 1:1 with the United States dollar, has since dropped close to 20 percent in value against the greenback, sparking debate on the need to use other currencies such as the South African Rand.Chinamasa, however, dismissed rumours that the controversial bond notes would be phased out under the new political dispensation.
“Bond notes will stay for as long as and until we have our own local currency,” he said yesterday while responding to questions during a breakfast meeting on the theme Zimbabwe’s New Economic Trajectory: Renaissance and Growth organised by the Centre for Risk Analytics and Insurance Research.
He added that even the local currency will only be introduced when macro-economic fundamentals such as having reserves equal to one year’s import cover, a sustainable budget and “right” consumer and business confidence are addressed. Zimbabwe adopted a basket of currencies, dominated by the United States dollar and South African rand since 2009, after the local Zimbabwe dollar was forced out of circulation by a 500 billion percent hyperinflation in 2008 that had rendered the local currency worthless.
The Treasury boss allayed fears of a possible back-door return of the local currency saying foreign currencies would remain in use until the southern African nation’s moribund economy picks up.
The Confederation of Zimbabwe Industries (CZI) last year implored government to put a cap on the value of Real Time Gross Settlement (RTGS) by printing more bond notes as a way of building confidence in the economy.
“What we are recommending specifically is that the cap on bond is replaced by a cap on RTGS plus bond and that enough bond is then released to meet the cash requirements in the economy. This solves the problem of the shortage of cash as a medium of exchange in the economy,” the country’s largest industry body said.
“As people withdraw bond from the banks, this will reduce the RTGS balances, further tightening monetary policy as when the bond is in someone’s pocket the money multiplier impact is not felt. In other words, cash money is much less inflationary than electronic money,” CZI has advised.
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President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa’s government is considering a cocktail of measures to reduce local production costs, including a reduction in fuel taxes and tax debt cancellation, in a bid to arrest price increases which pose the biggest challenge to its bid to revive the economy.
Inflation reached a five-year peak in December, official data showed this week, as foreign currency shortages continue to wreak havoc.
Economic analysts have urged government to implement a form of internal devaluation in order to reduce the country’s high cost of production and restore competitiveness.
Energy and transport costs are the second and fourth biggest weights, respectively, in the basket used to compute inflation.
With as much as 63 cents per litre of petrol and 50 cents for every litre of diesel going towards government taxes and levies, fuel taxes constitute nearly half of the commodity’s price, a key component in the overall pricing structure for businesses.
Tax on fuel is the second largest contributor to government revenue, after personal income tax, raising about $500 million annually, or 10 percent of the 2018 national budget.
A cut in the tax would significantly reduce business costs and release millions of dollars into the hands of households, for consumption.
It remains to be seen how far government would be willing to go, considering its limited funding sources.
Highly placed sources said government, which is under pressure to turnaround the economy after Mnangagwa took over from former president Robert Mugabe in November, was planning to reduce taxes on petrol and diesel as it seeks to influence a reduction in the prices of consumer goods ahead of elections expected this year.
The government is also contemplating a write-off of outstanding tax debts by the private sector to inject life into ailing companies, the sources said.
The re-introduction of a social contract between government, labour and business was also under consideration, they said.
But they indicated that a reduction in fuel taxes, which have resulted in a high cost of fuel, was likely to be acted upon soon to reduce production costs.
Prices have shot up significantly since last year, compounding the country’s economic woes.
The ruling ZANU-PF party recently set up an ad hoc committee led by Vice President Constantino Chiwenga to deal with rising prices. Chiwenga met captains of industry from across various economic sectors in Harare on Monday. The meeting was attended by representatives of the Confederation of Zimbabwe Industries (CZI), the Zimbabwe National Chamber of Commerce (ZNCC), National Economic Consultative Forum, Buy Zimbabwe, National Bakers Association of Zimbabwe, Stockfeeds Association, Oil Expressers Association of Zimbabwe, Zimbabwe Clothing Manufacturers Association, Meat Processors Association of Zimbabwe, Livestock and Meat Advisory Council and miners.
The meeting was also attended by Reserve Bank of Zimbabwe governor John Mangudya and Industry, Commerce and Enterprise Development Minister, Mike Bimha.

Industry, Commerce and Enterprise Development Minister, Mike Bimha.

“Chiwenga and central bank governor John Mangudya also agreed with industry to revive companies by scrapping their tax debt owed to the Zimbabwe Revenue Authority (ZIMRA),” another source who attended the meeting confided with The Financial Gazette.
“The RBZ governor said it doesn’t make sense for struggling industries, and those that even temporarily closed, to be forced to pay taxes for periods when they were ‘dead’. As such, the government is planning to scrap taxes from as way back as 2009 and allow companies to start on a clean slate,” the source said.
ZIMRA is currently owed over $3 billion in unpaid taxes as companies continue defaulting due to deteriorating economic conditions.
The Financial Gazette understands that other issues also discussed in the meeting included doing away with price controls, the three-tier pricing system, formalising the informal sector and ensuring timely availability of foreign currency to critical areas of the economy.
Chiwenga was said to have reiterated government’s commitment to stabilise the economy by dealing with most factors behind price increases.
One executive who attended the meeting said Chiwenga had promised to reduce fuel taxes without delay.
A top government official who preferred anonymity said the meeting with Chiwenga was “very robust with the business community and government reaching a consensus on the need to re-introduce a social contract and freeze wages and prices for the next six months”.
Government taxes and levies add 63,2 cents and 50,1 cents to the petrol and diesel pump price, respectively. The taxes include excise duty, a Zimbabwe National Roads Authority (ZINARA) road levy, carbon tax, debt redemption and strategic reserve levy. This has resulted in local petrol and diesel prices being far higher than those in neighbouring countries. The country’s petrol prices are currently around $1,39 per litre, while that of diesel is around $1,25 per litre.
Duty is pegged at $0,40 and $0,45 per litre for diesel and petrol respectively; the ZINARA levy is pegged at $0,06 per litre for both diesel and petrol; and carbon tax is at $0,13 and $0,04 per litre for diesel and petrol respectively.
Government also collects a debt redemption levy, introduced to clear a US$170 million Noczim debt, of $0,013 and $0,067 per litre for diesel and petrol, respectively.
The strategic reserve levy attracts a rate of $0,015 per litre for both diesel and petrol.
Prices of many basic commodities, including meat, milk and eggs have risen beyond the reach of many. Bread prices went up by 10 cents in December but producers were forced to reverse the increase after government intervention.
“We understand that the government gets much of its revenue from fuel taxes, but if they can find alternative means of getting revenue and reduce fuel levy this will result in low fuel prices and consequently low prices for basic goods,” said a petroleum industry player.
Oil prices on the international market declined from $123 per barrel in August 2014 to less than $50 per barrel this week, resulting in regional countries such as South Africa and Botswana slashing their petrol prices from an average $1,40 per litre to less than $0,95 per litre.
However, Zimbabwe’s fuel prices, which are set through a pricing model agreed to between the Energy Ministry, Zimbabwe Energy Regulatory Authority and oil companies, have remained relatively high despite carrying a 15 percent component of ethanol. The ethanol component was reduced to five percent this week due to declining sugarcane supplies.
There was a public outcry last December when prices of basic commodities went up by an average 100 percent, allegedly due to foreign currency shortages. Presenting the state of the nation address last month, Mnangagwa implored the business community to show restraint and avoid wanton price hikes.
“… such actions raise the appeal of cheaper imports, which has the effect of undermining current efforts to develop the local industry,” said Mnangagwa.
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Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum

ZIMBABWE has failed to make the inaugural top 100 list of the World Economic Forum (WEF)’s Readiness for the Future of Production Report, which profiles countries considered to be ready to benefit from emerging technology which is changing the nature of industrial production.
The WEF this year invited Zimbabwe’s President Emmerson Mnangagwa to attend its annual meetings, currently underway in Davos, Switzerland.
Mnangagwa has vowed to open the economy up and implement reforms long resisted by his predecessor, Robert Mugabe.
The report, the first ever to assess the readiness of world economies to adopt to the ever-changing technological developments, was published on January 12 and includes 16 African countries.
Among the countries that made it to the list are Zimbabwe’s neighbours, South Africa, Zambia and Botswana.
The report evaluates 100 countries on a scale of zero (worst score) to 10 (best score) across both the structure of production and the drivers of production components.
“As the fourth industrial revolution gathers momentum, decision-makers from the public and private sectors are confronted with a new set of uncertainties regarding the future of production. Rapidly emerging technologies — such as the internet of things, artificial intelligence, wearables, robotics and additive manufacturing — are spurring the development of new production techniques, business models and value chains that will fundamentally transform global production,” says the report.
“Both the speed and scope of change add a layer of complexity to the already challenging task of developing and implementing industrial strategies that promote productivity and inclusive growth. The report seeks to build awareness on the factors and conditions required to transform production systems and help countries assess readiness for the future.”
Of the African economies that made it to the list, South Africa scored 5,03 points to emerge on position 45 on the structure of production and scored 5,02 point on the drivers of production to land position 49.
Mauritius also performed well with scores of 73 and 39 respectively.
Botswana made a structure of production score of 3,17 (86th) and a drivers of production score of 4,43 (69th) while Zambia’s scores were 2,39 (92nd) and 3,54 (95th) respectively.
The other African countries that made it to the list are Kenya, Uganda, Tanzania, Ghana, Nigeria, Tunisia, Algeria, Egypt, Senegal, Morocco, Ethiopia and Cameroon.
The report analyses and presents the results of the first edition of the Readiness for the Future of Production Assessment, which measures how well positioned 100 countries and economies — across all geographies and stages of development — are to shape and benefit from the changing nature of production through the adoption of emerging technology. It serves as a new benchmarking and diagnostic tool to catalyse multi-stakeholder dialogue, shape joint actions and inform the development of modern industrial strategies.
“The nature of production is undergoing unprecedented change as new technologies transform cost structures, make new business models and methods of production available, and bring entirely new products and services to market,” the report said.
“Building on its competence in global benchmarking, notably in competitiveness, human capital, trade facilitation and digital readiness, the World Economic Forum developed a proposal for a new benchmarking framework to help countries assess the extent to which they are ‘ready’ or well positioned to shape and benefit from the changing nature of production.”
All the 16 African countries that appeared on the list are in the bottom 58, with economies classified as “nascent” when it comes to their readiness to adopting the technological changes.
Germany tops the list and the other countries that fared well on the list are the United States of America, the United Kingdom, Switzerland, Sweden, the Netherlands, Singapore and China.
“The output of the readiness tool will be a set of country profiles benchmarking economies and allowing decision-makers to identify the most pressing issues that require investment and action to respond to the fourth industrial revolution. Likewise, by identifying the current conditions critical to future readiness, the country profiles will allow stakeholders to have a sense of the speed of change and the effect of investments in the critical levers identified,” said the WEF.

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Beef reported the sharpest price hikes during the September 2017 price hike frenzy, which intensified in the aftermath of the political upheavals that brought Mugabe down.

A RAFT of punitive taxes and levies on beef farmers charged by at least six State agencies are behind sharp rises in the cost of meat, whose price also escalated during a spike in prices last year, an analysis done by business for the government revealed last week.
The Zimbabwe National Chamber of Commerce (ZNCC), which presented a six-page investigation into the crisis to Vice President Constantino Chiwenga, blamed the steep price hikes on pressure exerted on beef farmers by State agencies to pay high fees and levies, or face punitive action.
Zimbabwean beef, chicken and egg prices are now ranked among the most expensive in southern Africa, according to multiple reports obtained by The Financial Gazette.
Markets had expected that a change of guard in government in November last year would calm jittery markets and stabilise volatile prices.
But in the aftermath of the dramatic military action that triggered the abrupt departure of former president Robert Mugabe, the price of one kilogramme of economy beef rose by 100 percent to about $8, from about $4 before September 2017.
During the week when ZNCC submitted its paper to Chiwenga, economy beef cost $4 in Zambia, $3 in Pakistan and $6 in Argentina.
A crate of eggs cost $6,75, compared to $1,25 in Pakistan, $1,50 in Argentina and $3 in Zambia, the paper said.
A chicken costs $7 in Zimbabwe, almost three times higher than in Zambia, and almost three times more than $2 in Pakistan, said ZNCC.
Zimbabwe’s second largest business lobby warned Chiwenga against creating more “corporate tombstones” through price controls.
The paper demonstrated how levies and taxes charged by State agencies were devastating the economy, affecting consumers whose erosion of purchasing power has been worsened by high unemployment.
ZNCC slammed “greediness” for the price hikes.
Beef reported the sharpest price hikes during the September 2017 price hike frenzy, which intensified in the aftermath of the political upheavals that brought Mugabe down.
The Zimbabwe National Statistics Agency said last week annual headline inflation rose to its highest level in more than five years to 3,46 percent in December, representing a 0,49 percentage gain on the November figure of 2,97 percent.
The Zimbabwe Republic Police (ZRP), the Ministry of Health, Environmental Management Authority (EMA), the Agricultural Marketing Authority (AMA), the Division of Livestock Production and Development (DLPD) and rural district councils (RDCs) generated about $50 million from taxes, fees and levies from the beef industry in 2016 and 2017, according to ZNCC and Commercial Farmers Union statistics.
“There are about five legislations which govern the beef industry, the beef industry is regulated by six government departments,” ZNCC told Chiwenga.
“The government departments are meant to assist in the development of the beef industry. But to the contrary, these have increased administration costs…through duplication of fees and processes. For instance, abattoirs are obliged to pay annual registration fees to AMA and concurrently pay department of livestock and veterinary services and annual environmental impact assessment fees (to EMA), which are viewed as punitive. Compliance costs per beast amount to almost $100, which is unsustainable for the sector. Almost all these costs are ultimately borne by farmers because abattoirs will shift the burden to them through suppressing prices. This is raising the prices of final beef output,” said the paper.
Ultimately, the cost of producing one beast rises to $408,05 after adding other expenses, according to ZNCC.
Farmers said there had been cases where small scale beef producers had been paid less than $200 per beast.
The ruling ZANU-PF party has tasked Chiwenga to lead efforts to find solutions to the price hikes. In October, government inflicted more pain to the industry after introducing fresh levies through Statutory Instrument (SI) 129 of 2017.
It caused an outcry from the Livestock & Meat Advisory Council (LMAC).
“All registered cattle abattoirs (will) be charged $10 per animal, all registered milk processors (will) be charged one cent per litre, and all registered chick producers (will) be charged one cent per chick…Stakeholders in the livestock value chain are surprised by the announcement of the new SI levying the livestock sector at a time when the Office of the President and Cabinet is in the process of negotiations to reduce the regulatory costs by at least 50 percent,” LMAC said.
“LMAC has already approached the Ministry of Agriculture to consider a freeze in the implementation of this SI,” the statement said.
Tempers have been flaring over the price hike madness.
Pockets in government have blamed business for trying to undermine the new administration.
But in its paper, ZNCC asked government to review the State agencies’ roles and merge some of them.

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