Nicholas Goche

DURING his days in office, he commanded authority and respect, ruling with an iron fist in Mashonaland Central Province where he was the political godfather.
Clad in expensive suits, he, for years, strode the marble corridors of government offices with the exuberance of a prince while occupying high seats at prestigious State and party functions.
Famous for his dramatic chaperoning of civil servants and State security agents during his tenure as minister of public service and State security, Nicholas Goche was among the few powerful politicians in a small and closed cast that, until late last year, starred in President Robert Mugabe’s administration.
Never at the time would anyone have thought that Goche, then all powerful and close to the President, would become a simple and humble man that the world witnessed at a Rushinga rally on Wednesday last week.
Goche’s fall from grace started about this time last year — during that infamous and volcanic build up to the December congress — when he was accused of belonging to former vice president, Joice Mujuru’s alleged cabal that sought to dethrone President Mugabe.
In fact, ZANU-PF accused Goche of being the brains behind the alleged plot to assassinate the President.
As fate would have it, Goche fell out with President Mugabe and got sacked, losing his lofty party and government positions.
His health took a knock as he spent the duration of the congress battling reported hypertension in the intensive care unit of a local hospital.
In May this year, Goche further slid down the ZANU-PF packing order when he was handed a five year suspension from the ruling party.
The suspension, however, meant he avoided, thus far, a boot from Parliament and retained his Shamva North National Assembly seat.
But ZANU-PF gangs have reportedly been baying for his blood ever since, and even threatened to invade his flourishing farm on the outskirts of the farming and mining town of Shamva. The farm currently has a thriving wheat crop.
Members of the alleged Mujuru team, which was felled alongside the then vice president, have chosen different approaches to life after government and party.
Goche belongs to the same group as Francis Nhema, Olivia Muchena, Ray Kaukonde, Dzikamai Mavhaire and Tendai Savanhu who have decided to keep their cards close to their chests and maintain low profile, often making isolated appearances at funerals and carefully selected public gatherings.
The likes of Temba Mliswa, Rugare Gumbo, Didymus Mutasa, Kudakwashe Bhasikiti and Jabulani Sibanda have chosen to go rubble-rousing and feather-ruffling as they join the fight to muscle ZANU-PF out of power.
The unpredictable Webster Shamu keeps trying his luck, hoping to be embraced by those who suspended him from ZANU-PF, but has met no luck.
Last week, Goche seemed to have had little choice but to show his face at First Lady, Grace Mugabe’s rally at Chimhanda Business Centre in Rushinga.
It was actually a colleague who alerted this reporter to Goche’s presence.
“Do you see former minister Goche sitting there in the tent,” the colleague nudged me as he pointed to a crowded tent where attendees were regularly wiping rivulets of sweat with the back of their palms as the terrible Rushinga heat took its toll.
When this writer took a closer look, he saw Goche sitting deep in the middle of commoners.
A bowler hat, a plain shirt tucked into a khaki pair of trousers and farmer’s shoes conspired to blend Goche so perfectly well with villagers that someone who did not know him previously would be forgiven for mistaking him for just one of them.
When the master of ceremonies for the day, Saviour Kasukuwere, called out for MPs to walk to the front to be introduced to the First Lady, Goche stood in a row that for minutes was at the mercy of the sun.
It was such an interesting spectacle seeing Goche retreating humbly to his tent soon afterwards while his former juniors, Kasukuwere included, walked importantly to the cool VIP tent.
As if that was not enough, the First Lady had spared a few words for him, apparently.
“If leaders of the party charge you for indiscipline and they say step aside for some time, you should not lose heart. Keep faithfully working for the party and the country. In due time, you will be rewarded and be brought back into the party. We have some people here who were suspended from the party but are still working for it,” she said in a perceptible taunt.
And then at the end of the rally, Goche was one of the members who fell over each other to donate goods to poverty-stricken and hungry people ofRushinga through the First Lady.
It was the First Lady who announced that Goche was donating five tonnes of maize to the hungry community, at which point some women were heard singing: Goche adzoka kumusha, mutambirei shuwa adzoka, in a bastardisation of a local Christian hymn. Loosely, the chanters were saying: “Goche has come back home, please accept him, he has surely come back home.”
Goche presented a perfect glimpse into the lives of former government ministers and former party bigwigs chucked out of the party.
Higher Education Minister, Jonathan Moyo, once described life outside ZANU-PF as “very cold”.
newsdesk@fingaz.co.zw

Agriculture, Mechanisation and Irrigation Development Minister Joseph Made

CLOSE to one million Zimbabweans are in desperate need of food assistance as government and the international donor community struggle to raise enough food rations to avert a looming crisis.
Thousands are already down to just two meals a day in most rural communities with just over a week before Zimbabwe enters its peak hunger period of November to January.
The United Nations has since sent out an SOS to the international donor community to urgently put together US$86 million to fight hunger in the worst affected areas.
“While the Government of Zimbabwe has not declared an emergency, a number of ministries have requested urgent assistance from humanitarian and development partners,” the UN has said.
A survey by the Financial Gazette indicated that Zimbabwe is headed for a major food crisis in 30 of the country’s 52 districts at a time when government neither has enough food nor the capacity to distribute the little food it has.
Government has since requested the World Food Programme (WFP) to help it distribute some 30 000 tonnes of maize in its stocks after failing to raise funds to transport the grain to hunger-stricken villagers owing to a tightening national cash squeeze.
WFP, in turn, has extended its own appeal to other donors to help move the grain, highlighting the magnitude of the crisis ahead.
“Government has pledged a contribution of 30 000 MT (metric tonnes) of maize grain towards the World Food Programme for a joint lean season assistance programme. WFP has approached donors for funds to provide logistical support to move the maize grain and for purchasing complementary commodities for the food basket,” Eddie Rowe, WFP representative in Zimbabwe, said.
Rowe added that the joint effort between government and WFP would reach 22 districts, out of 52 districts. Some 636 000 people were expected to benefit. This leaves out 30 other districts with more than 800 000 people requiring food assistance.
“Each beneficiary household will receive a 50kg of maize grain while each member of the household will get 2kg of sugar beans/peas and 0,75 kg of vegetable oil or an equivalent cash amount to purchase the last two commodities,” said Rowe.
With government appearing to have no response plan of its own in place, besides this joint effort, the administration is keeping everyone guessing as to how it hopes to avert starvation in rural communities.
This is despite the fact that the UN’s food security response plan paints a grim picture of what lies ahead for a country whose agro-based economy is offering very little hope of rescuing the situation.
Out of the 22 hardest hit districts that the UN, WFP and other partners have targeted for support, only eight districts would be adequately assisted.
Thousands of villagers in 10 of the 14 remaining districts face starvation after the WFP indicated that it would only be able to assist between five and 30 percent of the total number of people in need of food assistance in the 22 districts.
The situation is expected to be dire in Mberengwa, Tsholotsho, Gokwe North, Uzumba-Maramba-Pfungwe, Beitbridge, Gwanda, Mutasa and Mudzi where the UN would only reach less than 30 percent of those in need of food assistance.
In Mberengwa, where an estimated 45 817 people require food only 2 503 people, representing just five percent, would be assisted by the world organisation while in Buhera 29 534 would be assisted out of 99 504.
The UN, which has indicated that it was hoping to reach 767 000 of the country’s 1,5 million people said to be in need of food assistance, representing 51 percent by the end of this month is, however, worried how the food would be distributed in a country that has become heavily polarised along political affiliations.
“There is a need to ensure that there are policies and mechanisms for distributing the staple food with the aim being equitable distribution of grain,” the UN noted in its food security response plan.
The response plan is unable to cater for thousands of other desperate villagers in 34 districts, the majority of whose crops failed to mature owing to a poor 2014/15 rainfall season.
The UN response plan, amounting to US$132 million, would only cater for 44 percent of Zimbabwe’s Zero Hunger Strategic Review programme that noted in June that US$300 million would be required to avert starvation.
Apart from assurances by Vice President, Emmerson Mnangagwa, who chairs the Cabinet Committee on Food Security, that “no one would starve”, very little else is pointing to the situation being under control.
In fact, Mnangagwa’s statement during the June launch of the Zero Hunger Strategic Review was telling.
“I am therefore calling on all our partners from development agencies and the private sector to assist us in providing the necessary resources to ensure that not even one of our communities nationwide is exposed to hunger and starvation,” he said.
Government’s ability to import more grain to avert starvation has become even more doubtful as grain prices firm in response to a downward revision of the 2015 production forecasts both regionally and globally.
And with more than 26 million southern Africans facing hunger in the coming months, the little grain that the region harvested is in high demand as reports indicate that Zambia, which had a favourable harvest, may soon suspend grain exports as food prices back home rise.
Zimbabwe earlier this year indicated that it would be importing grain from neighbouring countries such as South Africa and Zambia but there is no sign yet as to how much has been secured so far.
Zambia’s Minister of Agriculture, Given Lubinda, refused to say what kind of bilateral agreement Zambia has entered into over its maize exports to Zimbabwe, which has in previous years struggled to pay for maize supplies from its northern neighbour.
Prospects are that this year’s rainfall season would most likely start late, according to weather forecasts, meaning that communal farmers would only start getting some food from their farmers such as green mealies in late February or early March.
The Famine Early Warning Systems Network has since warned that: Worsening economic conditions in Zimbabwe and the unstable labour market in South Africa are expected to decrease remittance levels by about 40 percent of normal, meaning that the ability buy food by those in need would be seriously compromised.

Finance Minister Patrick Chinamasa

ZIMBABWE’S fiscal deficit is this year seen narrowing to below 0,5 percent of the country’s Gross Domestic Product (GDP) from 2,4 percent recorded in 2014 on improved revenue collections and rationalized government expenditure.

The Southern African nation has run successive budget deficits averaging 2,59 percent of GDP between 1990 and 2014, reaching a record low of 7,51 percent of GDP in 1992. But in a Letter of Intent to the International Monetary Fund signed by Finance Minister Patrick Chinamasa and central bank governor John Mangudya, the country said revenue shortfalls had made it difficult to achieve a balanced fiscal position.

Revenue collections for the first half of the year were nearly six percent behind the $1,76 billion target as the country endures widespread economic difficulties, shrinking corporate earnings, limited ability of companies to pay taxes on time, and rapid informalization of the economy.

“A shortfall in revenue collection has intensified fiscal pressures, and has made expenditure rationalization an urgent priority. Nevertheless, we intend to lower the primary deficit to below 0.5 percent of GDP and aim at a balance in 2016,” reads the letter dated September 30.

“We are enforcing tax payments by agreeing with clients on repayment schedules to eliminate their overdue tax obligations”.

Chinamasa and Mangudya said government was rationalizing the country’s public service establishment in order to generate savings on employment costs and seeking cuts in lower priority current and capital spending while safeguarding priority social spending. -The Source

ZANU PF Masvingo Province passed a vote of no confidence on the party’s acting chairman,Paradzai Chakona at a provincial executive committee meeting held on Friday over a number of allegations that include abuse of party resources.

According to media reports, the party’s secretary for administration in Masvingo Province Ezra Chadzamira announced the decision during a Provincial Coordinating Committee (PCC) meeting held this Sunday.

Among the allegations levelled against Chakona are abuse of party resources, imposition of candidates during the district elections and working with ousted former Vice President Joice Mujuru.

Delma Lupepe

ZIMBABWE Newspapers (Zimpapers) , recorded a US$1,9 million net profit for the half year to June 30, 2015, as it republished its results citing a material tax error in its initial financial statements.

In August the group had previously reported a US$20 000 loss after tax. Zimpapers recorded a US$1,4 million loss in the first half of 2014.

In a statement accompanying the company’s financial results on Tuesday, chairman, Delma Lupepe  said following the detection of a material tax error after publication of the group’s June 2015 financial results, “the board, in consultation with with the Zimbabwe Stock Exchange, has decided to re-publish the group’s financial results for the half year to  June 30, 2015 for the benefit of stakeholders”.

The group which publishes The Herald, Chronicle, Sunday News, Manica  Post and The Sunday Mail among other titles and owns radio station Star FM, said the decline in newspaper copy sales and advertising volumes in the traditional newspaper market resulted in their revenue declining by five percent to US$19,9 million for the half year to June 30 from US$21 million in the previous year.

Lupepe said the company embarked on cost containment measures that have started bearing fruit as an operating profit of US$1,8 million was recorded for the period under review compared to an operating loss of US$1 million posted last year.
“The finance costs remained high at US$700 000 due to the high interest rates prevailing in the market. In line with the July 2015 Monetary Policy pronouncement by the Reserve Bank governor, Dr John Mangudya, the company is in discussion with its bankers to reduce the cost of borrowing,” Lupepe said.
Profit before tax was US$1,1 million compared to a loss of US$1,9 million for the same period last year.
“The board and management continue to focus on streaming cost structures for the business to align with the level of generated revenue,” he said.
Due to the marginal profit situation, the company decided not to declare a dividend.
“The company remains committed to declaring a dividend to its shareholders when its fortunes improve,” Lupepe said.

Confederation of Zimbabwe Industries President Busisa Moyo

THE Confederation of Zimbabwe Industries (CZI) said on Wednesday manufacturing industry’s capacity utilisation has dropped by 2,2 percentage points to 34,3 percent in 2015 from 36,5 percent last year.

In its state of the manufacturing sector survey, the industry representative body said a host of internal and external pressures in the country continued to stifle the industry’s performance and recovery.

“Efforts by government to resuscitate the sector through tariffs continue to be undermined by the depreciation of the regional currencies, among other things,” the CZI said.

“Government and private sector should continue working together to address the economic decline.”
A depreciation of the South African Rand, the currency used by the country’s biggest trading partner, South Africa against the United States dollar has worked to the disadvantage of the local industry as it has made exports of local companies more expensive.

Zimbabwe’s manufacturing sector has failed to fully recover from decades of economic downturn, characterized by hyperinflation, which forced the government to ditch the Zimbabwe dollar in favour of the US dollar in 2009.

Over the decades, many companies collapsed leading to job loses as companies struggled to finance their operations while battling competition from cheap imported goods.

In the survey, in which around 250 companies participated, the CZI said issues affecting the local manufacturing industry remained unchanged since 2009 when the country dollarized.

Among the top challenges besetting industry are low domestic demand, capital constraints, antiquated machinery and machine breakdowns as well as competition from imports.

Compounding the problems were infrastructure related challenges which include power cuts, poor road infrastructure and inefficient rail network and water shortages.

Infrastructure has deteriorated as a result of years of neglect due to economic challenges, fuelled by western imposed sanctions that have seen government investing less in rehabilitation as well as new infrastructure.

The CZI said the obtaining environment impacted on the competitiveness of locally made goods which become more expensive.

“The current economic environment remains largely deterrent to foreign direct investment (FDI), a major source of capital investment,” the industrial body said. FinX

Energy and Power Development Minister, Samuel Undenge

GOVERNMENT has finally taken over the interest component on a Federation-era debt to Zambia, which had ballooned to US$114,8 million, the Financial Gazette’s Companies & Markets (C&M) can reveal.
The development comes more than a year after ZESA, through the Ministry of Energy and Power Development, had requested that the interest payable be transferred to government as the liability was a government-to-government debt.
The interest emanates from a US$70,8 million debt to Zambia, which Zimbabwe inherited after taking over power generation assets that had been shared between the two countries.
The debt was for the shared cost of the Kariba Dam construction and associated infrastructure during the tenure of Central African Power Corporation (CAPCO), a power firm jointly owned by the governments of Zimbabwe and Zambia when they were still part of the Federation of Rhodesia and Nyasaland, which was dissolved in 1963.
It also included the sale of assets belonging to CAPCO.
Last month, C&M reported that talks over the debt were under way, but now, this newspaper can reveal that government has finally taken over the debt’s interest component.
Energy and Power Development Minister, Samuel Undenge, told C&M last week that Finance Minister, Patrick Chinamasa, has made some arrangement with the government of Zambia to pay off the debt.
It was, however, not immediately clear by the time of going to print, what Chinamasa offered on his payment schedule.
“There is an arrangement now on how the Ministry of Finance, which has taken over the interest component, is going to pay it,” said Ungenge.
The development was also confirmed by ZESA Holdings group chief executive, Josh Chifamba.
“We fully settled the capital portion of the ex-CAPCO loan (amounting to US$70,8 million). “The interest portion on the loan (amounting US$114,8 million) is now the responsibility of government through the Ministry of Finance,” said Chifamba.
C&M was the first to report on the interest payment in February last year, which was due for payment last year.
The interest component was ratified by an inter-governmental committee of officials representing Zimbabwean and Zambian governments in February last year at a meeting in Livingstone.
Chinamasa was part of that meeting, and was requested by his Zambian counterpart to come up with a proposal on the interest payment.
Given the weight of debt the power utility is currently carrying, there were fears that ZESA could be forced to take the interest component into its books, a situation which could have worsened the pressure on the integrated power generation and distribution company, which has clearly struggled to service its foreign debts.
CAPCO was running the Kariba power project for the two countries but was disbanded in 1987, and was succeeded by the Zimbabwe River Authority.

ZESA Holdings group chief executive, Josh Chifamba

Its assets were distributed to national power companies in the two countries, which are ZESA Holdings and Zambia Electricity Supply Corporation.
After distribution of the assets, the government of Zimbabwe owed the government of Zambia US$70,807 million.
The amount remained outstanding, and in February 2012, Zimbabwe signed a new acknowledgement of debt with a payment plan.
Government then transferred the debt to ZESA Holdings as it was the beneficiary of the distributed assets.
ZESA Holdings was, however, pressured to pay the principal amount after Zambia threatened to pull out of a deal for the two southern African countries to jointly construct the Batoka Gorge Hydro Power Station on the Zambezi River.
Zimbabwe and Zambia in February 2012 signed a memorandum of understanding to jointly construct Batoka Gorge Hydro Power Station, with each country expected to get 1 600 megawatts of electricity from the project, a development which would help boost power supply in the two southern African countries.
The agreement on the Batoka project, situated about 54 kilometres downstream of Victoria Falls on the Zambezi River, was therefore dependent on Zimbabwe’s commitment to pay off the US$70,8 million debt.
Plans for the project were initially mooted in 1993.
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

RBZ governor, John Mangudya

THE Reserve Bank of Zimbabwe (RBZ) yesterday made shocking revelations that company executives were diverting earnings to individual accounts to dodge the tax collector.
RBZ governor, John Mangudya’s remarks at the Confederation of Zimbabwe Industries (CZI) meeting to unveil the Manufacturing Sector Survey report for 2015 stunned guests, as it brought to the fore the cat-and-mouse games between companies battling to preserve scant earnings and the Zimbabwe Revenue Authority (ZIMRA) struggling to meet revenue targets.
Mangudya did not say how much, in terms of taxes due to the State, had been lost through diversion of corporate funds into individual accounts.
But he noted that it was one of the reasons behind a plunge in revenues to ZIMRA, which has undermined government’s capacity to fund critical social operations, including servicing a US$10 billion public debt.
In July ZIMRA announced that net collections for the period were six percent below target for the first half of 2015.
The sustained decline in tax has affected government operations.
“Companies are depositing funds into individual accounts to avoid ZIMRA,” Mangudya told industrialists.
“They are doing creative accounting because they know that funds in individual accounts are free funds. That is why ZIMRA revenues have gone down,” said Mangudya, who revealed that the economic crisis buffeting the country had lumped Zimbabwe among African States considered to be fragile.
These include Somalia, Eritrea and Sudan.
In the case of Zimbabwe, the RBZ boss charged that the country had chosen to be poor due to delinquency and corruption.
The CZI Manufacturing Sector Survey highlighted that 43 percent of 250 industrialists polled cited corruption as one of the worst factors affecting the business climate.
Mangudya said Zimbabwe had made a number of mistakes, including failing to repay debts owed to local and foreign lenders.
These include the World Bank (WB) and the International Monetary Fund (IMF).
Could the diversion of funds to shady accounts by industrialists be a response to the heavy handed manner in which ZIMRA, which estimates that over US$1 billion in taxes due from the private sector companies are in arrears, has handled firms that have failed to pay taxes?
As the CZI survey showed yesterday, over 50 percent of survey respondents said companies were no longer viable, and were battling to fulfil their obligations, including paying for raw materials.
But the taxman has been ruthless, garnishing accounts of defaulters and leaving some of them bankrupt.
However, could it also be that the country’s captains of industry have become part of the scourge of corruption that has ruined our economy?
Deputy Minister of Industry and Commerce, Chiratidzo Mabuwa, revealed last year that industry captains had abused a US$40 million package unveiled under the Distressed and Marginalised Areas Fund (DIMAF) by servicing existing expensive loans and buying top of the range range vehicles and mansions to fund personal lifestyles.
DIMAF was jointly funded by insurance giant, Old Mutual and government.
“Firms benefited,” said Mabuwa.
“But they just simply did not repay,” she told a conference in October last year.
Yesterday, the RBZ boss hit out at deceitfulness by Zimbabweans, saying they should learn to repay debts at the individual level right up to government level.
“We have made a choice to be poor when we are rich,” he said, as he re-emphasised the need to honour a commitment Zimbabwe made in Lima, Peru two weeks ago to repay US$1,8 billion by April to the IMF, the WB and the African Development Bank (AfDB) as part of a debt settlement strategy.
“This economy is an economy in a vicious cycle of low productivity, low capacity utilisation, lack of capital formation and no capacity to service debt . . . the wicked borrow and they do not repay. If Zimbabwe borrows from other countries and we don’t repay, we are also wicked,” said Mangudya.
He said government had made a position to repay its debts, starting with the AfDB, IMF and the WB, before going on to the Paris Club to negotiate other debt repayment plans.
After that, the country expects further re-engagements with major global lenders, leading to the unlocking of vital capital to rebuild the economy.
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Confederation of Zimbabwe Industries President Busisa Moyo

A CONFEDERATION of Zimbabwe Industries (CZI) 2015 Manufacturing Sector Survey yesterday indicated that capacity utilisation within the manufacturing sector declined by 2,2 percentage points to 34,3 percent this year, from 36,5 percent last year.
This demonstrates the failure of combined government and private sector efforts to arrest de-industrialisation, mainly due to the absence of affordable funding to bailout struggling local companies. The resultant liquidity crisis has also seen the cash-strapped government battling to raise monthly salaries for its workers.
The decline, which represents a cumulative 23 percentage points fall from 57 percent in 2012, is clearly an indication of a worsening economic crisis, which was this year exacerbated by unexpected factors such as the continued depreciation of the South African rand and the Zambian kwacha, which affected the competitiveness of local products priced in United States dollars, the anchor currency in Zimbabwe’s hard currency economy.
“We need a comprehensive crisis response strategy,” former CZI president, Kumbirai Katsande, told guests at the launch of the survey at a Harare hotel.
“We will not come out of this crisis with our suits on. This crisis is deep and it is likely to get worse. We had a problem with the rand, now it is the kwacha. If the kwacha has gone down dramatically, how do we respond because Zambia is our major export destination?” Katsande said.
In 2009, the inclusive government said it required US$8,3 billion to revive failed industries, fund social services and stabilise the economy following a decade of turbulence, which resulted in a cumulative 50 percent decline in gross domestic product.
But with the country still facing a global embargo that has been in force since 2000, industrial bailouts and packages have remained elusive, and the little amount coming in through bank-negotiated credit lines has been accessed at high interest rates due to the risk associated with lending to the country.
The lack of recovery, compounded by mixed policy signals from government, has affected business confidence, said the survey, which was unveiled by current CZI president Busisa Moyo, who described the research findings as critical to Zimbabwe’s economy.

Former CZI president, Kumbirai Katsande

“The weighted capacity utilisation has shed 2,2 percentage points from 36,5 percent to 34,3 percent,” the Manufacturing Sector Survey said.
“The constraints to capacity have remained the same since dollarisation: low domestic demand; capital constraints; antiquated machinery and machine breakdowns; and competition from imports. Of the respondents, 39 percent said they were operating at levels above 49 percent while the remainder (61 percent) said they were operating at levels below 49 percent,” said the CZI.
“On average, small companies (between five employees and 19 employees) are operating at 26 percent capacity utilisation while medium companies (between 20 and 99 employees) are operating at 36,1 percent. The larger firms (100 and more employees) are operating at 43,1 percent,” said CZI
Eighty-nine percent of 250 executives surveyed had doubts over 2016 prospects, citing high costs of doing business in a deflationary environment, which has piled pressure on production and output.
CZI said a combined 65,7 percent of industrial capacity utilisation was idle in 2015, 2,2 percentage points up from 63,5 percent in 2014 after more firms crashed under the weight of factors that include power blackouts and difficulties in accessing working capital and expansion from internal and offshore sources.
At -3,11 percent in September 2015, Zimbabwe’s inflation was among the lowest in the world.
It contrasts sharply with the hyperinflationary era of 2008 when the inflation shot past the 500 billion percent mark, paralysing industries and triggering capital flight.
Early this month, CZI launched its quarterly business confidence index, which showed that perception remains low, with a composite quarter-on-quarter confidence index of -33,9 percent and year-on-year of -37,2 percent.
The softening business confidence worsened, as highlighted by 71 percent of CZI survey respondents, who said they ploughed back profits, despite a tightening liquidity crisis, to fund expansion and operations.
This had dire consequences on the overall state of industries, CZI said, with companies producing at 34,3 percent of combined installed capacity, from 36,5 percent in 2014.
Generally, it means companies that were producing 100 goods in 1999 were now producing 34,3.
Less than 50 percent of respondents said they accessed financial lifelines from both the domestic and international financial institutions due to a high country risk profile.
Hostile policies such as the indigenisation law have worsened an already bad investment climate and aggravated resentments by business over the status quo. This has the effect of repelling foreign direct investment inflows (FDI) and keeping lenders on the edge.
Fewer companies are still in production compared to last year, after failing to cope with low domestic demand compounded by a carnage on the job market, where nearly 30 000 workers lost their jobs three months ago, in addition to company closures.
In total, 25 percent of surveyed companies cut jobs during the review period, and 46 percent of respondents said businesses were bleeding.
At the heart of the manufacturing sector’s concerns were antiquated machinery, machine breakdowns and competition from imports, especially from neighbouring South Africa, the continent’s second largest economy, as well as the Chinese, who have been given free room to dump inferior products into Zimbabwe every year, with ramifications on local industries.
Very little production is taking place in the country.
In fact, a combined 66 percent of industries’ installed capacity is grounded, and that is why State revenues failed to achieve targets by six percent during the first half of the year.
The consequences have been far reaching on social services like health, education and rehabilitation of public infrastructure.
“Zimbabwe’s economy faces many fundamental problems that will need to be addressed before any type of economic development can take place. Against the background of weak domestic demand, tight liquidity conditions and the appreciation of the US dollar against the South African rand, inflation remains in the negative, recording -3,11 percent in September 2015 and is projected to remain low in 2015,” the report said.
“Forty seven percent of the respondents carried out new capital investment in 2014 while 41 percent carried out investment in 2013. The bulk of the investment (97 percent) was directed at machinery and equipment for replacement (60 percent) and expansion (40 percent). Profit plough back remains the largest source of financing of new capital as evidenced by a response rate of 71 percent.”
CZI said 44 percent of respondents expected to increase their level of capital investment in 2015/2016, adding that the current economic environment remained largely deterrent to FDI, a major source of capital investment.
CZI has previously called for a review of legislations that have a bearing on FDI.
This includes the review of the Indigenisation and Economic Empowerment Act and the resolution of the debt overhang.
Strides have been made towards debt resolution with Zimbabwe’s strategy being accepted by creditors during International Monetary Fund/World Bank annual meetings in Lima, Peru this month.
The real exchange rate overvaluation relative to the South African rand has caused a serious loss in external competitiveness, as it has made imports cheaper than domestically produced goods while making exports more expensive.
As a result of increasing demand for imports and dwindling exports, the external sector position continued in deficit, with an estimated current account deficit of US$3,1 billion this year.
“However, the economy continues to be able to finance this gap and at the same time still show growth in bank deposits. In the absence of lines of credit, this is a remarkable achievement. Exactly how we are achieving this feat is not well understood and merits further investigation. Volatile and fragile global financial environment, subdued levels of FDI coming into Zimbabwe compared to peers in the Southern African Development Community, decline in global commodity prices for Zimbabwe’s main mineral exports — gold, platinum, and diamonds — which were already facing high production costs, negatively impacted the fiscal and external accounts.”

CBZ Holdings chief executive officer, Never Nyemudzo

Unclear signalling through sometimes contradictory positions taken by different arms of government and lack of clarity on the Indigenisation and Economic Empowerment Act has become a deterrent to FDI, CZI noted.
“Most respondents felt that the conditions are poor or deteriorating and are not conducive for business growth and development. The need for policy certainty and consistency can never be emphasised enough and the creation of an enabling environment for business development is paramount. Some respondents felt that currently, over and above the inconsistency, there also were too many restrictive policies and the economy needs major changes and a business friendly environment. The need for FDI is also key to addressing some of the economic challenges the country is facing,” said CZI.
Industry and Commerce Minister, Mike Bimha, indicated that government had put in place several measures to help industries avoid collapse.
“There are things that we have done but we will not see instant results,” said Bimha.
Former CZI president, Joseph Kanyekanye agreed, saying if government had not taken some preventive measures, there would have been more trouble for companies.
CBZ Holdings chief executive officer, Never Nyemudzo, said the banking group, which sponsored the survey, had reduced interest rates to make funding cheaper for industries.
He, however, said future surveys should clearly elaborate areas that required funding so that the banking industry could come up with packages that suited industrial needs.
“We are reducing lending rates to help industry improve competitiveness,” said Nyemudzo, adding that the bank would unveil long term loans and funding for small to medium scale enterprises.

SURVEY HIGHLIGHTS

The 2015 Manufacturing Sector Survey shows a decline in the sector compared to 2014.
* Weighted capacity utilisation shed 2,2 percentage points from 36,5 percent in 2014 to 34,3 percent in 2015.
* The source of competition remains largely unchanged with 63 percent of respondents indicating they face competition from both local firms and foreign firms while 11 percent face foreign competition only.
*Twenty three percent compete with local firms only. South Africa remains the largest competitor to Zimbabwean producers followed by China.
*Forty seven percent of the respondents use mark up over cost as a pricing mechanism while 27 percent are market price takers. Imports continue to play a significant role in the pricing of local products with 12 percent of the respondents basing their prices on import prices. Negotiating with buyers is becoming a popular pricing mechanism in Zimbabwe with 10 percent of the respondents indicating that they use this strategy.
* Eighty four percent of the respondents indicated that the state of infrastructure is either poor or very poor. Sixteen percent of the respondents indicated that the state of infrastructure is moderate while no respondents pointed to good infrastructure. Respondents indicated that the infrastructure is unable to sustain economic growth (90 percent) while 10 percent indicated that this has no effect on economic growth.
* Seventy six percent of the respondents indicated that they did not change their working hours. Of the respondents that had indicated having changed working hours, the changes were due to a drop in aggregate demand which necessitated reduction in output hence the change. Twenty two percent of the respondents were forced into changing working hours to reduce labour costs and enhance viability and also due to inability to pay.

newsdesk@fingaz.co.zw

South Africa’s President Jacob Zuma

ZIMBABWEAN students studying at South African universities are breathing a sigh of relief after President Jacob Zuma ruled out any increase in tuition fees for next year.
The announcement followed a week of protests by university students over proposals to increase tuition fees for the 2015/2016 academic year.
South African universities had been pushing for an 11,5 percent hike in fees; but critics argued that this would have made university education a preserve for the elite.
University administrations had, however, justified the fee increases on grounds of rising operational costs.
Home to some of the best learning institutions in the world, South Africa boasts of universities such as the University of Cape Town (UCT), University of the Witwatersrand, University of Pretoria (UP), University of KwaZulu-Natal (UKZN) and University of Johannesburg, among many others.
Many Zimbabwean students have turned to these universities to pursue their studies.
According to the proposed fees schedules for the 2015/2016 academic year, fees at UCT would have increased to R69 000 (US$5 245) from R46 000 (US$3 496), UKZN from R45 860 (US$3 486) to R68 790 (US$5 229), UP from R30 500 (US$2 318) to R45 840 (US$3 484) and University of Free State from R26 015 (US$1 977) to R39 025 (US$2 966).
Zimbabwean students based in South Africa who spoke to the Financial Gazette said the neighbouring country offers an advanced learning environment, commensurate with the high fees they had to fork out.
“The zero percent cap is a great relief for most parents and guardians of Zimbabwean students in South Africa as our total expenses are almost double what locals pay, but in the long run it really isn’t much as tertiary education is still very expensive for the majority of Zimbabwean students,” said Nathan Khumalo, a third-year media student at UKZN.
University education is subsidised for South Africans, with international students, not on scholarship, required to pay full tuition fees at registration for each academic semester.
“Our fees range between R30 000 (US$2 280) to R45 000 (US$3 400) for a three-year degree programme and international students then pay a levy of about R4 000 (US$300) plus rent of about R25 000 (US$1 900) a year. Also bear in mind that some international students have to pay all their fees upon registration,” added Khumalo.

Students protest over planned increases in tuition fees. Pic by Reuters

One of the conditions for student permits for international students is that they are barred from taking part in student protests.
It is, however, understood that foreign students also participated in the #feesmustfall protests, which swept across South African campuses last week, disregarding the terms of their student permits.
Pretty Nxumalo, a first-year sports and leisure student at UP, said there had been no justification to the foiled fees increase and the issue had found common ground among foreign and local students.
“I definitely agree with the zero percent increase because the rate of inflation is half the rate of fee increase, so it means that university fees were about to rise at a faster pace than inflation,” she said.
Nxumalo said it was common practice that South Africans with lower qualifications were accepted into the institution, which is not the case with foreign students.
“Their system is structured in such a way that it makes it difficult for foreigners to do anything, like registration and tuition and so they aren’t really as accommodating to outsiders,” she said.
United Kingdom-based political analyst, Alex Magaisa, said the #feesmustfall campaign which had gripped South Africa was a coming of age of sorts for that country’s student movement.
“In a nutshell, the young men and women at universities and colleges begin to see the bigger picture, far beyond their enclaves, the little villages and towns in which they grew up. They begin to see the inequalities and injustices of the system, both at the national and international levels and they are outraged by what they learn,” he said.
“They are no longer just adding figures or constructing sentences, but learning the ways of the world. In short, they make an important discovery of their historic role in society and begin to call themselves the ‘Voice of the Voiceless’, often wearing apparel declaring the same.”
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Former Zimbabwe Broadcasting Corporation chief executive, Happison Muchechetere

AS the economic climate in Zimbabwe gets more unforgiving, a number of prominent citizens are failing to service their debts, resulting in many of them losing their assets.
Last week, the Sheriff of the High Court announced the upcoming sale of household property belonging to former Zimbabwe Broadcasting Corporation (ZBC) chief executive, Happison Muchechetere, after he failed to settle a US$24 000 legal bill to a Harare law firm, Dube Manikai and Hwacha.
Muchechetere, whose name together with that of former Premier Services Medical Aid Society’s Cuthbert Dube became national by-words for mega salaries, was defended by the law firm in a case in which he was accused of defrauding ZBC and criminal abuse of office.
The same sheriff announced the attachment and impending sale of property belonging to Zimbabwe Commercial Farmers’ Union president, Wonder Chabikwa, over an undisclosed debt owed to IETC Zimbabwe.
Chabikwa’s assets at his Coburn Estates in Chegutu that will be going under the hammer include two tractors, a herd of 60 cattle, 15 goats and sheep and other farming implements.
Former legislator and opposition politician, Job Sikhala is set to lose a commercial property in Chitungwiza after he failed to repay CBZ Bank an undisclosed sum of money.
Sikhala’s commercial property at Huruyadzo Shopping Centre in St Mary’s has nine shops.
Embattled businessman, Cecil Muderede, is set to lose a residential property in Harare’s Horgety Hill over an undisclosed amount owed to Allied Insurance Company.
Muderede owned the country’s largest wholesaler Jaggers and its subsidiary Trador, which went into liquidation in 2010 after he failed to pay creditors who were owed over US$13 million.
Another troubled businessman, Simba Mangwende had six lorry trailers attached by Roma Furniture over a debt of more than US$75 000 arising from unpaid rentals for business premises.
Seed firm, Seed Co is also dragging academic and farmer, Ibbo Mandaza, to court over an undisclosed debt. — newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

ZESA’s current assets stood at US$598,5 million while its current liabilities totalled US$1,2 billion

POWER utility ZESA Holdings, which extended its losses by about 900 percent during the year to December 2014, is now carrying a debt burden of nearly US$1 billion, with at least US$200 million in interest having accrued since 2009.
The situation at the parastatal portends disaster for the country, which is grappling with critical electricity shortages that have prompted country-wide load shedding of as much as 20 hours daily.
ZESA’s indebtedness implies that the company has no capacity to exploit its balance sheet for further borrowing to support planned electricity generation projects across the country.
It also requires money to rehabilitate its old infrastructure.
But the utility’s creditworthiness has inevitably been hammered by the huge debt, which means it cannot access offshore and even domestic markets for cash.
ZESA’s latest financial results show that the group’s debt escalated to US$942,1 million during the year to December 31, 2014, from US$774,7 million the previous year.
The group’s power distribution arm, the Zimbabwe Electricity Transmission Distribution Company (ZETDC) recorded a loss of US$118,3 million from a profit of US$22,3 million in the prior year.
The subsidiary was not servicing its short-term loans amounting to US$373,8 million, which were due and payable.
The loss-making position and negative working capital was due to non-performing debtors, which resulted in provision for credit losses of US$567,6 million.
Powertel, another arm of ZESA, made a profit of US$2,2 million, representing about two percent growth over prior year results.
This was due to the growth of sales coupled with cost rationalisation measures that resulted in a marginal increase in administrative expenditure.
ZESA Enterprises, another group unit, reported an operating loss of US$6 million because of the slashing of transformer prices by 50 percent due to stiff competition from cheap imports.
ZESA’s power generation subsidiary, the Zimbabwe Power Company, has also not been servicing its short-term debt amounting to US$339,4 million due to low power generation and now performing related party receivables from ZETDC.
The State-owned company has been struggling to service the principal debt plus interest pile, a situation which has weighed heavily on the operations of the integrated power generation and distribution company.
The financial results, released two weeks ago, revealed an easily observable sign of an emerging crisis in that about US$761,2 million is now due to creditors and therefore in arrears.
Only US$180,9 million of the debt is not yet due.
The report which was signed off by the board of directors headed by former Cabinet minister, Hebert Murerwa, showed the principal debt was at US$703,8 million, with local debt amounting to US$228,1 million while total foreign debt amounted to US$475,7 million.

ZESA’s latest financial results show that the group’s debt escalated to US$942,1 million last year.

Last week, Energy and Power Development Minister, Samuel Undenge hinted that tariff increases were inevitable, highlighting the desperation within government to save ZESA.
But critics warned that without government assuming ZESA’s debt, a tariff hike was unlikely to save the power utility.
There were indications government could allow a tariff increase for the first time since the last tariff revision of 2012 to enable ZESA to finance critical commitments.
ZESA has been proposing a tariff increase but had failed to get regulatory approval due to concerns a tariff hike would undermine efforts to revive the country’s struggling economy while also exposing an impoverished population contending with high unemployment.
Moreover, a number of companies, including major mining ventures, have been calling for a reduction in tariffs to cushion themselves from an inclement international commodities market, where prices have tumbled even as costs remained stubbornly high.
But ZESA officials said without an upward tariff adjustment, ZESA would sink deeper into debt and technical insolvency.
The parastatal has been unable to service its debts and invest in new capital projects in the wake of frequent breakdowns of its aging electricity plants.
Currently, the tariff is pegged on average at US$0,0986 per kilowatt hour, which is insufficient to support power projects currently underway.
In 2013, consultants, Norconsult, came up with a cost of US$0,14 per kilowatt hour but issues of efficiency at the country’s thermal power stations affected the actual cost of electricity.
Apart from the US$70,8 million ex-Central Africa Power Corporation (CAPCO) debt, which the power utility fully settled during the review period after Zambia threatened to pull out of a deal to jointly construct the Batoka Hydro Power Station on the Zambezi River, ZESA and its subsidiaries have failed to service their collective debt.
The debt situation could have been worse had government not assumed the interest component of the ex-CAPCO debt amounting to US$115 million as reported elsewhere in this week’s issue.
CAPCO was a company co-owned by Zimbabwe and Zambia during the Federation of Rhodesia and Nyasaland. The company was, however, disbanded in 1987 and was succeeded by Zambezi River Authority.
The interest was accrued from a US$70,8 million debt to Zambia, which included shared costs of the construction of the Kariba Dam and associated infrastructure during the tenure of CAPCO.
Among those still owed by ZESA locally include the Reserve Bank of Zimbabwe, which is owed about US$100,4 million after the central bank imported electricity on behalf of the power utility between 2006 and 2008, government (US$50,8 million), BancABC (US$17,1 million), the Infrastructure Development Bank of Zimbabwe (US$23,3 million), Sakunda Energy, ZB Bank and a Chinese firm called Afrochine.
Of the loans extended to ZESA by some foreign institutions , the European Bank is owed about US$45 million, Finish Export Credit Limited (US$24,2 million), International Bank of Reconstruction and Development (US$136,4 million), Lloyds Bank plc (US$12,3 million) and ZTE Huawei (US$7,7 million).
The Financial Gazette understands the loans were secured by a government guarantee.
The power utility’s operating costs also increased from US$967,3 million in prior year to US$1,072 billion in 2014, while revenue from electricity sales decreased from US$876 million in prior year in 2013 to US$872,9 million in the period under review.
Other revenue streams accounted for US$159 million in 2013 from US$68,2 million in the period under review.
ZESA’s current assets stood at US$598,5 million while its current liabilities totalled US$1,2 billion, resulting in a funding deficit of US$635,2 million.
This implies that the company may not be able to meet is current liabilities as they fall due.
According to the group’s external auditors BDO Chartered Accountants, the existence of a material uncertainty may cast doubt about the company’s ability to continue as a going concern.
ZESA reported that electricity debtors amounted to US$961 million during the period under review but as recently reported by the Financial Gazette, the power utility’s electricity debtor’s book has ballooned to over US$1 billion as firms and individuals continue to default on payments, a move which poses a risk to power supply security.
This means ZESA’s ability to adequately maintain its infrastructure has been affected, thereby worsening the system’s ability to deliver.
ZESA also failed to achieve the target of 30 000 new electricity customer connections during the year. The number of new connections increased from 19 070 recorded in 2013 to 22 369 in 2014, representing a 17,3 percent increase.
This was, however, below the annual target due to the shortage of connection materials especially meters.
However, the active customer base increased by 4,6 percent from 639 744 to 669 246 during the period under review.
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

RBZ Governor Dr John Mangudya talks to Finance Minister Patrick Chinamasa

THE average Zimbabwean lived on US$3,24 a day in September, according to the latest national datum lines from Zimbabwe national statistics agency (ZimStat).

This is above the World Bank’s Bank updated international poverty line of US$1,90 a day (old line was at US$1,25).

Zimbabwe is classified as a low income country by the World Bank. According to the latest available data, 72 percent of the population lives below the poverty lines.

The figures show that the total consumption poverty line (TCPL) for Zimbabwe stood at US$97,31 per person in Zimbabwe. This represents a decrease of 0,58 percent when compared to the August 2015 figure of US$97,88.

The TCPL for an average five persons stood at US$486,56, a decrease of 0,58 percent when compared to the August figure of US$489,51.

The Food Poverty Line for one person stood at US$30,86 from US$31,04. The FPL which is at US$1,03 a day represents the minimum consumption expenditure necessary to ensure that each household member can (if all expenditures were devoted to food) consume a minimum food basket representing 2 100 calories.

The FPL for an average of five families stood at US$154,32 a decrease of 0,6 percent from the August figure of US$155,22.

Again no details included in the index are provided but the differences in costs between different parts of the country are shown. Compared to US$486,56, the average cost for the basic requirements for a family of five for the whole country, the figure for Harare is at US$488,83, Bulawayo at US$501,94, Manicaland at US$438,30, Mash Central at US$484,24, Mash East at US$460,26, Mash West US$466,98, Mat North US$570 61, Mat South US$548 55, Midlands US$431,24 and Masvingo US$492,22. -FinX

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Finance and Economic Development Minister Patrick Chinamasa

ZIMBABWE has signed a US$87 million credit facility with the Export-Import Bank of India to fund the upgrading of one of its key power stations, as government battles to deal with a power crisis that has worsened in the past two months.
The deal, signed by Finance and Economic Development Minister Patrick Chinamasa last week, will result in the upgrade of the Bulawayo Thermal Power Station. The loan will be repaid over 10 years, with a grace period of three years, according to a statement issued by government.
Zimbabwe will pay an interest of two percent per annum, according to the statement issued by Chinamasa.
“The implementation of the project will indeed improve the supply of electricity which will in turn improve economic performance as it reduces the cost of production and reliability of power. What our economy requires is uninterrupted power supply to improve efficiency of industrial activities. The project is earmarked to be completed in three years and I urge all those involved in the implementation of the project to expedite the selection of consultants,” said Chinamasa.
He said the deal with the Export-Import Bank of India was part of a broad strategy by Zimbabwe to increasingly foster trade and economic ties with a block of the world’s fastest developing countries known as the BRICS.
The countries are Brazil, Russia, India, China and South Africa.
After political tensions with the west which started in 2000 led to a decline in funding flows from Europe and America, Zimbabwe has been pursuing a Look East Policy.
Export Import Bank of India has previously provided US$28,6 million for upgrading the Deka Pumping station in Hwange, US$49,9 million for vehicle purchases for the Ministry of Tourism and Hospitality Industry and US$13 million for Hwange Colliery Company Limited to purchase spares.
“The facility is one of the fruits of our accelerated re-engagement with the BRICS countries and pursuance of our Look East Policy,” Chinamasa said.
Zimbabwe is at the grip of a power crisis that has seen government, through the State run power monopoly, ZESA Holdings looking for financial lifelines to deal with the problem.
Electricity problems in Zimbabwe have affected the growth of businesses, which have been in crisis since hyperinflation kicked off in 2000.
After hyperinflation in 2008, the market has been hit by deflation.
But the Confederation of Zimbabwe Industries as on Wednesday the power crisis was one of the major issues now confronting the manufacturing industry.
The consequences have so far been disastrous, with even waterworks being affected by the power crisis.
Families complained of water cuts, which sparked fresh fears of epidemic diseases associated with water shortages.
But it is clear that the unrelenting power crisis that has crippled the nation has not been met with a sense of urgency.
Clearly, the country’s politicians and their technocrats are now desperate, but moves by Chinamasa to seek financial lifelines and renegotiate loan deals have been seen at positive steps towards ending the crisis.

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

flyAfrica had extended its route network to Namibia after starting off with the Harare- Johannesburg and Harare-Victoria Falls routes.

IN a fresh twist to the troubles rocking flyAfrica.com, a top executive has claimed that a family member of its sacked Zimbabwean partners stole US$140 000, triggering the fallout that grounded flights last week.
flyAfrica has made temporary arrangements to fly its passengers in Zimbabwe while its shareholders try to resolve their problems.
“On Tuesday 27 October flyafrica.com laid serious fraud and theft charges totalling in excess‎ of US$140 000 against a family member of our local partner in flyafrica Zimbabwe,” chief executive officer (CEO), Adrian Hamilton-Manns, said in a statement.
“flyafrica.com has also suspended the Zimbabwe partner within the airline for breach of directorial and fiduciary duties. Further charges are anticipated. In retaliation, the Zimbabwe partner illegally and unilaterally attempted to surrender our air operator certificate to the Civil Aviation Authority of Zimbabwe (CAAZ). This raised concerns within CAAZ about the relationship between flyafrica.com and the local partner,” Hamilton-Manns said.
flyAfrica halted flights last week after Zimbabwe chief executive officer, Chakanyuka Karase, responded to the dramatic boardroom coup by surrendering the airline’s operating licence to government, which said he was the recipient of the licence.
His move left passengers stranded.
And it placed more difficulties on the airline’s shareholders.
Last week’s statement by the airline indicated that the troubles were far from over, as fresh charges against the Zimbabwe CEO, or a member of his family, would deepen an already worse situation and keep the airline out of the country’s skies.
“We are seeking a swift solution to this and will be exploring all options as this action by our Zimbabwean partner is illegal and solely designed to damage our brand by attempting to inconvenience the travel plans of our loyal customers,” said Hamilton-Manns.
“We strongly believe that passengers should not be used as a pressure point in a shareholder dispute. We anticipate that the temporary flight ban will be lifted shortly. In the interim we have sourced an alternative aircraft from one of our other partners; some operations restarted today (28 October) and we anticipate normal operations from midday tomorrow, Thursday 29 October,” he said.
Karase approached the Ministry of Transport and Infrastructure Development after the attempted boardroom coup, calling off all flights.
However, government rejected changes proposed by the airline to its directors, noting that it was only Karase who was allowed to operate the airline in Zimbabwe.
The grounding of the airline, which had extended its route network to Namibia after starting off with the Harare- Johannesburg and Harare-Victoria Falls routes, left scores of passengers who were due to fly for a United Nations conference in Victoria Falls on Tuesday stranded.
But it triggered big battle.
As Karase surrendered the licence to CAAZ, Hamilton-Manns said shareholders were behind his push to crack down on his fraud claims.
“This conflict is deeply troubling to us,” he said.
“However, we cannot allow theft on such a large scale to go unresponded. Our commitment to flyafrica.com is absolute and our shareholders are backing us. This issue impacts flyafrica Zimbabwe – not the overall flyafrica.com project,” he said.
Last week, Transport Minister, Joram Gumbo, told this newspaper that government was concerned by the problems at the airline as it affected the flow of tourists.
flyAfrica had extended its route network to Namibia after starting off with the Harare- Johannesburg and Harare-Victoria Falls routes.

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Phillip Chiyangwa

ZIMBABWE Football Association (ZIFA) presidential aspirant Phillip Chiyangwa does not know what the abbreviations FIFA and COSAFA stand for.

Chiyangwa displayed his ignorance when he appeared on ZiFM stereo radio current affairs programme hosted by Ruvheneko Parirenyatwa this week.

The flamboyant businessman was sharing his manifesto with soccer fans.

A caller from Australia, Masimba, asked Chiyangwa: “What does FIFA COSAFA and CAF stands for?”

Instead of answering the simple question, Chiyangwa went ballistic and started shouting, accusing the caller of spending too much time in the west.

“Wa fonerei iwewe taura zvine musoro, ndozvinonetsa mukagarisa kuvarungu munotinetsa. musingade kupota muchibatsira Zimbabwe (why have you called, can you ask something sensible, that’s the problem with people who have overstayed in the west, you are one of the people who don’t even want to assist in building Zimbabwe).”

“What have you done for this country?” shouted Chiyangwa.

Then the caller said a lot of people,including his own mother, wanted to know if Chiyangwa was the right person to lead ZIFA.

“I don’t talk about your mother, it’s you who called, what have you done even to help your family and even assist Zimbabwe, not even in football but in whatever here?”

“Chi chaura kubatsira kuno kuZimbabwe iwewe what have you helped Zimbabwe with, this is one person I’m not going to answer.”

But the caller insisted that Chiyangwa should answer the question.

Ruvheneko then interjected and came to Chiyangwa’s rescue, telling the caller that her guest was not going to answer the question.

“He said he is not going to answer and if you have any other question I will give you the opportunity to ask since you called us all the way from Australia,” said Ruvheneko.

But Chiyangwa cut in, saying he had already made up his mind and was not going to answer any more questions from Masimba.

“No, no, no I don’t want to take any more questions from you and I don’t want to dignify your stupidity here, I don’t want to talk to you,” said Chiyangwa.

FIFA stands for International Federation of Association Football while CAF stands for Confederation of African football. COSAFA means Council of Southern Africa Football Associations.

So far, Chiyangwa will be squaring it with former Warriors skipper Benjani Mwaruwari who this week threw his hat into ring in the race to replace ousted Cuthbert Dube. Newzimbabwe.com

Parliament of Zimbabwe

IN 2006, one of the biggest scandals to ever rock a Zimbabwean government spilled into Parliament.
It was the case of high-level fraud and corruption in which senior government officials, including Cabinet ministers and Members of Parliament, were implicated in the plunder of resources at the Zimbabwe Iron and Steel Company (ZISCO).
The scandal was said to be so huge and damaging that “it would make all previous government graft cases look like a Sunday afternoon picnic when it eventually explodes”.
In the end, it never exploded.
It all started when the National Economic Conduct Inspectorate (NECI) produced a damning report implicating government bureaucrats in an “unimaginable looting spree” at ZISCO.
The Parliamentary Portfolio Committee on Industry and International Trade then interrogated the findings of the NECI report.
The then minister of industry and international trade, Obert Mpofu, at the committee’s initial hearing, confessed that the report not only existed, but actually implicated MPs and ministers.
He even committed himself to bringing the report to the committee in a week, heightening national expectations as people waited with bated breaths for the naming and shaming of the said MPs and ministers, which was anticipated to be followed by their dismissal from office.
But, alas, there was an anti-climax.
To everyone’s amazement, Mpofu walked into the meeting only to declare that he had no knowledge of such a report.
“I am not sure of any particular MP or Cabinet minister or senior person or anybody involved in ZISCO,” he told the committee.
This became one of the biggest letdowns for ZISCO workers, their families and the nation at large.
Word was that Mpofu had backtracked following an outcry from colleagues in his party and government. He then decided to absent himself from subsequent meetings and despite persistent efforts by MPs, the public and civil society, government refused to release the report and it died a natural death.

Obert Mpofu

Further investigations into the ZISCO scandal were halted and Parliament was only seized with trying Mpofu for contempt and lying under oath — offences for which he faced jail or fine or both.
He escaped with a ZW$40 000 fine.
Two years later, ZISCO would stop operations and all efforts to resuscitate it have been futile.
Many, however, still ask: If Parliament had succeeded in bringing to book the culprits, could the company have survived?
That question aside, the scandal is a perfect case study in our attempt to interrogate Parliament’s oversight function.
Parliament basically has three major functions namely legislative (lawmaking), representative and oversight.
While there has been widespread criticism over the other two roles, not much has been said about the oversight function, despite it being just as important as the other two.
Oversight is a function granted by the Constitution to Parliament to monitor and oversee government actions.
Parliament derives its powers from the Standing Orders that are made in terms of section 57 of the Constitution.
The oversight role is conferred on Parliament and codified by the House of Assembly Standing Order 159(2) and Senate Standing Order 149(2).
Parliamentary portfolio and thematic committees that are formed on the basis of such provisions have powers to summon any person or institution to give evidence or produce documents, and to report to them.
Critics have argued that the truest test of democracy in any nation is the extent to which its Parliament can ensure that government remains answerable to the public. This is done by maintaining constant oversight (monitoring) of government’s actions.
The recently amended standing rules and orders (SROs) actually go further to say any public official that fails to avail himself or herself for a committee meeting could be charged with contempt of Parliament.
When exercising oversight, Parliament ideally tries to ensure implementation and observance of the law, application of budgets as well as effective management of government departments, State enterprises and local authorities.
By so doing, Parliament is able to ensure that service delivery takes place, so that all citizens can live a better life.
The major reasons of exercising oversight are to detect and prevent abuse of office, to prevent illegal and unconstitutional conduct on the part of the government, to protect the rights and liberties of citizens, to hold the government answerable for how taxpayers’ money is spent and make government operations more transparent.
Portfolio committees have often been described as “engine rooms” of Parliament’s oversight and legislative work. They also interact with the public.
For example, the Parliamentary Portfolio Committee on Finance has just concluded its pre-budget consultations for the 2016 budget to be tabled in the National Assembly later this month.
Input from the consultations is incorporated into the budget, which Finance Minister Patrick Chinamasa will come up with.
MPs last week retreated to the resort town of Victoria Falls to brood over the key budget points.
After the presentation of the budget, each committee has hearings with the respective government departments over which they exercise oversight.
This serves to determine whether the department has kept its undertakings of the previous year, and spent taxpayers’ money appropriately.
In another example, one of the most important aspects of the oversight function is the consideration by committees of annual reports of organs of State, and reports of the comptroller and auditor-general, Mildred Chiri.
However, there have been grave concerns about the effectiveness of the entire process.
Some critics have argued, with a certain amount of justification, that oversight has been intrusive and meddling; others think it is short-sighted and counter-productive.
The most critical ones have dismissed it altogether saying it is just another component in the political cockpit of partisan politics from which it should be immune.
There is also an ample catalogue of examples that help the cause of those vehemently critical of the whole oversight functions who now are convinced that it severely lacks credibility.
Critics point out that Mpofu’s case clearly stands out as an aborted mission. While some argue that the fact Parliament actually achieved something by charging and fining him as an oversight milestone, others think it was actually a major letdown because in the end it did not address issues of public interest for which it was intended.
The portfolio committees have also suffered from truant ministers who decide to abscond the meetings or chose not to respond to their reports, a situation which heavily compromises the entire process.
A case in point is the famous clash between Local Government Minister, Saviour Kasukuwere, and chairperson of the Parliamentary portfolio committee on Youth, Indigenisation and Economic Empowerment, Justice Mayor Wadyajena.
The committee wanted to interrogate the minister on his dealings during his tenure as minister of indigenisation, particularly how he handled community share ownership schemes.
It took almost a year, repeated efforts and arrest threats for Kasukuwere to appear before the committee, and when he finally did, the meeting was reduced to a mere drama and exchange of harsh words between the two.
Kasukuwere reportedly saw Wadyajena, who is his political nemesis, as seeking to harm his reputation and discredit him. Far from attending to the critical issue, the meeting became a platform to settle political scores and there was no answer to an eager citizenry — only entertainment to an interested Press.
There are also other examples of how far the oversight function has been compromised. One such case being that of former Harare town clerk, Tendai Mahachi.
Last year, the Parliamentary Portfolio Committee on Local Government summoned him to give explanations on his income and the town clerk pitched up with a pay slip which showed he earned the moribund Zimbabwean dollar.
And when the then minister of local government, Ignatius Chombo, was later accused by the same committee of covering up for Mahachi, he said the Harare mayor, Bernard Manyenyeni, had been overzealous and involved himself in turf issues and overstepped his boundaries. That was the end of the issue.
A few months ago, State Procurement Board chairman, Charles Kuwaza, was chased from the Parliamentary Portfolio Committee on Mines and Energy meeting after failing to provide its members with adequate evidence on the issues they had raised.

Ignatius Chombo.

For Parliamentary Monitoring Trust director, Sibanengi Ncube, such behaviour renders the Parliamentary oversight function worthless.
“Parliament, which is the central institution of democracy and the key institution in oversight, suffers from crisis of credibility. The biggest problem I seem to notice is that because of the highly polarised nature of our politics, MPs are afraid of taking the executive to task. MPs from the ruling party (ZANU-PF) will not expose their colleagues in Cabinet because of the factional wars raging in the party and when they try to bring ministers to account, it is largely out of interest to bring down someone from an opposing faction and the whole oversight role is slowly losing significance,” said Ncube.
John Makamure, executive director of the Southern African Parliamentary Support Trust, said even though accountability mechanisms are embedded in the Parliamentary procedures, which, on paper, means the august House is doing its work, implementation and assurance of accountability mechanisms are not being allowed to work.
“For someone who works with Parliament every day, I think we can do better through enforcing the provisions of the Constitution and the SRO. We have seen presiding officers of Parliament, namely the Senate President and Speaker of the National Assembly, Jacob Mudenda, giving threats to ministers that do not bring bills to Parliament and that abscond sessions. That is good but threats alone will not serve us. There is need for action,” he said.
There have also been complaints about government failing to act on reports produced by these committees.
There could, however, be at least a sense of relief from how Minister of Public Service, Labour and Social Welfare, Prisca Mupfumira, has handled the case of the National Social Security Authority (NSSA).
In July, the Parliamentary Portfolio Committee on Public Service, Labour and Social Welfare ratcheted up pressure on government to overhaul NSSA after public consultations supported a shake-up of the public pension scheme following an investigation which unearthed rampant mismanagement.
Acting on the recommendation of the committee, the Minister appointed a new board last month, which immediately fired top NSSA bosses implicated in siphoning funds from the parastatal.
But one area which has been glaringly lacking has been that of Chiri’s reports that have exposed major shortcomings in State enterprises and local authorities. She has religiously submitted these to Parliament, but her recommendations have never been implemented.
The Financial Gazette inquired with some parastatal bosses after the release of another damning report last month which showed that they were still earning mega salaries, just to check their reaction.
One parastatal boss actually had the cheek to laugh and say confidently that he was not bothered at all because government would never touch them.
The Zimbabwe Parliament, like all Westminster parliaments around the world, should have a vibrant oversight function.
For example, in South Africa, President Jacob Zuma has had to answer corruption allegations emanating from reports that he used public funds to upgrade his rural Nkandla home.
British Prime Minister, David Cameroon, is weekly subjected to a barrage of questions by the House of Commons while United States President, Barack Obama, reports to both Senate and Congress regularly.
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Harare mayor, Bernard Manyenyeni

THE struggling Harare City Council (HCC) recently passed its 2016 budget without any discussion, amendment or dissent.
Serve for a few protests in the form of press releases and social media outbursts by the city’s residents’ associations during the budget consultations, there was total silence, generally.
It was only HCC’s finance committee chairman, Trynos Moyo’s voice that billowed through the packed chamber on the evening of October 23 as he rumbled through the 34-page budget statement.
Bemused councillors blankly stared at him as he flipped through the pages, perhaps most of them not making any head or tail of it.
This possibly vindicated the capital city’s mayor, Bernard Manyenyeni’s recent observation that there was serious illiteracy in council, an exposé he is now vehemently denying because it triggered serious salvos from the councillors.
Only two people could be spotted in the public gallery, which usually fills to capacity on such occasions when stakeholders stampede to hear what the city fathers would have in store for them as the city’s financial year makes way for yet another.
At the end, the mayor opened discussions on the budget to the floor.
As expected, there was no objection, no amendments proposed — and the US$343 million budget sailed through.
Just like that!
To all intents and purposes, the US$343 million monstrous budget does not make sense at all in the current environment.
In the current term, the city’s budget stood at US$272 million. For the 2016 financial term, the city fathers have added a massive US$71 million to last year’s figure, which beggars belief.
Developments on the ground speak a different story.
Government has been revising downwards its growth projections on account of a worsening economic situation and so have other multilateral financial institutions that have the gift of seeing yonder.
There has been a bloodbath in the corporate sector as companies retrench or drift into bankruptcy. Between July and August, nearly 30 000 workers lost their jobs after the Supreme Court ruled on July 17 that employers could terminate employment contracts on three months notices.
Conservative figures suggest unemployment may have skyrocketed to above 90 percent.
That alone has a direct impact on councils because they rely on their residents — who have been the worst affected by the economic situation — for revenue.
While people have found sanctuary in the informal sector, there are barely making ends meet. In any case, councils have been unable to come up with an effective formula to levy the informal sector due to its truancy.
Against this background, it remains to be seen how the city fathers in Harare hope to raise the staggering US$343 million, which represents a 28 percent increase on last year’s budget.
In Bulawayo, arguably the most efficiently run council in Zimbabwe, council has maintained a flat budget in view of the economic meltdown that has left residents badly exposed.
Local government consultant, Percy Toriro, said the planned 28 percent increase in the 2016 budget was “over the top”, given the revenue challenges of 2015.
“It is not right that a local authority should pass a budget they know very well is not realistic. That is just over the top and it jeopardises the whole point of local authority budgeting,” said Toriro.
“At this rate, people will wake up in two or three years’ time and in many cases their local council will not be there as they know it.”
But the HCC is adamant that it has the capacity to defy the odds by raising money to fund the monstrous budget.
The municipality hopes to increase revenue collection through improved water supply as the council completes refurbishment of its water and sewer plants.
HCC also anticipates raking more from property taxes.
“We have done our survey and realised that more than half of the properties in Harare are not captured in our database and we are moving to rectify that and it will earn us more revenue,” argued Moyo .
“We also hope that as we complete refurbishment of water and sewer infrastructure, which will allow us to pump more water into homes, we will realise more revenue”.
Judging from Moyo’s arguments, council seem to be making a huge gamble since they have premised their budget on assumptions, which may not materialise on time.
If the refurbishment of the city’s water and sewer infrastructure — a project that has been in the pipeline for sometime — is not going to be completed on time, it means council would be off-budget.
Indications already seem to suggest that the refurbishment might even drag up to 2018.
Similarly, was it an error of commission or omission that more than half of the council’s properties were not captured in Town House’s database?
What would make sense for residents is to have thorough investigations in order to get to the bottom of this instead of being given promises “to rectify” the anomaly.
With mismanagement and corruption rife at Town House, chances are that plans to correct the abnormality may run into serious problems, which would negatively impact on the 2016 budget.
While council did not say it, critics believe that Harare actually foresees more money coming from water sales as it moves to install pre-paid water meters.
There has been a gridlock over the pre-paid meters between council and other stakeholders, who are vehemently opposed to their installation through demonstrations.
A school of thought posits the argument that the budget has been inflated deliberately for selfish interests.
Government has made it a policy that local authorities should abide by a provision in the Urban Councils Act, which says 70 percent of the budget should be earmarked for service delivery, while the remainder could go towards remuneration.
By stretching the overall budget way beyond anyone’s imagination, while marginally tweaking with the wage bill, council could be attempting to fool the authorities into thinking that they have abided by the Urban Councils Act.
At face value, it appears that council has managed to reduce the annual wage bill to 33 percent of the budget, from around 70 percent alleged previously; yet the truth is the salary bill remains bloated, and the statistics may now be deceiving.
The 2016 budget actually raises the annual salary bill from US$111 million to US$114 million.
Another question for council is: Given that there was a drastic, government-sanctioned cut in executive salaries, and that council workers have not received an increment for years, what accounts for the increase in the wage bill from US$111 million to US$114 million?
That is the question the city’s treasury, and Manyenyeni, should answer.
Analysts say the increase in the overall budget is meant to maintain the status quo given how it corresponds with the substantial overall budget rise.
Of the new budget, US$170 million is planned to go towards “general expenses”.
Another US$60 million will pay operating expenses towards the city’s departments.
That translates to about US$15 million more in departmental spending next year over what was spent in 2015.
Of the US$170 million in new expenditure, US$10 million is going towards maintaining the city’s streets, storm water drainage, mains, vehicles, plant and machinery maintenance.
Residents rate the city’s street department, headed by Philip Pfukwa, as the least performing of all city departments.
Once again, the budget is tilted towards consumption, with very little going towards capital expenditure.
Decades of deferred maintenance and reconstruction on city streets — an invaluable asset to ratepayers — caught up with city fathers in recent years, resulting in massive flooding within the central business district due to poor drainage, potholes and garbage littering the streets and blocking drains.
What this simply demonstrates is that the leopard never changes its spots.
For the umpteenth time, the city fathers have stuck to their script — that of feathering their nests while residents and council workers continue to sing the blues.
Local government expert, Kudzai Chatiza, warned that council would have to look into “dark corners” to find the amount of money it proposes to raise.
“The local authority is dealing with huge revenue reductions due to the harsh economic environment which is predicted to worsen and has outlined a US$342 million budget for next year. I do not see that happening,” Chatiza said.
Chatiza noted that it would be impossible to raise that money, especially as council is currently saddled with debts, after dismally failing to meet the smaller 2015 budget.
What has raised eyebrows is the fact that HCC is currently surviving on a shoestring budget because it is owed US$380 million by ratepayers, yet it has increased its budget by a further US$71 million in 2016, without a clear idea where this will come from.
At present, the local authority has not paid its employees for three months.
Council finance director, Justin Mandizha, recently gave rare insights into the dire straits facing the capital city.
During a recent budget meeting with stakeholders, he said on average the city was collecting just 55 percent of their budgeted revenue, attributing the measly collection to a worsening liquidity crisis, which he said had compromised the city’s service delivery.
He said the trend was likely to continue.
“Our debtors’ portfolio is sitting at US$380 million, with high density areas owing US$82 million, low density US$140 million, industry and commerce owe the city US$141 million and public sector owes nearly US$17 million. We are operating in an environment where our stakeholders have started experiencing very low disposable income. The city is unable to implement capital programmes which drive service delivery,” he said.
What has also failed to appeal to many, especially residents, is the fact that the approved budget has many supplementary appropriations eating into it — essentially cost overruns for the just-completed 2015 fiscal year — to pay for municipal police, vendor removal and costs related to demolition of illegal properties.
Harare Residents Trust lobby and advocacy officer, Esther Chimanikire, said ratepayers would be wise to worry about the overruns since they underscore a potentially challenging financial picture for the city.
“There is nothing inspiring about this budget, which will further burden the ratepayer. Although council said it was not hiking rates, it is clear that it will not raise the money and as such, the move will only result in creating further deficits and council resorting to such harsh methods of collecting revenue as we have seen in the past like lawsuits and water disconnections,” she said.
With residents and other lobby groups having failed to get their views across, council has won an easy battle but not the war.
The real war, which the Movement for Democratic Change-dominated council should fully prepare for is getting the budget approved by a ZANU-PF-led Ministry of Local Government, headed by Saviour Kasukuwere, who happens to be the ruling party’s national political commissar.
Only time will tell!
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Reserve Bank of Zimbabwe lost the ability to implement monetary policy apart from its peg to international currencies.

CORRUPTION, policy instability and bureaucracy have been cited among factors undermining Zimbabwe’s competitiveness, a report released recently has highlighted.
The other issues highlighted in the Economic Competitiveness Report as contributing to the demise of the country’s economy include infrastructure problems, rigid labour laws and lack of access to cheap finance for companies.
“About 25 percent of the surveyed companies indicated that lack of finance was the major challenge bedevilling the local industry,” the report, which was released last week by the National Economic Consultative Forum (NECF), said.
“The limited access to finance reflects the severe liquidity conditions in the economy. Following the adoption of the multiple currency system in 2009, the Reserve Bank (of Zimbabwe) lost the ability to implement monetary policy apart from its peg to international currencies. Moreover, the banking deposits are mainly demand deposits, which are transitory in nature, and thus limit credit creation by banks,” the report added.
It said the low-income levels obtaining in the country have also reduced the propensity to save, resulting in a narrow deposit base.
In addition, the high demand for loans has pushed up interest rates and as such, the cost of borrowing is very high.
The report was released a day after a Confederation of Zimbabwe Industries survey cited high interest charges, labour laws and lack of credit as affecting the recovery of industries.
Although the country has been able to access offshore credit lines to ease the financing challenges, these have been mainly short-term as opposed to the much-preferred long-term financing.
The perceived country risk has also resulted in high interest rates compared to other countries in the region.
The high cost of finance negatively affects competitiveness among local firms.
“The issue of policy instability mainly stems from the uncertainty surrounding the indigenisation and economic empowerment legislation, which created uncertainty in the country,” NECF said in the report.
“The Act was recently amended and clarified in order to encourage further investment in the private sector.
“By the same token, the Labour Act is currently under review in order to bring flexibility to it in line with international best practices,” the report said.
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette

Supreme Court of Zimbabwe

THE Supreme Court has ruled that employers have a right at common law to single out an employee for dismissal even in cases where several other workers are guilty of the same offence.

In a judgment delivered in August this year, but the full details of which were only made public last week, the Supreme Court ruled that ZB Bank (formerly the Zimbabwe Banking Corporation) was right in dismissing one of its branch managers for offences that several of his colleagues throughout its branch network were habitually committing.
In September 2004, the bank dismissed Saidi Mbalaka, a manager at one of its branches in Bulawayo after finding him guilty of gross misconduct. Mbalaka had been charged with four counts that were listed as: Failure to comply with standing instructions; gross incompetence or inefficiency; habitual and substantial neglect of duties; and an act, conduct or omission inconsistent with the fulfilment of the express or implied conditions of his contract.
At the time, Mbalaka who had a (per client) lending limit of ZW$10 million, had authorised the encashment of a ZW$73 million cheque against an account that was already overdrawn to the tune of over ZW$10 million.
An investigation by the bank revealed that his branch was among the highest in terms of anomalies relating to the failure to adhere to data capture.
The branch had the highest number of overdrawn accounts, greatest exposure to risk in relation to client indebtedness, as well as the highest number of unclassified savings accounts.
It was also established that Mbalaka had disobeyed instructions to ‘un-pay’ cheques against certain accounts, which the bank charged was evidence of habitual and substantial neglect of his duties.
After a disciplinary hearing found him guilty on all the four charges, Mbalaka was dismissed.
An aggrieved Mbalaka appealed to a labour officer against his dismissal, arguing that since he was not the bank’s only manager who had misbehaved in this way, his dismissal amounted to selective punishment and victimisation.
The matter was referred to an arbitrator who, in February 2005 — while agreeing with the guilty verdict — however, ruled that instead of being dismissed, the branch manager should be given a final written warning and be transferred to another branch.
The bank appealed against the arbitrator’s ruling to the Labour Court, which also confirmed that Mbalaka was indeed guilty of the four offences, but still upheld the arbitrator’s ruling that he be re-instated, warned and transferred to a different branch.
The arbitrator had made the ruling that Mbalaka should be re-instated on the basis that he was not the only one in the financial services group who had committed similar offences. This is the ruling that the Labour Court concurred with.
This forced the bank to appeal to the Supreme Court.
Justice Anne-Mary Gowora, sitting with Justices Susan Mavangira and Elizabeth Gwaunza as the Supreme Court, trashed the previous rulings saying the bank was right in dismissing Mbalaka as he had his own contract as an individual that he alone was supposed to protect and therefore could not be allowed the privilege to hedge behind others.
It was the Labour Court that ruled that Mbalaka could not hide in the crowd, but went on to contradict itself by nevertheless agreeing that he should be re-instated.
“Given the finding by the (Labour) court a quo that the arbitrator had misdirected herself in ruling that the charges of misconduct preferred against the respondent amounted to selective punishment and victimisation, and that the misdirection went to the root of the case, it is finding of this court that the Labour Court, in turn, grossly misdirected itself in then holding that the misdirection by the arbitrator was not so gross as to warrant interference,” Justice Gowora ruled.
The court then ruled that ZB Bank was right in dismissing Mbalaka.
This particular case also serves to highlight how slow the Zimbabwean judiciary process can be as it took the Supreme Court a record 10 years to make a ruling.
This latest ruling adds to a barrage of other cases in which the Supreme Court has of late ruled in favour of employers.
In July, the court ruled that employers have a right at common law to terminate workers contracts of employment on the same three months’ notice that workers enjoy.
The ruling resulted in more than 30 000 workers losing their jobs as Zimbabwean employers — who are struggling to keep afloat in the country’s harsh trading environment — stampeded to shed off extra staff.
The same court followed up with another ruling to the effect that staff benefits are not an entitlement, but a favour that employers can choose not to give their workers.
In yet another ruling, the Supreme Court ruled that it is the prerogative of the employer to decide where an individual in their employment should be deployed.
This was a ruling in a case in which it dismissed a constructive dismissal case appeal by a former Rainbow Tourism Group general manager, Richard Nkomo, who had left the hotels group employment after being transferred from Harare to Victoria Falls.
newsdesk@fingaz.co.zw

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette