BH24 Reporter

HARARE -Finance and Eco-nomic Development Minister Patrick Chinamasa last week presented a growth-oriented Budget for 2016.

Under the current environ-ment nobody expected mira-cles on the size of the budget but policy measures aimed at creating an enabling environ-ment for business.

The minister’s budget did jus-tice in this regard.

And his theme “Building a Conducive Environment that Attracts Foreign Direct Invest-ment” spelt all the intentions of the Treasury boss.

There are a number of take

always from the 2016 National Budget, but the most interest-

ing ones are:

First, re-affirmation to clear

debt in line with the Lima out-come is a good move in the right direction, which will help to address the country’s risk profile and help both Govern-ment and private sector to attract funding. It is impor-tant to see the budget reaf-firming this.

There a number of measures, which were spelt out in the budget aiming at supporting agriculture which inter – alia include direct subsidies to agriculture particularly to cot-ton sector, agro – value chain, contract farming and mobili-sation of funding to the tune of $1 billion from the bank-ing sector. In line with this, the proposals by the budget to provide security of land tenure through the issuance

News Update as @ 1530 hours, Monday 30 November 2015

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ECONOMY 2016: Good times beckoning

Minister Patrick Chinamasa

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of tradable permits and trad-able lease agreements will help farmers to unlock finance from the banks and take away the burden from Government. This is an excellent move.

Again, still on agriculture, the call by the minister to oper-ationalise the Commodity Exchange, which was estab-lished way back in 2011 is again most welcome as it will help to address three critical challenges, which farmers are facing, that is, access to infor-mation, finance and markets. The commodity exchange in itself has a financing mecha-nism as it provide platforms for derivatives which can be used to finance agriculture. In addition, it provides ware-house receipts which can be used by farmers as collateral.

The budget eloquently spelt out the need for business link-ages and value chains which are important measures aimed at addressing national produc-tivity, employment creation, liquidity and improvement in

trade balances as the country localise the foreign currency.

One of the worst enemies of this country is lack of compet-itiveness. As such, the minis-ter laid out a number of meas-ures which include:

Efforts towards cutting down cost drivers such as regula-tory cost like the ones from the Environmental Manage-ment Agency (EMA) and multi-ple taxes in the mining sector and establishment of one stop border post.

It is even exciting to note that there is expedition in the establishment of the national competitiveness commission and operationalisation of the findings of the national com-petitiveness report which was launched on 29 October 2015. These twin moves will help to consolidate efforts towards raising national competitive-ness.

The move to establish incu-bation centres for SMEs and formalisation of the informal

sector is a good since the economy is now largely SME and informal. What is more refreshing is that the budget went on to propose supporting measures aimed at unlocking potential in this sector.

These measures such as establishment of SMEs indus-trial parks, completion of Indo-Zim Common Facility Centres, establishment of SME bank (SMEDCO capi-talisation), entrepreneurial skills upgrading, enhance-ment market access through business to business linkages and trade promotion, coopera-tives development, promotion of value chains through SMEs and development of the SMEs formalisation strategy.

The budget was also very clear on indigenisation. The problem with indigenisation in Zimbabwe is not the policy itself, but how it is spelt out. What is more damaging is not the policy but inconsistency pronouncement by officials who have no mandate to do

so.

One of the roles of the national budget is to set a positive tone on the economy.

It was good to see Minister Chinamasa clearly stating the point that the minister responsible for indigenisation policy, that is, Honourable Zhuwao will spell out before Christmas a template for indi-genisation which will put to rest the long term problem of Government officials singing different hymns.

Lastly, it was also interest-ing to note that all the pro-nouncements in the budget were structured in a manner that seek to see the effective implementation of the Ten Point Plan which was outlined by His Excellency, President Robert Mugabe in his state of the nation address in August..

This is important because it helps implementation of the policy and at the same time re-inforce policy consist-ency.●

BH243

By Tawanda Musarurwa

HARARE -Zimbabwe’s insurance regula-tor ,the Insurance and Pensions Commis-sion (IPEC) will soon appoint a substan-tive chief executive officer.

Introducing the IPEC's new board mem-bers this morning, Finance and Economic Development Minister Patrick Chinamasa said the delay in appointing a new CEO for the regulator had been delayed by the need to restructure its board.

"It (the new IPEC board) will have a working mandate to appoint a substan-tive chief executive officer. We have had an acting, whom I have been extending her tenure every three months because I didn't think it was my responsibility to appoint a substantive CEO, " said Minister Chinamasa.

The new six-member board is chaired by ex-AfrAsia CEO Mrs Lynn Mukonowe-shuro.

The other members are Mr George Mazhude, who is board vice chairperson, Finance and Economic Development secretary Mr Willard Manungo, Mrs Anna Mashingaidze, Abedinico Ncube and Mr Tafadzwanashe Zinyoro.

Although there is improved stability and confidence in the insurance and pension sector, it has largely remained depressed due to low economic activity and legacy issues emanating from the conversion of insurance and pension policies from the Zimbabwe dollar to the United States dol-lar values, among other issues.

According to Minister Chinamasa, some of the key issues that the IPEC board

must consider include: finalisation of amendments to pensions and insurance regulations, introduction of interface information technology (IT) system, the Commission of Inquiry, the Insurance and Pension Study and compliance with Pre-scribed Asset Requirement.

He also said there was need for the board to focus on review of minimum capital requirements as well as establishing effec-tive co-existence between the National Social Security Authority (NSSA) and pri-vate occupational pension schemes.

IPEC is the commission governing insur-ance and pensions in Zimbabwe, which emerged from the enactment of the Insurance and Pensions Commission Act of Zimbabwe.

Meanwhile Minister Chinamasa said the

bills for the insurance and pension sectors should be ready for submitting to Parlia-ment during the first quarter of next year.

"My Ministry is currently finalising the draft bills for the insurance and pension industry , taking into account stakehold-er's inputs.

"The bills include the Insurance and Pen-sion Commission Bill, Pensions and Prov-ident Funds Bill, and the Insurance Bill. It is anticipated that the bills would be pre-sented to Parliament in the first quarter of 2016," he said.

Among other things, the bills seek to bar shareholders with significant shareholding from holding executive positions in insur-ance companies and revise individual shareholding threshold.●

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New substantive CEO for IPEC

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$75m tranche in 2016 for NetOne expansion project

Chinese investors urged to focus on value addition By Funny Hudzerema

HARARE -Government has urged Chinese investors to invest in the value addition of raw materials.

The move is meant to assist Zimbabwe in reducing the trade imbalance, Minister of Industry and Commerce Mike Bimha has said.

“Currently, Zimbabwe is experi-encing a negative and high trade deficit with China due to the con-tinued export of raw and semi-pro-cessed goods, while we import fin-ished products from China.

"In this regard I call upon the Chi-nese business community present to participate in the value addition of Zimbabwe’s vast raw materi-als through partnerships in order to promote technology and skills transfer," he said during a Zimba-bwe-China Economic Cooperation Forum this morning.

The Zimbabwe-China Economic Cooperation Forum comes ahead of a visit by Chinese President Xi Jinping who is expected in the country tomorrow on a two-day State visit.

Zimbabwe and China have strong

bi-lateral ties, and China is cur-rently Zimbabwe's biggest trad-ing partner with trade statistics between the two countries peak-ing at nearly $1,2 billion between January and November last year compared to $1,1 billion in 2013.

Minister Bimha added that Chi-nese investors should invest in the country insofar as it also allows them to enjoy benefits from other trade blocks which Zimbabwe is a party to.

"Zimbabwe is also a member of regional economic groupings namely SADC, COMESA and is

also actively involved in the nego-tiations for the Tripartite Free Trade Area, which will create a free Trade Area for countries in the SADC, COMESA and the East African Community (EAC).

“This therefore gives companies investing in Zimbabwe a large market to supply its products, since COMESA countries have a total population of 650 million people and a GDP totaling $170 billion while the Tripartite member states have a total of 650 million people with a total GDP of $1 tril-lion,” he said.●

BH24 Reporter

HARARE -Government says $75,5 million will be disbursed for the on-going second phase of the NetOne expansion project.

The State-owned telecoms operator NetOne is currently implementing Phase II of the National Network Broadband project funded from a

$218,9 million loan from China Exim Bank.In the 2016 National Budget, Finance and Economic Development Minister Patrick Chinamasa outlined that a significant portion of the China Exim Bank loan facility had been uti-lised.

"Cumulative disbursements towards the project now stand at $118,1 mil-lion, with $52,4 million having been

disbursed as at 30 September 2015. Equipment worth $98,3 million has been delivered and installed coun-trywide," he said.

"In 2016, it is expected that $75,5 million will be disbursed for further works."

The three-year project, which is expected to be completed in 2016,

will see NetOne providing LTE ser-vices to its customers across Zim-babwe, resulting in wider broadband use in the country.

Statistics from the International Tel-ecommunications Union show that in 2013, Zimbabwe's fixed broadband penetration stood at 0,7 percent, while the mobile broadband pene-tration rate was at 38 percent.●

BH24

TAA:DI251386-Y22

Laz DI324241-D15

6

HARARE - Thin trading was the order of the day as the local bourse opened the week lower at 117.55, 0.09 points (or 0,08 percent) worse off from Friday.

A couple of heavyweight losses pulled down the main-stream industrial index. Seed manufacturer SeedCo lost $0,0099 to settle at

$0,8700 and giant insurer Old Mutual declined $0,0009 to close at $2,1100.

No counter traded in the pos-itive territory and six coun-ters remained unchanged at previous closing prices.

Barclays, CBZ, Econet, Simbisa, Padenga and Zimre Holdings closed at $0,0432, $0,1000, $0,1800, $0,1550,

$0,0750 and $0,0122 in that order.

The mining index was steady at 22.33 as Bind-ura, Falgold, Hwange and RioZim all maintained previ-ous price levels at $0,0130, $0,0050, $0,0340 and 0,1040, respectively.

- BH24 Reporter ●

ZsE7

Thin trading haunts market on opening

BH248

MOvERs CHANGE TOdAY PRICE UsC sHAKERs CHANGE TOdAY PRICE UsC

SEEDCO -1.12 87.00

OLD MUTUAL -0.04 211.00

INdEx PREvIOUs TOdAY MOvE CHANGE

INDUSTRIAL 117.64 117.55 -0.09 points -0.08%

MINING 22.33 22.33 0.00 0.00%

9 ZsE TABlEs

ZsE

INdICEs

stock Exchange

Previous

BH2410

11 dIARY OF EvENTs

The black arrow indicate level of load shedding across the country.

POwER GENERATION sTATs

Gen Station

30 November 15

Energy

(Megawatts)

Hwange 389 MW

Kariba 468 MW

Harare 30 MW

Munyati 0 MW

Bulawayo 23 MW

Imports 0 MW

Total 861 Mw

•1 December 2015 - The 33rd Annual General Meeting of the Members of Radar Holdings limited; Place; The Board Room, 6TH FlOOR, Tanganyika House, 23 Third street, Harare; Time: 15:00

THE BH24 dIARY

Johannesburg -The South African rand was flat against the dollar early on Monday, but traders and analysts said it could turn weaker if the October trade deficit came in bigger than expected later in the session.

The JSE securities exchange's Top-40 futures index was down 0.26 percent, suggesting the bourse would get off to a slightly soft start at 0700 GMT.

By 0645 GMT the rand traded at 14.4115 versus the dollar, hardly changed from Friday's close of 14.4025.

The rand barely moved after a central bank report at 0600 GMT showed growth in private sector credit demand in South Africa quickened to 8.87 per-cent in October on the year, from 8.39 percent in Septem-ber. - Reuters

Investors awaited more data from the revenue service at 1200 GMT, which could weigh on the rand. Econo-mists surveyed in a Reuters poll expected a widening to 4.9 billion rand in the October trade deficit, after an 890 mil-lion rand gap in September.

"A wider than consensus defi-cit print today could be rand negative if it raises concerns about a continued widening in South Africa’s current account deficit," Barclays Africa said in a market note.

Government bonds weakened in early trade, with the yield for debt due in 2026 rising 2.5 basis points to 8.585 percent from Friday's close

- Reuters●

JOHANNEsBURG - South African fashion retailer Truworths Interna-tional said on Monday it has entered into an agreement to buy an 88.9 percent stake in Britain's Office Retail Group for 5.5 billion rand ($382 million).The British retailer's management will retain an 11.1 per-cent stake in Office. Truworths has the option to buy that stake within 3 to 5 years, it said in a statement.

Office, a footwear retailer with 150 stores, would be Truworths' first foray into Europe. Shares in Tru-worths traded down 0.8 percent at 95.25 rand by 0740 GMT, while the Johannesburg Securities Exchange's All Share index was flat.- Reuters●

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Rand stable, could weaken on trade datas.A's Truworths to buy major-ity stake in Office Retail Group

Most-active iron ore futures in Sin-gapore sank below $40 a metric ton for the first time on concern that the economic slowdown in China will cut demand as supplies from the largest miners climb.

The SGX AsiaClear contract for Jan-uary fell 2.6 percent to $39.74 a ton at 2:38 p.m. in Singapore, heading for the lowest close since trading started in April 2013. On the Dalian Commodity Exchange, futures for May delivery sank as much as 3.1 percent to 293 yuan ($45.81) a ton, a record low.

The raw material has been pum-meled since the start of 2014 as surging supplies from low-cost pro-ducers including BHP Billiton Ltd. and Rio Tinto Group in Australia and Brazil’s Vale SA combine with falter-ing demand in China to spur a glut. Losses in Singapore and Dalian could presage a drop in the benchmark price for spot ore in Qingdao, which will be updated later in the day. The latest sign of new supply came from Australia, with a vessel waiting off-shore on Monday to load the first cargo from Gina Rinehart’s Roy Hill mine.

“Supply continues to rise while port inventories are starting to climb, weighing on iron ore prices,” analysts

at Maike Futures Co. said in a note on Monday. “The overseas producers are still profitable and are greatly reducing costs.”

steel Production

The top miners are betting that higher output will enable them to cut unit costs and defend market share while smaller rivals shut. Mills in China, contending with overcapacity

and depressed margins, will cut steel production by almost 3 percent next year, according to the China Iron & Steel Association.Ore with 62 per-cent content delivered to Qingdao rose 1.2 percent to $44.50 a dry ton on Friday, according to Metal Bulletin Ltd. The price bottomed at $43.89 on Nov. 24, a record for daily price data dating back to May 2009.Rinehart’s $10 billion operation,

which targets annual production of 55 million tons, missed an initial deadline to begin shipments earlier this year. The Capesize carrier Anan-gel Explorer, anchored offshore, will be loaded with the first cargo from the mine, Roy Hill Holdings Pty. con-firmed in an e-mail.

While Citigroup Inc. has forecast the mine’s new supply will contribute to a further slump, the producer has said almost 90 percent of its output is under long-term contracts and that it won’t pressure prices. Aus-tralia & New Zealand Banking Group Ltd. said it’s the pace at which the project comes on stream that will determine the impact.

Inventories at ports in China have expanded in six of the past seven weeks to the highest level since May. Holdings rose 1.8 percent to 87.65 million tons last week, according to Shanghai Steelhome Information Technology Co.

Miners’ shares dropped in Sydney. BHP, which is also facing the fallout from a burst mine dam in Brazil, shed 3.6 percent to A$18.09, the lowest close since 2005. Rio lost 0.7 percent, retreating for a seventh day, as Fortescue Metals Group Ltd. fell 4.9 percent. The trio are Australia’s biggest shippers. - Bloomberg●

INTERNATIONAl NEws 13

Iron ore sinks below $40 for the first time

By Kizito sikuka

Agriculture has been identified by Africa as a priority development area in the China-Africa strategic partnership.

The agricultural sector is regarded as an engine for socio-economic develop-ment in most African countries.

According to the African Union (AU), agriculture accounts for about one-third of the continent’s Gross Domestic Product (GDP), and more than two-thirds of its citizens rely directly on the sector for their livelihood.

Cognisant of the important role of agri-culture in the development agenda, Africa is redoubling its efforts to invest more in the sector and boost produc-tion.

However, the task of transforming agriculture is generally not an easy one. Similar to the struggle for inde-pendence, the agricultural drive also requires much more efforts from within Africa as well as outside, particularly from those that have successfully transformed their agricultural sector.

One country that has managed to record impressive progress in the agri-cultural sector is China. Other notable

countries in this regard include Argen-tine, Brazil, India and Tanzania.

From struggling to feed its growing population, China now ranks among the leaders in worldwide farm output, although accounting for less than 10 percent of arable land worldwide.

On the other hand, Africa continues to experience some challenges in improv-ing its agricultural sector, yet the con-tinent is endowed with fertile soils, a favourable climate and affluent water basin.

So what are the lessons and opportu-

nities for development between China and Africa as the latter has clearly demonstrated to the rest of the world that socio-economic development is possible through agricultural develop-ment.

One opportunity lies in knowledge and technology transfer and sharing, which is explicitly outlined in the Forum on China-Africa Cooperation (FOCAC) launched in 2000 and in each three-year plan ever since, where the two sides have agreed to work together in boosting agricultural production in Africa and ensuring food security for its citizens.

For example, China pledged to train agricultural technicians and manage-ment personnel as well as build agri-cultural technology demonstration cen-tres in Africa, and had done so in many countries.

This commitment is based on the fact that China has achieved an impressive agricultural growth from investment in agriculture research including the development of high-yielding, well-adapted lowland seed varieties, as well as appropriate fertilizer application, and farming machinery to boost pro-duction.

14 analysis14 ANAlYsIs

Agriculture a priority area in China-Africa relations

15 analysis15 ANAlYsIs

In this regard, Africa should up-scale the use of research in agriculture and not rely on cultivating more land and mobilising a larger labour force to increase production.

So far, at least 15 agricultural tech-nology demonstration centres built by China are operational in African coun-tries, in Benin, Cameroon, Democratic Republic of Congo, Ethiopia, Liberia, Madagascar, Malawi, Mozambique, United Republic of Tanzania, Togo, Sudan, Uganda, Rwanda, Zambia and Zimbabwe. Five more centres are expected to be built in countries such as Mali.

The agricultural technology demonstra-tion centre in Zimbabwe has trained more than 3,000 farmers since it started operations in 2012.

Another important area for China-Af-rica cooperation in the agricultural sec-tor is infrastructure development, par-ticularly irrigation, transport network and storage facilities.

Noting that the country had limited land for agriculture, China embarked on a massive drive to ensure that it maximises the little land it had for greater output by embracing the use

of irrigation.

This is in contrast with Africa where less than 10 percent of the arable land is under irrigation yet the continent is home to more than half of the world’s arable land.

As a result of the irrigation drive, China is able to conduct its farming activ-ities all year around. It will be critical for Africa to also embrace and heavily invest in irrigation development, and not heavily rely on climatic conditions, because lower precipitation would mean lower yield.

Africa has the capacity to increase its irrigation uptake as the continent is hugely endowed with watercourses such as the seven major river systems of Congo, Limpopo, Niger, Nile, Orange, Senegal and Zambezi.

Investment in road and rail upgrades will ensure that agricultural produce moves smoothly from one place to another, while establishment of more storage facilities will allow farmers to store their harvest for use in poor sea-sons.

According to the UN Food and Agricul-ture Organisation post-harvest crop

losses are estimated to be as high as 40 percent in Africa, so storage is a challenge to be resolved.

In addition to infrastructure develop-ment, agricultural cooperation between China and Africa should target small-holder farmers, who are the majority.

With clear agricultural policies such as access to inputs including seeds and fertilizer, as well as credit facilities and extension services, smallholder farm-ers have the capacity to increase pro-duction, as has been the case in China. Access to extension services is also critical for planning purposes, espe-cially when farmers want to diversify into new crops or livestock.

Another important lesson from Chinese agricultural development is that China was aware that agricultural policy implementations come at a cost.

Therefore, they were patient with their policies noting that agricultural development should first be aimed at achieving food security before achiev-ing socio-economic development.

As a result, agricultural development was an incremental learning process, meaning that any policy was first

implemented on a smaller scale, and only when it was successful was it then replicated in other areas as opposed to implementing unproven methods on a larger scale.

Furthermore, significant agricultural reforms in China were deeply rooted in fully implementing all agreed poli-cies, and the task for African countries is to transform its initiatives into actual implementation.

These initiatives include the African Union’s Comprehensive Africa Agri-culture Development Programme (CAADP), which encourages countries to reach a higher path of economic growth through agriculture-led devel-opment by allocating at least 10 per-cent of their national budgets to the agricultural sector each year. - sardc.net ●*This article from the Southern African Research and Documen-tation Centre (SARDC) through its Institute for China-Africa Stud-ies in Southern Africa, is part of a series exploring the dimensions of China Africa relations in advance of the FOCAC Summit to be held in Johannesburg in early December.