By Tawanda Musarurwa

HARARE – Government has not been effectively protecting Air Zimbabwe insofar as it has been licensing private airlines to service the same routes currently being serviced by the national airliner, the Zimba-bwe Flight Crews Association (ZFCA) has said.

Appearing before the Parlia-mentary Portfolio Committee on Transport and Infrastruc-ture Development, ZFCA chairman Captain Ottis Shonai said there was apparent little engagement at policy level with the airliner.

“A national airline is a national asset and half the time it is controlled from the Ministry

(of Transport and Infrastruc-ture Development) and it is run by the management and as such the Government has to make every effort to protect it, and we have seen recently we have seen new airlines that have been given licences to fly

exactly the same routes that Air Zimbabwe ply.

“It doesn’t happen anywhere else in the world except in Zimbabwe. All national airlines are protected by their Govern-ment and they are given the

first right of refusal.

“We are not saying we must not have competing airlines as competition is always good, but we are saying that the national airline should have the first right of refusal rather than just put a direct competitor on the same route that the national airliner is plying as we might not be able to compete in financing particular routes. Some will come at very low fares just to make sure that they sweat out the national airliner until it closes,” he said.

South African Airways plies the Harare-Johannesburg route and budget airliner, Fastjet Zimbabwe, currently plies the Harare-Victoria Falls

News Update as @ 1530 hours, Monday 06 June 2016

Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

‘Govt creating direct competition for Air Zimbabwe’

route three times a week, as well as flights between Harare and Johannesburg, both of which are also serviced by Air Zimbabwe.

Competition on the Harare-Jo-hannesburg route is threat-ening to ground the national airliner due to the intense competition on that route.

The Government is however on record that it would pro-tect the Harare-London route exclusively for Air Zimbabwe – although it is not currently servicing the route.

Earlier in February, Transport and Infrastructural Develop-ment Minister Joram Gumbo the Harare-London route would remain a preserve for Air Zim-babwe.

And the ZCFA told the commit-tee that to the extent that Air Zimbabwe successfully imple-ments a fleet modenisation programme, the Harare-Lon-don route should be revived expediently.

“We need the Harare-London route as soon as possible, that’s what we believe in as an association and we think that route is a cash-cow…if you look at how many Zimba-bweans in the diaspora who are flying KQ, who are flying Ethiopian Airways, who are flying Emirates everyday these flights are full, almost 80 percent load factors and that’s Air Zimbabwe traffic. We used to fly to London five times a week,” said the association’s secretary First Officer Gutu Kachambwa.

The association added that the national airliner’s fleet had outrun its economic life, and it has become more costly to maintain the current fleet.

Captain Shonai said an effec-tive fleet modernisation should see Air Zimbabwe acquiring two turbo-props (to service the regional and domestic markets), two medium range planes (for the regional and intra-regional markets), and three long haul jets (for the

international markets).

Air Zimbabwe pilots on allowances

ZCFA lamented the “poor working” conditions at the national airline, revealing that its pilots were not on con-tracts.

“We haven’t got proper work-ing contracts with the com-pany, we are just on a working allowance, but we have remained professional in our duties” said Captain Shonai.

And the ZCFA says it has two unfulfilled settlement agree-ments by the parent ministry on outstanding salaries.

He added that the poor work-ing conditions and a “lack of interest to retain manpower skills” had seen Air Zimbabwe losing pilots to other airlines.

Between the beginning of 2015 and the present moment, the national airliner’s pilots declined from 45 to 35.●

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BH244

By Funny Hudzerema

HARARE - The Ministry of Macro-Economic Planning and Investment Promotion is planning to release the Mac-ro-economic Policy Framework before the presentation of the 2017 National Budget which is expected to work as a guideline to economic growth and meeting regional targets on economic growth.

Secretary in the Ministry of Macro-Economic Planning and Investment Promotion Dr Desire Sibanda said the country’s cur-rent economy is characterised by continued decline in eco-nomic growth mainly due to the EL Nino-induced drought, lower commodity prices and reduced capacity utilisation.

“We want to link all the sectors of the economy to the Africa vision 2063 which as a country we want to streamline with our five year vision and also to the SDGs.

“The framework is going to be

produced before the presenta-tion of the 2017 budget as a guide line to economic growth of the country,” he said.

He said this while speaking during a workshop which was organized by the Ministry of Macro-Economic Planning and Investment Promotion in collaboration with the United Nations Development Pro-gramme [UNDP] to gather macroeconomic policies to grow the economy as well guiding the budgetary process.

“The purpose of the framework is to grow the economy, cur-

rently the economy is growing below 1,4 percent which is less than the average Africa growth.

“In order for us to grow the economy we need to get infor-mation from the key sectors such as mining, manufacturing and transport the purpose to is to gather problems which are affecting growth in order to come up with alternatives to attract investment to those sec-tors such that they can grow,” he said.

He added that the recommen-dations of the workshop are going to be used to guide the

budget and the recommenda-tions are within vision 2063, the SDGs and the ZimAsset plan.

The economic growth factors have resulted in revision of the 2016 economic growth forecast from an initial projection of 2,7 percent to 1,4 during the first quarter in 2016. The growth performance is below the ZimAsset target for 2016 of 6,5 percent.

In his remarks during the event Zimbabwe Strategic Economic Research and Analysis (SERA) Mr Ashok Chakravarti called on Government to remove export licenses for companies that want to export local products and increase import tax to grow the economy.

“There is need to remove export licenses to local companies which need to export because banning imports will not work towards economic growth and promoting local producers,” he said.●

Macro-economic Policy Framework to guide national budget

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Dr Desire Sibanda

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BH24 Reporter

HARARE – ZSE-listed sugar processor Hippo Valley Estates has reported a loss of $8, 5 million for the year ended March 31, 2016 from an after tax profit of $7, 3 million last year.

The massive slide into the red was largely due to a decline in production during the period under review.

Hippo, which is 50,3 percent owned by the South Afri-ca-headquartered Tongaat Hulett, saw its sugar output for FY2015 drop 11 percent

to 204 000 tonnes from 228 000 tonnes due to a decline in raw cane deliveries from private farmers as well as poor growing conditions.

`Private farmers delivered 631,000 tons down from 745,000 tons

The sugar miller’s capacity util isation dropped to 64 percent from 71 percent last year.

Revenue for the year amounted to $116, 8 million down from $146, 8 million, while operating loss for the year amounted to $6, 2 mil-

lion compared to an operat-ing profit of $16, 2 million.

Cash generated from oper-ations totalled $5, 4 million for the year under review against $17, 8 million prior year.

Sugar exports fell 45 percent to 98 000 tonnes largely as a result of lower production volumes.

Of these 9 000 tonnes were exported into the regional markets while 74 000 tonnes and 150 000 tonnes were exported to the European Union and the United States

respectively.

The company’s export rev-enues were also negatively impacted by lower interna-tional sugar prices.

Total industry sugar produc-tion for the 2016/17 season is estimated between 379 000 tonnes and 440 000 tonnes compared to 412 000 tonnes produced in the 2015/16 season.

In terms of outlook, man-agement said will focus on cost-containment in order to mitigate against future potential volume volatil ity. ●

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Hippo falls into the red with $8, 5m FY loss

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HARARE - The International Monetary Fund (IMF) has said it will assess the impli-cations of Zimbabwe’s plans to introduce bond notes in October, and other measures announced by the Central Bank to deal with the current liquidity crisis.

The Reserve Bank of Zim-babwe (RBZ) last month announced a cocktail of measures to deal with the prevailing cash shortages, including introducing bond notes, backed by a $200 mil-lion Africa Export and Import Bank bond facility.

But the bond notes have been met with mixed feel-ings, and partly fueled the current high demand for cash. The bond notes will be at par with the US dollar and will circulate alongside the foreign currencies in use.

IMF deputy spokesman William Murray told a press briefing in Washington that the global lender will assess Zimbabwe’s plans to deal with the current cash situa-tion.

“We are currently assess-ing the implications of the

measures on the economy, including the more recently announced issuance of bond notes and we will engage in further discussions with the authorities with regard to their strategies,” he said.

Murray attributed the cash shortages mainly to declin-ing commodity prices on the international markets which in turn resulted in low export earnings.

He said drought in the coun-try had also worsened the situation.

“The Governments had to increase its food imports to mitigate the impact of crop failures on its people and the strengthening of the mul-ti-currency system through the conversion of export earnings to euro and rand.”

The RBZ also introduced a foreign exchange priority list, withdrawal limits and called for greater use of plastic money to ease the cash

shortages.-New Ziana

●

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IMF to engage Zim on bond notes

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HARARE - The equities market started the new week on a low as the mainstream industrial index opened lower at 104.10 after losing 0.20 on the back of losses in heavyweight Delta.

The beverages manufacturing giant was the only loser to close at $0, 6950 after a $0, 0050 loss.

Conglomerate Innscor and

starafrica corporation were unchanged at $0, 2025, $0, 6500 and $0, 0085 respec-tively.

On the upside, giant insurer Old Mutual advanced by $0, 0049 to $2, 2400 while telecoms giant Econet inched up $0, 0005 to close at $0, 2305.

Activity remains rather low on the local bourse as 11

counters traded today, with total turnover amounted to $233 759.

The mining index was flat at 25.77 as Bindura, Falgold, Hwange and RioZim main-tained previous price levels at $0, 0120, $0, 0050, $0, 0300 and $0, 1640 respec-tively.

BH24 Reporter ●

Equities open lower

12 ZsE

MovERs CHANGE TodAY PRICE UsC sHAKERs CHANGE TodAY PRICE UsC

ECONET 0.21 23.05 DELTA -0.71 69.50

OLD MUTUAL 0.21 224.00

INdEx PREvIoUs TodAY MovE CHANGE

INDUSTRIAL 104.30 104.10 -0.20 points -0.19%

MINING 25.77 25.77 +0.00 POINTS +0.00%

13 ZsE TABlEs

ZsE

INdICEs

stock Exchange

Previous

today

14 dIARY oF EvENTs

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

PowER GENERATIoN sTATs

Gen Station

06 June 2016

Energy

(Megawatts)

Hwange 415 MW

Kariba 583 MW

Harare 0 MW

Munyati 25 MW

Bulawayo 0 MW

Imports 0 - 400 MW

Total 1448 Mw

9 JUNE -- First Mutual Holdings Annual General Meeting; Place: Royal Harare Golf Club, Harare; Time: 14:30hrs

15 JUNE 2016 -- Rainbow Tourism Group 7th Annual General Meeting; Time: Jacaranda Rooms 2 and 3 at the Rainbow Tour-ism Hotel and Conference Centre, 1 Pennefather Avenue, samora Machel Avenue west, Harare; Time: 1200 hours...

16 JUNE 2016 -- RioZim 60th Annual General Meeting; Place: No. 1 Kenilworth Road, Highlands, Harare; Time: 10.30 hours...

22 JUNE 2016 -- Zimre Holdings limited 18th Annual General Meeting; Place: NICoZdIAMoNd Auditorium, 7th Floor Insur-ance Centre, 30 samora Machel Avenue, Harare; Time: 1430 hours...

22 JUNE 2016 -- GB Holdings limited Annual General Meeting; Place: Cernol Chemicals Boardroom, 111 dagenham Road, wil-lowvale, Harare; Time: 11.30 hours...

23 JUNE 2016 -- Zimpapers 89th Annual General Meeting; Place: Zimpapers ltd Boardroom, sixth Floor Herald House, Cnr. G. silundika/sam Nujoma street, Harare; Time: 1200hrs…

THE BH24 dIARY

Naspers last week became the fourth company on the JSE wi th a market va lue of more than R1-tr i l l ion and i t may take a whi le for another company to ach ieve th is mi lestone.

Globa l beer g iant Anheus-er-Busch InBev is the b iggest company on the JSE, wi th a market cap of R3,1-tr i l l ion, fo l lowed by Br i t i sh Amer ican Tobacco wi th R1.9-tr i l l ion and SAB-Mi l ler wi th R1,6-tr i l l ion.

Naspers edged into the t r i l l ion rand league on good resu l ts f rom i ts 34% investment in Chinese com-pany Tencent , and severa l new investments inc lud ing Udemy, an on l ine learn ing marketp lace.

"Obvious ly, the weaker rand has been he lp ing these companies of la te, as they are a l l b ig , industr ia l rand hedges — meaning they are internat iona l ly d ivers i f ied," sa id Stan l ib reta i l investment d i rector Paul Hansen. "And the JSE a l l share has been h i t t ing new h ighs late ly."

Naspers is the b iggest loca l share on the JSE at 13,2 percent fo l lowed by SAB-Mi l ler at 13,1 percent .

"SABMi l ler i s , o f course, pegged to the do l lar because of i ts pending buy-out ," Hansen sa id.

The b ig four in the t r i l -l ion league have a market cap of R7,6-tr i l l ion, o f the JSE’s tota l R14-tr i l l ion.

The market cap of the 16 next b iggest compa-n ies on the a l l share is R3,9-tr i l l ion. The other s ix shares in the top 10 have a combined market va lue of R2,2-tr i l l ion.

Globa l luxury goods group R ichemont is f i f th in l ine,

wi th a market cap of R479bn. R ichemont has been retreat ing th is year, down 16,5 percent on d imin ished As ian sa les.

The t rad i t iona l dominance of the miners on the a l l share has evaporated, but BHP B i l l i ton and Glencore remain among the top 10. Anglo Amer ican has rebounded into the top 20 at 15th p lace, but a l l the b ig go ld and p lat inum miners of the past have vanished f rom the top 20.

Hansen says BHP B i l l i ton is the fourth b iggest share on the JSE exc lud ing the beer g iants , but i s near ly 50 percent down f rom i ts 2014 record h igh in rand terms and is now at 2007 leve ls .

"Some of the other p lay-ers in the top 20 inc lud ing MTN and Standard Bank, are a lso st i l l way of f the i r h ighs," he sa id.

Saso l i s at number n ine, h i t hard by the weaker o i l pr ice, fa l l ing 16 percent in 2014 and 2,6 percent in 2015. I t i s up 16 per-cent so far in 2016 on the recovery in the Brent crude pr ice.

The top 40 on the JSE now der ive more than 50 percent of the i r revenue outs ide SA, accord ing to a recent Prudent ia l report .

Chances of other loca l com-panies making i t into the top league would depend on structura l i ssues, such as the US mainta in ing i ts re lat ive ly large current account def ic i t .

"Many countr ies would st ruggle to ach ieve the economic growth rates they current ly enjoy should US growth contract ," sa id Stan l ib economist Kev in L ings. - Bdlive●

15

Naspers edges into JsE trillion-rand league

REGIoNAl NEws

OPEC meetings aren’t what they used to be.

Far from sending the oil market into gyrations, the run-up to last week’s OPEC meeting kept oil pinned near $50 a barrel and sent hedge funds to the sidelines.

Speculators cut their total long and short positions on West Texas Intermediate crude to the lowest since January 2015 and one meas-ure of market volatil ity fell to a 10-month low before the Organisation of Petroleum Exporting Countries’ June 2 meeting.

Ministers emerged from the gathering voicing unity and continuing a policy of no production limits. US data released the same day showed oil supplies are drop-ping, a sign that the supply glut that sent prices plum-meting this year is finally dissipating.

"It’s very clear that OPEC is less relevant than US pro-duction data," Rob Thummel, a managing director and

portfolio manager at Tortoise Capital Advisors LLC, who helps oversee $14,1 bill ion. "We’re going to trade near $50, plus of minus five bucks for quite a while," though higher prices are inevitable, he said in a phone interview.

Prices rallied from a 12-year low to reach $50 a barrel as consumers burned through a supply glut. OPEC has rejected a production freeze, in part because Iran has said it will continue to boost output after the removal of international sanctions in January.

The group estimated it pumped 32,4 million barrels a day in April. That supply has been balanced by dis-ruptions in Canada, Libya, Nigeria, and Venezuela.

WTI rose by 1 percent to $49,10 a barrel on New York Mercantile Exchange during the CFTC report week.

The U.S. benchmark added 1 percent to $49,09 at 12:15 p.m. Singapore time on Monday. Implied volatil ity on

near-term options fell May 27 to the lowest since July.

Cutting Back

Money managers reduced their short positions on WTI, or wagers that prices will fall, to 53,377 futures and options during the CFTC’s report week, the lowest level since May 2015. Long posi-tions, or bets that prices will rise, declined 2,9 percent to 294,105 contracts, the low-est since March.

Stockpiles in the U.S. fell 1.37 million barrels for the week ended May 27, accord-ing to Energy Information Administration data released June 2.

Nationwide production declined to 8.74 million bar-rels a day, the lowest level since September 2014. Stil l, the number of active US oil rigs rose by nine to 325 last week, the largest gain of the year, according to Baker Hughes Inc.

“There’s been a lot of big news and little movement,”

said Rob Haworth, senior investment strategist in Seattle at US Bank Wealth Management, which over-sees $128 bill ion in assets. “Slightly higher prices could bring back US shale produc-ers.”

In other markets, speculators remained bullish on US ultra-low sulfur diesel as net-long contracts rose by 16 percent to the highest level since July 2014.

Net longs on Nymex gasoline declined by 24 percent to 16,128 contracts, with bull-ish bets falling to the lowest level since October 2013.

"There was long liquidation in the week spanning the Memorial Day holiday, which is the traditional start of the driving season," in the US, Tim Evans, an energy analyst at Citi Futures Perspective in New York, said in a phone interview. Speculators "are not looking for gasoline price strength this summer," he said.

– Bloomberg●

16

oPEC unity keeps oil near $50, sends speculators to sidelines

INTERNATIoNAl NEws

Zimbabwe’s leading plati-num mining giant, Zimplats Holdings, allegedly set up an offshore company more than a decade ago to pay salaries for its senior managers, leaked documents reveal.

The offshore company was allegedly set up without the knowledge of the Reserve Bank of Zimbabwe. According to doc-uments, HR Consultancy was set up for the sole purpose of receiving funds and remunerat-ing Zimplats’ senior managers.

Northern Wychwood, the off-shore company that registered HR Consultancy in the Isle of Man, sought the services of Mossack Fonseca to facilitate the process.

The leaked records claim that the shareholders and direc-tors at HR Consultancy are foreign corporations, and that the named senior officials are Zimbabwean.

However, neither the names of the recipients nor the payment amounts are given. It is also not clear how the payments were channeled to the offshore company.

17 analysis17 ANAlYsIs

Zimbabwe: The case of the invisible company

Zimplats

18 analysis18 ANAlYsIs

But the leaks indicate that Northern Wychwood continues to update HR Consultancy’s certificate of incumbency, with the latest filing having been done through Mossack Fonseca last year.

Zimplats denies any relation-ship with HR Consultancy or Northern Wychwood. This raises the possibility that Zimplats was fraudulently used by Northern Wychwood to set up HR Consultancy as a conduit of Zimplats’ salaries.

HR Consultancy is owned by the British Virgin Islands-regis-tered Hanoverian Ltd. Hano-verian lists Palatinate Ltd as its corporate director. Palatinate Ltd in turn lists Hanoverian Ltd, alongside three Zimbabweans.

A senior corporate lawyer who spoke off-the-record to Voice of America’s (VOA’s) Studio7 said the fact that Northern Wych-wood continues to pay consul-tancy fees to Mossack Fonseca suggests that its relationshiop with HR Consultancy remains

intact.

Setting up an offshore firm to pay managers without the knowledge of the central bank, says a banking expert, implicates Zimplats in illegally expropriating money and tax evasion.

“As long as the central bank was not involved in this, Zimplats would be involved in money laundering, externalisa-tion and tax evasion,” says the expert.

In a telephone interview with VOA’s Studio7, central bank governor, Dr John Mangudya who only last December revealed that Zimbabwe had lost $500m to illicit money movements, said: “If proven, this is a blatant violation of the country’s exchange control policy, which is a punishable offence.”

Northern Wychwood, the offshore registering company, declined to comment while both Mossack Fonseca and Zimplats denied any relationship with HR

Consultancy.

Implats, the world’s biggest platinum producer, which owns 87 percent of Zimplats and has significant executive control there, also denied any knowl-edge of HR Consultancy.

Said Johan Theron, Implats’ head of corporate affairs: “We don’t subscribe to the use of such services at all. In fact, we have prioritised transparency in all our dealings and gone out of our way to transact fairly, openly and as far as possible, to pay taxes in the countries in which we operate.”

But correspondence in 2012 between Northern Wychwood and Mossack Fonseca strongly suggests that HR Consultancy handled the remuneration for the senior managers at Zim-plats.

“We receive the funds to cover the total salaries from Zimplats and pay the managers accord-ingly,” says an HR Consultancy employee in correspondence dated 5 November 2012.

A source of funds or wealth declaration form signed by Palatinate in July last year says it is a director on Northern Wychwood Ltd. It lists Zimba-bwe, South Africa, UK and Isle of Man as countries where its activities are conducted.

Former minister of finance between 2009 and 2013, Ten-dai Biti, says if it is true that Zimplats set up an offshore company to pay salaries for its managers, then the managers at Zimplats also evaded paying taxes since they were being remunerated for work they did on Zimbabwean soil.

A recent central bank report claims Zimbabwe lost three billion dollars through illicit financial flows between 2009 and 2012, while Africa lost many billions of dollars in illicit financial flows during the same period. – New African Magazine ● • This article was produced by the African Network of Centers for Investigative Reporting (ANCIR).