BH24 Reporter

HARARE – The demise of the local motor vehicle compo-nent industry has seriously hindered the country’s vehi-cle manufacturers’ ability to meet requirements to export into the region.

For instance, the Common Market for Eastern and Southern Africa (COMESA)’s rules of origin entail that the domestic value added/local content quota requirement for a product to get pref-erential treatment ranges between 25 and 35 percent

– depending on the type of product.

Zimbabwean vehicle manu-facturers are currently failing to meet such quotas due to the increase in imports of vehicle components that the country used to produce.

Deven Engineering managing director Mr Patrick Mun-yaradzi said the proliferation of motor parts imports at low

or no duty means they have to import the majority of components for the vehicles they produce.

“We used to have back-ward and forward linkages which were very vibrant. As a result of these continued imports and lack of support to local vehicle manufactur-ing industry we have seen the demise of local compo-nent manufacturers - the

value chain.” And to this extent, their exports into the region tend to be uncompet-itive without the preferential treatment that other export-ers in competitive industries are getting.

“The 25 percent rules of origin requirement is local content prerequisite for your product to qualify to go into the regional markets duty free. If we take any vehicle that is being manufactured by any local manufacturer and you say list down all the components you use to assemble and take 25 per-cent including electricity and water and say which are the elements that constitute 25 percent of this entire list it will be difficult to meet it.

News Update as @ 1530 hours, Wednesday 06 April 2016

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Local vehicle exports uncompetitive ...as local car-makers are failing to meet region’s rules of origin requirements

“At present we can only tick items such as labour, elec-tricity, water as the local components out of a com-prehensive list. This is where now the local value chain needs to be resuscitated, starting from ZISCO,” he said.

“If we continue failing to meet that 25 percent bench-mark, exports into the region will be difficult, while our neighbours continue export-ing to us.”

The uncompetitiveness of local vehicle exports into the region makes it a double

whammy for Zimbabwe’s car manufacturers who are already facing the challenges of low local uptake for their products as both Government and individuals opt for both new and second-hand vehicle imports.●

2 NEWs

Late start to tobacco season affects cash inflowsBy Funny Hudzerema

HARARE -The delay in the com-mencement of this year’s tobacco selling season has affected the injection of cash in the coun-try which have resulted in the liquidity crunch the country is experiencing a senior official from the Reserve Bank of Zimbabwe (RBZ) has said.

RBZ deputy governor, Kupuk-ile Mlambo said exports from tobacco, gold and platinum are bringing large volumes of money in the country and the shift in tobacco selling season have affected the exportation of tobacco to bring the required

foreign currency.

“In this country we depend on three commodities for export revenues its tobacco, gold and platinum thus a high concentra-tion of commodity dependence for our revenues and we must not be surprised now with the liquid-ity crunch in the market.

“The liquidity crunch that we are having now is partly because for a long time the period between October and February is always dry period because the country will be depending on earnings from gold and platinum,” he said.

Dr Mlambo said the tobacco

selling season normally starts in February but this year it started on March 30 and that is creating the liquidity crunch that the coun-try is facing.

“Commodity dependence is real in this country and what is hap-pening on the international front is commodity prices are falling and we expect that even in 2016.

“For example oil prices are expected to decline by 25 percent in 2016, metals by 10 percent, precious metals by 8 percent and specifically gold is expected to decline by 7,3 percent in 2016 and this is creating havoc in our balance of payment,” he said.●

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BH244

HARARE –Steward Bank, a subsidiary of mobile tele-communications firm Econet Wireless yesterday launched a facility under which it will provide financial assistance to small and medium scale enterprises (SMEs).

Under the facility, dubbed the “Revamped SME Account,” the financial insti-tution will avail funding and capacity building programs such as financial l iteracy to support growth of a sector that has become a corner stone of the Zimbabwean economy.

The initiative would also pro-vide free marketing for SME products through the Econet Wirelesses e-commerce plat-form called Ownai, formerly known as Tengai.

Small and Medium Scale Enterprises and Co-opera-tive Development Minister Sithembiso Nyoni lauded the initiative, which she said

would allow the sector to create more jobs and grow sustainably.

“Access to affordable finance by SMEs is necessary to create a conducive economic environment for growth and prosperity of these firms,” she said.

Minister Nyoni said limited access to affordable finance, lack of adequate business skills, poor business man-agement were among the

major challenges facing the small enterprises sector.

The last survey conducted in the sector in 2012 showed that it employed 5,7 million people, close to half of the country’s over 13 million people.

Minister Nyoni urged other players in the financial sec-tor to come up with attrac-tive products for SMES, most of which remained unbanked.

“The sector has lost confi-dence with banks due to lack of attractive products that could lure the sector to open accounts with them,” she said.

“Tapping into the sector will ensure that money circulates in the formal economy.”

She urged small business operators to take advantage of initiatives such as the “Revamped SME Account” to grow their businesses- New Ziana ●

5 NEWs

steward Bank avails support for sMEs

BH246

By Funny Hudzerema

HARARE–Local internet service provider ZOL is tar-geting to introduce its fibre optic network in more than 100 000 homes by 2017.

ZOL chief executive Mr Denny Marandure said the group is expecting an increase in the number of internet sub-scribers through introducing cheap and affordable pack-ages for its subscribers.

“Our real target is to con-nect 100 000 homes by next year but the challenge is in the delaying of licensing and costs of building infrastruc-ture,” he said.

Mr Marandure however said the target could be hindered by the high cost of setting up the requisite infrastruc-ture and delays of licensing approvals by local authorities and the sector regulator.

“You must realise that as

we want to connect every one we must consider the infrastructural issues where everywhere you go you must make an application, there is the Harare City Council, the Postal and Telecommunica-tions Regulatory Authority of Zimbabwe (POTRAZ) there is lot of things that hinders us from moving forward.

“Without such constraints, connecting 100 000 subscrib-ers would be easy to achieve in a short period of time,” he said.

ZOL has so far covered more than 15 000 homes in Harare with its fibre optic internet.

Mr Marandure said an increase in the penetration of internet services in the Zimbabwe will help reduce the cost of internet in the country.

“The more people sign up for internet the cheaper it will be or the less expensive so that’s what we are working on to reduce internet costs,” he said.

He was speaking at the com-pany’s launch of some new fibre optic internet packages for 2016.

The new launched packages include the Fibroniks Lite

package costing $29 per month with 15 megabytes per month free Zol to Zol calls and other benefits, modern firmly package $199 dollars, an auto-connect function and Basic Essentials $39 per month.

All the package have a num-ber of benefits which include cordless ZOL phone hand-set offering customers the best low cost phone service nationwide, with calls start-ing from as little as 0,10c per minute.

The packages are available to users in Harare, Bulawayo and Victoria Falls within areas where fibre is already installed.

According to POTRAZ, fibre has become the fastest of connections for internet accounts, with 0,21 percent of subscriptions in Zimbabwe with mobile internet mak-ing up 95,6 percent of total internet subscriptions.●

7 NEWs

ZOL targets 100 000 homes for fibre optic internet

BH24 Reporter

HARARE -Regional multi-re-sources miner Premier African Minerals says it expects positive operational cash flow from its 49 percent owned RHA Tungsten mine when it commences under-ground operations this month.

RHA Tungsten mine is located approximately 20 kilometres south-east of Hwange and 270km north of Bulawayo.

Premier said re-equipping of the 120 meter vertical shaft nearing completion, and it was antici-pating positive operational cash flow from the site, before capital expenditure and working capi-tal, when first ore from the 870 level is processed and crushing circuit upgrades are installed.

It added that upgrades to crush-ing circuit planned for this April, with the total cost of the crush-ing circuit upgrade is expected to be less than $100 000.

Management expects the crush-ing circuit upgrade to “take less

than two weeks to install and commission once all components are at site at RHA.”

Said chief executive officer Mr George Roach:“Re-equipping the 120 meter existing vertical shaft at RHA has taken a little more time than was originally expected but with all equipment now on site and power reticu-lation installed, this project is nearing completion and ore will arrive at surface during this month.

Upgrades to the crushing circuit have been agreed by Premier's consultant and Appropriate Process Technologies (APT), who

have been instructed to proceed immediately at their expense.

“Premier has dramatically reduced fixed expenditure at RHA and we remain confident that as and when 870 ore is processed at the grades indi-cated, and through-put and recovery meet design criteria, RHA will operate profitably."

Earlier in January, Premier announced that its plan is to process around 32 000 tonnes of run of mine ore at an average grade of 6.20 kg/t to produce 249 tonnes of concentrate at 63 percent WO3 over six months.●

8 NEWs

RHA Tungsten mine to be profitable as operations begin

Tungsten

HARARE -The equit ies mar-ket snapped the mini- los ing streak as the mainstream industr ia l index gained 0.09 to c lose at 97.40.

The r isers were led by giant insurer Old Mutual , which gained $0,0074 to trade at $2,2119, whi le FBC Holdings added $0,0015 to $0,0629 and Barc lays rose $0,0009 to sett le at $0,0279.

Trading in the red was cement producer PPC, which eased $0,0475 to trade at $0,6500 and Dair ibord which s l id $0,0009 to c lose

at $0,0510.

Beverages giant Delta shed $0,0001 to $0,5650.

The mining index was f lat at 19.69 as Bindura, Fal-gold, Hwange and RioZim al l maintained previous pr ice

levels at $0,0102, $0,0050, $0,0300 and $0,1040 respect ively

.- BH24 Reporter ●

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stock Exchange

Previous

today

11 diARy oF EvENTs

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

PoWER GENERATioN sTATs

Gen Station

06 April 2016

Energy

(Megawatts)

Hwange 504 MW

Kariba 453 MW

Harare 30 MW

Munyati 16 MW

Bulawayo 23 MW

Imports 0 - 400 MW

Total 1334 MW

Upcoming AGM

• Falgold, KPMG Building, Corner 14th Avenue/Josiah Tongogara Street, Bulawayo,13 April, 1000hrs

THE BH24 diARy

JOHANNESBURG - South Africa's rand edged up against the dollar today but was stil l off recent four-month highs, with local political uncertainty as well as overall low risk appetite seen capping any significant gains.

Stocks opened slightly firmer, with the JSE securi-ties exchange's Top-40 index up 0,5 percent from Tues-day's close.

At 0714 GMT the rand traded at 15,0350 to the greenback, gaining 0,4 percent from its previous close in New York.

The rand has however lost significant ground since rallying to 14,6050 to the dollar last week as inves-tors cheered a court ruling that President Jacob Zuma unconstitutionally ignored a directive to pay for some of the state-funded upgrades to his home.

President Zuma, who has been dogged by controversy since becoming president in 2009, survived an impeach-ment motion by the oppo-

sition on Tuesday thanks to the ruling African National Congress's majority in par-liament.

Investor sentiment has been shaky since President Zuma inexplicably fired the former finance minister in Decem-ber, raising fears that Pre-toria might veer away from prudent fiscal policies.

"The rand is back above 15, but not only because of

domestic events," Standard Bank said in a note, point-ing to a general sell-off in emerging market currencies.

"We stil l believe that the currency will struggle to maintain a foothold below 15 into mid-year."

In fixed income, the yield on debt due in 2026 eased 2 basis points to 9,24 percent in early trade - Reuters●

REGioNAL NEWs 12

Rand seen struggling due to local politics, risk aversion Zambia's kwacha gains 1,6 pct as

copper ticks higher

JOHANNESBURG - Zam-bia's kwacha strengthened 1,6 percent against the dollar today, extending sharp gains to the second straight session as cop-per prices cruised higher.

By 0643 GMT the kwacha had gained 1,12 percent to 10,64 per dollar, after strengthening to as much as 10,61.

Zambia is Africa's second big-gest producer of copper, which saw its prices tick higher today

. - Reuters●

Pfizer Incorporated decided to terminate its $160 bill ion merger with Allergan Plc, a person familiar with the matter said, marking an end to the largest-ever health-care acquisition as officials in Washington crack down on corporate inversions.

Pfizer will need to pay a $400 million fee to Aller-gan for expenses relating to the deal, the person said, asking not to be identified as the information is private. Allergan, which is run from New Jersey but has a legal domicile in Dublin, last year agreed to merge with Pfizer in a deal that would have given the New York-based company a foreign address and a lower tax rate.

The decision represents a victory for President Barack Obama, whose administration on Monday proposed tough-er-than-expected new rules aimed at making inversions like the Pfizer-Allergan deal harder to achieve. In an inversion, a US com-pany shifts its tax address overseas, often through a

merger. In the Pfizer-Aller-gan deal, the new company would have been located in Ireland.

The Treasury Department said Monday that new rules would limit companies’ abil-ity to participate in inver-sion transactions if they’ve already done them within the past 36 months.

Allergan has been involved in several such acquisitions in that time frame. Represent-atives for Pfizer and Allergan declined to comment.

Prior to April 4, Allergan “was a great fit,” Bloomberg Intelligence analyst Asthika Goonewardene said via e-mail. But the new policies would have stretched the combined entity’s ability to garner the favorable Irish tax rate, he said.

Criticism

Pfizer had been examining how it might be able to chal-lenge new rules from the US Treasury Department, people with knowledge of the matter said earlier.

From the moment it was announced last November, the Pfizer-Allergan transac-tion drew criticism from US public officials and from both Democratic and Republican presidential candidates.

Obama on Tuesday told reporters that inversions make “hardworking Amer-icans feel like the deck is stacked against them.” Since the first inversion in 1982, 53 US companies have shifted their tax addresses offshore -- 22 of them since 2012.

Pfizer has said it has stra-tegic reasons for pursuing the acquisition, though it would also help the company escape the US’s 35 percent tax rate, which applies to profits made anywhere in the world.

Ever since a tax-law change in 2004, the main way that US companies have been able to claim a foreign address has been to buy a smaller company abroad and adopt its domicile.

The law requires the for-eign company to be at least one-fourth the size of the US one.

Monday’s proposed rule tightens that restriction by saying that if a foreign com-pany has bulked up through mergers with other US companies in the last three years, as Allergan has, that additional bulk isn’t counted toward its size. Treasury offi-cials have said they weren’t targeting any particular tax-payers with the new rule.

“It is fair to say the admin-istration would be pleased if corporate inversions that happened solely so corpo-rations don’t pay their fair share won’t go through,” Josh Earnest, a White House spokesman, said Tuesday during a press briefing.

CNBC reported earlier that the two companies would mutually end their planned merger, without naming its sources.... - Bloomberg●

iNTERNATioNAL NEWs 13

Pfizer to terminate $160 billion merger with Allergan

By Nigel Gambanga

Zimbabwe is facing another cash crisis. That much is pretty obvious to the people standing in queues outside some of the retail banks around the country.

Though not as crippling as the cash shortages that the country has experienced in the past, the current spate has affected scores of account holders who have had to experience frustra-tions related to this.

Despite assurances from different institutions that the situation is manageable, some people have already tagged the situation as the start of something that could spiral out of control and lead people down a very familiar and uncomfortable road.

Zimbabweans generally prefer to deal in cash and when it comes to the secu-rity of the formal financial

system and questions about the reliability of banks, it doesn’t take much to rattle the entire population.

For more than a 10 years cit-izens have been subjected to

different waves of financial services mayhem.

From banks facing curator-ship and then going under, accounts of speculative prac-tices from the champions of indigenous financial insti-

tutions to a hyperinflation experience that eroded the value of bank deposits and came tied with its own cash shortages, most Zimbabwe-ans will tell you that they have seen the rough side of

14 analysis14 ANALysis

Mobile money is the most credible solution to Zimbabwean cash crisis

15 analysis15 ANALysis

formal financial services.

The solutions that have been embraced for the current shortage by those affected are fairly obvious.

A report in the Herald out-lined some of these measures which have included $500 limits on withdrawals, the disabling of the Zimswitch cross-bank ATM facility and the suspension of the Point of Sale cashback facility from some retailers.

The governor of the Reserve Bank of Zimbabwe Dr John Mangudya also encouraged people to use plastic money instead of relying on cash. This came ahead of a direc-tive issued to tobacco farm-ers to open bank accounts from which they would receive the payments for the sale of their crop.

Where is mobile money in all this?

One measure that isn’t being pursued as aggressively,

though, is the mass adoption of mobile money services as a way of working around this potential crisis.

Despite its strong presence across the country where it has outpaced formal bank-ing services, mobile money has only been mentioned as one alternative and not as the leading solution that it is primed to be.

Some likely reasons could be the high costs attached with mobile money trans-actions as well as the fact that the leading provider of mobile financial services, Econet’s EcoCash, (it holds 74,3 percent of registered mobile money subscribers) which handles the majority of mobile money transac-tions (it pushed 96,9 percent of transactions in the last quarter of 2015) is a private sector operator and not a public sector solution.

However, all this is flying in the face of the reality that

mobile money has estab-lished a firm place in the Zimbabwe financial services matrix. Our country’s econ-omy has slowly embraced the movement of money through informal trading channels and mobile money has emerged as a convenient tool for carrying these transac-tions.

In the most recent telecom-munications sector quarterly report from the industry reg-ulator POTRAZ, mobile money services registered transac-tions valued at $533 million dollars in the three months ending December 2015 from an aggregate of 7,3 million mobile money subscribers.

The service’s popularity has been fuelled by a high mobile penetration rate, the ubiq-uity of mobile money agents (there are over 33 000 mobile money agents across Zimbabwe) limited require-ments for signup as opposed to formal banks’ account reg-istration and of course, the

significant distrust that the country’s banks have earned.

Mobile money service pro-viders also appreciate the convenience that they can deliver and have been going out of their way to integrate their platforms with as many third-party services as possi-ble in the hopes of mopping up as much transactional revenue as possible.

All this points to how mobile money should be at the centre of this cash crisis workaround or at the very least, how it should be more of a solution than the use of plastic money alternatives which the central bank has been advocating for.

For the sake of progress, until the actual solution for the real problem that is instigating this cash crisis has been identified, it would probably be worth exploring how the use of mobile money can be positioned as a solu-tion. - TechZim●