Denis Norman’s Odd Man In: A review

I have had a writer’s burnout for the better part of two years. It’s an awfully long time for one not to be too keen to write, especially for one whose career is all about writing. Also quite amusing if not surprising that within those two years, I managed to oversee the launch of two national newspapers – probably making history by being the only one to do so within a year. Throughout my burnout, which is an extreme writer’s block, I was searching for that rejuvenation; that one moment, which would make me love punching my keyboard again to express my mind and not to do the admin work that comes with being an editor. The November events could have been enough to jolt me into action. However, when the country changed its leadership, I didn’t know how to react. The script had gone terribly wrong.  Much in the same way it is doing now with the only difference being that last year’s script was about political allegiances.

It is with this background in mind that when I got an invitation to attend the Denis Norman book launch, I had an aha moment. I thought if the burnout has to end, then it has to be with something that I am quite passionate about. I love books with any historical narration and this has been highlighted through an alter ego (Chipangamazano), who will soon come out of retirement now that the snap has finally occurred. The title of the book itself is not luring enough, neither is it original. The Odd Man In forms the title of Jerry Lee Lewis’1975 album. One of Jerry’s worst albums actually, which only made it to number 33 on the country music billboard charts.  It’s the subordinate or secondary title that’s clever and which forms the basis of my attraction to the book; Mugabe’s White Hand Man.

As we have already begun to experience after the leadership change, a lot of people are now putting together works of literature shaped around the man who ruled Zimbabwe for 37 years. Some of the books, which are already out, are not worth the effort. A lot of revisionism is taking place while most would rather just talk about the bad side of the former leader, which in all honesty, the majority of people only saw in the last years of his rule. No one talks about the prolific 60-year career that he had. In future, however, I suspect much of his actions will form the basis of political theories. A book about Robert Mugabe from Robert Mugabe would be a bestseller and I really hope that he is putting some of his memories together or at the very least that he has a close relative that is willing to listen to his tales. I am ready to pay big bucks for such a book when it comes out. I paid for this one too. $25 on whichever mode of payment.

This one however is not a book about Mugabe. It is a narration of Norman’s life. A lot of the stories or key events in his life are rushed through. Perhaps the memories are fading. He does however explain in detail on a few key achievements that he pushed or participated in. He also makes mentions of events that amused him. But what’s clear is that he was an action minister who tried his best and succeeded to stay out of politics in Rhodesia and Zimbabwe. According to his narration, he would always go to the ground, access the situation and eventually come out with a practical solution. The same can’t be said of a present day non-political minister, who after just six weeks, has adopted a pop-star kind of status full of vids and tweets.

Norman, who is now 87 was Zimbabwe’s first Minister of Agriculture. In similar fashion to what occurred in Zimbabwe in the past September, Mugabe had to get his optics right after independence. This he did through a speech that preached reconciliation and appointing the right Cabinet. It was a delicate time for the country, which had just seen through not only a war of liberation that most now believe could have been easily avoided as had been seen in other countries in the region, but had gone through 15 years of sanctions and therefore isolation during Ian Smith’s UDI.

The book does give insight into the difficulties faced by the Rhodesian farmers in setting up commercial enterprises. An observation is pushed by the writer that it’s wrong to assume that white farmers settled on the land for free. Norman bought his farm through a loan facilitated by then Farmers Co-op. In an interview on Friday, Finance and Economic Minister Mthuli does allude to two compensation models. Full compensation (for land and improvements on Bippa farms) and compensation on improvements for the rest of the farms.

 In the book, he also seeks to correct that communal lands or reserves where most native people were moved to did not contain poor soils although he did admit that there were no communal lands in region 1 and 2. He chronicles the challenges faced by farmers particularly during UDI when the country had to circumvent the sanctions, mainly on how they managed to sell tobacco and the role Affretair played. It was during this time that crop diversification was adopted. These UDI challenges saw his rise to leader of the Rhodesian Farmers Union which was re-branded Commercial Farmers Union during the Muzorewa government. He was part of the Lancaster House delegation as a few years before 1979, he had put forward a proposal to include black ownership in commercial farming and perhaps it is for this reason that Mugabe appointed him as Agric minister. He does note however that his successor would get the combined Agriculture and Lands ministry but when he would be re-appointed, it would always be about agriculture.

At the launch, Norman said back in the day, he had said the only way to boost agriculture production was to focus on this: Education, Availability of inputs, Access to markets and his life’s story is clear. From his narration, he wasn’t close to Mugabe but he no doubt had his ear. To Mugabe, Norman could have been one of his hard working ministers. But no clear explanation as to why he was dropped from Cabinet, when he was then left to be a part of Eddie Cross’ Beira Corridor Group. Perhaps it was necessary, since he came back as Minister of Transport.

From his time at BCG, the narrations become more detailed, perhaps only for the reason that the memories are not too distant. Interesting points that anyone can relate too as well. He talks of plans to extend the pipeline to Gweru and Bulawayo and the successes of BCG in raising capital. In his stint as Transport minister he correctly states what needs to be done at the Air Zimbabwe and even talks of an incident where Mugabe supported him in the sacking of then chairman Xavier Kadini. His major disappointment is the corruption on the new airport design which had to be re-tendered to accommodate Mugabe’s relatives.  When he was given an additional portfolio Norman talks of how a British engineer helped solve a crisis at Hwange. However, when he left for the Agric portfolio, the engineer’s permit was not renewed.

Back at agriculture, the rise of Roger Boka dominates his narrative. He does not seem remorseful about his death as he was against the licencing of his floors. Without any other major policy change, Norman resigns a few months before the land reform. At the height of the land reform he sells his farm to Anthony Mandiwanza and goes off to England where he started.

Overall, he does give glimpses into Mugabe’s character but it doesn’t seem like he had a close relationship with him. Mugabe trusted him without doubt as someone who delivers and perhaps preferred him at times over guerrilla comrades. Norman concludes by giving very good economic advice noting that some of the challenges have been known since the days of UDI.  He sums it up: once corruption becomes an established practice it is difficult to eradicate. It was a good read and I enjoyed it thoroughly – Happi Z

Record breaking streak on ZSE continues unabated

HARARE – The stock market continued its record-breaking streak on Thursday as investors continue to pile money into the stock market as an alternative to holding RTGS balances.  At close, the Industrials Index shot past the 600 level and almost closed past the 700 mark after it gained 17.86% to 699.89. The All Share Index touched a new record high after gaining 18.01% to 208.31. The ZSE Top 10 was up 19.23% to 190.64 while the Minings Index which is still to surpass the record set in March 2011, was up 19.23% to 242.81 and is the only index whose year to date gains have not doubled at 71%.


ZSE just $65m trades away from surpassing F17 turnover

HARARE – The Zimbabwe Stock Exchange is just $65 million trades away from surpassing the $694.96 million turnover value achieved the whole last year, amid expectation that if the current economic situation maintains, the stock market could for the first time hit the $1 billion turnover mark.
At the close of trades on Wednesday, turnover was $20.04 million, the bulk of which was comprised of foreign investors with $18.2 million invested in Delta from 5 million shares. Foreign buyers totalled $19.15 million while $962 865 sold.
The ZSE set another market cap cap record of $19.5 billion after the Industrials Index surpassed its all time high, which was achieved on November 14, 2017 of 534.13 after it surged 15.96% to $593.82.
Investors continue to pile into the stock market amid concerns about the exchange rate and rising inflationary pressures. The script is similar to last year’s ZSE performance in Q4 where shares hit record highs to hedge against the loss of value on RTGS deposits after the US$ black market rate started creeping up towards 20%. A lot has happened since then including the ouster of long time President Mugabe.
The gains came as Finance and Economic Development minister Mthuli Ncube issued a statement that the exchange rate on RTGS deposits will be maintained at par with the US dollar in spite of earlier statements where he said he would leave the market to decide the exchange rate.
The All Share Index was 16.14% higher to 176.52 while the ZSE Top 10 Index put on 18.03% to 190.64.
The Minings Index traded past the 200 level after it gained 19.2% to 203.65 but is still to beat the record of 272.21 achieved in 2011.
On the price sheet there were no fallers with bids congesting the line. BAT Zimbabwe put on 17.85% to 3300c, Delta was up 19.93% to 364c, Econet, which is currently trading a cautionary which will result in multiple transactions, added 19.90% to 244.25c.
General Beltings led the risers after it gained 36.04c to 1.51c but slightly below its year high of 1.55c
Meikles traded flat at 65c after Government took the company to court seeking to overturn a payment on a long-running debt issue.

Ncube retracts London statement, says RTGS deposits will be maintained at 1:1

HARARE – In what could largely be interpreted as a retraction of sorts, Finance and Economic Development Minister Mthuli Ncube has said that Government remains committed to preserve the value of RTGS deposits at the current exchange rate of 1 to 1. This he said is being done in order to protect people’s savings.

Ncube’s comments come after earlier his statements at an investor roadshow in London on Monday, had caused pandemonium within the market. Ncube had said that the market had already determined that RTGS bank balances are not at par with the US dollar and that Government would not intervene on devaluation and to control parallel market rates.

“The market has already determined that RTGS and bond notes are not at par with the US dollar and I am not about to argue with the market,” he told a roadshow at Chatham House.

His remarks saw most suppliers change their pricing terms while some products and services were withdrawn from the market due to the pricing conundrum. At what price should producers sell, particularly in a market, which outlawed any tier pricing systems.

In today’s statement, Ncube said: “Government recognises concerns surrounding RTGS deposits, and we commit to preserve the value of these balances on the current rate of exchange of 1 to 1, in order to protect people’s savings.”

He said that the challenges Government is facing, which include cash shortages and the proliferation of foreign exchange parallel market rates which have a negative effect on prices, require that Government position the economy on a strong footing by implementing reforms.

“Such reforms  include cutting on government expenditure, working towards import parity pricing system, increasing efficiency on government delivery systems and fast-tracking the State Owned Enterprises reforms, among a host of reforms.”

He added that the reforms should be accompanied by a strong and sustainable currency reform system. “This is necessary to ensure that any currency reform programme that the Government would put in place is effective and that it has minimum disruption to business.”

Ncube said in view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right to do, the country shall continue to use the multi-currency system which was put in place by Government in 2009.

“This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system as is per the current policy of foreign exchange management system. In parallel, the Reserve Bank shall continue to maintain adequate resources for the import of essential commodities.”

He said over and above the Nostro Deposit Protection Guarantee from Afreximbank, the ministry is also reinforcing Nostro foreign currency accounts with a statutory instrument to guarantee that these are private deposits, and neither the Reserve Bank nor government has any access to them.



Zimbabwe stock market rallies to new record highs

HARARE – Zimbabwe Stock Exchange shares rallied strongly to new record highs on Tuesday as investors continue to hedge against inflationary pressures following the admission by Government that RTGS, bond notes were not at par with the US$ and that they were leaving it to market forces to determine the true value. Already, since the announcement of the Monetary Policy Statement last week, where the governor Dr John Mangudya separated foreign currency accounts from RTGS balance, parallel market rates have rallied to as high as 300% to the US$.

However, Dr Mangudya maintained the official exchange rate at 1:1, a position which has left many companies in a conundrum with regards their pricing structures. At what price do they sell their products, most of which have an imported component? Analysts believe that that the constant loss of value of RTGS/Bond notes present the biggest risk to companies at the moment. Already products such as beer and bread are in limited supply while on some lines the prices have more than tripled.

At the close of Tuesday’s trading session, the market, which had been somewhat lacklustre before the Monetary Policy announcement last week, rallied to new highs on its market cap to $16.7 billion, beating the previous record, which was set last year, just before the ouster of President Robert Mugabe of $15.16 billion.

The All share index and the Industrials index both went up 13.23% and 13.18% to close the second session of the week at 151.99 and 512.09 respectively. The ZSE Top Ten Index rose 14.82% to close at 161.52 after strong trades in Econet, Delta, Innscor and Old Mutual.

Beverages concern Delta, which has not effected any price increases went up 19.95% to 303.50c.  Telecoms giant Econet maintained the buoyancy seen after it announced that it will unbundle its fintech unit and convert debentures into equity. The counter put on 19.31% to settle to 203.71. Old Mutual was up 19.93% to 884c as the group prepares to unbundle its banking unit NedBank. Innscor, which is targeting to be a $1 billion revenue company in the next 15 months, rose 19.86% to 169c.

The Minings Index was up 1.40% to 161.52 after gains in Bindura Nickel and RioZim. RioZim put on 0.71% to 141c after the group announced its intention to sue the central bank for not sticking to its directive on foreign currency retention. The group said it had only retained about 15% since 2016.

Total turnover was at $9.6 million as 20.6 million shares exchanged hands in today’s session. There were no foreign sells, but foreign buys amounting to $44 752.


Change in sales mix boosts Truworths F18

HARARE – Modification of the Truworths Limited credit offering for Apparel and Homeware products saw the group’s margins improve in the 52 weeks to July 8, 2018. Revenue in the period increased 9.46% to $16.26 million from $14.86 million in the prior period.

Chief executive Temba Ndebele told analysts last Thursday that the group had managed to return to profitability due to the change in the sales mix.  Retail sales were 9.7% higher at $13.45 million.

The group saw increased GP margin at 50.9% (2017: 40.2%) due to increased sales at full margin and no markdown in the period compared to a markdown of 13% of sales last year, and a change in sales mix in favour of apparel.

Credit sales made up 67.3% of sales from 70.6% last year, cash sales were 30.8% while lay-bye sales were at 1.9%. By store, Truworths cash sales were 30% higher and credit sales were up 11.6%. Topics saw a 35.3% increase in cash sales but credit sales were down 1.3%.  There had been an increase in the number of accounts to 91 745 from 88 982.

Other income of $646 303 related to income from the CABS credit card facility. The group’s manufacturing unit reported a loss of $10 365, which narrowed from the $171 739 loss achieved last year. Trading expenses were 6% lower at $8.08 million than last year although there had been an increase in employment costs due to return to full time work for all employees in September.  Employment costs were 4.4% higher and Occupancy costs were down 14.2% but made up 16% of retail sales.

Ndebele said occupancy costs had declined due to store closures. Six Number 1 stores had been closed down and this had also had an impact on lease expenses which were down 13.5%. Other operating costs had increased 3.1% due to higher distribution volumes than prior year and increase costs of computer consumables and motor repairs.

The group had extinguished all long term and foreign obligations while short term borrowings were down 3.9% to $7.5 million. Trade receivable costs decreased 48.1% after the net bad debt write off was 28% lower than last year. Trade receivables were down $8.98 million from $9.05 million. Doubtful debt allowance charge for the year was down 53.3% and debt collection costs were down 12%.

Operating profit was 15.1% of retail sales at $2.02 million after the group overturned a loss position. Subsequently the pre-tax line was at $1.11 million from a loss of $2.38 million and the bottom-line closed at $806 916. The group’s return on capital and NAV were at 14.6% and 1.02 in that order.

Giving an update on performance post year end, Ndebele said sales for the two months (July and August) were positive on the apparel side. Truworths sales had gone up 26.7%, Topics 41.6% and Number 1 at 52.3%.

Ndebele however said that shortage of foreign currency will continue to pose a challenge to product availability and will negatively affect product supply and sales. “Resurgent inflationary pressures will negatively affect consumer disposable incomes and confidence.”

Our thoughts on Truworths:

In the just-ended earnings season, there have been a host of different outcomes depending on what band of inflation you find yourself in, which ultimately determines whether an increase is due to inflation or inflation and some growth. Generally, top lines have risen by 20%-30% and the bottom line depends almost entirely on whether you have a large imported component in your cost of sales – but it is anything from 10% to 200%.

For all the brouhaha about the economy growing, Truworths (and for that matter Edgars last week), have high imported components in their goods, and had different outcomes – Edgars did the industry standard of 30% on the topline and 200% on the bottom-line, while Truworths was 9.7% and a return to profit. Firstly, lets qualify that Truworths was reporting YE results, so a direct comparison is unfair and it’s also difficult.

By its own admission, Truworths makes its annual profit in the two weeks over the Christmas period and has a quieter H2 – this year H2 was as strong as H1 and activity in the past few months has warmed up even more with Topics and Number 1 reporting sales growth of 41.6% and 52.3%. Ndebele gave two examples of people walking into stores and buying everything in a single line as they worked out the “value proposition” of buying the items on credit.

Behaviour such as this, and profit increases of the order of the past earnings season are out of keeping with a “low inflation economy” such as is claimed by the authorities. But it was not so much the results of these two retailers, but the “other evidence”. If this economy was roaring, the number of accounts would be too. Edgars had slightly fewer overall, while Truworths had slightly more and the number of outlets increased marginally.

Much will depend on what happens over the next month as the past year of “economic growth” has been driven by quasi-fiscal expenditure programmes (Command Agriculture and “subsidies” for small scale miners) that have put money in peoples’ pockets. Whatever may be claimed, this drives inflation and many of us have seen this picture before. As Ndebele pointed out, it really depends of what level of debt Truworths opts to take on to finance this.

As is the case with varying levels of inflation, there is also a varying levels of valuations in the market and, as was the case in 2003 when the first Great Stock Market Rally of the inflationary period started (with NMB’s note on the expected performance of Colcom F03), it is not quite apparent what will ignite this in the market. The top stocks are sitting on PEs of 20-30 while others, most notably the banks, are on single digits historic PEs.

We have seen revaluations of some of the smaller companies in recent months – among them the long overdue rise in Powerspeed, Proplastics, Turnall, and Zimplow – even Truworths and Edgars have been on the move – but there is a good deal of value in the lower capitalised retail stocks – Truworths ($5.45m) with its 61 branch network is certainly among those – and we are only going to see earnings acceleration in the year ahead. – FinX

Consolidated Income Statement   
Details8-Jul-189-Jul-17% Change
Retail Merchandise Sales13,458,04812,267,6439.70%
Trading Expenses8,080,5458,600,802-6.05%
Finance income262046525234353.85%
Operating Profit2,026,119-1,228,015-264.99%
Finance Cost-911,228-1,152,813-20.96%
Profit/Loss before Tax1,114,891-2,380,828146.83%
Earnings per share0.21-0.47144.68%
Consolidated Statement of Financial Position
Details8-Jul-189-Jul-17% Change
Total Equity3,881,4423,074,52626.25%
Total Assets16,291,45115,891,2482.52%
Current Assets14,866,10214,147,4275.08%
Current Liabilities11,970,30211,270,7176.21%
Current Ratio1.241.26
Statement of Cash Flows
Details8-Jul-189-Jul-17% Change
Cash Flow from Operating Activities1,672,5141,404,14519.11%
Cash Flow from Investing Activities-70,553-26,678164.46%
Cash Flow from Financing Activities-1,583,332-1,419,28311.56%
Closing Cash and Cash Equivalents456,163437,5344.26%

Monetary solutions to economic problems is what brought Zim to where it is now  

This article was sent out as an email on October 4, 2018

Dr Tinashe Nyamunda and Happiness Zengeni

HARARE- Throwing monetary solutions at economic problems is nothing new in Zimbabwe’s economic history. In 1981, the Zimbabwe Conference for Reconstruction and Development (ZIMCORD) was held to raise money required to finance economic development. There was excitement about the new independent country then and this was seen through the successful raising of US$3 billion that Finance Minister Enos Nkala and Economic Development Minister Bernard Chidzero ( felt would be sufficient to put the country on a sustainable development trajectory.

However, the economic blueprints of Growth with Equity and the Transitional National Development Plan culminated in the government needing more money from the International Monetary Fund and this resulted in Zimbabwe adopting the disastrous Economic Structural Adjustment Programme by 1990; the effects of which the country never recovered from as has been well studied by various scholars. The raised funds were simply consumed and the country acquired more debt. In fact, all of the plans which were to follow even after 1981 were then adopted from long standing political culture that enforces bad fiscal practices

Why? Because the problem is not monetary! The monetary challenges in the country are a painful symptom of the problem and emanate largely from political spending. As it is currently, the Reserve Bank of Zimbabwe is just an overdraft institution for bad government spending Ever since dollarisation the country has been attempting to fix its problems using monetary solutions. However as many have for long been advocating, including the governor himself, the solution is connected to production! Put people to work, produce, sell and then get the money! Forget the reforms if you do not put the country to work. No matter how much money you put in the economy, whether it is the $27 billion that some estimate would bring the economy back to equilibrium, or even more, if the country is not producing, forget it! It will simply consume the money and get into even more debt!

Perhaps it is in this light that the move by Finance and Economic Development Minister Mthuli Ncube to announce fiscal measures at the same time as the MPS, could signal a shift towards correcting this. In his parting statement, which he personally believes was tough talk, RBZ governor John Mangudya admits that the measures he presented would need to be supported by a package of measures to reduce fiscal imbalances that are exerting pressure on money supply and hence inflation as a result of increased consumer spending which in turn requires increased foreign currency inflows. The country needs to live within its means.

Mthuli’s great plan to capture the informal market?

There is need to reduce a gaping fiscal deficit while boosting spending on priority areas such as infrastructure. For the Government to set itself to achieve any semblance of fiscal balance, the new Finance Minister quickly announced a new tax of 2 percent for every dollar transacted but one which also has unintended consequences particularly on the socio-political front. Going by the current levels of transactions within the economy, this would result in revenue of some RTGS $3.5 billion. But given that in a single stroke, they have subjected other non-foreign exchange monies to inflationary pressure because of the separation from FCA, even this is unworkable. And even for the capital markets where rates as low as 3% per annum would result in a negative return for short term tenors unless there is an adjustment to the interest rates. A 90-day TB tender would require a much higher compensatory yield to cover the flat charge. On the stock market, investors would now face charges of just above 8%. The negative effects of such will ultimately become a huge cost to Government.

The attempt to reign in the informal sector in this way is ridiculous as the players will simply just pass on the cost to the consumer who will bear most of the brunt of government revenue targets. These policies, to say the very least, are not people friendly and neither will they yield the aspired solutions.

Its most likely there will be an adjustment, reversal or even a shelving to the tax tomorrow when Ncube launches the Transitional Stabilisation Plan (2018-2020) only for the obvious reasons that it was an ambush on the people and that the quantum is against the push to improve the doing business environment for companies who are the main drivers of high value transactions.

Only for his PR, Ncube should start by apologising to the nation for presenting this tax to them and before he announces the new position, he will do well by presenting the available options. While still on it, its clear that there is a serious gap and that there is no time for a Government, which has to implement things fast, it would be wiser to call for an AUDIT into how the Government ended up with a $10.8 billion debt, how the money was used particularly on the TBs side.  They also need to be honest about the maturity profile given that half of the TBs mature within 15 months.

Kenya presents the nearest example of what such kind of decisions can be out-rightly rejected by the people. In August, the Kenyan parliament threw out an earlier version of proposed fees on bank transfers, a so-called “Robin Hood” tax of 0.05% on transfers of more than 500,000 shillings. Perhaps its useful for Government to make a case study of this.

Reining in the informal market?

The government’s financial authorities are deluding themselves if they think that the measures they have announced have the capacity to rein in the informal market. First, separating FCAs from RTGS balances will only accelerate rather than slow down the parallel currency market. It makes all these other forms of money worthless. This is a veiled admission that an exchange rate actually exists in real terms, otherwise, there would be no need to do so! His explanation that this is to not discourage exporters is unconvincing.

Moreover, Mangudya and Ncube, went further to tax intermediate money transfers including mobile money, cell phone and all sorts of money movements to try raise more revenue for the state. The other explanation was to try and reign in the informal economy which they have no direct methods of extracting from.

If anything, most informal sector traders buy their products from South Africa and sometimes Botswana. Most of what they sell is imported and the government cannot possibly provide them with the foreign exchange they require to keep them in business. If the object is to drive their market into the ground or slow down their activities in favour of boosting the formal market, then their only option is to put these people to work. The informal sector will continue to thrive and formal sector will soon begin to face numerous viability challenges because of the structural misalignment just introduced into the economy.  Both the RBZ Governor and the Minister of Finance’s diagnosis of the problem and their proposed solutions are seriously erroneous. Not only should they rethink their approach, but they now need to really consult widely in order to get to the real issues to be addressed. If anything, the outcry following the announcement of Dr Mangudya’s statement is a strong indication that many Zimbabweans are fully aware of the challenges that confront the country and the solutions suggested are untenable.

Everything boils down to the need to improve production

If the erstwhile financial authorities pursue the production agenda, they would need to confront the politics of state capture in the major primary industries of the country. How will they confront leakages in, for example, mining where high ranking politicians have huge interests? How do they regularise production to insure that all that is what is sold is captured through proper fiscal channels to insure revenue is not hemorrhaged out of the country through the various smuggling and laundering methods? How do you retake all of those sectors that have been parcelled out to influential politicians who control them and profit irregularly, outside proper fiscal channels? How do you retain money locally to build capacity for capital and economic expansion?

Mangudya suggested that inflation had been contained within the SADC threshold of 3-7%, which he argued to be okay for the country’s development trajectory. Not only is this figure woefully inaccurate in real terms, but the Governor is contradicting the institution he leads. A paper from the RBZ previously noted that if inflation passed 4.62 percent, it would be bad for economic growth and they would treat this as a danger zone.  Official inflation is at 4.83%.

Overall, as was noted on tambarara earlier this week, there was a lot of tinkering and fiddling but no real solution to the challenges facing the nation.

Hwange Colliery Company suspends top brass

HARARE – Coal miner, Hwange Colliery Company Limited (HCCL) says it has suspended two senior board members  effective October 4, 2018 on allegations of mismanagement of funds.

Early this year, HCCL also suspended its managing director Thomas Makore on allegations of “insubordination and corruption”.

“The company advises that it has suspended its Acting Managing Director, ( Shepard Manamike) and the Executive, Finance and Administration (Mr Tawanda Marapira) with effect from 4th October 2018.

Hwange said it had witnessed unethical business practices characterized by financial improprieties, particularly unauthorized expenditure from the top management.  “The circumstances are unaccepted especially when the company was focused on production and sales. Due to the unauthorized financial transactions, the company failed to meet its key obligations due to its creditors and employees,” said the company in a statement

The company is currently sitting on a stockpile  of 345 000 tonnes which it says is easily convertible to revenue of around $13 million) to enable it to address its short term challenges.

“It is unacceptable that with such stock the Company fails to meet its financial obligations,” group’s acting board chairperson Juliana Musikwe said.

The Ministry of Mines is still to appoint a substantive board.

Musikwe said the company is working hard to address the temporary impediment that has caused poor performance. “However, this is just a temporary setback occasioned by substandard performance within management structures, which the board assures all stakeholders it is on course to address and restore normalcy,” she said.

Musikwe said the board is entrusted to protect the interest of the company and preserve investor value.

The mantra under the “new dispensation” is zero tolerance to corruption.

“HCCL is strategic to the national economy and cannot be prevented from becoming a successful concern on an account of substandard performance, she added.

Caledonia’s Blanket Mine lifespan extended on increased exploration

HARARE – Canadian based mining firm, Caledonia Mining Corporation says due to increased exploration activities, it has identified additional gold reserves at its Blanket Mine, which will extend its lifespan.

The mining firm owns 49 percent stake in Blanket Mine in Gwanda, Matabeleland South province.
“Today’s resource upgrade is yet another positive step in our journey as we invest for the long term future of Blanket.

This upgrade takes our total resource endowment at the mine to almost 1.8 million ounces. We have increased total resources at Blanket by 86 percent since 2011 in addition to mining over 300,000 ounces over this period,” chief executive Steve Curtis said in a statement on Thursday.
The resource upgrade marks the seventh successive year of sustained resource growth at Blanket mine.

“The increase in the Measured and Indicated resource base of 13 per cent to 805,000 ounces is good news for the longer term life of mine plan at Blanket and underscores the overall confidence level in Blanket’s resources which is underpinned by the planned increases in cash flow and production as the investment in our Central Shaft comes to an end.”

The grade of the ore body remains consistent with the company’s expectations and continues to be well above the current mined grade at Blanket of 3,3g/t. Curtis said the nine per cent increase in the inferred resources at depth to 963,000 ounces shows the longer term potential of the mine.

The group is optimistic that the Central Shaft project will set the mine up for many years. “I am confident that the life of mine will be further supplemented by resource additions and upgrades as a result of the increased exploration activity at Blanket in the future,” he added.

As at June 30 2018, Caledonia had net cash of $5.3 million.  Blanket is poised to produce about 55,000 to 59,000 oz of gold by year end.

Caledonia targets to produce 80,000 ounces of gold by 2021.

Econet considering debentures to equity conversion

HARARE – Econet Wireless Zimbabwe could be considering a debenture to equity conversion, people with knowledge in the matter have said. This comes after the group issued a cautionary statement to shareholders in which it said it was engaged in discussions and is considering various proposals, which if implemented may have a material impact on the value of the company’s shares.

Well-placed sources told FinX that the group might be looking at converting outstanding debentures into equity. This comes as the group last year raised $130 million through a rights issue and a linked debenture sale. During that time, shareholder concerns had been raised on the structure of the debenture and through an amended resolution, which was passed, Econet had a buy back option of the debentures for those who did wish to hold on to them. Econet argued then that the debenture was an instrument which would give investors a definite return. The sources said over the past few weeks, Econet has been approaching investors who wish to sell their debentures.

“Econet is full of surprises and there is speculation on what their cautionary could be about but everything points to the debenture/equity conversion, given that they have been buying them back.”

At its last results briefing, Econet said it desperate to find a quick solution to circumvent regulatory challenges which had hampered plans to list $50 million debentures on an external securities exchange to protect value for shareholders who bailed out the company.

Econet said while its board had wanted to list the debentures issued by the company on an external securities exchange shortly after the rights issue, the relevant authorities did not approve the request for a sinking fund, which it intended to use to repay the liability.

The cautionary may also relate to plans for an initial public offering by Liquid Telecom in London. However, market players say this is highly unlikely as Econet only owns a part (51%) of Liquid Zimbabwe and not the broader Liquid Telecom. Others say that it could signal the unbundling of either Cassava (which holds Ecocash) or Steward Bank from  the group.

“Shareholders, debenture holders and members of the investing public are therefore advised to exercise caution and consult their professional advisors before dealing in the company’s shares until further details of the transaction(s) are announced or upon withdrawal of this cautionary,” said Econet in the cautionary statement.