VICE-PRESIDENT Kembo Mohadi has taken his two former business partners at Malindi Storage and Logistics (Pvt) Ltd to the High Court demanding US$107 135 he claims was misappropriated by the pair.

BY CHARLES LAITON

Through his lawyers Messrs. Mugiya and Macharaga Law Chambers, Mohadi issued summons against Tichaona Mushipe and Oscar Chiromo, both residents of Beitbridge.

In his declaration, Mohadi said sometime in November 2016, he entered into a partnership agreement with Mushipe and Chiromo which operated until August 31, 2018 when he pulled out.

“The partnership operated until August 31, 2018 when the plaintiff (Mohadi) pulled out of the partnership following the misuse and misappropriation of partnership funds by the defendants (Mushipe and Chiromo) which prejudiced the plaintiff the sum of US$107 135,” Mohadi said.
He added that after the collapse of the partnership, the licence holder and owner, Malindi Storage and Logistics (Pvt) Ltd, which he owns, recalled its trading licence and invited auditors who then established that more than US$107 135 had been misappropriated.

“On April 15, 2019, the parties entered into a deed of disengagement. The parties then agreed to engage an auditor so that the parties could see what they were worth and what their obligations were to each other. After the auditor finished his work, the defendants then refused to accept the audit report for no apparent reasons. The parties have been stuck since then,” he said.

“The audit report showed that the defendants prejudiced the plaintiff of US$107 135 and are supposed to pay the plaintiff the said amount collectively. The defendants clearly breached the partnership contract and the deed of disengagement contract by failing to complete their obligations in terms of the said deed,” he said, adding that the claimed amount could also be paid in local currency using the obtaining bank rate.

Meanwhile, Mushipe and Chiromo have since entered their notice of appearance to defend the matter through their lawyers Sinyoro and Partners Legal Practitioners.

After enjoying rare inflated topline growth in the first six months of 2019 and the immediate past financial year, Zimbabwe companies are set to report a sharp contraction in earnings for the full year period to December 2019.

Equity Axis

The projection of a worse off outcome is premised on a pronouncement by the Public Accountant and Auditors Board (PAAB), a statutory board created by an Act of Parliament and mandated with regulatory oversight of the accounting and auditing profession in Zimbabwe, that companies preparing financial statements for the period July 1 onwards, are urged to adopt IAS 29. This follows a broad consultation with market players including accounting and auditing professionals which established that there was a consensus on hyperinflation in Zimbabwe.

IAS 29 Financial Reporting in hyperinflationary economies applies where an entity’s functional currency is that of a hyperinflationary economy. The standard does not prescribe when hyperinflation arises but requires the financial statements and corresponding figures for previous periods of an entity with a functional currency that is hyperinflationary to be restated for the changes in the general pricing power of the functional currency.

Zimbabwe is a classified hyperinflation economy from an accounting perspective which, however, is at variance to the economic classification.

Economists typically classify an economy as under hyperinflation if month-on-month inflation remains above 50% over three consecutive months. Zimbabwe’s monthly inflation for September was last recorded at 17,5% having been slightly up a month earlier. Annual inflation for the respective month, however, came in at 353%.

From an accounting perspective, the view is that an economy satisfies hyperinflation if certain conditions are met and does not necessarily prescribe a particular rate of inflation. According to the standard characteristics of the economic environment of a country which indicate the existence of hyperinflation include the general population preferring to keep its wealth in non-monetary assets or in a relatively stable foreign currency; amounts of local currency held are immediately invested to maintain purchasing power; the general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency; sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short; interest rates, wages, and prices are linked to a price index; and the cumulative inflation rate over three years approaches, or exceeds 100%.

Zimbabwe perfectly satisfies all the conditions set above in the IAS 29 standard which qualifies an economy as being under hyperinflation. The pronouncement by PAAB, therefore, follows the necessary evaluation and now companies will have to adopt the standard in the current period and the impact on earnings will be fundamental.

In the half year period to June, all listed companies reported surging earnings, driven by upward price reviews, and other once off gains such as revaluations and foreign currency exchange gains, which are all related to the economic environment. A change in reporting currency from US dollar to Zim dollar resulted in fair value gains and exchange gains which significantly drove net earnings upwards. Prices have soared by 350% year on year as September and this shows how companies benefited from price increases to boost income.

Although the quality of earnings and sustainability of earnings in this regard was questionable, at least there was no standard at present compelling companies to adjust their earnings for a more factual presentation of their earnings. With the coming in of IAS 29, companies will have to use a price index to discount their earnings, such that if the rate of price growth (inflation) is ahead of earnings growth, then a company’s results based on hyperinflation accounting will be in losses.

Old Mutual, which is the only company to have applied hyperinflation accounting on its first half earnings, reported that profit for the period under hyperinflation accounting was -$210,47 million against a profit position under historical cost accounting of $509,15 million which was a gain of 671% on the prior year. This is how exposing hyperinflation accounting is.

Old Mutual, however, stated that the magnitude of loss was exacerbated by the fact that the bulk of the group’s net assets comprised monetary assets carried at fair value and these have not increased at the same level as CPI.

This means for companies with less exposure to monetary assets such as manufacturers, the gravity of loss emanating from this specific adjustment may be less severe. Broadly this would mean to preserve value companies have to increase stock levels and contain costs, maximise production efficiency and adopt a flexible pricing mechanism which closely track CPI.

Although government has stopped the publication of annual CPI data, companies will have to continue referring to the same data, which is readily available at research houses, to inform their pricing. To investors, valuations will have to be adjusted accordingly taking note of the effect of inflation on the adjusted earnings based on hyperinflation accounting.

Scores of parents of children learning at Sunningdale 1 Primary School in Harare early this week staged a demonstration against the school for demanding $35 from each pupil to replace stolen roof sheets.

By Ruvimbo Muchenje

The parents alleged that a member of the School Development Committee on Wednesday barred their children from entering the school gate unless they produced proof of payment for the missing sheets.

“We are here to defend our helpless children,” a parent, Learnmore Moyo, said.

Longina Mugadza, another parent, said the school had been missing a lot of things lately, but no investigations have been conducted.

“A water tank went missing, tablets for the children went missing, calculators, even bond paper, but there are no investigations. Instead, they want us to replace those things using our own money,” an irate Mugadza charged.

A teacher at the school, who refused to be named, blamed the security staff for the thefts.
“The headmaster confessed to having seen one of the guards holding the missing sheets, but he said he thought they were from next door. What I know is that if these guys are questioned thoroughly, they will lead us to their boss,” the teacher said.

The school head, Never Zviripi, said a security guard had already been arrested for stealing the roofing sheets and he appeared in court
yesterday.

He, however, refused to divulge more information, saying he was attending a conference out of Harare.

Media stakeholders have called on the government to ensure that its institutions provide citizens with access to information to minimise the spread of fake news in the country.

BY FARAI MATIASHE

The call, however, comes at a time the government has been accused by content creators as one of the biggest peddlers of fake news.

Speaking at a panel discussion on fake news organised by Perch Media in Harare on Wednesday, media consultant Koliwe Majama said when public institutions deny citizens information through public means, they find a way to get it, even if it means leaving a gap for fake news.

“When you look at the process that the African Commission is going through now to revise the declaration on freedom of information, it answers to (access to) information, you can’t separate the two. You can’t start to talk about freedom of expression without access to information. So the only way is to have more open public institutions,” she said.

Information ministry director for international communication services, Ivanoe Gurira, said government, through the weekly post-Cabinet briefing, was striving to timeously and openly provide information to the public.

“We are not already at 100%. We think communication is very important, it is the livelihood of any society and information in our age has become as precious as the oxygen that we need. Government will continue working to improve the public communication strategy platforms. Government, after every Cabinet briefing, has a media briefing to update citizens on every decision made by the government,” he said.

Gurira added that government, in the near future, would consider doing daily briefings with the media in a bid to give information to the citizens.

“What I like about the United States of America is that they have daily briefings. We are at a weekly basis, but I think in the future, we will move to more regular briefings, at least with the media. If the government comes up with daily briefings, that would, to a greater extent, sanitise the environment and reduce fake news,” he said.

Gurira also suggested that there was need to regulate social media as it is the major platform for fake news.

Up-and-coming Zimdancehall artiste Brian “Ding” Chipara has lamented lack of sponsorship in the farming town as a major drawback for most artistes in his category.

BY SIMBARASHE SITHOLE

Having started music in 2003, the 35-year-old chanter from Holland Farm in Mvurwi said he will not give up despite the hurdles thrown on his path as his dream was to be ranked among the country’s best musicians.

The artiste told NewsDay Life & Style that renowned studios such as Chillspot Records were charging high recording fees.

“We have vast talent here in Mvurwi, but promoters are turning a blind eye on us. We cannot afford the so-called big studios. Just last week, I went to Harare and tried Chillspot Studios who are demanding a minimum fee of US$50. I simply cannot afford that as an individual,” Chipara lamented.

The artiste, who has one album, Hupenyu, and has recorded 10 singles which he sent to various radio stations said to date only one single titled Castle has made it on air.

He implored radio stations to play his songs as he was currently marketing his music through social media platforms.

“We have a big challenge of airplay. So far only one of my songs is getting airplay. This speaks to the issue of sponsorship. For us to be heard we have to go to Harare, yet we have studios here in Mvurwi,” he said.

Chipara once shared the stage with sungura prodigy Romeo Gasa and Wasu Dacoda in Mvurwi and he aims to perform alongside big names like Soul Jah Love whom he is currently working with on a collaboration.

“I am currently working on a collaboration song with Soul Jah Love titled Kwamuri Baba to be released mid-month,” he said.

Mvurwi boasts of one Zimdancehall artiste, Takura Chioniso, popularly known as Blot Grenade, who hit the headlines after relocating to Harare, where he recorded his hit song Ndiri Bad on the Star riddim at Chillspot Records.

Despite recording his first song Pamangoma at Talkat Studio in Mvurwi, it did not help his career to soar to greater heights until he relocated to Harare.

Zimbabwe’s economy is set to shrink by 6,5% this year – its first contraction in a decade — after a drought and power shortages, the Finance minister said yesterday.

Reuters

Power generation could be cut at the largest hydro plant due to low water levels, Finance minister Mthuli Ncube also said.

Ncube told lawmakers in the resort town of Victoria Falls that Zimbabwe would spend more than $300 million to import 840 000 tonnes of maize, a staple crop, after the drought left more than half the population in need of food aid.

The national Treasury said on October 7 that the economy was projected to shrink by up to 6% this year.

Hopes that the economy would quickly recover under President Emmerson Mnangagwa, who came to power after the late ruler Robert Mugabe was removed after a coup in 2017, have dimmed quickly as Zimbabweans grapple with soaring inflation, rolling power cuts and shortages of foreign exchange, fuel and medicines.
Ncube said the economy was projected to recover and grow 3% next year on the expectation that there would be better rains to power agriculture as well as improved foreign exchange inflows and electricity generation.

Power cuts have hit industry and mining, the biggest export earner. Earnings from mining fell to $1,9 billion between January and September this year, compared to $2,4 billion during the same period in 2018, central bank governor John Mangudya said.

Ncube said water in the Kariba Dam, which has capacity to produce 1 050 MW, was so low to the extent that “we are dangerously close to a level where we have to cut off power generation.” Kariba was producing 122 MW yesterday.

Zimbabweans are experiencing daily hardships with prices of basic goods, fuel and electricity soaring, while the Zimbabwe dollar that was re-introduced in June has continued to weaken against the United States dollar.

The national statistical agency stopped publishing annual inflation figures in June, but with prices surging, economists examining the official monthly data put the rate in September at 380%, the highest since the hyperinflation horrors of 2008.

Critics accuse Mnangagwa of lacking commitment to political reforms and failure to tackle entrenched corruption but the 76-year-old leader has pleaded for time and patience to bring the economy back.

THE final event in the 2019 Drag Racing Series is set for Donnybrook Raceway in Harare on Sunday as the season draws to an end.

By Freeman Makopa

At least 45 drivers and 15 superbike riders are expected to battle it out for national points in front of a colourful crowd, if usual trends are followed this weekend.

The drag racing series has now become a premier motorsport event in Zimbabwe.

Zimbabwe Motorsport Federation spokesperson Temba Mazvimbakupa said he expects this year’s event to be a memorable one and fun-filled with adrenaline-pumping action.

“We are ready to roll and we hope this year’s event will be a memorable one. This event is a crowd puller and this year we are expecting around 5 000 spectators. We have had a good season and I hope fans will throng Donnybrooke raceway to witness adrenaline-pumping action,” he said.

“Competitors will range from first-timers, who are out to have fun, to the highly competitive participants determined to leave a mark at the fast-growing competition,” he said.

The competition is expected to be particularly fierce in the battle for the fastest car and fastest bike of the day.

Mazvimbakupa said the association is on overdrive to spread the sport to every corner of the country.

“We have motorsport which has been doing well in places like Zvishavane and we are also trying to take drag racing there and we will also continue spreading the sport to every province and that is achievable because Zimbabwe is filled with talent. Drivers are also bracing for the 3-Hour Enduro to be staged in Bulawayo and Zimbabwe Summer Series which will be season’s closing event and will also be held the same month and will have riders from other countries,” he added.

High speeds of over 200km per hour are achieved over a quarter mile (402m), the sport is more about showing off dexterity on the wheel. Control is the name of the game.

ELECTION observers who were part of the 2018 general elections, have called on Zimbabwe to implement a law capping political party expenditure during polls to curb vote-buying and abuse of national resources for political party gains.

BY BLESSED MHLANGA

Zimbabwe Elections Support Network (Zesn) has suggested that the law should open for audits into political party spending and how they use campaign funds to ensure electoral malpractices and unfair advantages are dealt with.

“The law should provide for disclosure and audits of parties’ sources and use of campaign funding. It should confer an independent institution with the legal mandate to regulate and oversee electoral finance issues and undertake verification of the contestant’s financial reports,” Zesn said in a statement.

Political parties represented in Parliament have access to public funds through the Political Parties (Finance Act), but these have used the money without being audited.

The Commonwealth Observer Group (COG) said such a law will ensure accountability and transparency on the source of funding of political parties and how the money was used.

“Promote accountability and transparency of campaign finance and expenditure by introducing explicit regulations on campaign expenditure including reporting requirements before nominations and after the declaration of results,” COG said.

The law will also require that candidates declare their assets before nomination and all donations received by political parties to ensure that voters have full information as they go to vote.

Money has been a major factor in deciding elections in Zimbabwe with opposition parties accusing the ruling Zanu PF party of abusing State resources to fund mega rallies, buy campaign regalia, spending big on billboards and flashy cars as well as buying votes.

The draft Child Justice Bill, which seeks to establish a distinct criminal justice system for children, does not meet international standards by failing to provide for compulsory provision of legal assistance for children, a children’s rights organisation has said.

BY FARAI MATIASHE

During his recent State of the Nation Address, President Emmerson Mnangagwa said one of the first Bills to appear before the Second Session of the Ninth Parliament would be the Child Justice Bill.

The draft Bill, which was released recently by the Justice ministry and yet to be gazetted, is going to consolidate existing child protection instruments, including the Children Act (Chapter 5.06), Criminal Procedure and Evidence Act (Chapter 9.07) and the Criminal Law (Codification and Reform) Act (Chapter 9.24).

Speaking at a panel discussion on the draft Child Justice Bill convened by Justice for Children in Harare yesterday, the organisation’s children’s rights lawyer Musa Kika said the draft Bill fails to provide the right for the children in conflict with the law to unqualified legal representation.

“The Bill marks significant progress in the treatment of children in conflict with the law. By and large the best interest of the child principle is upheld. However, the Bill is fraught with some glaring inconsistences, omissions and shortcomings in meeting international law stipulations and standards in child justice as provided for in the United Nations Convention on the Rights of the Child, the African Charter on the Rights and Welfare of the Child (ACRWC) and the Beijing rules, such as compulsory provision of legal assistance,” he said.

“The Bill provides that in certain cases a child may be provided legal representation at the State’s expense, effectively regurgitating the position of the Constitution in Section 70 (1) (d). The Bill does not provide for an unqualified right to legal representation for all children in conflict with the law at all times, as required by Article 40 (2) (b) (ii) of the UNCRC and Article 17 (2) (c) (ii) of the ACWRC.”

Kika said the international standards on children’s rights require children in conflict with the law to be protected from members of the Press, but the daft Child Justice Bill was silent on that.

“Clause 81 on privacy and confidentiality does not carry an express prohibition of the Press in court proceedings involving child offenders or child witnesses, as required by ACRWC,” he said.