BY VENERANDA LANGA

MINISTRY of Energy secretary Gloria Magombo was yesterday grilled by Parliament over issues of rebundling of Zesa with MPs questioning why an institution that was recently unbundled was now being rebundled.

Magombo had appeared before the Joel Gabbuza-led Parliamentary Portfolio Committee on Energy to speak on her ministry’s 2020 budget proposals.

Gabbuza also asked her to explain the $8,6 billion loss by Zesa which was attributed to exchange rate losses and low electricity tariffs.

“After the $8,6 million loss which was attributed to exchange rate losses you were now given a new tariff and calculations show that this will enhance your revenue by $800 million per month, and it shows that you should be able to offset this loss within three months,” Gabbuza said.

Magombo admitted that the sharp increase in Zesa tariffs will boost the company’s balance sheet.

“We were operating in a situation where our tariffs were low, as well as issues of inflation – and because of this background Zesa has been operating in an almost impossible situation with revenues amounting to $98 million against expenditure of $1,2 billion,” Magombo said.

“The major issue that was causing the net loss were the sub-economic tariffs that were previously charged,” she said.

Bikita West MP Elias Musakwa then asked Magombo to explain the rationale of unbundling and then rebundling Zesa, and why she would need to get outside consultants to rebundle Zesa.

“You said you will engage consultants to re-bundle Zesa, but is this country suffering from lack of consultants? Do we not have technocrats in this country who can do that exercise without us paying all that money to foreign consultants?” asked Musakwa.

Magombo then responded: “The issue sounds simple, but rebundling means there are people who are going to lose jobs. There is a vested interest and the role of a consultant is to do an independent structure which is not based on individuals and personalities.”

Uzumba MP Simbaneuta Mudarikwa said unbundling of Zesa was done by consultants, and now they wanted to hire other consultants to rebundle. He said Zesa was concentrating on wrong issues instead of focussing on ensuring that the country had enough power.

“The unbundling exercise was the work of a consultant and we need to know if they were competent enough. The only things we see is the expansion of the Zesa car park. You are generating 1 300 megawatts with three boards. While the sizes of your vehicles are improving, there is no generation of power. Our focus must be on generation of power,” Mudarikwa said.

MPs suggested that Magombo should look at the issue of hiring local consultants — even at universities to look at the issue of the Zesa rebundling.

NOIC acting chief executive officer Godfrey Ncube said the major challenge affecting non-availability of fuel was foreign currency.

“We had 104 million litres up to August, but we only sold 76 million litres. On capital projects, we developed four projects in Mabvuku, Bindura, Warren Park and Masvingo. The major challenges that we are facing which are causing shortages of fuel is foreign currency, but in the short term I think it will be better because of pricing, and we also hope that in the long term there will be proper functioning of public transport,” Ncube said.

BY PRAISEMORE SITHOLE

President Emmerson Mnangagwa (pictured) yesterday urged companies and producers to export 20% of their produce to the foreign markets, but retain 80% for local markets.

Mnangagwa made the remarks while officially opening the ZimTrade’s 2019 Exporters’ Conference at the Zimbabwe International Trade Fair in Bulawayo.

The conference saw the President launch the Zimbabwe national trade policy vision and export promotion strategy.

“I urge every local producer, at every level, to aim to have a minimum component of their total output going towards exports, for example, through the ratio of 80% for local markets and 20% for export markets,” Mnangagwa said.

“I urge all stakeholders to embrace the new Zimbabwe national trade policy vision and export strategy roadmap towards the exports target of US$7 billion by 2023 and US$14 billion by 2030 in order to facilitate the attainment of the national vision of an upper middle income economy by 2030.”

Mnangagwa said they had moved ZimTrade from the Ministry of Industry and Commerce to the Ministry of Foreign Affairs because as government they saw that, although there could be internal trade, it was critical to engage with the international community.

“In line with the theme rethink, reform and export, provinces must identify strategies for economic activities in their regions to ensure everyone participates in growing our exports and the economy at large,” Mnangagwa added.

The President indicated that the Zimbabwe national trade policy vision and export promotion strategy towards 2030 agenda sought to propel the country’s industrialisation towards a transformed and internationally competitive economy, driven by robust, free and fair domestic and international trade.

He said the vast natural and human resources that Zimbabwe is endowed with require policy strategies that will enable the country to build production capacity and generate the much-needed foreign exchange earnings through exports.

Mnangagwa said the country has largely relied on exporting primary commodities, with exports of value-added goods and services having remained subdued due to a number of factors.

“On Monday, I launched the mining development strategy roadmap, where value addition and beneficiations are key. My government expects all sectors of the economy to draw lessons from the mining sector and begin to develop, set targets and milestones to pursue with regards on increasing our exports,” Mnangagwa said.

“In this regard, provincial ministers are urged to tap into ZimTrade confidence, let us take export targets for our companies. By 2023 our exports should be $7 billion and in 2030 $14 billion. This can only be achieved when all of us realise that we have a role to play to achieve those standards, it’s not the business of one company, one province, but it is the business of all of us.”

“In line with our county laws, all companies must insist on the use of local currency for all local transactions,” he added.

The President, however, expressed disappointment that in Japan last month exhibitions did not show the best of Zimbabwe, but just showed a few pictures and books, but elsewhere, where ZimTrade was showcased in Egypt, Germany and Spain, he received rave country reports.

He further indicated that Zimbabwe’s trade potential had not been fully exploited to enable the country to meaningfully gain from trade.

BY Respect Gwenzi

Cassava Smartech, an Econet spinoff, recently launched Sasai, a mobile application which mirrors China’s WeChat. Of course, it is a first by Africa, but odds are highly-staked against its success.

There is already intense competition in the chatting space, with statistics showing that South Africa and Nigeria, WhatsApp usage is now entrenched, so is the rest of Africa.

Opportunities are ready in the payments space, but MTN, which is due to launch its own version of WeChat, stands a better chance of gaining traction and market dominance due to scale and brand equity. Even so, WeChat has intensified own efforts to expand and increase its value proposition on the continent.

Broadly, internet adoption on the continent remains very low compared to the rest of the world. These are some of the key factors which will militate against Sasai’s success.

Sasai is an African region-focused instant messaging application, but with much more functionalities most notably, a payments and an exploration platform. The payments functionality allows users to transfer money to and from users on the same platform, withdraw money on selected payments platforms, as well as make payments for goods and services.

The exploration functionality partially interlinks with the payments functionality as users can purchase applications, books, pay for online streaming services, download apps within the app, among other services.

The application was launched in Zimbabwe a few months ago, a country which gave parent Econet, the clout it commands in the mobile telecommunications space, even as some of its off-springs such as EcoCash and Steward Bank, now all housed under Cassava, have outshone the market.

But, of course, the Econet group has suffered defeats before, especially on products that tend to focus on the continent and not the micro-market of Zimbabwe.

In 2018, Econet was forced to shut down loss-making and uncompetitive pay TV Kwese, which had ambitiously sought to dethrone Naspers’ DStv as market leader on the African continent.

Although it amassed a fair share of subscribers, it fell short on numbers, which is what defines a pay television channel. The case may now be different with Sasai, which is in-house built and has relatively lower running costs, with minimal limitations such as payments regulations and integration costs.

However, the aspect of scale is still paramount to increase value proposition. Messaging applications thrive on suction effect and the larger the ecosystem the quicker the growth.

To generate numbers, there has to be a fair share of early adopters and these are normally drawn by either brand equity or a strong value proposition. For example, one will ask what incremental value do they accrue, if they have to forgo an application such as WhatsApp, where most of their friends are, on jumping to Sasai.

If payments is the value proposition, it also has to be more clear what savings one makes from transacting within Sasai compared to say direct EcoCash transacting on mobile wallet. Either way, the value proposition has to be very strong because chatting on its own ranks on top in terms of hierarchy of subscribers needs.

Sasai’s success will be tested on the domestic front in Zimbabwe, where it enjoys strong brand equity and leverages on group synergies. Zimbabwe has a more favourable internet penetration level compared to the region.

It equally has a higher mobile internet and specifically high social media usage. High adoption of mobile money has catalysed financial inclusion in light of cash scarcity, positing the market as fertile for escalated online payments.

Traditional brick and mortar banking is dwindling even before the rural market is saturated. But smartphone adoption among the rural folk will continue to increase at a very slower rate, while affordability is dampened by a worsening economic environment, thus dampening the expected growth rate, although this may only be a short-term constraint.

The local economic landscape may tilt in the mid-term, but the timing of the product’s release was also very wrong.

Data cost is going up frequently beyond affordable levels, forex scarcity has intensified, meaning topping one’s international credit or debit cards gets to be more difficult.
The same can be said for local currency scarcity, which has limited EcoCash’s services to only a money transfer platform. The Econet magic of 1998, which saw the company going for a listing, despite the emerging economic turbulence, cannot be replicated here.

Times have changed and the underlying conditions also very different. Back then, Zimbabwe had no effective mobile telco offering, which meant there was a strong propensity for growth. The same can be said for EcoCash in 2011.

On the continent, parent Econet has a foothold on broadband via Liquid Telecoms, but lags in terms of mobile telco due to limited geography coverage. Mobile telecom companies with dominance in Africa’s most populous and industrious economies of Nigeria and South Africa are better placed to take a lead in the combined chatting and payments market and one provider, MTN, is already making headway in that space.

MTN announced plans to launch the instant messaging app in March 2019, which was expected to roll first in its West African markets before expanding to other 17 markets, where it has ready presence through mobile money and voice. In these markets, which include South Africa, Nigeria and Asia, MTN has a combined 235 million subscribers.

Global leader, WeChat’s success was curved on China’s closed economy, which restricts other popular Western applications such as WhatsApp as well its high population, factors that are not inherent in Sasai.

As internet adoption increases, payments as a solution, is highly becoming sought after and players such as Paypal, Alipay are reaping big.

Facebook’s Libra, if it sees the light of the day, could be very disruptive. Sasai had better chances of succeeding had it focussed more on the payments space in isolation, integrating all payment systems in Zimbabwe, including API’s for banks, EcoCash and even remittance services, but the chatting space is always tempting, given its ability to lure customers.

There is a clear ambition on Strive Masiyiwa’s side to bring in a block buster product that could shutter the global space and position it as a game player among the giants, but Sasai will not be the one.

BY MISHMA CHAKANYUKA

RESERVE Bank of Zimbabwe (RBZ) deputy governor Jesimen Chipika has urged banks to focus on savings deposits in order to enhance financial support to the productive sectors.

Productive sectors of agriculture, mining, manufacturing, construction and mortgages are financed by local banks through long-term loans.

As at June 30, 2019, local banks had total deposits valued at $16,9 billion, three quarters of this amount was used to finance the productive sector.

“Our hope is that we can shift the nation to the savings mode — that is very key and critical. It is the savings deposits that banks can use to loan, on a long-term basis, to the productive sectors. Our deposits are such that you can come and demand your money any day and any time and that makes it difficult for financial institutions,” Chipika said.

She said this in an address at the Zimbabwe Independent Banks and Banking 2019 Survey awards ceremony in Harare yesterday.

“There is high demand for loans in the country, particularly because we are trying to move every micro project, small projects, and media businesses and so on to look for formal financing. So far, we are happy with the sectorial distribution of the loans, because almost three quarters of the loans are going to the productive sector, mainly agriculture and manufacturing. We are also seeing quite a big chunk going to mortgage.”

Chipika added that the private sector was key to the growth of the country’s economy and government had laid a sustainable foundation for the private sector economic transformation.

According to government’s 2019 mid-year review and supplementary budget, credit to the private sector remained subdued, growing by 16,20%, from $3,80 billion in May 2018 to $4,4 billion in May 2019.

Chipika advised financial institutions and people in general to put efforts in minimising the adverse inflation expectations and protect the local currency in order to stabilise the economy.

“As long as the people of this country and even the foreigners that we want to attract to come and work with us do not have confidence in what we are doing, the macro-economic environment cannot stabilise,” she said.

BY MISHMA CHAKANYUKA

ECOBANK emerged the overall winner at this year’s edition of the Zimbabwe Independent Banks and Banking Survey ceremony which was held in Harare yesterday.

The main aim of the event, organised by Alpha Media Holdings (AMH), is to award banks that have done exceptionally well over a given period. AMH are the publishers of NewsDay, The Standard and Zimbabwe Independent and also runs an online radio station HSTv.

POSB emerged as the first runner-up, while NMB was the second runner-up.

The event came at a time banks are reeling from excess constraints which include liquidity challenges, shortage of foreign currency, slow foreign direct investment inflows, high interest rate rates, adverse economic evolution and a suppressed performance of banks’ loan portfolios.

This year’s survey is themed Return of the Zimdollar Transition to Normalcy? It was sponsored by First Capital Bank.

The survey revealed that the banks under review performed well under the prevailing economic conditions, with most of them performing positively.

The awards for the 2019 half year were based on the findings by an independent research house, Equity Axis.

Overally, all the banks registered huge growth in their balance sheets due to property revaluation processes and exchange gains, while income performance for the banks was also good.

Stanbic had the biggest market share by balance sheet size which stood at $3,1 million followed by CBZ at $3,09 million and CABS at $2,1 million.

The survey showed that banks were increasing their loaning platforms and it also looked at banks ratios and earnings.

This year the survey incorporated some awards that are in line with the changing times.

Below are the citations by Equity Axis for the awards:

Overall winner — Ecobank

Barely nine years ago, this bank was at the brink of collapse before a reputable international bank came in to breathe a new lease of life into it. Eight-and-a-half years later, after following a restructuring exercise, the bank is now one of Zimbabwe’s top performers. It has curved a niche in trade financing leveraging on the parent and taking advantage of dwindling correspondence banking to spur its non-funded business. This bank has recorded superior returns ahead of the market and is on course to complete a two-year run on strong earnings growth.

Second runner-up — NMB Bank

The bank has emerged from a volatile past and it has stood the test of time.

The bank is among the few speeding up innovation in Fintech and its results have been showing. Its latest earnings results show a bank that is already reaping early gains from digitisation through a very low income to OPEX level.

First runner-up — POSB

This bank has shown a consistent growth pattern in earnings over the last four years, defying a past of losses and low capitalisation. At one point it was the only profitable parastatal entity and this was achieved through an internal reformation of the bank.

business reporter

THE battle over a US$400 million deal to recapitalise the National Railways of Zimbabwe (NRZ) could be headed to the courts, further delaying plans to fix the country’s collapsed rail network.

After government said it had cancelled the contract with the Diaspora Infrastructure Development Group (DIDG), claiming the consortium had failed to show it had the financial backing to complete the project, DIDG says it “strictly reserves its rights” and describes the cancellation as one driven by “malice”.

According to a statement released Tuesday via Information secretary Ndavaningi Mangwana, government rejected the DIDG because it had shown funds sourced internationally, but excluding South Africa rail company Transnet, whose participation had been a factor in the consortium winning the tender. The tender would now be re-issued to other potential partners, government announced.

“The exclusion of Transnet had a legal impact on the tender, which had been awarded to them as a consortium. In light of the foregoing, government took a position to issue a new tender. If any of the former members of the consortium want to compete, they are still eligible to make bids and will be adjudged fairly,” Mangwana said.

But reacting on Wednesday, Donovan Chimhandamba, head of DIDG, hinted that his company could take legal action.

“We have noted the official statement from a few government authorities. We have been dealing with such malice for the last 18 months and they had managed to hide behind various issues. Last week it was about funding, now it’s about Transnet. None of these parties has communicated anything to us, which we find disturbing. However, we remain resolute to our cause and strictly reserve our rights,” Chimhandamba said.

In 2018, as part of a temporary agreement, DIDG delivered 13 locomotives, 200 wagons and six passenger coaches on a lease arrangement to the NRZ. The delivery was touted as one of the early successes of President Emmerson Mnangagwa’s efforts to attract investment and repair the country’s decayed infrastructure. However, with the deal now in trouble, questions will emerge about how the deal went wrong and what government plans to do next to revive the NRZ.

At its peak, NRZ moved 18 million tonnes of freight per year, according to data from the Infrastructure Development Bank of Zimbabwe (IDBZ), which has been involved in efforts to refurbish the national railway system. In the first half of 2019, according to an NRZ report, the company moved just 1,3 million tonnes of freight, 8,5% down on the same period last year.

The US$400 million deal was meant to cover only the first phase of NRZ’s restoration. To get back on track, NRZ needs a total of US$2 billion in investment, according to an IDBZ assessment report. The needed refurbishment comprises rehabilitation of the railway line network, construction of new railway lines, replacement of signalling equipment, new rolling stock — the locomotives, coaches and wagons — plus repairs to bridges, buildings and other supporting infrastructure.
— newZWire

BY ALLIEWAY NYONI

A FRESH human-wildlife conflict is looming in Chivi North and Zvishavane following reports by village heads that a parade of four elephants was seen at Takavarasha village before two crossed Runde River to Mazvihwa.

Rangers from the Zimbabwe Parks and Wildlife Management Authority (ZimParks) from Mushandike confirmed the development and advised the public to notify the police or relevant authorities if they come across the jumbos.

“Tracking ZimParks rangers have picked spoor of four jumbos at Murowa-Buchwa area in Zvishavane and another spoor has been discovered at Chitowa in Chivi North, with prints indicating that other two jumbos are heading towards Shurugwi area,” said one of the ZimParks rangers.

“It is not known which direction the other two took in Mazvihwa area upon separating from others,” said Zvishavane-Runde Member of Parliament Cuthbert Mpame, who was assisting rangers in search of the dangerous animals.

ZimParks Ngezi cluster manager Trumber Jura advised the public to spread information and avoid a tourist approach in trying to view the animals.

“Let’s keep our people informed about the presence of these straying elephants to save life. Elephants can cover very long distances in a short space of time. If encountered they can pound their target to death.

“Imagine the little ones, especially those unsuspecting schoolchildren, who are likely to take a touristic approach seeing the jumbos as big toys and tamper with them, therefore, inviting an obvious horrific death,” he said.

Jura said his department was working tirelessly to apprehend the jumbos and place them into safety.

Chief Madyengove in Chivi said the animals were suspected to have moved from conservatives in Chikombedzi and were travelling upstream along the Runde River and were first spotat Takavarasha.

BY STEPHEN CHADENGA

GWERU mayor, Josiah Makombe on Wednesday said the local authority would soon identify land for the relocation of the Gweru Sports Club and other recreational facilities to allow for the expansion of the Midlands city.

Stakeholders have, however, castigated council for trying to sell land around the sports club to private developers as part of efforts to expand the central business district, (CBD), saying such a move would deprive the city of recreational facilities.

“As city fathers we have resolved that we need to identify alternative land to relocate the recreational facilities before they are sold to private developers,” Makombe said.

“We take cognisance of the need to ensure that recreational facilities are available for our residents, hence we are going to identify suitable land for the relocation of existing facilities before we repossess that land for the city’s expansion drive.”

Early this year, Gweru Residents Forum director, Charles Mazorodze urged council to “rescind the proposed sale of Gweru Sports Club in the public interest and look for alternative space for the so-called investor”.

Last year, council chamber secretary Vakai Chikwekwe indicated that the municipality would not renew lease agreements on premises located behind the Government Complex to pave way for the establishment of an industrial park that will extend to Fairmile Motel, along Bulawayo Road.

Chikwekwe said council had given the two institutions until January 31 this year to wind up operations.

The proposed disposal of the sports facility has drawn widespread condemnation from the Sports and Recreational Commission, among other stakeholders.

BY NQOBANI NDLOVU

EGODINI Mall developer Terracotta (Pvt) Limited has reportedly been forced to change or amend some structural designs of the mall to cut costs owing to the punishing hyper-inflationary environment.

A progress report to the Bulawayo City Council (BCC) town, lands and planning committee by Terracota reveals that the company has been severely affected by a number of challenges such as the increase in interest rates, inflation and currency changes resulting in it re-designing some parts of the project to cut costs.

“Notwithstanding the challenging environment, works on site have been progressing at an acceptable rate. Due to the prevailing economic situation, the developer has amended certain design elements to mitigate against higher costs that can’t be passed onto tenants,” Terracotta’s report read.

“The sudden introduction of the Zimbabwe dollar in June 2019 as the sole legal tender meant that all arrangements (e.g, bill of quantity, construction contracts, procurement contracts, lease contracts) had to be revisited to enable continuation of planned development activities.

“With inflation last reported as being more than 150%, the project has experienced challenges with suppliers and sub-contractors who are unwilling to price for periods longer than seven to 14 days. This has introduced significant challenges in terms of procurement and budgeting. Under such circumstances, it would not be unreasonable to suspend construction works.”

The project, valued at $60 million, is on a build, operate and transfer basis and will come at no cost to council, reports have said.

The local authority will ultimately own it once Terracotta has recouped its investment.

“As with any capital project, debt funding is a critical component to fund the project to final completion. When civil works commenced, interest rates were between 10% and 12%.

However, these were suddenly increased to as high as 50% as part of the ongoing fiscal reforms.

“This has expectedly had an adverse effect on the phase 1 project programme to completion,” the report read.

Construction of the mall by the South African engineering firm took off last year after several false starts spanning over a period of five years.

BY NQOBANI NDLOVU

THE Bulawayo City Council (BCC) says it has started repossessing several properties, mostly residential, deemed to have been abandoned after having gone for five years without any bill payments.

Town clerk Christopher Dube told Southern Eye that the properties would be sold after a month unless their owners show up and settle all outstanding payments to council.

“We are saying you have not been paying for the past five years, which means you have abandoned the property, or that land. We want the owners to claim those properties and if they don’t in the next 30 days, we will be left with no option but to take those (properties) to the sheriff for sale so that we recover the monies due,” he said.

According to a notice issued by Dube yesterday, hundreds of properties in the city are due for repossession by the local authority after being condemned as abandoned, with the owners nowhere to be found.

In the notice, he said failure to claim the properties would result in council disposing of the said properties in terms of section 5 of the Titles Registration and Derelict Lands Act, Chapter 20:20, which reads: “Whenever there remains due and unpaid for the space of five years any rate or assessment payable to any municipality or other public body upon any immovable property in Zimbabwe and such property is abandoned, deserted and left derelict, and the owner thereof cannot be found, it shall be lawful for the person or body claiming such rate or assessment to apply to the High Court, stating the amount claimed to be due and the grounds for applying for relief under this Act.”

Bulawayo Progressive Residents’ Association coordinator Emmanuel Ndlovu said council is allowed by constitutional provisions to seize derelict properties.

“Yes, I know there are some provisions that allow the council to seize some derelict properties,” he said.

BCC is owed several millions of dollars in unpaid rates by ratepayers with government also being one of the debtors.

A harsh economic climate characterised by skyrocketing prices of basic goods and services has further incapacitated ratepayers’ ability to pay their tariffs, but the local authority has indicated that it has no option, but to increase rates by about 700% in the next four months — if approved by the parent Local Government ministry.