editorial comment

EXACTLY a year after Zimbabwe’s first biggest fuel hike since President Emmerson Mnangagwa took over the reins of power from the late Robert Mugabe, the administration was at hand to celebrate the January 14, 2019’s 150% fuel hike anniversary with a yet another fuel price increase.

While this time around the increase over the weekend was a modest 10%, it represents a major milestone in a year that the fuel adjustments have brought nothing but misery and death upon the Zimbabwean citizenry. At the weekend the Zimbabwe Energy Regulatory Authority announced new petrol and diesel prices of $18,28 and $19,55, respectively, which essentially means that in just a year the price of fuel has risen by a jaw-dropping 1 284%.

While the country’s so-called financial gurus held the entire country hostage, held the gun to every citizen’s head and banned any talk of inflation whatsoever, this simple kindergarten mathematical observation clearly shows that even the assumed unofficial inflation figure of over 500% is a gross understatement.

Finance minister Mthuli Ncube promised to start publishing the annual inflation figures next month, and many are definitely going to accept whatever the minister dishes out to the nation with a pinch of salt simply because the fuel price increase alone tells a harrowing story. Is it not high time the government stopped hoodwinking its citizens as far as inflation and the country’s general economic performance is concerned? The general outlook does not appear good at all, given the obviously poor rainfall season that spells disaster for one of the country’s major foreign currency earners: Tobacco.

It is a fact that many tobacco farmers failed to return to the field this season after proceeds from their last harvest fell way too short to afford them the chance to stock up on inputs following government’s poor handling of their pay cheques. Having promised to pay the farmers half in foreign currency and the other half in local currency, the government made a violent about turn and decided to force the farmers to buy their other 50% foreign currency component at a rate which was essentially a moving target. This significantly eroded their earnings at a time the Zimbabwe dollar was losing value to the US dollar every day. In other words, there will be very little tobacco to shore up the country’s economic performance.

Ncube has already admitted that food, power and currency stability are the three things that are giving him sleepless nights and as yet another drought looms, his hours of lack of sleep will evidently lengthen. There is little hope that Zimbabwe’s main power supply source, Lake Kariba, will have enough water to improve generation capacity given that the devastating drought is regional. With tobacco in a poor show, there is little chance that food crops will fare any better. And on the currency front the situation on the ground already points to the Zimbabwe dollar heading for a brutal bashing from other major currencies having, for the first time, been upstaged by the South African rand with which it has for some time traded at 1:1.

So many hope and fervently pray that Ncube and his colleagues will be honest and stop pulling wool over people’s eyes as far as the country’s overall economic performance is concerned.
There is no reason or justification for government to keep lying to itself and the nation that all is well at the front when it is not.

By Rex Mphisa

A BEITBRIDGE male teacher at the weekend knelt down before Vice-President Kembo Mohadi begging him to influence an upward pay review for teachers.

Poloko Malapela, a teacher at Dulivhadzimo Primary School, who was the master of ceremonies at the funeral of Admire Mbedzi, Mohadi’s nephew who was buried on Saturday, drew both sympathy and praise from the crowd when he made his passionate plea.

“I have a request Vice-President Mohadi, I am going to kneel down to drive home this important message to you,” Malapela said, as he crouched in front of Mohadi.

“We are suffering and life has become hard and can you please put word for us so we can have a salary raise.”

For a moment, the sombre mood at Mohadi’s Mtetengwe homestead was lightened as mourners cheered on Malapela, who soon after driving his point home returned to funeral business.

Earlier, Mohadi had explained that if government released more money into the market, it would have inflationary effects.

He did not respond to Malapela’s request, but merely nodded his head.

Zimbabwean teachers have reportedly gone on a nationwide go-slow to press for a pay rise, arguing that their salaries were too low and they could not afford to send their children to the very schools they are stationed.

Civil servants received cushioning allowances ranging between $400 and $800 this month.

However, they have been demanding that their employer adjusts their salaries to match what they used to earn during the dollarisation period.

guest column:David Mhlanga

MANY commentators, researchers and economists the world over are increasingly talking about the potential impact of the fourth industrial revolution. Researchers are fully admitting to the fact that the fourth industrial revolution is changing how we live and work, how the economy works and countries are governed.

The Citi and Oxford University in 2016 estimated that 57% of jobs across the Organisation of Economic Co-operation and Development community are at risk of automation and the Financial Times reported in 2016 that between 2000 and 2010, of all the jobs lost in the United States, over 85% were lost to new technologies, and the Bank of England estimated that two thirds of all jobs are capable of being automated within 20 years.

Regardless of the specific data, an indisputable fact is that the fourth industrial revolution has already come, and the current workforce is already feeling the heat. The question which remains is what is the fourth industrial revolution
The fourth industrial revolution describes the blurring of boundaries between the physical, digital and biological worlds. It’s a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing and other technologies.

In fact, it is the collective force behind many products and services that are fast becoming indispensable to modern life. For example, the GPS systems that suggest the fastest route to a destination, voice-activated virtual assistants such as Apple’s Siri, personalised Netflix recommendations and Facebook’s ability to recognise your face and tag you in a friend’s photo.

As a result of this perfect storm of technologies, the fourth industrial revolution is paving the way for transformative changes in the way we live and radically disrupting almost every business sector. It’s all happening at an unprecedented, whirlwind pace.

This requires economic agents, politicians and policymakers to come up with innovative mechanisms to ensure that they are found prepared. Businesses should also build customer success platforms to keep up with the changing customer expectations.

While the fourth industrial revolution, sometimes called the 4IR or industry 4.0, is set to change society like never before, it builds on foundations laid by the first three industrial revolutions.

The advent of the steam engine in the 18th century led to the first industrial revolution, allowing production to be mechanised for the first time, and driving social change as people became increasingly urbanised.

In the second industrial revolution, electricity and other scientific advancements led to mass production. A third industrial revolution, beginning in the 1950s, saw the emergence of computers and digital technology.

This led to the increasing automation of manufacturing and the disruption of industries including banking, energy, and communications. The person who labelled today’s advances as a new revolution was Klaus Schwab, founder and executive chairman of the World Economic Forum and author of a book The Fourth Industrial Revolution.

In a 2016 article, Schwab wrote that “like the revolutions that preceded it, the fourth industrial revolution has the potential to raise global income levels and improve the quality of life for populations around the world”.

While the business world is already discussing and preparing for how this revolution will affect their businesses, dubbing it “Industry 4.0”, the wider societal impacts of this new revolution have not, to date, been discussed in depth nor planned for.

There are many questions which governments should be prepared to answer. Are we going to see a rise in the levels of poverty or we are likely to see a fall in the levels of poverty?
Will there be an improvement in the quality of life of the people or a decline in the quality of life? Past industrial revolutions have forced society to undergo major and often painful processes of adaptation, for example, from rural, largely agricultural societies, to urban, industrial societies, and then to post-industrial societies dealing with the loss of traditional industries and sources of employment.

The societal impacts of the fourth industrial revolution also appear likely to be far-reaching, resulting not only in the social and economic impacts of the loss of many current jobs, but also fundamental, and increasingly volatile shifts in the nature of work and future jobs, and in how public and private services will be delivered.

The loss of jobs is not a unique feature attributed to the fourth industrial revolution alone, but in all the revolutions there were massive displacements in the labour market.

With all other revolutions, there was movement of labour from one sector to another ie from the primary sector to secondary sector. However, with the fourth industrial revolution, we have other creatures that are taking the jobs previously done by humans. These creatures include computers, robots etc. As a result, this should act as a wake-up call for everyone to be prepared.

BY MTHANDAZO NYONI

ZIMBABWE’S agriculture sector players should immediately come up with strategies on how to grow the sector in the face of climate change and limited access to appropriate funding among other challenges, a government official has said.

Addressing delegates attending the ongoing integrated results-based strategic planning workshop in Bulawayo yesterday, Lands ministry permanent secretary John Bhasera said challenges such as climate change were a threat to the agriculture sector.

“Climate change, low productivity, pest and diseases, limited access to appropriate finance, to mention just a few, are hitting our sector hard. These are our current realities, but we need to face them head-on so that we grow,” Bhasera said.

“Importantly, we need to shift our thinking gears from negative-thinking to positive-thinking, from positive-thinking to possibility-thinking, from possibility-thinking to creative thinking. Let’s come up with strategies on how to grow our sector, lest we die. Anything which is not growing is dying. It is our responsibility to grow the agriculture sector….,” he said.

Bhasera said agriculture, which is the country’s economic backbone, had been experiencing several challenges, mainly caused by climate change.

The country has been experiencing extreme weather conditions such as recurrent droughts and heat waves over the past few years.

The other challenges include limited access to finance, low productivity levels, high cost of doing business as well shortage of water and electricity.

He urged industry players to start harnessing their comparative advantages, climate proofing agriculture, come up with irrigation development agenda, increase mechanisation development, improve all farms efficiencies and to build competitiveness, capacitation of extension services as well as improve linkages between research and extension services.

Bhasera said industry players should also improve water management systems, climate change adaptation and research, access to appropriate finance for farmers and agriculture value chain, private sector participation in agriculture, private public partnerships, land tenure system and 99-year lease agreement, tapping into ICTs, growth plan for national herd, finalisation of the agricultural policy framework.

“We need to grow our agriculture and our economy. Our agriculture will play a central role in that…,” he said.

guest column:John Legat

Funds held in the banking system at RBZ, the interbank market or in cash notes totalled $ 14,8 billion.
Some $7,4 billion was held in FCA accounts.

The remainder of the assets of the banking sector were held in contingent assets, non-financial assets and other assets. In theory then, the banks could reduce their liquidity to lend more to the private sector or buy more government securities.

Threat of bank failure
The reality is different, however. First, the bulk of bank deposits are demand deposits. This explains the large amount held in the banking system to cover customers’ use of swipe cards and mobile money. Second and more concerning is the level of bank capital and reserves which stood at $3,9 billion or just US$257 million.

This compares with “other liabilities” that have grown rapidly to $4,6 billion (US$300 million), which we have to assume are foreign exchange linked liabilities given their rapid rise since February 2019 when they represented 31% of bank capital.

This is another scary number that we would like to look into in greater detail as it might be highlighting the possibility of a bank or banks failing. Put another way, banks need to maintain very high liquidity levels and restrain from lending medium and long term either to government or the private sector.

We noticed this at the end of last year when a number of the listed companies we speak to highlighted the difficulty of obtaining loans of any meaningful amount from their banks.
No lending capacity
Further in our last Notes we made mention of the fact that bank balance sheets were falling rapidly in real terms as compared with their client base as a result of bank assets largely being held in Zimdollar denominated assets, whilst their clients’ revenues and profits could move more in line with inflation. Put simply, banking sector borrowers have become far greater in balance sheet terms than the banks themselves.

This in turn has forced the private sector and government to turn to the pension funds and the insurance sector for liquidity. As we have highlighted above, these two sectors have very little liquidity and it is entirely held in $ denominated assets. The private sector’s needs though are based on the US$ rather than the Zimdollar.

Farmers have no source of funding as liquidity bites
For example, to plant and grow a hectare of maize is estimated to cost around US$800 for dry land or rain reliant maize which covers mainly diesel, fertiliser, spare parts, among others. All of which are US dollar denominated.

So a crop of one million tonnes, assuming an average yield of say 4,5 tonnes per hectare, would require say US$180 million which, at the interbank rate at the end September, would have equated to $2,7 billion. At the parallel rate of $19 at that time, this number would rise to $3,4 billion and at today’s rate of $24 would imply a need for $4,3 billion.

For large commercial farmers with access to irrigation on the other hand, the cost per hectare would rise to US$1650 per tonne but the yield will rise to maybe 8 tonnes or more per hectare. In reality, Zimbabwe relies on both dry and irrigated land but the amounts involved provide a good illustration that can be compared to the current size of the domestic capital markets.

Anecdotally, we saw this at the end of 2019 as we were approached by a number of agricultural commodity consumers seeking capital to provide farmers for the 2019/2020 planting season, capital that they would normally obtain from the banks. Sadly the pension and insurance industry could not fill those shoes and as such we assume that the number of hectares planted was substantially down on the previous year.

We were very interested to see CBZ Bank last week offering a $500 million bond together with a US$50 million bond in order to raise a total amount of US$80 million at current interbank rates.

Late ‘planting’
These funds would be used for the current agricultural season, 2019/2020, specifically to grow maize (170 000 hectares) and soya (30 000 hectares). The offer closed last Friday on January 10. This strikes us as being rather late as we understood planting needed to take place by the end November in time for the rains, which have yet to materialise in any consistent way.

We note, however, in the risk clause within the term-sheet that should farmers not be able to supply the products to the Grain Marketing Board for whatever reason, government will step in and supply the necessary amount of Zimdollar to allow for the conversion by the RBZ to cover the US$50 million repayments together with interest at 9,5% in USD terms.

That equates to an unlimited liability in the Zimdollar. The same is true for the local $ bond, with the government guaranteeing the repayment plus an 18% coupon all in $.

There appears to be no risk to CBZ. Given the lateness in the placement of these two bonds from an agricultural perspective and the likelihood of drought, the default risk must surely be high and could therefore prove expensive for government in 270 days’ time which is the maturity date of the two bonds.

That of course assumes that both bonds are subscribed for which given the liquidity numbers we have outlined in these Notes, suggests that this will be a tall order. The Ministry of Finance must be hoping as much!
Starting the printing press
This brings us back to a point that we made in our last Notes published in October where we surmised that “the RBZ has become the lender of ‘first resort’” given the constraints of the domestic capital markets.

We explained that if government was unable to fund itself through taxation and the issuance of Treasury Bills, then one of the few options would be to print money thereby undermining the currency by boosting reserve money.

This of course happened in August 2019 as we highlighted in our October Notes and resulted in the currency halving on the black market in a matter of weeks. That action by the RBZ has also put at risk the IMF’s Staff Monitored Programme (SMP).

Returning to the domestic capital markets and specifically prescribed assets (‘PAs’), IPEC is encouraging the insurance industry as a whole to move to 15% of assets in PAs. That would require investing an extra 2% or $216m as at September 2019, the equivalent of US$14m at the time.

Pension dilemma
For the pension fund industry, the IPEC level stated in their quarterly report is 10% (until December 2019) implying a further $230m or US$15m. Although these could be funded out of money market assets, in reality this could not be the case as liquidity is required to pay pensions, insurance claims and run the various businesses.

In the overall scheme of the economy US$29m (at September 2019 rates) does not fund very much even if these sectors coughed up those funds.

IPEC or government could force the insurance/pension sectors to sell down their property and equity assets but in reality that would be very difficult indeed; outside of strategic shareholders local pension and insurance funds are the largest owners of domestic property and equity which implies that foreign investors would be required to purchase these assets from the local institutions. This seems highly unlikely as foreign investors remain net sellers of the Zimbabwe Stock Exchange (ZSE).

Further, as IPEC states in its report, equity and property have proved to be the best performers of local assets even if they haven’t kept pace with the decline in the local currency.

Local debt assets have lost significant value in real terms by contrast. Herein lies the dilemma for pension fund trustees.

On the one hand their fiduciary duty to their stakeholders (employees and pensioners) is to protect the real value of the pension funds under their supervision as best they can.

If they then knowingly buy an asset that will likely lose real value — if not all of it compared to other assets such as property and equity which both have proven to be excellent assets to hold in the event of the demise of the Zimdollar (eg 2009), then they risk being sued for negligence by those stakeholders and maybe their unions. Under the new Company’s Act passed in the latter half of 2019, that would mean being sued in their personal capacity.

On the other hand IPEC may fine the pension fund for not meeting the targets.

For now IPEC is giving trustees the time to attempt to comply with their targets all of which would delay implementation. In a hyperinflationary environment, the longer this implementation takes the better for the stakeholders as value would be preserved to some extent.

Most of the prescribed assets on the market are debt orientated and denominated in $. In the event of the demise in the $ at any point, these assets would cease to exist — and become valueless – as occurred in 2009. We have found few such debt instruments that have a clause that protects investors should such an event occur, by for example an immediate conversion to US$ or into a related equity instrument.

We have seen one such instrument in the making but it is not a prescribed asset. It is even harder to find an equity-related prescribed asset and those that exist may not make economic sense to the investor.

The search for US$
As stated in our previous Notes during 2019, we have looked at a number of private equity investments as alternatives to equities and property.

Similar to agriculture though, the difficulty is that all of these projects usually have some need for US$ or the Zimdollar capital requirements are linked to the US$. That implies an unlimited liability for $ investors should the Zimdollar continue to decline.

Take for example, a solar project of which there have been a number approved in recent months. An US$10 million investment either in debt or equity (usually a mix) equates to $170 million at today’s interbank rate or more appropriately $240 million at the black market rate.

That might provide 10 megawatts of power. Since the equipment has to be imported, the solar company may well have US dollar debt on its balance sheet which would need to be funded and eventually repaid.

But Zesa can only pay in Zimdollar even if the tariff paid to the solar company is in some way linked to the US dollar. The risks therefore remain extremely high. As illustrated above, the pension and insurance industry do not have the free funds to invest in such a project. The project may be scaled back into smaller bundles at which point the economics of power generation start to fall away.

A time to sell or buy?
Meanwhile, as highlighted in our October Notes, the valuations of listed equities in US dollar terms remain extremely low and cheaper arguably as compared with the latter days of the Zimbabwe dollar in 2008. That of course is not surprising; foreign investors have been net sellers of equities over the past twelve months and domestic investors have had little surplus money to buy more.

Valuations of any asset around the World tend to fall when few want to buy whilst they rise to very high levels when investors refuse to sell as prices rise, sometimes to astronomical levels as we have seen on Wall Street in the recent past. The best time to buy an asset is therefore when nobody else wants it, or indeed is able to buy it and that is usually when assets can be bought at a huge discount to their intrinsic or real value.

Equally, the best time to sell is when there are no sellers despite rising valuations.

In this regard we have been asked by a number of our pension fund clients whether now is not a good time to wind up their pension funds as they have lost so much real value since 2016 (US dollar terms). There seems little point they argue in making contributions if they will lose real value, better to spend that money now.

The answer of course is that now is very much not the time to be selling undervalued assets and indeed it is the best time to be buying into such low valuations by continuing to make contributions to their pensions.

Recent history has shown that to be the case when valuations in US$ terms rose exponentially between 2008 and 2013 as the economy recovered. We have no idea when this may occur again but as with 2008, the current economic situation is unsustainable ultimately. Something will have to give.

If what “gives” leads to stability in Zimbabwe’s monetary foundations as occurred in 2009, then the prospects for the domestic pension and insurance industries will be excellent so long as they enter that period with solid or real assets such as the ones they hold today. In other words, valuable stakes in Zimbabwe’s finest companies and secure property assets.

Meaningless numbers
The International Monetary Fund team was in Harare in early December to continue negotiations with regard the SMP and the Article IV Report, the latter is expected to be published in February 2020. This will give us an idea of how the IMF is thinking and whether indeed the SMP will be extended or cancelled.

With inflation running at 521% per annum (December 2019), the economic numbers that government, the IMF and economists are dealing with are fairly meaningless. This was apparent in the national budget where the numbers both in real and nominal terms bore little resemblance to any prior budgeted figures.

As we write, the rains have been worryingly erratic. Early warnings back in September suggested above or normal rains prior to January with below average for the rest of the season.
Rains prior to January have been below normal with long periods of no rain and if there is little change to that between now and the end of the rains in April, agriculture will suffer dramatically. Dams are already below 50% whilst the water table has not recovered implying that boreholes will likely struggle through 2020.

This would cause a contraction in the agricultural sector with knock-on effects across the economy. The World Food Programme has already issued an alert to the international community to raise funds for Zimbabwe in the likely event of a severe drought. Even if we receive food aid, the logistics of bringing that food in will be enormous not least in terms of the number of trucks required to ship it in and of course the fuel to drive those trucks.

Low dam levels suggest that electricity from hydro-power plants will remain constrained. Without external assistance, 18 hour power cuts are likely to persist well into 2020 with the consequent strain that this will put on the industrial and farming sectors. With more foreign exchange directed to food imports, the ability to source petrol and diesel will also be tough and hence we expect shortages to continue during 2020. A weaker economy is, therefore, more likely than a stronger one.

2008 rewind?
The prospects for Zimbabwe in December 2008 looked bleak and uncertain. Industry was devastated after years of neglect and under investment.

The domestic savings industry was in a far worse state than it is now but thanks to the ZSE it was at least invested in non-monetary assets. The banking sector could not lend back then due to the second highest hyperinflation the World had ever seen.

Real disposable incomes had been destroyed with a large part of the population on the poverty line. But then in 2009, something “gave”, and the country dollarised in its entirety providing the economy with a stable monetary foundation from which to grow. It grew rapidly from then on.

We knew back then that the status quo was unstainable and that something would have to “give” but it was hard to predict how it would end. When it did end, asset values grew rapidly in US dollar terms enabling the domestic capital markets to once again provide capital to those that needed it.

BY LIFE & STYLE REPORTER

AFTER a series of conversations and lively studio sessions, the Dreams of a Better Zimbabwe riddim on a reggae/dancehall tip that features some of the country’s top voices was recently released on the Song Zimbabwe’s YouTube channel.

In a statement, Song Africa said through the Dreams of a Better Zimbabwe riddim, whose themes centre on hope, love and resilience, they seek to uplift music enthusiasts especially Zimbabweans and encourage them to hold onto their hope and deep love for the country.

“Artists and creatives play a critical role in society. They can inspire citizens and communities to dream and work together for the Zimbabwe we want. Throughout history when societies have been stuck in the dark ages, it has been artists who have been able to break the impasse and lead the way to enlightenment,” read the statement.

“We hope that we will see a better Zimbabwe where generations will thrive and be proud of their country, the intense love so many of us have for this beloved Zimbabwe and the resilience to remain standing and not succumb to anything that wants to eat away at our hope and love.”

Song Africa saluted the artistes who featured on the riddim among them dancehall sensation Guspy Warrior, Amara Brown (pictured), Ras Caleb and Ishan, describing them as amazing musicians who expressed what is in their hearts in an electrifying and passionate way.

“The reggae and dancehall genre, which has such a wide base among our people in Zimbabwe, has historically been associated with messages which are conscious, uplifting and inspiring.”

Some of the songs on the Dreams of a Better Zimbabwe riddim are Stand Tall Zimbabwe that features a group of powerful voices on the music scene who include Ras Caleb, Ishan, Amp, and Dhadza D.

The other track, Rise Like Eagles, features a wonderful mix of gifted artistes such as Guspy Warrior, Ammara Brown, Ninja Lipsy and Amp, Nutty O, while the Easy on the Ears instrumental was produced by DJ Tamuka and Amp, Rodney Beatz.

BY FIDELITY MHLANGA

THE United Nations(UN) has painted a bleak picture of Zimbabwe’s economic outlook saying the economy shrank 5,5% last year and is envisaged to contract by another 2,5% in 2020.
The UN’s annual report, the World Economic Situation and Prospects 2020, forecasts a modest acceleration in global growth, reaching 2,5% in 2020 and 2,7% in 2021.

“The economy of Zimbabwe is experiencing a severe crisis amid foreign currency shortages, elevated public debt and uncontrolled inflation. In a number of countries, however — particularly those with severe macroeconomic imbalances — inflation is elevated In Zimbabwe, economic and financial conditions have deteriorated substantially, prompting the return of hyperinflation,” reads the UN report.

Authorities in Zimbabwe are, however, anticipating a 3% economic growth in 2020.

According to the global body there is also an elevated risk that difficult economic conditions in some countries in southern Africa could become more entrenched, leading to prolonged recessions in Angola, Namibia and Zimbabwe.

The UN said political conflicts, social instability and security concerns are major downside risks across the continent and can affect the short-term outlook in many countries in the region
The 236-page report, produced by the UN Department of Economic and Social Affairs, the UN Conference on Trade and Development and the UN’s five regional economic commissions, chronicles that public debt levels exceed 100% of gross domestic product in countries such as Cape Verde, the Congo, Djibouti, Eritrea, Mozambique and Sudan. It also revealed that some economies with lower debt ratios, including Zimbabwe, face increasing repayment burdens.

Economist Persistence Gwanyanya said a contraction of 5,5% last year could be conservative as the economy underwent serious challenges in the past year.

“I am not so sure how the UN arrived at its projections, but I am pretty confident the economy contracted in 2019. I actually think the 5,5% economic contraction is on the conservative side as the government, which is normally unrealistically conservative is even estimating a decline of 6,5% in 2019.”

“Government’s initial projection of 3% reflects the effects of unforeseen eventualities namely the devastating effects of drought and Cyclone ldai. Importantly, the estimated contraction reflects the impact of monetary reforms, which I am now convinced our policymakers did not anticipate. The mere fact that we did a supplementary budget of $10,5 billion in July 2019, which was even higher than the initial budget of US$8,2 billion bears testimony to my assertion of lack of deeper understanding of the true nature of our country’s economic challenges and, importantly, the effects of monetary reforms,” Gwanyanya said.

He added that a contraction of 2,5% was overambitious due to the fact that the economy is still wallowing in great distress.

“We still see the projected 2,5% as overambitious in light of the number of downside risks to growth this year. The 2019/20 agriculture season is not promising to be good due to late and erratic rains as well as poor preparedness on behalf of farmers who were previously supported by Command Agriculture programme, which was transformed into Smart Agriculture at a time prices of agricultural inputs shot up due to the effects of monetary reforms.

“All these mean greater need for the country to import food to support the vulnerable groups of the population at a time the strategic grain reserve of the country is depleting. The increasing trend towards dedollarisation is going to take a heavy toll on revenue performance due to a sharp decrease in the 2% intermediated money transfer tax. Also worrying is the political impasse which will certainly weigh down on economic performance,” said Gwanyanya.

Economist John Robertson pointed out that a prediction of a more than 10% contraction would be realistic because nothing has changed to transform the country’s economic fortunes.

“Projections of more than 10% are realistic for 2020 because of power, water, fuel shortages that have not changed. Investor confidence is till at its lowest. Government has not done much to improve investor confidence. We need to work very hard to overcome the handicap of not keeping promises. If promises are not kept, investors lose confidence. We are in for a difficult year. Government should fulfil its promises on improving the ease of doing business,” Robertson said.

United Kingdom-domiciled global business intelligence entity, the Economist Intelligence Unit (EIU), early this month projected the economy to shrink by 13% this year.

Zimbabwe featured among the worst performers, coming second to Venezuela whose economy is envisaged to contract by 20,5% according to the EIU report released early this month.

BY SHARON SIBINDI

BROOKLYN Films International 2020 director Tinashe Gijima said his current production, Scars/Amanxeba, whose third episode shooting started yesterday is a feminist project.
In an interview with NewsDay Life & Style yesterday, Gijima said part of the feature film’s episodes seek to unpack some of the causes of the girl children dropping out of school and also amplify on the importance of culture.

“Scars is a Zimbabwean feature film set in an old village where there is no electricity or any type of public services. This is a youthful creative project which shall unpack the facts and myths of our Zimbabwean society,” he said.

“The film’s richness roots from the empowerment of women, the importance of the education of a girl child, gender equality and a lesson to men to stop gender-based violence. It also highlights the impact of culture, HIV and Aids yesterday and today.”

Gijima said Scars/Amanxeba, written and co-produced by John Mabuyane of Kingbubble and Nothando Vuyiso Moyo unpacks the inner voice and unveils the untold.

“I was born in a primitive society in which women had no voice or rather less or no education at all, their rights not recognised, suppressed by the demands of a typical patriarchal society. A society that pigeonhole women into stereotyped roles,” he said.

“It is in such a society where we find principles, morals and values remaining stagnant and core roots of the challenge a girl child faces today. In this rigid setting we find culture being the four pillars of the community. It becomes a catalyst to the rampant spread of HIV, the disease that cripples the society giving birth to certain myths surrounding the cause of many deaths in the village.”

He said the film dates back to an era that questioned the impact of culture on HIV and Aids and young women and how its branches have stretched to date.

“Will one woman’s story marked with hope and stoicism be able to change people’s hearts?

Domestic violence, child marriages, teenage pregnancies become a serious concern in this village and young girls drop out of school as a result and arranged marriages become the order of the day,” he said.

“How do we curb these effects and close the tap to the new generation? Scars leaves one in a state of self-introspection. Change must begin with the community. This is a film that will be seen for decades as it holds part of our social and cultural history.”

Some of the cast of the film shot in Umguza, include Donna from SkyzMetro FM who is the lead actress, Charmaine Mudau of Urban Culxure, award-winning model and ambassador of Mr Zimbabwe BenChest.

BY MTHANDAZO NYONI

TELECEL Zimbabwe says its operations have been affected mainly by limited funding for a long period of time, in the face of challenging economic conditions in the country.
In a statement, Telecel said though it faced some challenges, it was not on the brink of collapse and continues to offer quality service to its customers.

“Like all other local organisations, Telecel Zimbabwe’s operations have been affected by a host of factors, both macro and micro economic, but attributed mainly to limited funding for the company over a long period of time, in the face of challenging economic conditions in Zimbabwe.

“Specifically, rapid depreciation of the local currency and the levels of tariffs increases approved, which continue to lag behind inflation, have affected the ability to meet the foreign currency-denominated obligations, especially spares for equipment and service level agreements and support,” the company said.

Government is the major shareholder after acquiring from Amsterdam-based VimpelCom (now Veon) 60% shareholding in the third largest telecom company and is in the process of buying the remaining 40%.

The remaining shareholding is controlled by James Makamba through Kestrel Corporation, the Indigenous Business Women Organisation through Jane Mutasa’s Selporn Investments, Zimbabwe Miners’ Federation, Affirmative Action Group, War Veterans’ Association and Zimbabwe Farmers’ Union
The mobile operator has, however, been the subject of a share ownership battle over the years. In October last year, the High Court ruled in favour of once-exiled Makamba in a long drawn-out Telecel Zimbabwe (Pvt) Ltd share ownership battle with a war veterans’ organisation, Magamba eChimurenga Housing Trust.

Workers at the mobile network operator last wee raised a red flag over the state of affairs at the company, saying it faces imminent collapse unless government urgently intervenes to rescue the entity.

In order to mitigate these challenges, Telecel said it had been on a very aggressive import substitution and local skills transfer drive.

It also decried power outages which have resulted in the company’s operating costs ballooning due to the use of alternative power, particularly diesel, and has in turn affected base station availability in many parts of the country.

The company is, however, in advanced discussions with the power authorities and officials in the Ministry of Energy to ensure a dedicated power line to its switching centres.

In addition, the company is investing in alternative power solutions such as Tesla solar batteries for its base stations.

Telecel said it continues to engage all the relevant authorities to ensure that the tariffs are adjusted in line with the cost movement of other basic operational costs.

“The Telecel board and shareholders are aware of the ongoing challenges. Plans are underway to address the issue of recapitalisation and in this regard, a five-year strategic plan has already been formulated and adopted,” the statement reads.

“The finalisation of all outstanding financial statements is on course and this will open avenues for new funding from financial institutions.”