Tag Archives: Business

Govt secures funds for GMB grain deliveries: VP

GOVERNMENT has secured funds to buy grain up to 1,3 million metric tonnes delivered to the Grain Marketing Board (GMB), so that farmers can prepare for winter wheat farming in earnest, Vice-President Emmerson Mnangagwa has said.

BY MTHANDAZO NYONI

Vice President Emmerson Mnangagwa

Vice President Emmerson Mnangagwa

Giving his keynote address at the Zimbabwe International Business Conference yesterday in Bulawayo at the on-going Zimbabwe International Trade Fair, Mnangagwa said the government was ready to purchase all grains delivered to GMB.

“The country is expecting a bumper harvest this year. The country is thus assured of readily available feed stock that will go into various agro-processing productions lines that all along have largely relied on imports,” Mnangagwa said.

“To minimise cost harvesting grain losses, enough grain storage facilities have been made available by government supported by the private sector in particular the Grain Millers’ Association of Zimbabwe (GMAZ). Also in order for farmers to prepare for winter wheat farming in earnest and pay for goods and services and other necessities, the government will ensure that farmers are paid on time for delivered grain,” he said.

“We already have funds covering up to 1,3 million metric tonnes of grain delivered to Grain Marketing Board and we are still working on mobilising further funds because we believe that grain intake will exceed 2 million metric tonnes, but let me assure you that for now we have already have enough funds to cover 1,3 million metric tonnes of grain delivered.”

Responding to questions from the delegates, Mnangagwa said the Finance ministry has put aside $199 million to purchase the grain under the command agriculture.

He said $199 million would purchase about 500 000 metric tonnes of grain. Apart from that, Mnangagwa said GMAZ has come forward to purchase 800 000 metric tonnes of grain.

He said the country has about 136 combine harvesters, but of those only about 80 were functional.

Mnangagwa said currently silos in the country could only store 700 000 metric tonnes of grain, but they were expecting in excess of 2 million metric tonnes of grain.

“So you can see there is balance where there is no silo storage in the country and (Finance minister Patrick) Chinamasa does not have enough funds to build the things that we want for storage.”

“However, the private sectors have come forward. We needed $8 million to create storage facility outside silos storage. We have secured $8 million from Grain Millers Association of Zimbabwe, who have volunteered their importation of grain which is about 800 000 metric tonnes of grain from outside to buy internal and giving us this $8 million. They will draw down the grain,” he said.

With this, the country can store up to 3,2 million metric tonnes of grain.

The trade fair, which will run up to Saturday under the theme, Harnessing Linkages for Industrial Development, will be officially opened by Namibian President Hage Geingob tomorrow.

RBZ wary over external loans contraction

THE Reserve Bank of Zimbabwe (RBZ) is concerned with the acquisition of external loans by local companies as the repayment of such loans eats into the country’s export earnings, deputy governor Kupukile Mlambo has said.

BY FIDELITY MHLANGA

RBZ9

Mlambo said RBZ preferred development financial institutions to invest in local companies through equity than loans.

“When companies get external loans, in general, it’s a good thing, but you see increasingly that investors are continuously giving out loans than buying equity. Every dollar we get from outside is equivalent to a dollar in export earnings when servicing that loan because we pay everything from our exports, whether its imports or loans. So for every loan that comes in, we have to find an equivalent export to repay it. Foreign companies are more interested in giving loans than buying equity. Increasingly, we are saying ‘can we have more of equity than loans?’,” he said.

This comes after the RBZ approved and registered 247 facilities with a monetary value of $1,8 billion external loans in 2016.

Agriculture received the largest share, accounting for 47% of loan approvals during the year, largely driven by tobacco finance facilities which are renewed seasonally.

The value of loan approvals increased by a marginal 1,5% to $1,843 million approved in 2016 from $1,81 billion in 2015.

Mlambo said RBZ was concerned about local banks’ lending skewed towards individual spending instead of the productive sectors of the economy.

“Civil servants have become a fishing ground for banks. We would want a reverse of that in such a way that lending goes to mining, manufacturing and all than going towards individuals,” he said.

Of the $3,69 billion loaned by banks in 2016, a huge chunk (28,7%) went to individuals, agriculture got 16,7%, distribution (15,3%), services (14,95%) and manufacturing sector at 10,4%.

The mining sector received 4,5%, construction (3,5%), financial firms (2,11%) and 1,5% of the loans went to the communication sector.

According to the central bank, funding to productive sectors of the economy such as mining and manufacturing continues to be constrained by the short-term liability structures of banking institutions’ balance sheets.

Chinese dribble govt on blanket imports

BLANKET smuggling is on the rise, with Chinese importers listing blankets as quilting kits, to pay a lower duty at the country’s ports of entry.

BY TATIRA ZWINOIRA

A Waverley Blanket employee preparing wool for blankets during a tour of the factory in Graniteside, Harare yesterday

A Waverley Blanket employee preparing wool for blankets during a tour of the factory in Graniteside, Harare yesterday

According to documents provided to NewsDay from a source yesterday, a number of Chinese companies have resorted to this modus operandi to pay a lower duty, as it has a different tax code.

Statutory Instrument 19 of 2016 removed blankets from the open import licence and requires importers to have permits.

As such, these come with a tax code requiring importers to pay 40% of value imported, $2,50 per kilogramme and 15% value-added tax (VAT), which are measures to deter blanket imports.

Since the goods are listed as quilting kits, Chinese blanket importers pay 10% of the value imported, $1,45 per kilogramme and VAT of 10%.

Due to this loophole, Chinese blanket importers are bringing these blankets in 44-foot trailers, which should cost a duty of about $70 000 considering weight, but are paying between $4 000 and $6 000 instead.

Quilting kits are listed in the base form of the blankets that is fabric, compressed fibre, and sewing thread. NewsDay was shown a sample by a source, which is basically a semi-finished blanket that only needs stitching to be completed.

The source said this also implied the Zimbabwe Revenue Authority (Zimra) border officials were complicit in the smuggling, since they were allowing blankets to pass through as quilting kits despite being noticeably the former.

“They do not declare the right commodity, price, quantity and pay between $4 500 and $5 000 for goods in a 44 foot container costing millions in revenue,” the source said.

In one of the documents, there is a letter from Zimra to one of the Chinese companies, Redbart Enterprises, raising questions over the company’s import practices from January 2011 to October 31, 2016 concerning the quantity and value of their imports during this period.
Industry and Commerce minister Mike Bimha confirmed yesterday there were loopholes in blanket importing.

“I find it difficult that we continue to import blankets. I think that it is something that we have the capacity to do (produce) ourselves. I also think there are a lot of loopholes and that we can do better. Importing for the sake of importing is not something that we want as a ministry. We want to support our local industry,” he said during a tour of Waverley Blanket factory. Bimha was accompanied by legislators from the parliamentary portfolio committee on Industry and ministry officials.

He promised to step up efforts to improve border technologies to curb smuggling.

Zimbabwe Textile Manufacturers Association secretary general Raymond Huni said the association’s investigations unearthed the smuggling. The investigations were called for by blanket manufacturers.

“We conduct yearly reviews on all the textile companies in the country to review their capacity. In the second week of March till the second week of April (last week) we discovered the practice of underwriting (under declaring) the value of blankets by blanket importers was being done,” he said adding that the association has since engaged the ministry of Industry and Commerce.

New players buck economic trend, join tourism sector

The tourism industry has seen the entry of more than 25 new restaurants and 17 new guesthouses in recent years despite economic challenges besetting the sector, an official has said.

BY MTHANDAZO NYONI

Zimbabwe Tourism Authority (ZTA) chief executive Karikoga Kaseke told NewsDay that while some businesses closed down in recent years due to economic challenges, there has been a notable rise in new investments into the tourism sector.

“For instance, the sector registered 28 new restaurants, 17 new guesthouses and 28 incentive travel organisers. This goes to show that the sector can actually be the catalyst for the economic turnaround of Zimbabwe given all the necessary support and enabling operating environment,” Kaseke said.

Industry officials say Harare requires about 1 000 more rooms by 2018 and at least another 1 000 by 2020. Victoria Falls requires at least 500 more rooms by 2018 and a 1 000 more rooms by 2020.

He said tourism thrives well in an economy that was stable, but the ongoing economic challenges have resulted in low disposable income for the country’s citizens, who are the nation’s potential domestic tourists.

Consequently, Kaseke said the domestic tourism suffers, as there was low propensity for the locals to engage in tourism activities.

“The liquidity cash crisis in the country has resulted in limited business both at local and international level impairing the growth of the tourism industry as both domestic and foreign tourists cannot access cash,” Kaseke said.

“The prevailing cash shortages have also resulted in damage to the country’s image. This is especially so as some countries including the UK issued travel advisories warning their citizens on the cash shortages, a move which deters potential tourists to the country.”

Furthermore, this scenario reduces tourism expenditure denying the sector the opportunity to generate the much needed foreign currency, he said.

Kaseke said tourists do not have the cash to buy curios, arts and crafts further reducing the downstream impact of tourism.

The ZTA boss said the tourism industry was affected by many taxes and licences and this was compounding in making the country’s tourism product more expensive and uncompetitive within the region.

“Tourists now prefer to stay in neighbouring countries crossing over into Zimbabwe for fewer days because of the higher costs of the destination,” he said.

Mzembi drums up support ahead of UNWTO polls

Tourism and Hospitality Industry minister Walter Mzembi paid a courtesy visit on African Union Commission deputy chairperson Kwesi Quartey on Tuesday as he drums up support ahead of the election for the secretary general’s post of the UN World Tourism Organisation (UNWTO).

BY BUSINESS REPORTER

The election to replace Jordanian Taleb Rifai will be held in Madrid, Spain on May 10 and 11.

Mzembi will fight it out with Armenian Vahan Martinosyan, Márcio Favilla (Brazilian), Jaime Alberto Cabal Sanclemente (Colombian), Zurab Pololikashvili (Georgian), Young-shim Dho (South Korean) and Alain St. Ange from Seychelles to head the organisation in the period 2018 to 2021.

In a statement, the AU Commission said Mzembi briefed Quartey about Africa’s potential in the tourism sector. Mzembi explained tremendous challenges facing the continent’s tourism sector including insecurity issues and underlined the fact that for many African countries, tourism was a principal export and a recognised development tool.

The Commission said Mzembi implored that his candidature for the post hinged on three pillars — to restore Intergovernmental agency of the organisation, resource mobilisation and business development; and enhancing the diplomacy status of the organisation.

Mzembi was endorsed by the African Union for the top post in June last year. Before then, he had already secured the support of the Sadc bloc.

Tuesday’s meeting was attended by the Ambassador of Zimbabwe to Ethiopia Albert Chimbindi as well as other staff from the Embassy of Zimbabwe in Ethiopia.

Government rescues Sanganai/Hlanganani expo

THE Zimbabwe Tourism Authority (ZTA) has received a “substantive amount of money” from the government to fund this year’s Sanganai/Hlanganani World Tourism Expo and pay all debts incurred in previous editions.

BY TARISAI MANDIZHA

Minister of Tourism Walter Mzembi touring the stands at the Sanganai/ Hlanganani World Tourism Expo last year

Minister of Tourism Walter Mzembi touring the stands at the Sanganai/ Hlanganani World Tourism Expo last year

Speaking at a media briefing in Harare yesterday, ZTA chief executive officer Karikoga Kaseke said hosting the expo required not less than $3 million, but given the current operating conditions in the country the expo would require between $1 million to $1,2 million including the contribution from the tourism sector.

The tourism sector last year contributed $470 000 for Sanganai/ Hlanganani Expo.

“The Zimbabwe Tourism Authority would like to inform its esteemed tourism partners, stakeholders and the nation at large, that Sanganai/Hlanganani World Tourism Expo 2017 preparations have been resumed. This is despite our previously announced possibility of cancelling the event due to lack of funding,” Kaseke said.

“The new development has been prompted by the commitment made by the government to fund the expo and also to pay all the debts that were incurred during previous edition of Sanganai/ Hlanganani Expo. They have already disbursed the funds to pay all the service providers who supplied goods and services to Sanganai last year.”

Last month, Kaseke said ZTA would not be holding the expo this year citing funding constraints and that the authority was being haunted by debts from the previous edition.

This year’s edition will be held from September 27 to 30 in Bulawayo.

Kaseke said a third of the exhibition space has already been taken by local and international exhibitors, a good sign that the business world continues to see value in the fair.

“A number of foreign exhibitors have already registered, notably those representing South Africa, Malawi, Botswana, Zambia, Namibia and Mozambique,” he said.

Kaseke said more exhibitors, particularly from South Africa were expected to confirm soon as the majority of them have shown a lot of interest in the show.

“We have put in place a well-considered and stringent selection benchmark of buyers’ participation that ensures the premier tourism show attracts only high-profile international buyers. These are buyers who are genuinely interested in doing business with tourism brands from Zimbabwe and South Africa in general. The buyers should be eager to package Zimbabwe and the region as a tourism destination,” he said.

OK promises bigger, better Grand Challenge

OK Zimbabwe will this year offer customers loyalty points valued at $200 000 as part of the annual OK Grand Challenge Promotion which begins today.

BY TATIRA ZWINOIRA

Forty Nissan NP 300 single cab trucks will be won in the 29th edition of OK Grand Challenge jackpot promotion which was launched at the Borrowdale Racecourse yesterday

Forty Nissan NP 300 single cab trucks will be won in the 29th edition of OK Grand Challenge jackpot promotion which was launched at the Borrowdale Racecourse yesterday

The loyalty programme comes as part of OK Zimbabwe’s strategy to hit targets which the retail organisation set for 2017, new chief executive officer Alex Siyavora told NewsDay yesterday at the launch of the 29th edition of the OK Grand Challenge promotion.

“In this year’s promotion we have introduced what we call an amplifier to run alongside the legacy OK Grand Challenge Promotion format.
This amplifier picks on the promotion we ran successfully in the third quarter of 2016 dubbed “OK Shop Easy Club: Token of Appreciation”. It will reward our customers for patronising our outlets during the Grand Challenge as they purchase your brands for their day-to-day needs,” Siyavora said.

“We are seeing a bit of that growth from last year and this year is definitely better than the previous year. The activity level is higher. The challenge we experience will always have to do with product supply because of the difficulties with international settlements. Sometimes you can go for time without certain products, but the supplier base continues to plan, react and move forward. But, yes, that is an interruption to smooth retailing,” he said.

The OK Grand Challenge runs up to June 2, 2017 with the draw, to be held the following day. The loyalty programme will offer points to customers for shopping at the different OK stores throughout the country.

OK Zimbabwe chief operating officer, Albert Katsande said the loyalty programme was a chance to reward shoppers who did not win at the OK Grand Challenge Promotion.

“You are not winning but you are getting rewarded and get points with the value of up to $200 000 in addition to whatever we are doing. We lead in giving value to the customers in terms of special prices during this period and continuously and all our competitors follow suit,” he said.

On top of the loyalty programme, the OK Grand Challenge will give 41 vehicles, up from last year’s 40. The promotion will also give away $200 000 worth of airtime as part of their prizes.

The OK Grand Challenge will feature 200 products from over 50 supplier partners over the seven-week duration of the promotion.

“Last year’s grand challenge was successful. We managed to hit our targets, but every year there are enhancers that get
introduced to keep it more interesting and more exciting,” Siyavora said.

He said certain fundamentals of the challenge would remain because of the promotion’s tradition, but that there would definitely be new things and ideas.

Siyavora began his tenure this month as CEO of the listed retailer after replacing Willard Zireva who retired in February.

Afreximbank bails out Zimbabwe

Forex-starved Zimbabwe has been given a lifeline after the African Export-Import Bank (Afreximbank) availed two nostro stabilisation facilities amounting to $220 million.

BY NDAMU SANDU

Afreximbank president Benedict Oramah

Afreximbank president Benedict Oramah

The facilities come at a time the economy has been facing a foreign payment gridlock due to the depletion of the nostro facilities.

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya told NewsDay last week that the proceeds derived from the two facilities of $70m and $150m each would be used to settle outstanding foreign exchange payments.

“We expect to draw down the two facilities of $70 million and $150 million from Afreximbank between this Friday (last week) and Easter. We remain most indebted to Afreximbank that has continued to support Zimbabwe during its hour of need,” he said.

“We are going to utilise proceeds from these facilities to settle outstanding foreign exchange payments, supported by funded accounts, for firms that are in the productive sectors of the economy and education foreign payments.”

Foreign payments delays have hamstrung companies’ abilities to produce after failing to access key raw materials thereby threatening production.

Last year, Delta Corporation said it was failing to remit dividends to foreign shareholders and Econet Wireless recently raised money from existing shareholders to meet foreign payments due to the gridlock in processing foreign exchange payments.

Afreximbank has been Zimbabwe’s all-weather friend, providing a bailout in her time of need.

In 2015, Afreximbank availed a $200m Trade Debt-Backed Securities, which operates and functions as a window of last resort at RBZ for local banks.

The facility was extended to 2019. It is credited for maintaining financial sector stability and inclusive growth. Total trades under this facility amounted to $641m over a two-year period from the effective date of the facility in February 2015.

Mangudya said the economy was picking up as old and new firms were resuscitating or starting operations.

He said apart from the expected good agricultural outturn, a good number of firms that are benefiting from Statutory Instrument 64 of 2016, including those in the food processing, plastic and packaging, light manufacturing, confectionaries, dairy and beverages sectors were producing above 50% of their capacity.

Mangudya said, while this was encouraging, the implication on the demand for foreign exchange was quite significant as the firms need to import feedstock.

“Therefore, demand for foreign exchange has increased, not only to satisfy transactional cash requirements, but also for import of raw materials. This in turn presents a hard choice of either importing more foreign exchange cash to meet local cash requirements or importing raw materials to increase capacity utilisation, enhance productivity and secure or create employment,” he
said.

“Whilst the opportunity cost is quite high, it is quite reasonable to support local production for the sustainability of the economy.”

Mangudya said there was need for a development of the Re-industrialisation and Export Growth Strategy (REGS) to revitalise the economy in line with Zimbabwe Agenda for Sustainable Socio-Economic Transformation and the Ten-Point reform agenda.

“REGS needs to be anchored not only on resource mobilisation but also on structural reforms that include the ease and cost of doing business, fiscal efficiency, enabling investment environment and the re-organisation of state-owned enterprises. While some of these structural reforms will cost nothing to the fiscus, their benefit is quite huge,” Mangudya said.

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