Zim News Blog -NEWS NETWORK

Source: ‘New mining regime boon for investors’ | Sunday Mail (Business)

Enacy Mapakame
Business Reporter

The imminent review of the law to allow foreign investors to wholly own investments in diamond will help boost foreign direct investment in the mining sector and across value chains, the Chamber of Mines of Zimbabwe (CoMZ) has said.

The Government has been progressively reviewing the Indigenisation and Economic Empowerment Act in order to create a business-friendly environment.

In the post November 2017 political transition, Government immediately scrapped the requirement for foreign investors to limit their investment threshold to 49 percent, but it was retained for the diamond and platinum mining sectors.

However, in an interview with US-headquartered Bloomberg TV last week, Finance and Economic Development Minister Professor Mthuli Ncube said the requirement foreigners would now be allowed to control 100 percent of their investments in the key mining sub-sector.

“We are removing that indigenisation rule, which is discouraging foreign direct investment. We say Zimbabwe is open for business; you can only be open if you allow ownership of 100 percent,” said Minister Ncube.

There are indications that the policy would be extended to the diamond mining sector as well.

CoMZ chief executive officer Isaac Kwesu said the latest move was a step in the right direction and would bring the much-needed foreign direct investment, create employment within the sector and across value chains.

“We have a huge mineral resource as a country, but on our own, without foreign direct investment, we may not realise much or unlock value from our mineral resource.

“The platinum value chain is capital intensive, and this move will attract investors across value chains. As it is now, we need FDI, which is the common practice everywhere,” said Mr Kwesu.

Positive spin-offs

The country’s platinum production, he added, would also increase on increased investment in the sector, while beneficiation and value addition would expand — boosting employment creation, taxes and royalties.

Other downstream industries are also expected to benefit through local procurement.

“The bigger population will benefit from this. This will have a huge impact in the socio- economic transformation of many Zimbabweans,” he said.

Mining is one of the strategic sectors driving the economy.

Government has been working on attracting capital into the sector, which is considered key in plans to establish an Upper Middle-Income economy by 2030.

Zimbabwe has vast mineral deposits ranging from gold, platinum, diamonds, nickel and chrome.

The country is home to the world’s second-largest known platinum deposits after South Africa, while its gold reserves are one of the largest in Africa.

United Kingdom-based economic research firm Fitch Solutions believes Zimbabwe will become a mining giant in the Sub-Saharan region.

“Zimbabwe is emerging as an important mining centre within Southern Africa as foreign investment drives growth in mineral and metals production,” said Fitch in their recent publication on the country ( Zimbabwe Country Risk Q1 2019).

“In terms of overall platinum output, Zimbabwe is challenging the world’s largest platinum producers, Russia and South Africa, while gold production is also set to ramp up over the medium term.

“Zimbabwe will experience a temporary boost in gold production in 2017-2019 as the impact of a gradual recovery in global gold prices and regulatory changes lead to an increase in activity by smaller mining firms. Zimbabwe’s platinum output will also grow at a steady pace, while that of its main competitors, South Africa and Russia, will stagnate over time, according to our mining team,” said Fitch.

The international think tank also sees the Zimbabwean economy recovering from more than two decades of sluggish growth driven by mining and tourism, among other key sectors of the domestic economy.

Fitch also says President Mnangagwa’s administration has shown commitment to reforms with the amendments to indigenisation laws a positive sign of its pledge to create a conducive business environment.

“The new Government in Zimbabwe has shown signs of progress towards implementing investor-friendly structural reforms, which will encourage FDI and buttress economic growth over the long term.

“Zimbabwe is endowed with a wealth of natural resources and vast human capital compared to regional peers,” it said.

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Source: Dr Mangudya fights for ZAMCO | Sunday Mail (Business)

Tawanda Musarurwa

The Reserve Bank of Zimbabwe (RBZ) is doggedly pushing for the Zimbabwe Asset Management Company (Zamco) — which was created to warehouse sourcing loans from the banking sector — to run until its term expires in 2025.

Zamco was established in 2015 with a 10-year mandate to mop up non-performing loans (NPLs) in the financial services sector. Treasury indicated in the 2019 Budget that Zamco would be disbanded soon as it would no longer be taking any new NPLs since Government had taken the decision to cut down on issuing additional securities to the market.

Treasury Bills(TBs) worth more than $1 billion were issued to help soak up the souring loans.

“Government has taken the position that there will be no further acquisitions of non-performing loans by the Zimbabwe Asset Management Company,” said Minister Ncube at the time.

However, RBZ Governor Dr John Mangudya told parliamentarians last week that the entity has “performed well” and is likely to see out its term.

“We had a meeting with the Minister (Prof Mthuli Ncube) and we advised him that the statement does not reflect our observation or knowledge about Zamco, and we take comfort that he understood,” said the central bank chief when he appeared before the Parliamentary Portfolio Committee on Public Accounts on Monday.

“Zamco acquired 1 160 NPLs from banks at a value $1,13 billion, and we think that ZAMCO has performed very well. So far $260 million has been repaid,” he added.

As a result of the statutory body’s interventions, NPLs had markedly dropped from 20 percent to 8 percent, which is marginally above the recommended average of 5 percent.

Zamco chief executive officer Dr Cosmas Kanhai also indicated last week that the body needed to run its full course.

“We hope that by 2025 we would have resolved all the acquired NPLs,” he said.

Notwithstanding the drop in NPLs, official figures show that credit risk in the banking sector increased last year.

This is reflected by the ratio of NPLs-to-total loans of 8,3 percent as at December 31 2018 from 7,1 percent as at December 31 2017.

“The increase in NPLs is largely a reflection of forward-looking credit risk management tools adopted by banks in line with the IFRS 9 accounting standards, resulting in improvement of the banks’ risks controls and provisions coverage,” reads part of the latest Monetary Policy Statement.

Meanwhile, the statistics show that lending to the country’s productive sector increased over the past year from 73,6 percent to 76 percent of total loans as at the end of last year.

Total loans in 2018 amounted to $4,2 billion compared to $3,7 billion in 2017.

The RBZ attributed the increase to lending to the agricultural sector, which increased from 14,7 percent to 16,4  percent, and State-owned enterprises from 12,1 percent to 20,1 percent.

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Source: Diaspora can offer invaluable solutions: DIDG | Sunday Mail (Business)

Africa Moyo
Senior Business Reporter

The Diaspora Infrastructure Development Group (DIDG) — which won the $400 million tender to help nurse the National Railways of Zimbabwe (NRZ) together with Transnet of South Africa — say Zimbabwe and South Africa should tap skills in the Diaspora to give traction to agreed projects.

The remarks come as Harare and Pretoria are having preparatory meetings that will culminate in bilateral agreements to be signed on Tuesday.

There is concern over lethargy in implementing 45 agreements that were agreed between the two countries in previous bilateral engagements.

DIDG strategic planning and implementation director Ms Fadzai Nyamasve told The Sunday Mail Business on Friday that: “The Diaspora are well-positioned to support Zimbabwe and its regional trade partners like South Africa in implementing bilateral projects.

“Many Zimbabwean professionals in the Diaspora occupy senior positions in various technical companies, financial institutions and public enterprises that the Government of Zimbabwe and private institutions want to do business with.

“As such, we are the first port of call for multinationals and bilateral trade partners such as South Africa when they are considering to invest into Zimbabwe.”

The Diaspora, she said, could come in handy in promoting cooperation between Zimbabwe and its regional trade partners.

South Africa-based DIDG is run by a team of Zimbabwean professionals living in countries such as the UK, USA, Australia, Canada, New Zealand, Namibia and Botswana.

Through its diverse skills and expertise, the organisation has evolved into an integrated engineering, construction, operations, manufacturing and industrial company focused on investing and developing economic infrastructure such as rail, water, energy, air and roads in Zimbabwe.

Added Ms Nyamasve: “DIDG’s strategic mission is to participate in the ownership of the key infrastructure management companies operating in the targeted sectors.

This enables us to take a long-term investment view when we invest and support the value-chain industries, which, in turn, develop the local industrial economy.

“Presently, DIDG, as a co-shareholder in the new NRZ rail concession operator, is strategically pursuing the resuscitation of local companies that previously provided critical services to NRZ.

“We are in the process of acquiring or forming strategic partnerships with the likes of Fort Concrete, Zeco Holdings and other heavy engineering, signalling and telecommunications companies.”

DIDG is also pushing for training and skills development.

Discussions with tertiary institutions such as the National University of Science and Technology (NUST) are currently underway to help bring technology, manufacturing, assembly and research and development into the innovation hubs of universities in the long-term.

DIDG said the policy by the new political administration to co-opt the Diaspora through creating a department in the Ministry of Foreign Affairs and International Trade to help encourage them to invest back home is encouraging.

However, they feel there is need for a dedicated ministry to represent their interests within Zimbabwe.

Ms Nyamasve said: “DIDG has now more than 2 600 members in its professional network, including myself, and such members are interested in seeing how they can contribute in the DIDG plans of recapitalising Zimbabwe’s critical infrastructure.”

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Source: Zimra collects US$18,5 forex from retailers | Sunday Mail (Business)

Africa Moyo
Senior Business Reporter

THE Zimbabwe Revenue Authority (Zimra) has so far collected almost US$18,5 million in value added tax (VAT) from retailers selling goods and services in foreign currency, it has been learnt.

Government directed the taxman to begin collecting VAT in forex, particularly from companies that were charging their goods and services in hard currency, in November last year after some service providers stopped accepting electronic payments and insisted on hard currencies.

There were also fears that the practice was fuelling arbitrage as most businesses were paying their tax obligations using electronic payments, which were heavily discounted on the parallel market.

Zimra acting head of corporate communications Mrs Inzwirashe Muwonwa told The Sunday Mail Business last week that they had “collected a total of US$18 481 400 to date”.

“Indeed, the traders are required to pay VAT in forex. We have held several meetings or seminars with the traders to remind them of the tax obligation.

“After the announcement of the Monetary Policy Statement and the promulgation of the Finance Act Number 1 of 2019, we are preparing the guidelines and public notices for our taxpayers.

“In addition, we carry out on a regular basis tax compliance enforcement measures, including tax audits.”

In October last year, the Reserve Bank of Zimbabwe (RBZ) allowed banks to separate Nostro Foreign Currency Accounts (FCAs) from RTGS accounts as it deliberately tried to coax the US dollar in the mainstream banking system.

However, the decision — which was interpreted as a devaluation of electronic money and bond notes and coins — fuelled activity on the parallel market.

In order to preserve value, most companies began demanding payments in foreign currency.

Government reacted by ordering Zimra to collected VAT from such traders in “their currency of trade”.

But small retailers, most of which trade in cash and foreign currency, still remain outside Zimra’s dragnet.

It is also increasingly difficult for authorities to account for the businesses as they are not fiscalised.

Further, some market watchers believe there could be collusion between Zimra staffers and traders in order to cheat the system.

However, Mrs Muwonwa said Zimra had sufficient systems to ensure the integrity of their staff.

“Failure to abide by the requirements of this policy is a dismissable offence. As a measure to enforce this policy, Zimra conducts periodic lifestyle audits on all its employees.

“The lifestyle audits also cover tax issues on these employees and their businesses, if any.

“Zimra will not tolerate employees who breach the income tax provisions and will take appropriate disciplinary action,” she said.

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Source: Industry upbeat ahead of Zimbabwe-SA deals | Sunday Mail

Africa Moyo
Senior Business Reporter

AS Zimbabwe and South Africa prepare to further deepen trade, investment and diplomatic relations this week, local industry has tabled its wish-list for consideration by Pretoria.

Industrialists believe that memorandums of understanding (MoUs) that will be signed on Tuesday during the third session of the Bi-National Commission (BNC) should help remove barriers to trade and promote co-operation in livestock breeding and establishing a platinum refinery.

Senior government officials from South Africa arrived in Harare on Wednesday for meetings that ran from Thursday to Friday.

A ministerial meeting is scheduled for tomorrow, before Presidents Emmerson Mnangagwa and Cyril Ramaphosa headline the Zimbabwe-South Africa BNC on Tuesday.

National Business Council of Zimbabwe (NBCZ) president Mr Langton Mabhanga told The Sunday Mail Business that the Zimbabwe-South Africa BNC was critical as both countries shared a common resolve to pull their economies out of “internal and external debts”.

The two countries, he said, should “attend to the challenges of energy, mineral exploitation and optimisation, agriculture and manufacturing” to potentially create a common ground for engagement.

“There will be need for the two economies to share notes on the strategic support that Zimbabwe will require to build its own platinum refinery.

“The current toll-refining arrangement being done by individual mines might not be sustainable and inconsistent with Agenda 2063 and the vision and thrust of President Mnangagwa on industrialisation and beneficiation,” said Mr Mabhanga.

He said there was need for robust engagement to remove barriers to trade, including crafting a trade pact to promote existing and new manufacturing industries in Zimbabwe.

“There is scope for us to continue improving productivity and competitiveness.

“The two trade partners need each other, and both will require to leverage on sound bilateral relations for mutual benefit.

“It will be strategic that the huge investment of resources by Zimbabwe in building world-class and competitive education and training (infrastructure) that have supported Africa and beyond should be recognised as a tradable comparative advantage, given the human capital resources that Zimbabwe has contributed.

“Agricultural research and development, including livestock breeding and bio-security protocols, would make sound strategic concern to take in the bilateral discourse, especially in resolving the productivity gaps in our agro-production and growing our livestock national herd — (focusing on) cattle, sheep, piggery and poultry — in which South Africa has covered quite some ground,” he said.

Similarly, other business lobby groups see significant potential and opportunities for business with South Africa.

Last week, Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe said bilateral agreements with Pretoria could help with the much-needed leverage to further penetrate the lucrative South African market, as the two countries “share value chains”.

“South Africa is the biggest economy in Sub-Saharan Africa.

“Now, the biggest market is actually close to us, and with a population of over 50 million people, that is a huge market, especially with their high per capita income.

“So we expect the Bi-National Commission to help local entrepreneurs to penetrate that market,” he said.

Presidential Advisory Council (PAC) facilitator and industrialist Mr Joe Mutizwa said last week it was critical for Zimbabwe to forge diplomatic and economic ties with the rest of Sadc countries if it was to build an “economic fortress”, considering the hostility it faces from Western countries.

On Tuesday, the United States government extended sanctions on imposed on Zimbabwe — through the Zimbabwe Democracy and Economic Recovery Act (Zdera) — by a further 12 months ostensibly because the country continues to pose an “unusual and extraordinary” threat to US foreign policy.

This week’s BNC, which is the highest bilateral framework of cooperation between the two sister republics of Zimbabwe and South Africa, follows the recent highly successful inaugural BNC with Botswana.

Harare and Gaborone inked six major agreements and MoUs in areas of energy, mining, extradition, diplomacy and cooperation in the field of science and technology.

Botswana also extended a BWP1 billion credit facility to help Botswanan company ratchet up investments into Zimbabwe.

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