THE AXiS

The Zim’s lack of transparency and accountability
The future of business
ZIMCODD commends NDS 1 strides
Africa, Italy’s new gas supplier

An explosion of

epic proportions

#ISSUE: XXV

The AXiS: Friday 2 April 2022 #ISSUE: XXV

The Hedge-seeking
in Zimbabwe

Beat the currency with smart moves…

equityaxis.net @equity axis @equity axis zimbabwe @equity axis PAGE 6
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Zimbabwe dollar tumbles, inflation rages havoc
In recent weeks, Zimbabweans have witnessed
an elevated massive decline of the Zimbabwe cy concerning the bidding and forex allotment reasoning is based on the fact that even before
dollar (ZWL) particularly in the parallel processes. This could explain why RBZ has the Russia-Ukraine war started on the 24th of
market. Year to date, the local currency has remained the sole supplier of forex traded on the February 2022, inflation outturn was upscaling on
shaved about 32% of its value on the official auction thus making it difficult for one to rule a monthly basis. In short, the war is regarded as
market. The latest weekly foreign currency out the possibilities of corruption, deliberate a secondary factor that is exacerbating an infla-
(forex) auction results released by the Reserve exchange rate manipulation, and insider trading tion crisis that was existing before the war in
Bank of Zimbabwe (RBZ) this week, 26 April shenanigans. The opening of the auction market eastern Europe. Since the beginning of the year,
2022, show the ZWL plunging by 2.6% to settle from the festive season holiday break was inflationary pressures have also been elevated on
at US$1: ZWL159.35. In the alternative (parallel) delayed in January 2022 as the RBZ alleged that the global scale driven by global supply chain
markets, the local unit is depreciating significant- it identified rogue businesses and individuals that disruptions caused by the COVID-19 pandemic as
ly with the US dollar now trading between the were externalizing forex received from the auc- well as elevated liquidity due to increased fiscal
ZWL320-350 range. tion. Again, when the auction forex allocation spending and accommodative monetary policies
Source: RBZ and ZIMCODD Research backlog crossed the US$200 million mark in that were undertaken to subdue the impacts of
2021 (an indication of a huge demand-supply the pandemic and spur economic recovery.
mismatch), the auction weighted average rate The latest inflation statistics released by the Zim-
barely moved. Generally, under forces of demand babwe National Statistics Agency (ZimStat) show
and supply, when the demand for a commodity that price inflation is now raging havoc. Inflation
grows faster than its supply, the price shoots to as measured by ZimStat’s all-items Consumer
clear the market. This was however not common Price Index (CPI) increased by a mouth-watering
at the RBZ auction in 2021. All these examples 96.4% year-on-year in April 2022 relative to an
illuminate the serious flaws associated with the increase of 72.7% that was registered in the prior
RBZ auction. Recently, the Confederation of Zim- month, March 2022. This is the highest annual
babwe Industries (CZI) posited the same submit- inflation outturn in 10 months, that is, since June
ting that the current forex auction is not a real 2021 when annual inflation was recorded at
Dutch Foreign Currency Auction System as pur- 106.64%.
ported by authorities.

The average parallel market exchange premium The authorities exonerate themselves from the Source: ZimStat
which is the percentage difference between the currency and inflation crisis by associating the From a month-on-month perspective, price infla-
official and alternative exchange rates is now current instability mainly with human behavior tion increased by 15.5% in April 2022, an
hovering above 100% against the globally accept- (speculation) as they argue that the basic macro- increase of 9.2 percentage points from 6.3%
ed threshold for currency stability of at most economic fundamentals needed for stability are
20%. In short, this means that the US dollar is stable and sound. But is this assertion 100% * To Page 5
at least 100% more expensive in the parallel true? A close analysis of official statistics shows
market than what it is costing in the official that since the hurried ZWL re-introduction in Government steps
market. As a result of limited forex supply on 2019, exchange rate depreciation and rampant up 2022/23 summer
the auction market against rising forex demand as inflation growth are primarily driven by the cropping
shown by recurring forex allocation backlog, the actions of authorities; excessive liquidity (money
expensive parallel market has become the sole supply) growth in the economy. The latest RBZ preparations PAGE 15
supplier of forex demanded by the informal statistics show that the broad money supply grew
sector and the general public. The informal sector by 123.77% (year-on-year) in February 2022 after
constitutes a greater proportion of the total econ- another growth rate of 113.4% in the prior
omy with the International Monetary Fund (IMF) month. These growth rates of money supply are
estimating Zimbabwe to be at least 60% infor- excessive and unsustainable for a structurally
malized. Also, the increased forex demand in the rigid economy. Even if one adjusts for exchange
parallel market is emanating from other formal rate movements, the annual broad money growth
businesses that are not easily accessing the offi- rate is above 50% which is also unsustainable
cial market coupled with the rising price inflation and destabilizing. According to the father of
that is fuelling the chase for a strong greenback Monetarism, Milton Friedman, inflation is always
for value preservation. and everywhere a monetary phenomenon. As
RBZ introduced the forex auction system in June such, the quantity of money in an economy
2020 and promised that the system will greatly should generally move in tandem with the quanti-
help in the discovery of the true ZWL market ty of output produced in the real sector. Other-
price. However, 22 months have elapsed now wise, there will be too much money circulating
without sustained currency stability. Many ana- chasing too few goods.
lysts are attributing the failure of this auction
system to RBZ’s allotment of forex that is not It is excessive ZWL liquidity in the economy
available as well as a general lack of transparen Markets watch 27that is largely driving rampant price inflation

growth via exchange rate pass-through. This
PAGE

ZSE ASI 23,486.38 ZSE TOP 10 15,344.66 MEDIUM CAP INDEX 40,322.85 ZSE TOP 15 17,232.26 SMALL CAP INDEX 503,410.25 ZWL INTERBANK 155.1419
24,527.07 16,007.66 42,248.87 17,959.55 521,871.64 155.1419
25,742.59 16,832.30 44,144.69 18,861.41 527,806.88 155.1419
28,816.65 19,166.09 47,015.01 21,297.02 547,731.16 159.3482
29,440.85 19,558.84 48,170.97 21,740.00 576,134.42 159.3482
29,026.92 19,331.40 47,081.97 21,468.17 590,028.07 159.3482
23.59% 25.98% 16.76% 24.58%
17.21% 2.71%

Inn FFooccuuss 3The TAhXeiSAXViS -XFXrVida-yF1r8idFayeb2r9uaArpyr2il0220222

* From Page 2 arbitrage opportunities as these importers are discover the market-clearing price of the ZWL.
benchmarking the prices of their final goods at For instance, increasing transparency in bidding
recorded in the prior month. This April outturn the parallel rate. and allotment processes will attract many buyers
plunges the monthly inflation rate into dou- Furthermore, ZWL liquidity in the market is also and sellers of forex. This, supported by prudent
ble-digit territory breaking a 20-month single-dig- expected to remain high in 2022 as the govern- government policies that increase the use of ZWL
it monthly inflation streak that started in August ment increase spending to cushion the economy in domestic transactions creates value for the
2020. With salaries for many Zimbabweans large- and citizens from value erosion being caused by local currency.
ly constant and largely dominated by sliding inflation and impending poor staple harvest. Also, • There is a dire need for RBZ to reduce the
ZWL, many households are suffering as prices of some spending will be directed towards subduing increased money supply in the economy by
basic goods are now beyond their reach. Poverty the dire impacts being witnessed due to a undertaking open market operations and abandon-
levels have risen sharply as nearly half of the pro-longed Russia-Ukraine war. For instance, fuel ing quasi-fiscal operations (QFOs). The Treasury
population is reportedly choked by extreme pov- prices are skyrocketing. During the week, the should broaden its tax base and spend within its
erty. According to IMF, a third of the population Zimbabwe Energy Regulatory Authority (ZERA) limits.
is faced with food insecurity in 2022 as the astronomically increased the maximum pump • Strengthening institutions, legal frameworks,
country has experienced a poor 2021/22 cropping prices of fuel upwards with a litre of diesel now and public resource management systems to
season due to erratic rainfall patterns received costing US$1.71, a 6.9% increase from US$1.60 reduce leakages caused by public corruption and
across the country. set in March while that of petrol has increased illicit financial flows. This is key because in
by US$0.04 from US$1.59 to US$1.63. This calls 2021 the country received about US$9 billion as
In the outlook, I expect currency depreciation and for increased targeted productive subsidies to foreign exchange inflows, a record since 1980.
inflation to remain elevated as long as the Bank manufacturers and service providers because fuel However, the country is not enjoying exchange
remains adamant about liberalizing the auction is one of the key enablers of economic activity. rate stability that generally emanates from
market. The market is failing to achieve alloca- There are also possibilities of policy slippages as increased forex balances in the economy.
tive efficiency, that is, attaining an equilibrium authorities try to find ways of reducing the • Implementation of economic and structural
point where the price of a commodity is equal suffering of the electorate ahead of the 2023 reforms to reduce existing price distortions and
to the additional/marginal cost of producing it. watershed general elections. subsequently increased rent-seeking.
Why? Because economic agents are accessing As such, the government should quickly address • There is a need to lower public debt which is
forex on this market at an exchange rate (price) the current currency and inflation crisis before now in distress and unsustainable. This affects
that is lower than the additional cost of earning things get worse. Some of the ways to arrest the capital accumulation through constraining coun-
forex from forex thereby creating excess forex situation may include: tercyclical fiscal policies, heightened long-term
demand. In 2021, the country received record • Reforming the auction system to efficiently interest rates, higher distortionary tax rates, and
forex exchange inflows of about US$9 billion inflation.
with exports alone contributing US$6 billion.
However, this failed to stabilize the exchange rate
because the Bank is selling forex to importers at
an overvalued (cheap) rate thus creating massive

Transparency, accountability, the lack
of it and the Zimbabwe economy

Z imbabwe’s economic maladies feature The recent economic events in Zimbabwe change and a western puppet. For the RBZ’s
among the world’s worst alongside coun- informed the need to look at these concepts and part, the lack of accountability is not new to
tries like Venezuela, Cuba, and Lebanon to call the government to act on the deteriorating Mangudya’s tenure. It was the same case even
Zimbabwe’s economic maladies feature among economic environment intensified by the runaway during the Gono era, highlighted among others
the world’s worst alongside countries like Vene- exchange rate and high inflation. by his defense of the 2007/8 Farm Mechanisa-
zuela, Cuba, and Lebanon with hyperinflation and Recently addressing a rally in Epworth to cele- tion Scheme which has siphoned billions of dol-
currency depreciation standing out as some of the brate the by-election victory of ZANU PF’s can- lars from the country’s coffers despite only ben-
key elements in a complexity of structural prob- didate, President Emmerson Mnangagwa offered a efitting select political elites.
lems. If we take a decades-long view, Zimba- chilling warning to alleged economic saboteurs.
bwe’s current economic trajectory is quite pre- He said, “The exchange rate is being manipulated Whilst Pres- * To Page 5
dictable, and the impending collapse of the Zim- to cause inflation and bring anger on our people. ident
babwe dollar (“ZWL”) a foregone conclusion. Recently addressing a rally in Epworth to cele- Mnangag-
As unsustainable inflation levels measured at brate the by-election victory of ZANU PF’s can- wa is
96.4% in April 2022 (year-on-year), high external didate, President Emmerson Mnangagwa offered a accusing
debt above US$15 billion (from 2020 levels of chilling warning to alleged economic saboteurs. the
about US$13 billion), a forex crisis, and the He said, “The exchange rate is being manipulated alleged
double whammy of the pandemic and tensions in to cause inflation and bring anger on our people. econom-
Eastern Europe pushing the country to the brink We are taking tough measures against those ic sabo-
of collapse in 2022 - a year before the highly distortions. teurs
anticipated presidential elections, the government “We are closing banks and big companies work- and
has resorted to what it knows best, playing blame ing with other countries to destabilise our econo- making
games. my all for regime change.” it clear
A detailed scoping finds two key twin concepts
standing out as drivers of the economic decay. His statements come at a time the Reserve
These are transparency and accountability and in Bank of Zimbabwe(RBZ) closed operations of
this context the lack of it from the central gov- service providers such as Simbisa’s money
ernment and key economic institutions like the transfer service, Innbucks, and seized opera-
central bank. tions of Metbank and Rolink Finance as
These concepts are important pillars of democrat- authorised dealers in foreign currency
ic governance in modern societies. They are criti- trading.
cal for the efficient functioning of a modern
economy and for fostering social well-being. Such has been the case where the
Transparency implies openness and honesty and central bank and the government
accountability can be simply defined as a state of connive in blaming everyone else
being accountable. for the economic challenges
Expanded further, accountability refers to “the facing the country by using
obligation of or willingness to accept responsibili- tactics such as propaganda
ty or to account for one’s actions”’ according to where anyone who expresses
Webster’s English Dictionary. contrasting views is easily
labelled an agent of regime



Economic News & Analysis 5The AXiS XXV - Friday 29 April 2022

* From Page 3 tries (CZI) on the cur- tMugabe and the current one have both commit-
rency situation. The CZI in its paper called for ted three (3) cardinal sins which together forms
that the closure of banks and other top institu- the suspension of the foreign exchange auction he unholy trinity of economic disaster.
tions is not an independent work of the RBZ, he system and declared that a mono-currency was These are unwarranted expenditures to finance
ignores the government’s shortcomings which in place. government programs, thereby stoking money
directly impact economic growth. These include The RBZ, however, dismissed the report as supply, heavy reliance on commercial borrowing
violation of human rights, abuse of power by bearing the potential of destabilising financial to finance the budget deficit, and failure to diver-
state agencies such as the police, and corruption markets and economic stability of the country sify the export market - largely depending on
associated with shady deals involving government when in fact, the economy is already in a dire mining, agriculture, and the tourism sector for
officials. These actions are cited among the key state due to poor policy decision-making by forex inflows.
reasons pushing away foreign direct investment the apex bank. These unsound policy decisions Relying on a few sources for most forex earn-
(FDI) inflows into the country which ironically can be attributed in part to the expansion of ings leaves the country susceptible to global
have been plummeting since the birth of the the political influence over the Bank where shocks. For instance, the global coronavirus
second republic despite the “Zimbabwe is Open sympathisers of Mangudya argues that he is (COVID-19) brought an abrupt halt to the tour-
for Business” Mantra campaign strategy. being misdirected through political capture. ism sector, resulting in huge losses of forex earn-
The contrasting views by the industry’s largest ings for domestic economies, Zimbabwe includ-
Of the famed roads rehabilitation program, Econ- board and the RBZ is a clear indication of a ed.
omist Respect Gwenzi cautioned on the source of lack of transparency and accountability. With- The pandemic can just be seen as the ‘straw that
funding. He says that the construction of the out transparency and accountability, trust will broke the camel’s back’ rather than the cause of
roads is being funded by ZWL which the gov- be lacking between a government and those the country’s economic woes and the same goes
ernment has not earned (budgeted) and through whom it governs. The result would be social for the reverberating effects of the Rus-
Treasury Bills (TBs). instability and an environment that is less than sia-Ukraine war affecting the global economy.
conducive to economic growth. The first two sins highlight the weak foundation
TBs fuel money supply growth which is infla- Meanwhile, the Zimbabwean public bears the of an economy that is now collapsing in on
tionary,” he said. brunt of the crisis, with daily power cuts, sky- itself. The government and institutions like the
rocketing prices of fuel and essential goods RBZ should take responsibility.
“Worse, the government-linked contractors are becoming the new normal.
getting a preferential rate on payments and The government of the late President Robert
dumping the Zimdollar on the black market,
driving the exchange rate crazy.”

Last week, the RBZ dismissed with contempt a
report by the Confederation of Zimbabwe Indus

When you discipline with you get the
combine a an ethic of magical alchemy
culture of entrepreneurship, of great
perfomance

Havard Business School Press

Economic News & Analysis 6The AXiS XXV - Friday 29 April 2022

Hedge-seeking in Zimbabwe

Beat the currency with smart moves… asset type has a high intrinsic value and pays out
dividends regularly. This is so because there will
always be a need for housing, regardless of the
economic situation, and because when inflation
grows, so do property prices, and therefore the
amount a landlord can charge for rent is
frequently used as an inflation hedge. Real estate,
on the other hand, is illiquid since it is a physi-
cal asset.

Real estate investment trusts (REITs) are another
option to examine. REITs are more liquid assets
that may be purchased and sold on the open
market. REITs are real estate investment trusts
(REITs) that hold and manage commercial, resi-
dential, and industrial real estate assets.

The downside of real estate is the legal environ-
ment as well as the economic environment of the
macro-economy. While inflation rapidly and ran-
domly goes up, property and rental valuation take
time to adjust.

As Harare’s sour relations with the West power of their liquid assets. This translates to an The adjustment has to follow legal stipulates as
persists on issues to do with governance, annual return after-tax of about 156% required the government seeks to ensure the welfare of
political and electoral reforms as well as twholly counter a 61% inflation loss. As a hedge citizens. The adjustments also tend to be affected
Hedge seeking refers to an attempt to improve against inflation, stock markets usually play a by the depleted disposable incomes amid rampant
the value of your assets over time by at least as viable role. Stocks represent an ownership stake inflation, a sentiment not found in stock markets.
much as they will lose value to inflation or other in a business. Typically, as inflation rises, busi- Valuation of the properties will also be subdued
economic atrocities. Inflation is one of the big- nesses have to charge more for the goods and in real terms as hyperinflation triggers the scarci-
gest risks that may devalue any form of invest- services they sell, which increases their revenues ty of a hard currency. Scarcity improves the value
ment if not carefully planned. According to and in turn, can cause their stock prices to rise. of money, and therefore, property valuation on
Investopedia, in economics, inflation refers to a Stocks generally do a good job of keeping pace the basis of a hard currency will be lower as the
general increase in the prices of goods and with inflation. currency gets scarce.
services in an economy. When the general price Meanwhile, venturing into small businesses with
level rises, each unit of currency buys fewer In 2020, the Zimbabwe Stock Exchange recorded the expectation of beating inflation means you
goods and services; consequently, inflation corre- an annual return on investment of 1056% in have to reprice on a daily basis in nominal terms,
sponds to a reduction in the purchasing power of nominal terms, followed by 311% in 2021. This or you have to only accept a hard currency as a
money. Inflation, therefore, reduces the value of saw the bourse emerging as the best performing means of payment. With the Central Bank on the
dollars over time as prices for basic necessities stock exchange in Africa and the best asset class tail of every economic player shunning the local
rise, so we need more dollars in the future just to invest in locally. The stock market presents currency, this renders the second option undoable.
to buy the same things we can buy with dollars liquid assets in the form of stocks, and this Zimbabwe has ranked above 140 out of the 190
today. allows investors to safeguard their liquidity posi- economies in the ease of doing business, by the
People often invest to increase the value of their tion in a safe haven against inflation. The stocks World Bank.
money in the long run. Even after the effect of recorded significant returns in the past two years While other people may choose commodities as
taxes and inflation, we anticipate our dollars to as values chased exchange rate inflation. With an a hedge against inflation, which usually serves
increase by enough to generate additional dollars increased number of people seeking hedge in only to preserve value without significantly
when inflation is low. When inflation is rampant, stocks over the years, the high demand has sub- improving it, other vehicles of opportunities arise
however, our goal may shift from generating dol- sequently driven the share prices to all-time in an inflationary economy. One such opportunity
lars after inflation to ensuring that the value of highs. or venture is the acquisition of bank loans.
our dollars is at least preserved in the face of In essence, if someone held US$100 at the begin- Exchange rate inflation entails the loss of value
inflation. ning of 2021, this would have been translated to of a certain currency against another, which is
Zimbabwe has been hit with rampant hyperinfla- ZWL$12,000 on the parallel exchange rate (more usually a hard currency.
tion in each respective decade since indepen- realistic). If this money was invested on the Zim- Therefore, as a hedge, one can simply attain the
dence. Recently, in 2020 the country recorded babwe Stock Exchange (ZSE) into an average hard currency and store it as a preservation
annual inflation of a whopping 557%, followed counter, this would have risen to an average of method. However, this can be done on a com-
by 61% in 2021. This has been attributed to a ZWL$49,320 based on an average growth of mercial or big scale. One can acquire a bank
weak official local currency commanded onto an 311% at the end of 2021. Based on the closing loan at a fixed interest rate, use the loan to
economy which is a net importer- a sentiment parallel market exchange rate, ZWL$49,320 acquire the hard currency, then hold the hard cur-
that has never worked in the history of the uni- would translate to US$247, a 147% growth in rency for a timed period before translating it
verse. Comparatively, on the formal currency real terms. It should be imperative to note that back to local currency at a premium when the
market the ZWL lost almost -400% in 2020, when investing or preserving liquid assets for the rate has sky-rocketed and pay off the loan at the
compared to approximately -450% on the parallel medium to long term, the asset ought to be fixed rate.
market. expressed in terms of a hard currency, and in On the bottom line, investors constantly make
In 2021, the local currency depreciated by -33% Zimbabwe, we use the United States Dollar. risk-reward choices in order to optimise growth
in the formal currency market against -67% in Meanwhile, one would argue about the viability while staying within risk parameters. When infla-
the informal currency market. Zimbabwe as a of other asset classes in preserving value, includ- tion is low, it is almost impossible to ignore
highly informalised economy depends highly on ing real estate and small businesses. Investing in because it affects everything, and even the safest
the informal means of survival, including access real estate comes with a slew of benefits. This investments can produce positive after-inflation
to the foreign currency. This has resulted in the returns.
thriving of the parallel currency market and it is However, when inflation rises, inflation hedging
seen as the most realistic measure of value by becomes more important, especially for older
the economic players. investors who rely on their investments for
Nevertheless, investing and surviving in Zimba- income.
bwe means one needs to be aware of these weak Understanding the consequences of inflation and
economic fundamentals and thus hedge against the sorts of investments to consider or avoid, as
the highly possible devaluation of any or all of well as all of the other risk-reward components
their investments. With an annual inflation of of investing, becomes critical.
61% as of December 2021, one needs a net
after-tax return of 1/0.39 to preserve the buying

Economic News & Analysis 7The AXiS XXV - Friday 29 April 2022

3 trends Zim companies should gravitate to by 2025

T his article will examine three significant likes of the Econet 5G network. percent as a result of improved operational effi-
themes that Zimbabwean businesses should Wearers will have direct access to internet appli- ciencies and sustained cost control initiatives.
be aware of. These trends indicate the cations geared for an enhanced or augmented It is reasonable to conclude that internet firms
world's direction in the coming years, as seen by reality experience thanks to the technology being such as Liquid Telecom and Telone, to mention
the rise in investment in these areas. developed to connect glasses to the internet. They a few, should not slumber but rather ride the
Reading glasses to be connected to the internet will also be able to manipulate the interface wave and become pioneers in Zimbabwe before
More than six (6) out of 10 people wear glasses without touching it thanks to eye-tracking tech- the market becomes saturated. Google has already
or contact lenses around the world. Glasses or nology. introduced similar technology with Google Glass
contact lenses are worn by the great majority of Zim Outlook: Econet, which has spearheaded and is currently working on connected contact
the population. It is quite rare for an elderly several innovation initiatives in the past, is lenses. Following the lead of top companies like
person to not wear glasses or contact lenses. The expected to invest in this technology in the Google is imperative for success in the market.
major trend to 'keep an eye on' in this regard is future, according to Equity Axis analysts. Econet
research into reading glasses as well as the inter- had a positive financial year in 2021, according Zim Outlook: Econet, which has spearheaded
net. Econet just became the first Zimbabwean to its annual statement. Revenue climbed by 23% several innovation initiatives in the past, is
business to offer 5G internet services, establish- to ZW$35 billion from the previous year, owing expected to invest in this technology in the
ing them as a market leader in internet innova- partly to a 47 percent growth in data usage. The future, according to Equity Axis analysts. Econet
tion among Zimbabwe's telecommunication com- profits before interest, taxes, depreciation, and had a positive financial year in 2021, according
panies. For this technology to work efficiently, amortization (EBITDA) margin increased to 52 to its annual statement. Revenue climbed by 23%
there is a need for good connectivity like the
*To Page 8

Term of The Week

Volatility -Square the deviations
-Add the squared deviations together
Dre'etfiunrnitsiofonr: a statistical measure of the dispersion of -Divide the sum of the squared deviations by the number of
a given security or market index. In most cases, data values.
the higher the volatility, the riskier the security. In the Types of volatility: there are two main types of volatility
securities markets, volatility is often associated with big namely:
swings in either direction. Historical volatility: This measures the fluctuations in the secu-
rity’s prices in the past. It gauges the fluctuations of underlying
Understanding volatility: volatility often refers to the securities by measuring price changes over predetermined peri-
amount of uncertainty or risk related to the size of chang- ods. It is the less prevalent metric compared to implied volatility
es in a security's value. because it isn't forward-looking.
When there is a rise in historical volatility, a security's price will
A higher volatility means that a security's value can poten- also move more than normal. At this time, there is an expecta-
tially be spread out over a larger range of values. This tion that something will or has changed. If the historical volatili-
means that the price of the security can change dramati- ty is dropping, on the other hand, it means any uncertainty has
cally over a short time in either direction. A lower volatili- been eliminated, so things return to the way they were.
ty means that a security's value does not fluctuate dra- Implied volatility: also known as projected volatility, is one of
matically, and tends to be steadier. the most important metrics for options traders. It refers to the
volatility of the underlying asset, which will return the theoreti-
While variance captures the dispersion of returns around cal value of an option equal to the option’s current market
the mean of an asset in general, volatility is a measure of price.
that variance bounded by a specific time. Thus, we can As the name suggests, it allows traders to decide of just how
report daily volatility, weekly, monthly, or annualized vola- volatile the market will be going forward. It also gives traders a
tility. way to calculate probability.

How it’s calculated: volatility is often calculated using
variance and standard deviation.
-The standard deviation is the square root of the variance
-Find the mean of the data set

Economic News & Analysis 8The AXiS XXV - Friday 29 April;2022

*From Page 7 The Volkswagen Group remained in second
place, while BYD rose four spots to third. BYD
to ZW$35 billion from the previous year, owing Zim Outlook: Zimbabwe's energy crisis is a delivered over 600,000 units (excluding buses) in
partly to a 47 percent growth in data usage. The severe issue for the country. Many Zimbabwean 2019, up from 400,000 in 2020. After experienc-
profits before interest, taxes, depreciation, and businesses are now investing in solar energy to ing obstacles in 2019 and 2020, global EV sales
amortization (EBITDA) margin increased to 52 help deal with the energy crisis issue in the resumed in 2021. We predict EV sales to revert
percent as a result of improved operational effi- country, and the majority of solar panel compa- to more typical growth this year, reaching rough-
ciencies and sustained cost control initiatives. nies in Zimbabwe import cheap panels from ly 9,5 million units, with greater numbers provid-
It is reasonable to conclude that internet firms China. According to EA experts, as the cost per ed supply and logistics difficulties are handled.
such as Liquid Telecom and Telone, to mention watt of solar decreases, Zimbabwean solar enter- Zim Outlook: Zimbabwe consumes 7.6 million
a few, should not slumber but rather ride the prises would be able to import from a variety of litres of fuel per day (petrol and diesel com-
wave and become pioneers in Zimbabwe before nations other than China in the coming years bined), and given that fuel prices are continuing
the market becomes saturated. Google has already which will result in wider choice and less pres- to rise owing to supply chain bottlenecks, it is
introduced similar technology with Google Glass sure on the national energy grid powered by prudent for Zimbabwe to begin the transition to
and is currently working on connected contact hydro-electricity. an electronic vehicle sector. A single charge for
lenses. Following the lead of top companies like Individuals are expected to spend more on solar, an electric car covers 400 kilometers, whereas a
Google is imperative for success in the market. and more corporations are expected to follow in full tank for a fossil fuel vehicle covers 1200
the footsteps of OldMutual, Zimplats, and Insscor kilometers, implying that an EV need just three
UN delivers climate plan to reduce by investing in solar energy. In the next years, charges to cover the same distance.
emissions caused by global shipping most businesses will be self-sufficient and will ZERA had planned to establish commercial EV
industry not rely solely on power from Zesa, resulting in
increased capacity utilization in many businesses. fleets (car rentals and taxis) in 2019, but Covid
19 stymied its plans. We can only hope that now
Over 170 countries agreed at discussions that the World EV Sales to Grow is the right time to embark on the EV journey
UN's maritime organization will draft a strategy and plan for the future.
to reduce greenhouse gas emissions by 2025.
This can be seen as an adequate response to the
Paris Climate agreement which prioritized the
urgent need for reductions in carbon emissions to
keep warming to safe levels. Countries at the
International Maritime Organization have taken a
crucial step to limit the climate impact of global
maritime transport. At a historic session in
London of the IMO’s Marine Environment Pro-
tection Committee (MEPC),173 Member States
adopted an initial strategy to reduce the carbon
emissions of global shipping by at least 50%
from 2025 to 2050.

Zim Outlook: Zimbabwe is a landlocked country, In 2021, global EV sales reached 6,75 million
and the proposal to reduce emissions caused by units, up 108 % from 2020. Passenger cars, light
global shipping in the future will have an impact trucks, and light commercial vehicles are all
on Zimbabwe because it is landlocked and Zim- included in this volume. EVs (BEV and PHEV)
babwe is a net importer of many goods and accounted for 8.3% of worldwide light vehicle
resources, so reducing emissions in the global sales in 2018, compared to 4.2% in 2020. BEVs
shipping industry will cost shipping companies accounted for 71% of overall EV sales, while
more as they find ways to ship while using less PHEVs accounted for 29%. Over the crisis year
polluting fuel. The unintended effect is that Zim- of 2020, the global auto market improved by
babwe, like any other landlocked country, will only 4,7%. EVs were resilient to setbacks in auto
most likely witness a rise in shipping costs, per- demand and supply, just as they were in 2020.
haps leading to an increase in the price of The astounding year-over-year growth rate of 108
imported goods as suppliers pass the cost burden % must be viewed in the context of the low base
to customers. This might actually promote the volume of 2020. Regulations and Covid-19
increase in local production and discouragement caused worldwide EV sales to fall below the
of imports in the long run. long-term trend in 2019 and 2020, but they
recovered in 2021. While the year-over-year rise
Reduction of Cost of Solar Panels per appears to be dramatic, the volume forecast for
Watt 2021 is still reasonable.

Over the last decade, the cost of solar panels has
dropped considerably, and solar systems now
offer more value to homes than they ever have.
Solar panels, however, are only one part of a
comprehensive solar system.

Solar panels have become significantly cheaper Tesla was part of it, dominating the OEM EV
over the last decade as the sector has matured rankings with 936 000 deliveries, 436 thousand
and reached mass production on a worldwide more than 2020. After the Toyota Camry, the
scale. Solar panel prices have dropped by around Model-3 became the second most popular midsize
90% since 2010, while worldwide solar deploy- nameplate, with 501 000 units sold.
ment has increased by over 400%, resulting in
remarkable price reductions across the entire
global solar supply chain.

Economic News & Analysis 9The AXiS XXV - Friday 29 April;2022

ZIMCODD commends NDS 1 strides on digital economy

T he Zimbabwe Coalition on Debt and Development The government also set up a data gap between the rural and urban-based people.
(ZIMCODD) says the National Development Strategy 1 backup system at the Reserve Bank According to the latest data from POTRAZ,
(NDS1) performed fairly well on the key priority area of Zimbabwe in Bulawayo which is networkgap between the rural and urban-based
five which focuses on the promotion of a digital economy. expected to secure and store public people. According to the latest data from
In its research project titled National Development Strategy 1: finance management records. POTRAZ, network coverage remains lower in
Abridged Civil Society Monitoring Mechanism (CISOMM) Through the introduction of ICT in rural areas, especially much lower in rural areas,
Report, the organisation said the sector performed well despite primary and secondary schools in especially for LTE (4G), and more is still needed
the hurdles encountered in collecting state data and interopera- 2021, there was an improvement in to be done to provide broadband to rural and
bility. ICT literacy thus improving digital other underserved areas.
“The Priority Area on Digital Economy performed fairly well literacy skills.
although there is limited access to state data and interoperabil- ICT-based public services improved. The graph below shows Mobile Net-
ity,” ZIMCODD said in its report. The government was more active in work Population Coverage stats by
“As per the Digital Economy and Society Index (DESI) engaging with the public through POTRAZ
dimensions, the NDS1 is on the right track with respect to online services as government depart
digital economy.” ments and state enterprises have web- Also, the government has scored zero with
At the launch of NDS1, the Ministry of Information and sites and service interactive platforms regards to finishing up the television digitalisation
Communication Technology proclaimed a ZWL8 billion to that give online attendance to the programs and is also silent regarding the National
support digital infrastructure development and digital skills general populace. According to ZIM- Geospatial and Space Agency. In 2021, the gov-
capacity improvement. CODD, 2021 saw an improvement in ernment revealed that the first Zimbabwean satel-
The government promised to support the digitalisation of the government to citizen communication lite, the ZIMSAT-1, will be launched in 2022.
economy through increasing mobile and data penetration, wid- and government to business commu-
ening broadband area coverage, integration of digital technolo- nication through the use of the inter- “Congratulations and
gy, and ICT literacy through investments in the digitalisation net which it dubbed, “A clear indica- well done for this
sector. tion towards effective and mature first national space
NDS 1 aimed at increasing internet access through improving e-government.” project which lays
mobile phone penetration, widening broadband area coverage, Some notable achievements were also the foundation for
and increasing information communications and internet scored on the integration of digital space and scientific
access centres. technology through investments in programmes.
Data released by the Postal and Telecommunications Regula- ICTs. The government through
tory Authority of Zimbabwe (POTRAZ) shows that mobile TelOne rolled out a broadband and
phones and data penetration were on the upsurge during all convergence program in 2021 across
the quarters of 2021 and increased from 2020 statistics. the country. The latest statistics from
POTRAZ show that international
internet connectivity also increased.

This is indeed a
major step in
enhancing the
deployment of earth
observation technolo-
gies in supporting
the National Devel-
opment Strategy,” the
President, Emmerson
Mnangagwa, said at
the launch of the
Zimbabwe Science
Park and commissioning of the Zimbabwe
The government also increased information communications Furthermore, the government made National Geospatial and Space Agency (ZNGSA)
and internet access centres beyond Harare. In January this further strides in improving interoper- on 13th September 2021.
year, the government set up new three ICT access facilities ability among network providers
in Bulawayo at Elangeni Public Service Training Centre, Bul- which made it possible to buy, for Interoperability is still at the early stages as 2021
awayo Data Backup Centre, Public Finance Management example, Netone airtime using Eco- capped with the sending of money from One
System Centre as well as an ICT lab per school for Waterford cash. wallet to Ecocash or Telecash still unfounded.
and Emakhandeni. The ICT sector has transformed and Zimbabwean data prices remain high in the
evolved due to the COVID-19 pan- region and this is retarding the growth of the
IN 2021, A total of 5 new 2G, 12 new 3G, and 37 LTE demic which resulted in increased digital economy as prices are beyond the reach
eNode Bs were deployed bringing the total number of base demand and acquisition of ICT of the general public.
stations to 9,099 from 9,045 recorded in the second quarter services by consumers. Due to the To further grow the sector, the government
of 2021, anchoring internet access throughout the country. outbreak of the COVID-19 pandemic, should step up to subsidise data prices while dig-
digitalisation is now more important ital infrastructure developments speed up in both
The graph below shows total mobile base stations than ever as the pandemic continues rural and urban areas.
growth in 2021 to transform how people live, work,
and interact with one another. NDS 1
targets a digital economy by 2025.

Challenges Another mechanism that can be employed by the
government is to enable duty-free on the importa-
However, regarding the improvement tion of ICT gadgets to encourage wide usage.
in ICT literacy across the country, Currently, imported cellular telephone handsets
rural settings largely lag due to chal- attract a 25% tax and a further proposed US$50
lenges with respect to poor ICT infra- levy on cell phones.
structure. Most rural schools have no ZIMCODD also recommended the government to
access to electricity, let alone comput- prioritise the training of ICT personnel for
ers which widens the ICT literacy onward cascading of the skills to all and sundry
.



Economic News & Analysis 11The AXiS XXV - Friday 29 April;2022

KZN floods trickle-down effects felt in Zimbabwe

(US$656 million) in Sasol also announced it would donate R7.5-mil-
infrastructure damage lion to support emergency relief efforts in Kwa-
and a national state of Zulu-Natal.Companies will be inclined to show
disaster was declared. their CSR side by being supportive of the drive
to help reduce the effects of the floods. This will
It can not be a coinci- serve as an important lesson for many companies
dence that the price of that are only focused on profit-making as opposed
gasoline climbed by to actually making a difference in society as well.
3% from $1.59 to It is safe to expect Zimbabwean companies with
$1.63 and the price of operations in SouthAfrica to also push forward
diesel increased by 7% their CSR drive to support the flood victims and
from $1.60 to $1.71 the South African economy as a whole.
around the same time
as the floods in South Toyota
Africa. The Zimbabwe
Energy Regulatory The floods in KwaZulu-Natal are expected to
Authority (ZERA) reduce the car industry's contribution to South
argues that price Africa's economy this year. After flooding this
increases were prompt- month left a trail of destruction across the prov-
ed by price patterns on ince, Toyota South Africa Motors (TSAM) con-
the worldwide market, firmed that its facility in Prospecton, south of
although this may not Durban, had suffered substantial damage. Since
be the sole explana- April 11, production at the plant has been halted,
tion. and TSAM has offered no indication of when it
will resume. "Plant operations have been halted
Supply Chain while an assessment and clean-up is carried out.
issues When the plant enters the restoration phase, the
shutdown will be extended," it stated. “The
T he majority of the time, macroeconomic The supply-chain damage caused to the TSAM facility has not yet
events in South Africa have an impact on disruption in KwaZu- been fully quantified. A more accurate forecast
Zimbabwe. When it comes to the effects lu-Natal following the concerning the resumption of production will be
of economic events in South Africa on the mac- recent floods has had provided once assessments are completed.”
roeconomic climate in Zimbabwe, the phrase "serious" consequences The fact that TSAM was the best-selling automo-
"coincidence" does not apply. The arrest of for SA trade especially bile brand in South Africa for the 42nd consecu-
former President Jacob Zuma for contempt of fruit exporters, with tive year in 2021, with a market share of 25.4
court caused a wave of public unrest in South some grapefruit grow- %, demonstrates the importance of TSAM to the
Africa's KwaZulu-Natal and Gauteng provinces ers already suspending performance of the country's automotive industry
from 9 to 18 July 2021. Protests over Zuma's harvesting as a result. and its contribution to the economy. This means
detention sparked widespread rioting and looting, Heavy rain and mud- that Toyota automobiles accounted for one out of
much of it allegedly perpetrated by those slides have wreaked every four vehicles sold in the local market last
opposed to Zuma and fueled by job losses and havoc on freight train year. With 15 008 vehicles sold in March, it
economic disparity exacerbated by the lines leading to Durban's port, which was halted attained an average market share of 30% in the
COVID-19 pandemic. last week due to flooding. Around 40 ships were first three months of 2022, setting a new sales
Looking at the figures above, we can see that still waiting to dock in Durban. According to record. According to Theron, about 70% of
fuel prices in Zimbabwe climbed by 3% for data from trade economics, Zimbabwe imported TSAM's vehicles sold in March were either man-
petrol and 2% for diesel in the month of about $2.49Billion worth of goods from SouthAf- ufactured or assembled locally at the Prospecton
August-21, the sharpest increase compared with rica meaning that this supply chain bottleneck plant. The floods, however, influence TSAM.
the previous 5 months. It is not a coincidence caused by the floods in SouthAfrica will have an Toyota Zimbabwe imports some of its cars direct-
that fuel prices in Zimbabwe rose sharply a few impact on the Zimbabwean economy which ly from the Toyota Plant in SouthAfrica and what
weeks after this unrest since the instability depends on imports. it means with this flood is that Toyota Zimbabwe
disrupted numerous supply chains, and some of will have to find other countries to import from
Zimbabwe's fuel is imported via South African Relief fund in SA due to the reduction in production in SouthAfrica
channels. Surprisingly, the price of crude oil per caused by the floods in SouthAfrica.
barrel fell between July and August (during the Small Business Development Minister Stella
civil instability in South Africa), implying that Ndabeni-Abrahams has launched a relief scheme Other Car manufacturers affected also
global oil prices had nothing to do with the rise for small businesses. Floods in KwaZulu-Natal
in Zimbabwean fuel costs. have caused damage worth almost a billion rand. The floods in KwaZulu-Natal, according to Mikel
A year later In April 2022, days of heavy rain The business sector has also been affected. The Mabasa, CEO of the automotive business council
across KwaZulu-Natal in southeastern South minister says they are providing R10 million to Naamsa, have not only damaged Toyota as a
Africa led to deadly floods. Particularly hard-hit informal traders. In 2021 the South African gov- local manufacturer situated in that province but
were areas in and around Durban. At least 435 ernment provided tonnes of maize meal as sup- have also caused delays in imports and exports
people died across the province, with an port to Zimbabweans who were affected by the due to disruptions in the Port of Durban's opera-
unknown number of people missing as of April tropical cyclone Idai 2019. Whether the Zimba- tions. According to Mabasa, BMW has approxi-
21. Thousands of homes were damaged or bwean government will also extend such a ges- mately 300 export vehicles stuck on trains head-
destroyed. Critical infrastructure, including major ture towards SouthAfrica since the country has ing for the Port of Durban, while Ford has
roads, transportation, communication, and electri- experienced floods is highly unlikely but it is the approximately 400 export vehicles stuck on trains
cal systems, was also impacted by the flooding, right move for bilateral relations to continue bound for the Port of Durban. He is unsure what
and this damage greatly hampered recovery and strong. effect this will have on South Africa's motor
relief efforts. It is one of the deadliest natural industry's export performance this year, but
disasters in the country in the 21st century, and How businesses are fairing: SASOL believes the Port of Durban will be impacted
the deadliest storm since the 1987 floods. The only temporarily.
floods have caused more than R10 billion Due to the impact of heavy rains and floods in The floods have had an impact on logistics
the KwaZulu-Natal region, South Africa's Sasol because nearly 800 containers that need to be
Ltd declared force majeure on the shipment of transferred are languishing at the Port of Durban,
some chemical products, potentially hurting its while ships sit offshore, presumably carrying
fourth-quarter volume outlook. The level of infra- automotive components or other automotive prod-
structure damage and the timeliness of the reha- ucts. Many of the brands available in South
bilitation and restoration of major infrastructure Africa were already under pressure and anticipat-
and utilities could have an impact on Sasol’s Q4 ing a slowdown in April sales because of the
FY22 volume outlook according to an internal Russian invasion of Ukraine, particularly from the
statement. Due to the extension in time on ship- momentum the new vehicle market has built up
ments, it means some Zimbabwean companies since the beginning of this year, the flood will
that import chemicals from Sasol will be affected only make it worse.
as well and this will affect their productivity as
well essentially affecting their operational capaci- *To Page 12
ty.

Economic News & Analysis 12The AXiS XXV - Friday 29 April 2022

*From Page 11 to see some Zimbabwean employees facing the as well as a cloth warehouse, were damaged in
SA's automobile industry contributed 4.9 percent axe and this could potentially have an impact on the floods that hit KwaZulu-Natal this month.
to GDP in 2020, accounting for 18.7 percent of some funds that they send back to Zimbabwe for But TFG says the flood damage has not been
the country's manufacturing output (2.8 percent their relatives back home material.“These damages are not considered to be
manufacturing and 2.1 percent retail). Vehicle and material in the context of the group’s South Afri-
automotive component exports set a new high of Foschini Group expects a profit surge, can operations and all affected stores have since
R175.7 billion in 2020, accounting for 13.9 per- says KZN flood impact is not material resumed trading. The group has an appropriate
cent of South Africa's total exports. insurance cover and has notified its insurers
In a trading update for the year to end-March, accordingly,” said TFG. The group reported a
The Toyota South Africa Motors (TSAM) plant retailer The Foschini Group (TFG) says its head- strong trading performance in South Africa, the
manufactures Hilux, Fortuner, Corolla Cross, and line profit should be more than 692.6 cents per UK, and Australia in the second half of the
Corolla Quest models, and employs 7 200 share, compared to 197.9 cents per share in the financial year. This offset the impact of the July
people. Flooding also impacted the Toyota plant previous year. Their brands offer a variety of unrest in KwaZulu-Natal, as well as an R2.7
during heavy rains a few years ago, and, lifestyle products including clothing, jewellery, billion goodwill impairment at its TFG London
although it was not damaged during the unrest in cellphones, accessories, cosmetics, sporting appar- operations. Companies with good insurance
July last year, Toyota had to temporarily suspend el, homeware, and furniture from value to upper covers like this one will bounce back in no time.
operations. The flooding could not have come at market segments. Each brand offers a distinctive In conclusion, the floods in SouthAfrica will
a worse time for the motor retail industry, which proposition to its customers. The company, which have an impact on the Zimbabwean economy
is still recovering from the blow delivered by the also owns American Swiss and various other directly and indirectly.
Covid-19 pandemic. Job losses are expected in retail brands, also confirmed that 36 of its stores,
the industry and considering that many Zimba-
bweans work in SouthAfrica, it can be a surprise

Monthly inflation hits fastest pace since July 2020,
at 15.5% in April

In the face of soaring inflation, the monthly average basket price also keeps on expanding, further eroding
the values of income for most households. The Total Consumption Poverty Line (TCPL) for Zimbabwe stood
at ZWL11,363.46 per person in April
2022, up 17.1% when compared to
the March 2022 figure of
ZWL9,708.15.

I nflation in Zimbabwe remains red hot as con- The monthly outturn marks inflation’s fastest rise This means that an individual required that much
sumer prices increased sharply to 96.4 percent since July 2020 when it was recorded at 35.5 to purchase both non-food and food items as of
in April year-on-year, compared to 72.7 per- percent and the first time it reached the two-digit April 2022 in order not to be deemed poor. This
cent in March 2022 amidst a surge in fuel prices levels in nearly two years (20 months). represents an increase of 17.1 percent when com-
tied to Russia’s invasion of Ukraine whose “The month-on-month Food and Non-Alcoholic pared to the March 2022 figure of ZWL9,708.15.
effects are reverberating worldwide through sup- Beverages inflation rate stood at 18.5 percent in A week before the April CPI data was released,
pressing supply chains which in turn trigger April 2022, gaining 12.5 percentage points on the the Reserve Bank of Zimbabwe (RBZ) conceded
higher prices. March 2022 rate of 6.0 percent,” ZimStat said in that its initial inflation targets for the year will
While inflation is up across much of the world an accompanying statement. be missed. The target range as set in the 2022
as economies share supply-chain problems, Zim- “The month-on-month non-food inflation rate Monetary Policy Statement was annual inflation
babwe’s inflation was already under pressure stood at 13.3 percent, gaining 6.8 percentage of between 25-35 percent by year-end and to
before the escalation of the Russia-Ukraine war points on the March 2022 rate of 6.5 percent.” average below 3 percent monthly inflation in the
as the overstretching Zimdollar depreciation In the face of soaring inflation, the monthly aver- second half of 2022.
weighs on the pricing dynamics in the economy. age basket also keeps on expanding, further erod- Now the Central Bank sees inflation closing
The rate of change in the exchange rate and ing the values of income for most households. December 2022 at 71.80 percent, which however
inflation overwhelms wage growth triggering the ZimStat data shows that the Total Consumption appears to be an understatement considering the
threat of social unrest as most people are left Poverty Line (TCPL) for Zimbabwe stood at rate at which the Zimdollar is tumbling on the
stranded and failing to meet the increasing cost ZWL11,363.46 per person in April 2022. multiple currency markets.
of living.
Whilst the monetary authorities have continued to
cast a blind eye on the structural rigidities affect-
ing the economy such as a poor monetary policy
framework, the reality on the ground dictates that
much needs to be fixed at home to contain the
runaway exchange rate and bring back inflation
to sustainable levels.
Data released by the Zimbabwe National Statis-
tics Agency (ZimStat) also shows that the month-
ly CPI spiked to 15.5 percent in April gaining
9.2 percentage points on the March 2022 rate of
6.3 percent. The CPI is a key indicator of infla-
tion, defined as the sustained rise in the cost of
living.

13

Economic News & Analysis 14The AXiS XXV - Friday 29 April 2022

Zim’s April 2022 Inflation Review & Outlook
I n what comes as the highest monthly
cumulative price change since July 2020’s Housing and utility challenges moving minimal value loss position that arises
35% setback, April 2022 realised a 15.55% from exchange rate dynamics.
In what comes as the highest monthly cumula- As the country crawls into a chilly winter In the case of utilities, energy demand in gen-
tive price change since July 2020’s 35% season, the need for pre-seasonal infrastructure eral traditionally increases at this time of the
setback, April 2022 realised a 15.55% change preparations has been met with inflationary year, especially from increased heating appli-
in ZIMSTAT’s CPI data. Compared to a year pressure that has manifested in different forms ance use. With high and rising natural gas and
earlier, April 2022’s headline inflation stood at in the period under review. Also, as leased solid fuel costs as reflected by ZERA’s month-
96.43% - an alarming uptick when compared property demand gradually expands in urban ly price reviews, this component of CPI is
with March 2022’s 72.70%. education hubs such as Harare, Bulawayo and likely to rise for another month or two.
Bearing this year’s inflation upsurge in mind, Gweru, tenant volume upsurges bring about a
inflation-targeting and any State announce- need for improved living amenities. Agricultural implications
ments relating to such efforts are likely to fall Naturally, with both formal and informal cur-
on deaf ears and be interpreted more as poli- rency market exchange rates shifting frequent- April’s inflation data highlights an interesting
ticking than genuine attempts to slow-down ly, housing repair and maintenance costs are agricultural development where animal drawn
foundation-level stability of Zimbabwe’s econ- nudged higher. As a result, composite rental vehicle costs expanded by about 20% com-
omy. expenses swell as property owners chase a pared to a month earlier. What this indicates
is:

• Between access and pricy entry costs,
mechanised crop harvesting remains out of
reach for a sizeable portion of farmers in Zim-
babwe;
• Consequently, manual labour in the
form of livestock-centred harvest equipment
emerges as a more affordable alternative. But
high seasonal demand creates shortages, hence
April 2022’s animal drawn vehicle cost
growth.

Parallel market mayhem

Taking a closer look at the country’s composite basket of consumer goods, April’s top The March-April 2022 period has seen unprec-
five inflation drivers were: edented ZWL depreciation relative to the US$,
Restaurants & Hotels with the local unit losing as much as 50% in
which on average became 25.76% more expensive, mainly due to cost growth among value. Considering the dominance of parallel
accommodation facilities and consumption-oriented centres such as cafés; market price benchmarking in Zimbabwe, the
Housing, water, electricity , gas and other fuels inflationary effect has been tangible in differ-
which on average became 22.17% more expensive as rental costs have trended ent parts of Zimbabwe’s economy.
upwards; As a result, hedge-seeking behaviour accelerat-
Education ed in the form of ZSE activity with the All
with its 19.15% general price level increase that falls in line with the upcoming Share Index up 172% as of April 27th this
resumption of the national academic calendar; year. With the ZSE’s market cap fast-ap-
Food and non-alcoholic beverages proaching ZWL4 trillion, speculation has
with an 18.47% price increase fuelled by bread, cereals, oils and fats – CPI compo- emerged of an impending bubble burst.
nents prone to negative global developments;
Alcoholic beverages & tobacco Inflation Outlook
which on average became 15.35% more expensive as beer and wine prices in particu-
lar crept higher in April. The continued inaction by monetary authorities
allows currency markets to speculate uncon-
trollably at the expense of pricing stability and
consumer welfare. Failure to strategically navi-
gate these uncertain times equates to commer-
cial losses which build-up and collectively
contract economic development. Consequently,
Zimbabwe’s 2022 GDP forecasts ranging from
3.7%-5.5% are likely to be revised downwards
in Q2 2022 if ongoing conditions persist or
deteriorate.

Did you know?

Zimbabwe has a mixed economy in which there is limited private free-
dom, as the econonmy remains highly controlled by the governement.

The main pillars of the economy are agriculture, mining and tourisim
which have succeeded in developing strong industries.

Business News & Analysis 15The AXiS XXV - Friday 29 April 2022

Government steps up 2022/23 summer
cropping preparations

Arcadia Lithium Project, Harare gramme through training and the inclusion of Masuka.
agrochemicals and water retention enhancers in The country received a bumper harvest in
A s the global threat of possible food inse- packages. 2021, but the possibility of that happening
curity and hunger continues to worsen, the The Pfumvudza programme was introduced in during the current summer season is highly
government of Zimbabwe has already 2020, as a way of helping boost maize produc- unlikely, given the erratic rainfall that is
started preparations for the 2022/2023 summer tion and tonnage. According to Zimbabwe’s being experienced all around the country.
cropping season instead of August as has been agriculture second assessment report, yields for However, the early preparations for the
the case. smallholder farmers who practised this approach coming season may not give the anticipated
During a post-cabinet briefing held earlier this stood at 5.28 tonnes per hectare (t/ha), com- results if the rain season is as bad as the
week, Minister of Lands, Agriculture, Fisheries, pared to 1.16 t/ha for farmers who used the current one, so what is really needed is a
Water and Rural Development, Dr Anxious conventional tillage. constant electricity supply, water and fuel to
Masuka said that this was going to be a way of The number of people under the presidential farmers.
dealing with the adverse effects of climate input programme popularly known as command Meanwhile, Cabinet approved the new selling
change, as well as geopolitical conflicts that have agriculture has been revised upwards, from 2.7 process of grain in order to help maintain
disrupted global supply chains for grain and agri- million farmers last year, to three (3) million farmer viability and profitability as well as
cultural inputs. farmers in the coming year, while ensuring that productivity, in line with the current econom-
Plans are already underway to accelerate timely provision of fertilisers, seed and tillage ic realities.
climate-proofing of the Pfumvudza/Intwasa Pro services are made. “A good price that promotes sustainable
There is also going to be the facilitation of growth of a particular value chain is that
maize for small grains swap arrangements for which allows the farmer to realize at least a
farmers by the Grain Marketing Board (GMB) 15% profit margin,” said Masuka.
as well as expediting irrigation development to The new floor producer prices for maize and
cover at least 50 000 hectares per year. traditional grains have been set at ZWL 75
“Cropping targets for the 2022 / 2023 summer 000 per tonne, up from ZWL 58 553 for
season include 3 million metric tonnes for maize and ZWL 70 263,90 for traditional
maize; a combined 467 000 metric tonne (mt)t grains set earlier.
for traditional grains; 140 000 mt for soy- Soya bean floor producer price is set at
abeans; 82 500 metric tonnes for sunflower; and ZWL 171,495.00 per metric tonne, while the
350 000 mt for groundnuts, with cotton and sunflower floor producer price is set at ZWL
tobacco production also expected to more than 205,794.52/mt.
double on previous production levels,” said

AfDB’s halt in new coal investments, a setback

to Africa’s energy sector

At a time when the African economy has At the United Nations Climate Change Confer-
turned to coal-powered plants to boost its ence last year, Western nations pledged US$8.5
energy generation, the African Develop- billion over theAfrica and clean energy alterna-
ment Bank (AfDB) has completely halted invest- tives
ments in any new coal projects, a move which With the global fight against carbon emissions,
will put the energy sub-sector into disarray. the world is shifting to clean energy which
includes solar energy.
Over the years, Africa's energy needs have been c a n con- Africa currently accounts for more than one-sixth
growing and with hydro-powered plants being tinent is set of the world's population, but it generates only
affected by the effects of climate change which to wit- ness a 4% of the world's electricity.
include droughts, the continent has been facing worsening energy According to the International Energy Agency
power shortages resulting in most of the conti- crisis where it is already failing to (IEA), the clean energy transition is an opportuni-
nent’s governments relying more on coal-pow- meet demand which has led to erratic power ty for many African countries to bypass tradition-
ered plants. cuts in most countries within the continent. al fuels and infrastructure and go straight to
Africa’s largest economies, like Nigeria, South building sustainable energy systems, but they will
Africa, and Kenya have been succumbing to Meanwhile, as much as the halt in coal invest- need the support of the international community,
massive blackouts, forcing the trio to focus ments is in line with the global goal of especially to attract the necessary investments.
more on coal production, especially South achieving a ‘Net zero carbon emission’, it has The above statement by IEA clearly shows that
Africa. material effects on Africa’s energy sector, as without adequate investment, Africa will not be
Africa currently has only four coal power plants the alternative of green energy has over the able to fully unlock the clean energy potential
in construction, in South Africa and Zimbabwe, years proved to be rather too expensive for within the continent due to a lack of funds to
and only three plants have been operational most African countries to implement. implement the clean energy projects.
since 2015. Elsewhere, Botswana, Kenya, African countries collectively are expected to IEA further highlighted that at the same time,
Malawi, and Mozambique are still keen on commit to reduce the continent's contribution Africa has the potential to play a leading role as
developing their coal power plants. to greenhouse gas emissions by 32 percent by the world’s energy systems transition to a net-ze-
Currently, the bulk of Africa's electricity is pro- 2030. However, this requires a lot of funding ro future. The continent’s geographic diversity
duced from thermal stations, such as coal plants to spearhead alternative power projects that holds huge potential for solar and wind power,
in Southern Africa and oil-fired generators in bear less or no pollution. and its soils are home to many of the minerals
Nigeria and North Africa. As of 2021, the and rare earths needed for clean energy technolo-
Global Coal Plant Tvracker lists 22 potential At the United Nations Climate Change Confer- gies.
new coal plants (excluding refurbishments and ence last year, Western nations pledged However, while wind and solar have become
existing complexes) across Africa with a total US$8.5 billion over the next five years to sup- increasingly cost-competitive, the implementation
capacity of 13 GW. port South Africa in phasing out coal. of renewable energy in Africa continues to lag
v
With the halt in new coal investments, the Afri-

*To Page 16

Regional News & Analysis 16The AXiS XXV - Friday 29 April 2022

*From Page 153 the effects caused by coal on the environment. coal (29%), and renewable energy sources.
With Zimbabwe’s proven coal deposits estimated
behind much of the rest of the world: Solar and Zimbabwe at around 25 billion tonnes, such a ban on any
wind together constituted 3% of Africa's gener- new coal project investment will affect the
ated electricity in 2018, versus 7% in other Zimbabwe’s energy sector largely relies on country’s energy generation as coal is undoubt-
regions of the world. hydroelectric power which has, however, been edly one of the main power producing products
The World Bank has estimated that US$43 affected by a series of droughts that the country in the country, and investment in more coal
billion per year of investment is required for has been facing as a result of climate change. plants would see the country being able to close
infrastructure in the power sector, while the Coal is the second-largest source of energy in its energy demand gap.
African Development Bank estimates a need for the country with the completion of Hwange coal To resolve the power shortages currently being
US$230 to US$310 billion until 2025, with an projects expected to ensure the country’s elec- experienced in the country, the government is
additional US$190 to US$215 billion required tricity self-sufficiency by 2023. mostly focused on expanding coal production
for 2026 to 2030. The Zimbabwe Energy Regulatory Authority from three million tonnes annually to 15 million
As such, if investments in renewable energy are (ZERA) in 2021 reported that energy supply tonnes.
not harnessed in Africa, the continent will con- inthe country is a mix of hydropower (70%),
tinue facing power challenges as their coal alter-
native seems to be reaching a dead-end due to

Africa replaces Russia as Italy’s Innscor focuses
main gas supplier on countering
I n February 2022, Russia waged an imperial- complex trading
istic war against Ukraine. The war has seen deal with Angola, which is Africa’s second-largest oil environment
the commodities world going in shambles as producer in Africa and seventh in natural gas with the
Italian prime minister revealing plans to add Congo impacts
Brazzaville to the list. The deals in Angola and Congo
global supply chains were disrupted. The war could bring Italy an additional 1.5 billion cubic meters I nnscor fAofcruicsaedinctonusLocnontrieermrmincAiagtoifenruisdctnahteeLfrosiiicammnuyipsgtseeaddcttshsiaetoyonsf
also saw the brewing of sour relations between and 5 billion cubic meters of gas per year respectively. remains
the West and Russia culminati described as the The graph below shows the top 10 countries that pro-
act of tions between the West and Russia culmi- duce the most natural gas (Billion Cubic Meters,
nating in stiffer targeted sanctions on the Russian 2020). Source: World Population Review 2022
economy.

This brought a new evolution in the geopolitics impacts of the uncertain economic
of energy. To move away from depending on outlook and the increasingly complex
Russian energy, Europe started turning to Africa trading environment by driving vol-
for its natural gas imports and Italy has already umes, ensuring competitive pricing,
registered a large footprint in substituting Russian closely managing operating expendi-
gas dominance. Across the entire continent, natu- ture, and managing working capital
ral gas reserves amount to a total of more than positions most effectively and efficient-
800 trillion cubic feet, with BP predicting that the ly.
production of natural gas in the continent will
expand by 80% by 2035, contributing to rising In a trading update for the third quar-
Gross Domestic Profit (GDP), the emergence of ter and nine months period ended 31
middle-class consumers and increased market March 2022, Group Company Secre-
value. tary, Andrew Lorimer said the third
quarter saw continued local inflationary
In early April, Algeria agreed to increase its gas Ipressuresawndithexhcehictgahenhertgtaeiennienercdcaroetnaeousimnnvgiccloeylorauttatilioclniootmtkyy,palnedx
supplies to Italy by 50% which translates to an Meanwhile, the European Union is courting Nigeria to
increment of 9 to 10 billion cubic meters on an be its first African liquefied natural gas supplier, even combined
annual basis as early as the end of 2022. In 2021, as it tries to reduce its reliance on Russian gas. After against the backdrotpradoinfg theencvoirnonfmliecntt in by
Italy received around 21 billion cubic meters the United States and Qatar, Russia was, in 2021, Eastern Europe and the resultant impli-
from Algeria. The export boost would probably Europe’s third liquefied natural gas supplier. cations felt across international com-
see Algeria replace Russia as Italy’s largest gas In early April, The European Union started courting modity markets and inbound supply
supplier. its first African liquefied natural gas supplier Nigeria. chains.
According to the Statistical Review of World Nigeria and Algeria are the biggest African liquefied
Energy, Italy is ranked twelfth gas consumer natural gas suppliers to the Old continent. The bloc is “Notwithstanding the challenging
globally and requires 2,384,575 million cubic feet trying to strengthen its ties to Africa's top petroleum market dynamics, the Group delivered
per annum while accounting for about 2.0% of producer as Europe tries to wean itself off Russian pleasing volume growth across all core
the world's total consumption. Rome imports resources. manufacturing business units, under-
around 30 billion cubic metres of gas from pinned by strong consumer demand in
Russia every year - some 40% of its total gas Top 10 African countries with gas reserves in the informal trading channels and sup-
imports, thus, Angola, Algeria, and Congo deal trillion cubic feet ported by diversified product portfolios
will bring Russian dominance to extinction. and the recent investments into capaci-
ty expansion and manufacturing
The graph below shows Italy’s 2020 gross enhancements,” Lorimer said.
gas imports by country
The Group has several operations
which include Bakeries, National
Foods, Colcom, Ivirnes, Associated
Meat Packers, NatPak, Prodairy, Pro-
bottlers, Profeeds, and Probrands.

Source: Department of Petroleum Resources 2021 During the period under review, the
Zimbabwe has also gas reserves in Muzarabani where Group’s bakery division’s volumes
the Australian company, Invictus Energy is carrying were 23% ahead of the comparative
out explorations. The company is also exploring oil period with several expansion projects
and gas in the Cabora Bassa Basin in Zimbabwe, one currently underway in the business,
of the largest under-explored interior rift basins in which will lead to improvements in
Africa. both capacity and capability in the
Harare and Bulawayo production facili-
ties.

The Department of Petroleum Resources report in The Colcom division continued to reg-
2021 placed Algeria as the second largest country ister volume growth in all its products
with natural gas reserves in Africa and 11th in with cumulative nine-month volumes
the world. 16% ahead of the comparative period
On the 22nd of April, Italy signed another gas
*From Page 1 7

Business News & Analysis 17The AXiS XXV - Friday 29 April 2022

*From Page 1 6 Global cooking oil, food prices set to spike as

while at Irvine’s, cumulative supply concerns mount on Indonesia's oil ban
nine-month volumes for the
day-old chick and frozen poultry T he world is set to experience yet another hike
categories improve by 38% and in all major edible oils including palm oil, soy
30% respectively. oil, sunflower oil, and rapeseed oil as one of
Volume performance at the Asso- palm oil producers and exporters globally, Indonesia
ciated Meat Packers continued to recently banned exports of palm oil, putting extra
show pleasing signs of recovery strain on economies which are already hit by higher
across the full protein range, with food inflation.
an overall growth of 16%.
The expansion initiative within the The world's supply of cooking oil was already Africa’s situation with palm oil
“Texas Meats” retail network squeezed amid Russia's war in Ukraine—the two top
under the division continued, with producers and exporters of sunflower oil. That drove It is generally agreed that the Oil Palm (Elaeis
three further outlets opened during the prices of palm and soybean oil to record highs. guineensis) originated in the tropical rainforest
the third quarter. Indonesia's export ban will leave manufacturers with region of West Africa.
At NatPak, overall volumes no other alternative but to pass on higher prices. The main belt runs through the southern latitudes
improved by 24% on a cumulative Indonesian President Joko Widodo announced the sus- of Cameroon, Côte d’Ivoire, Ghana, Liberia,
nine-month basis while the Pro- pension of cooking oil and raw material exports from Nigeria, Sierra Leone, and Togo and into the
dairy division’s volumes were April 28 until further orders following a severe short- equatorial region of Angola and the Congo.
34% ahead of the comparative age and surging edible oil prices in the Southeast Sub-Saharan Africa’s palm oil market has grown
period. Asian nation. substantially in the last 10 years. In 2019, Afri-
“During the quarter, the business Since the invasion of Ukraine by Russia, countries can countries produced around 2.79M tonnes of
commissioned additional produc- have been embracing price hikes of edible oils. How- palm oil, not enough to meet the local demand
tion capacity and capability within ever, the latest ban by Indonesia will add salt to the of about 7.31 million tonnes.
the dairy blend category, launching already bruised cooking oil market already running As a result, imported palm oil plays a major role,
the new, versatile Tetrapak “Edge” short of sunflower oil. In February, prices of vegetable increasing from more than 3 million tonnes in
packaging format,” Lorimer said. oils jumped to a record high as sunflower oil supplies 2010 to some 5.5 million tonnes in 2019, a
He added, “Raw milk production were disrupted from the Black Sea region CAGR of 6.02% over that period.
remains a critical aspect of the Soon after the announcement by Indonesia, soya-bean Major palm oil importing countries include Nige-
business, and in this regard, the oil prices rose to a record high, a reflection of what ria, Kenya, Tanzania, Angola, and South Africa.
business continues to make a is to come in the oil market. As such the Indonesian ban on palm oil exports
significant investment in national Palm oil is the world's most widely used vegetable oil will have an impact on the prices of edible oils
raw milk production both within and is used primarily for cooking in developing coun- in most African countries especially those that
its operations and in support of tries. It is also used in food products, detergents, cos- import the product as they will now be acquiring
contract producers.” metics, and, to a small extent, biofuel. it at a higher price due to the short supply.
The Probottlers division volumes According to Global Trade Atlas (GTA) data reported Most households in the continent are likely to
improved by 27% driven primarily by individual reporters, in 2019, global palm oil export embrace severe food insecurity challenges as
by the capacity expansion initia- exceeded 50 million tonnes with exports largely domi- inflationary pressures, floods and droughts are
tives undertaken within the “CSD” nated by the Southeast Asia region with Indonesia and already causing food shortages.
category. Malaysia as the top exporters who together contributed Zimbabwe
At Profeeds, stock feed volumes around 44 million tonnes. The country does not produce any palm oil, as
closed 16% ahead of the compara- On the demand side, palm oil's largest consuming such, it depends on importing the product from
tive nine-month period, combined markets are held by India and China, with 9.7 million other countries within Africa and beyond.
with a 30% improvement in and 7.6 million tonnes imported respectively. It is also Zimbabwe’s cooking oil-producing companies
day-old chick volumes over the largely imported into America, Europe, and Africa. import most of their raw materials which include
same period. In 2020, Indonesia exported US$17.9 billion in palm palm oil, sunflower oil, and soy oil. This is
“The “Profarmer” retail division oil, making it the first largest exporter of Palm Oil in evidenced by the companies being the top benefi-
delivered volume growth across the world. In the same year, Palm Oil was the 1st ciaries of the foreign action market as they need
all its ancillary farming product most exported product in Indonesia. the forex to import raw materials.
categories, including seed, veteri- According to Statista, in 2021, the value of Indone- Meanwhile, the country’s top trading partners in
nary products, and farming equip- sia's total palm oil exports amounted to around terms of palm oil are South Africa, Mozambique,
ment. The division continues to US$28.52 billion. The value increased by about ten Malaysia, and Indonesia with a share of 60%,
introduce new product offerings billion U.S. dollars in comparison to the previous year, 10.7%, and 9.46% in 2020 respectively.
and drive operating efficiencies making it the highest value in the last decade. Indone- According to the Observatory of Economic Com-
across its growing retail network,” sia is the world's largest producer and exporter of plexity (OEC) in 2020, Indonesia exported
Lorimer said. palm oil, followed by Malaysia. US$$4.21 million to Zimbabwe with its main
At the Group’s Probrands division, As such, the recent palm oil export ban by Indonesia exports to Zimbabwe being palm oil (US$1.61
despite aggregate volume growth will disrupt the supply chain of the product world- million), other vegetable oils (US$$770 000), and
being muted on a cumulative wide, pushing prices up as demand will be high while special pharmaceuticals (US$593 000). During the
nine-month basis, encouraging supply will have decreased. last 25 years, the exports of Indonesia to Zimba-
growth was registered in the spe- This is going to put further strain on countries global- bwe have increased at an annualised rate of
cialised product and condiment ly as they are already battling with food and fuel 0.79%, from US$3.45 million in 1995 to US$4.21
categories, closing at 41% and hikes coupled with inflationary pressures which are million in 2020.
22%, respectively, ahead of the threatening the livelihoods of most households globally Hence the recent ban on palm oil exports by
comparative nine-month period. as the cost of living is growing rapidly. Indonesia will not spare Zimbabwe as the country
Looking forward, Innscor contin- The ban will also undoubtedly put more pressure on will use more to import the oils, pushing the cost
ues to review its financing, capital the already high global food inflation as apart from of production up, and resultantly cooking oil
investment, and working capital cooking oil, other food products which use palm oil prices will sour.
models as part of its business con- as a raw material will experience a hike in production Already owing to the effects of the Rus-
tinuity plans cost, and companies that produce those products will sia-Ukraine war which has caused supply disrup-
“At present, the financial status of increase the selling price for the specific products. tions, cooking oil prices in Zimbabwe have hiked
the Group remains healthy, and Meanwhile, companies like Unilever which is one of to the range of US$4.50 to US$5 for a 2-litre
the impact of the COVID-19 has the world's largest buyers of palm oil with about 1.5 bottle and this ban will in the near term see the
not created any issues from a million tonnes purchased annually (3% of global pro- prices soaring.
solvency or liquidity perspective,” duction), are likely to experience an increase in the
Lorim said. cost of production which will translate to a hike in
prices for their products.

Regional News & Analysis 18The AXiS XXV - Friday 29 April 2022

Lafarge’s full year revenue tumbles

over 35% as supply chain disruptions

take toll

• The Holcim Group member
reported a 35.5% decline in
inflation-adjusted revenue for
the year ended 31 December
2022

• Attributed to a poor industrial
performance largely due to the
roof collapse incident

• Reported a loss of ZWL 649.7
million

• Optimistic about the prior year, reflecting the decline in cement vol- compared to the prior year,” Katsande said.
opportunities in the umes alluded to earlier. “This was also spurred by the introduction of
infrastructure sector as the “The Company instituted various measures to WaterShield cement, and the scaling up of the
government continues contain structural administrative costs, under a SupaFix range of products in the first quarter of
with its strategy for difficult period, resulting in a marginal 4.4% the year.”
infrastructure development increase compared to the prior year,” he said. On the outlook, he said that the Company is
However, despite the Company’s cost contain- optimistic about the opportunities in the infra-
Z SE-listed maker and distributor of cement ment efforts, the poor industrial performance structure sector as the Government continues
and allied products for the building indus- alluded to earlier on and the ensuing decline in with its strategy for infrastructure development.
try, Lafarge Cement Zimbabwe Limited volumes weighed down the overall performance “However, the global economic trends due to the
announced Thursday that full-year revenue fell by of the Company to a loss of ZWL 649.7 million, war in Ukraine could weigh down any meaning-
35.5% from a year ago, while it recorded a loss down from a profit of ZWL 5.0 billion recorded ful growth in the country.”
as the company confronts supply chain disrup- in the prior year, in inflation-adjusted terms.
tions emanating from both the COVID-19 related About Lafarge
lockdown restrictions in 2021 and significant The rooftop collapse resulted in the stoppage of
business interruption when the roof over both of cement production from the 10th of October Formerly known as Circle Cement, the company
its mills collapsed. 2021 up until mid-February 2022. is a subsidiary of the Lafarge Group. The
Katsande highlighted that the combination of cement product range includes Portland compos-
In its financial results for the year ended 31 theCOVID-19 induced slowdown and the roof ite cement which is the cement used in beams,
December 2021, the company said that as a collapse resulted in volumes declining for the foundations, and load-bearing structures; Supaset,
result of the poor industrial performance which year by 21% from the prior year. used by concrete brick makers and homebuilders;
was mainly attributable to the roof collapse inci- On a positive note, the Dry Mortars business Masonry cement, used for general construction
dent, revenue declined by 35.5% to ZWL 7.2 realised some growth despite the significant work such as screed flooring, brick and mortar,
billion compared to ZWL 11.1 billion recorded in impact of the cement roof collapse, which nega- and plastering mortar.
2020. tively affected availability of the majority of the Lafarge Cement Zimbabwe also sells a range of
Company’s products which are cement based. allied products which include washed sand,
“Following the aforementioned incident, the “Increased demand and capacity, following the 6-mm stones, 20-millimeter stones, and crusher
Company resorted to selling clinker, an interme- commissioning of the new automated plant, saw run. Specialised products include Agricultural
diary product, for sustenance,” Kumbirai the Dry Mortar business volumes grow by 19% lime, Colorbrite and Snolime, pre-sanded Cem-
Katsande, Lafarge Zimbabwe’s chairman, said in wash and Impermo.
a statement.

“This business sustenance plan meant that the
overall gross margins were squeezed, resulting in
a decline in gross profit margins to 49.6% com-
pared to 60.5% in the prior year.”

Katsande said in spite of the decline in the reve-
nue and volumes during the year, the Company
managed to maintain tight control over its expen-
diture as total expenses fell by 4.9%. Distribution
expenses declined by 33.2% compared to the

Regional News & Analysis 19The AXiS XXV - Friday 29 April 2022

Natfoods’ volume momentum slows in Q3’FY22

After recording higher volumes growth per- been impacted by erratic rainfall patterns, the the jump in wheat and fertilizer prices being of
formance in the first quarter and the Group said that it is likely that imports of maize particular relevance to its operations.
second quarter of the financial year 2022 and soya will be needed before the 2022-2023 The volumes for the third quarter and the year
and 8% respectively year-on-year, an expected harvest. to date compared to the same period last year are
decline in maize offtake following the excellent “This is disappointing given that the initial shown in the table below:
2021/2022 harvest resulted in a significant slow- weather forecasts and production estimates had
down in volumes performance during the third looked encouraging,” it said.
quarter for listed agro-industrial concern, National
Foods Limited (Natfoods).

In a trading update for the third quarter ended 31
March 2022, the Group said that volume momen-
tum for the quarter slowed, with an increase of
only 3% relative to the prior year.

“Volumes for the quarter were largely impacted
by an expected decline in maize offtake follow-
ing the excellent 2021-2022 harvest,” Natfoods
said in its update.

“Excluding Maize, volumes increased by 9%
compared to last year.”

Maize volumes decreased by 11% compared to
the same period last year, however, the Group
expects that with the ongoing recovery in local
agriculture production they will also be able to
extensively remodel this unit to enable it to com-
pete sustainably.

On a cumulative year-to-date basis, volumes grew “These increases will see inflationary pressure in “The Group is carefully managing its pricing
by 11% ahead of the prior year, driven by stock- US$ terms in many of the categories we partici- strategy, doing its utmost to minimise the impact
feeds, rice, salt, and snacks. pate in during the coming periods, and especially on consumers by moderating prices in order to
“Whilst consumer demand remains solid, it has the flour to bread value chain,” Natfoods said. retain volumes.”
clearly been impacted by the recent resurgence in The Group said that the war in Ukraine has It also highlighted that the Harare Cereal and
inflation,” the Group said adding that “To this caused a surge in global commodity prices, with Bulawayo Flour mill projects continue to make
end, we welcome and support the measures taken steady progress and are expected to be commis-
by the authorities to control inflation.” sioned in mid-2022 and early 2023 respectively.
Noting that the current agricultural season has

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Politics Around The World 21The AXiS XXV - Friday 29 April 2022

Russia warns 'serious' nuclear war risks should likely won't rest easy for long. ISIL has increased its attacks in northeast Syria,
not be underestimated after US special forces assassinated then-leader
The significance of France's national election goes Abu Ibrahim al-Qurayshi and his official spokes-
Russia told the world not to underestimate the far beyond the country's own borders, and Cobbe person. – Al Jazeera
considerable risks of nuclear war that it said it says there were sighs of relief across much of
wanted to reduce and warned that conventional France and far beyond as Macron's victory Denmark becomes the first country to halt its
Western weapons were legitimate targets in quashed the chances of an extremist president — Covid vaccination program
Ukraine, where battles raged in the east. hostile to the European Union and NATO, and Denmark has become the first country to halt its
with close ties to Russia — taking office, at least Covid vaccination program, saying it is doing so
"The risks now are considerable," Foreign Minis- for another five years. because the virus is now under control.
ter Sergei Lavrov told Russia's state television “Spring has arrived, vaccine coverage in the
according to a transcript of an interview on the President Macron's supporters partied until late Danish population is high, and the epidemic has
ministry's website. into the evening under the Eiffel Tower, celebrat- reversed,” the Danish Health Authority said in a
ing his decisive win with more than 58% of the statement Wednesday.
"I would not want to elevate those risks artificial- vote against Le Pen's 41%. – CBS “Therefore, the National Board of Health is now
ly. Many would like that. The danger is serious, ending the broad vaccination efforts against
real. And we must not underestimate it." Israel closes crossing to Gazans after new rocket Covid-19 for this season,” it said. People will not
attacks be invited for vaccines from May 15, it said,
Lavrov had been asked about the importance of although everyone will be able to finish their
avoiding World War Three and whether the cur- Israel said it will close its only crossing from course of vaccination.
rent situation was comparable to the 1962 Cuban the Gaza Strip for workers on Sunday in Denmark’s Covid vaccination campaign began
Missile Crisis, a low point in U.S-Soviet relations. response to overnight rocket fire, stopping short soon after Christmas in 2020. Some 4.8 million
Russia had lost its "last hope to scare the world of conducting retaliatory strikes in an apparent citizens have been vaccinated, the health authority
off supporting Ukraine," Ukraine's Foreign Minis- bid to ease tensions. said, with over 3.6 million people receiving a
ter Dmytro Kuleba wrote on Twitter after Lav- booster shot. – CNBC
rov's interview. "This only means Moscow senses The rocket attacks on Friday night and Saturday Turkey’s military operation causes controversy,
defeat." – Reuters morning followed days of clashes at Jerusalem's division in Iraq
flashpoint Al-Aqsa mosque compound and a Turkey’s latest military operation in the Kurdish
Russia’s war in Ukraine jolts Iran, Syria and month of deadly violence. region of northern Iraq began early last week,
Middle East security with Ankara launching an air and ground offen-
The unrest -- which comes as the Jewish festival sive targeting the Kurdistan Workers’ Party (PKK)
Russia’s war in Ukraine has serious repercussions of Passover overlaps with the holy Muslim in pockets of Duhok province on April 18.
for the Middle East — affecting, in particular, fasting month of Ramadan -- has sparked inter- These operations against the PKK, an armed group
Iranian entrenchment in Syria and regional securi- national fears of a wider conflict, one year after fighting for the autonomy of Turkey’s southeast
ty for Israel and the United States. similar violence led to an 11-day war between and considered a terrorist organisation by Ankara,
Israel and Gaza-based militants. have become a regular occurrence over recent
In 2015, Iran’s Qassem Soleimani, then general of years. However, they are growing more controver-
the Islamic Revolutionary Guard Corps, flew to "Following the rockets fired toward Israeli terri- sial in Iraq, and not just in areas administered by
Moscow to meet with Kremlin officials just weeks tory from the Gaza Strip last night, it was the Kurdistan Regional Government (KRG).
after the conclusion of the original Iran nuclear decided that crossings into Israel for Gazan “This operation is basically trying to intervene and
agreement, the Joint Comprehensive Plan of merchants and workers through the Erez Cross- establish networks of observation, monitoring, and
Action (JCPOA). The goal was to change the ing will not be permitted this upcoming Sunday," bases,” Sardar Aziz, an analyst and former adviser
course of Syria’s civil war, which looked bleak for said COGAT, a unit of the Israeli defence minis- to the KRG parliament, told Al Jazeera. “This
their ally, Syrian President Bashar al-Assad. The try responsible for Palestinian civil affairs. time Turkey is planning to stay.”
meeting “forged a new Iranian-Russian alliance in – AFP
support of Assad,” turning the course of the war
in their favor. The successful outcome allowed The deadly accordion wars of Lesotho
Iran to move with confidence toward its primary
objective: creating a vassal state in Syria, as it Rivalry between stars of a unique accordion-based
had in Lebanon with Hezbollah. – The Hill style of music in the southern African kingdom of
Lesotho has sparked years of deadly gang warfare
NATO, Russia eye each other as both up forces in that has turned the tiny country into the murder
the Med capital of the continent.

As Russian forces continue to pound Ukraine, the "Maybe I've survived because I'm a woman," Only days before Turkish President Recep Tayyip
aim is "to show the Russians that the eastern Puseletso Seema says quietly, her whisper a Erdogan ordered the launch of the operation,
Mediterranean is a NATO area," says lieutenant shadow of the powerful voice that once entranced dubbed Claw-Lock, he met with the KRG Prime
Johann, the aircraft's chief officer, who asked that thousands of fans in beer-halls and stadiums Minister Masrour Barzani, an apparent signal that
his surname not be used. across southern Africa and beyond. the KRG was supportive, to a certain extent, of
The Ukraine war has seen Washington and Acclaimed as the Queen of Famo, the popular the operation. Erdogan has also said that the Iraqi
Moscow boost their presence in the area to levels national music of Lesotho, she sits on a scuffed government cooperated with the operation.
unseen in a generation. sofa in her tiny, bare, cement-block home, with – Al Jazeera
"Ukraine has changed things. The Americans are little to show for her years of success. Democracy loses its glow for South Africans amid
back. This hasn't been the case since the Cold "Everyone wants to show off their manhood by persistent inequality
War," says Thibault Lavernhe, regional communi- owning a gun," she says. South Africans believed that the introduction of
cation officer of the French army in the Mediter- Famo has the gentlest of origins. It developed democracy in 1994 would transform their lives for
ranean. when traditional "wayfarers' hymns" - a form of the better through equality of opportunities.
"Russia has doubled, if not tripled, its military spontaneous oral poetry, or rap, composed by This hasn’t happened.
capacity in the area" in terms of destroyers, frig- herders or travellers to while away long hours Socio-economic inequality and job scarcity, as well
ates and submarines, says Lavernhe. guarding cattle or journeying on foot through as unequal opportunity to quality education have
The Mediterranean is of strategic importance to Lesotho's mountains - began to be accompanied created a view that democracy has not delivered
the world economy, with 65 percent of EU energy first on the concertina, and later the accordion. a better life for all.
supplies and 30 percent of global commerce, – BBC News The country celebrates 28 years of democracy at
according to the French foreign ministry, passing Several killed in suspected ISIL attack on north- a time when democracy is under threat globally,
through the sea with shores in Europe, the Middle east Syria iftar in the context of growing inequality
East and Africa. Suspected ISIL (ISIS) gunmen killed seven people and mistrust in democratic institutions.
There are currently around 20 Russian warships in and wounded four others at a Ramadan iftar gath- Increasingly, scholars focus on what makes democ-
the sea, Lavernhe told AFP. – AFP ering in Syria’s northeast Deir Az Zor province, racy valuable amid its decline. This is important
according to activists and monitors. given the global rise in populist and
France's President Emmanuel Macron easily The former spokesperson of the United anti-democratic politics and authoritarianism.
beats Marine Le Pen to serve 2nd term, but elec- States-backed, Kurdish-led Syrian Democratic The Human Science Research Council’s South
tion shows far-right gains Forces, Nouri Hamish, had hosted the iftar dinner, African Social Attitudes Survey, conducted annual-
French voters reelected President Emmanuel which marks the end of the day’s fasting, at his ly, show that South Africans are
Macron on Sunday night, granting him a second home in the town of Abu Khashab on Wednesday. increasingly dissatisfied with democracy. In 2004,
term with a substantial victory over his far He was among those killed, according to Syrian when the country celebrated a decade of democra-
right-wing opponent Marine Le Pen. CBS News media group, the Euphrates Post. cy, 59% were satisfied with
correspondent Elaine Cobbe reports that many had The attackers arrived on motorcycles and fled democracy. Now only 32% are satisfied with how
expected the weekend runoff election results to be after villagers reportedly confronted them. democracy is working in South Africa.
very close, but even with his clear win, Macron – Moneyweb

Business Around The World 22The AXiS XXV - Friday 29 April 2022

Africa faces hard knocks as rich countries take Ford confirms 2022 profit outlook “We continue to align staffing around the critical
manufacturing back home Ford confirmed its 2022 profit outlook despite skills needed to deliver our products, services, and
The global economic crisis triggered by the out- lower quarterly auto sales as strong vehicle pricing the Ford+ plan,” the company said. “As part of the
break of the COVID pandemic in 2020 and Rus- offsets the hit from higher operating costs and the ongoing management of our business, we will
sia’s invasion of Ukraine in February this year has ongoing semiconductor chip shortage. continue to align our staffing to meet our future
intensified the risk of declining trade integration Echoing statements from General Motors, Ford business needs and plans.” – CNBC
between countries. A process referred to as the executives described "pent-up" consumer demand Africa’s richest man betting $21bn on oil and
de-globalisation of trade. for autos in a market characterized by limited fertilizer
The pandemic sent shocks through supply chains vehicle supply despite rising inflation. When Aliko Dangote, Africa’s richest person,
across the world. As a result, companies in some The result has been elevated auto pricing that has decided to construct a refinery in southern Nigeria
advanced economies have started to prioritise so far enabled Detroit carmakers to offset soaring on a plot of swampland almost half the size of
bringing production that was previously outsourced costs from steel, nickel and freight. Manhattan, he turned to a man who’s helped him
to Asia back home or closer to home. The expec- In the first quarter of 2022, Ford averaged transform a small trading company into an indus-
tation is that this will avert ongoing and future $57,514 for the F-150 truck, up 16 percent from trial empire spanning the continent.
supply-chain disruptions, ensuring a steady and 2020, according to data from Edmunds.com. For 30 years, Devakumar Edwin has navigated
reliable supply of goods. – Moneyweb – eNCA some of the world’s most difficult business envi-
Musk's criticism of Twitter staff triggers backlash Zimbabwe’s president warns banks could be ronments to build Dangote’s textile factories, flour
Elon Musk's criticism of Twitter Inc (TWTR.N) stripped of licenses mills, and food plants and cement firms. Now he
sparked a barrage of abusive tweets against the Zimbabwean President Emmerson Mnangagwa is overseeing its biggest project yet: a $20.5
company's top lawyer on Wednesday, raising ques- said banks and companies involved in local cur- billion oil refinery and fertilizer complex.
tions about his compliance with a non-disparage- rency manipulation and unjustifiable increases in – Moneyweb
ment agreement and the tone that the social media the prices of goods and services could lose their Jobs crisis widening as boomers retire: Canada
platform's incoming owner will set for its users. operating licenses, according to a report by a state statistical agency
Musk tweeted he disagreed with a decision Twit- media outlet. A record number of baby boomers that are set to
ter made in 2020 to restrict the distribution of a The government has identified the entities respon- retire from the labour force threatens to compound
New York Post article about U.S. President Joe sible, the Sunday Mail cited the president as a worker shortage in Canada, according to data
Biden's son, Hunter. The billionaire, who has saying. The administration is devising methods to from a 2021 census.
about 87 million Twitter followers, called the deal with those banks and companies, and the "Never before has the number of people nearing
company's decision to lock the Post's account on plans will be announced in due course. retirement been so high," Statistics Canada said in
the platform "incredibly inappropriate." – Reuters “These economic players are not acting alone, a statement, with more than one in five workers
Boeing delays its newest jet as losses soar they are being sent by foreign countries hostile to (21.8 percent) close to the mandatory or proposed
The bad news keeps piling up for Boeing. The Zimbabwe to weaken our local currency,” Mnan- retirement age of 65.
company is delaying the debut of its newest pas- gagwa told supporters at a political rally, accord- The statement cited the boomer cohort's exit from
senger jet to 2025, and it reported a much big- ing to the newspaper. – Moneyweb the labour force as "one of the factors behind the
ger-than-expected quarterly loss. Higher food and energy prices could last 'for labour shortages facing some industries across the
The aircraft builder announced Wednesday it years,' World Bank warns country." – eNCA
would temporarily pause the start of production Russia's invasion of Ukraine has contributed to an Apple will now sell you parts to fix your own
for its 777X passenger jet, which it planned to historic shock to commodity markets that will iPhone
start delivering to customers by the end of 2023. keep global prices high through the end of 2024, Apple has officially opened its self-service repair
Demand for long-range and widebody passenger according to the World Bank. store, which provides manuals and parts for users
jets, a key to Boeing's commercial jet business, The spike in energy prices over the past two years seeking do-it-yourself fixes for their iPhones.
continues to be hurt by weak demand for interna- is the biggest since the 1973 oil crisis, while the The online shop offers more than 200 individual
tional flights during the pandemic. jump in food prices is the most since 2008, the parts and tools, such as iPhone screws, cameras,
But Boeing attributed much of the delay to a World Bank said Tuesday in its commodity mar- batteries, displays, SIM card trays and more,
longer certification process by the Federal Aviation kets outlook report. allowing customers and third-party fixit companies
Administration than in the past. Boeing said it "Overall, this amounts to the largest commodity access to genuine Apple components for the first
didn't want to start production before the certifica- shock we've experienced since the 1970s," said time. Previously, Apple (AAPL) users had to rely
tion process was complete or near complete and Indermit Gill, the World Bank's vice president for on the company's in-house repair service or autho-
then have to a large inventory of planes that equitable growth, finance and institutions. – CNN rized repair outposts to fix devices.
required changes before it could deliver them. Omicron, imports expected to restrain U.S. The components for sale are specific to iPhone
– CNN growth in first quarter 12, iPhone 13 and iPhone SE (3rd generation)
Dollar climbs towards 20-year high; earnings U.S. economic growth likely slowed sharply in the smartphones. – eNCA
buoy stocks first quarter as a wave of COVID-19 cases curbed Australia opens facility that will ‘blast’ human
The dollar was on the cusp on Thursday of its activity, but retained sufficient underlying strength waste and convert it into fertilizer
highest in two decades on Thursday while stocks to keep the expansion on track amid headwinds An Australian plant that converts human waste
gained on corporate earnings, with the yen tum- from soaring inflation and rising interest rates. into fertilizer and energy has been opened, with
bling to its lowest since 2002 after the Bank of The growth rate, which is anticipated to be the those involved in the project hoping it will reduce
Japan doubled down on its ultra-loose monetary slowest since the recession triggered by the pan- carbon emissions and save money.
policy. demic ended nearly two years ago, would also Located at the Loganholme Wastewater Treatment
The yen dropped to a 20-year low and breached reflect a surge in imports. Economists are split Plant in Logan City, Queensland, the biosolids
the 130 per dollar level after the Bank of Japan over whether inventories would contribute to gross gasification facility was developed by Logan
vowed to buy unlimited amounts of 10-year bonds domestic product growth after they accounted for Water, the water business of Logan City Council.
daily to defend its yield target. The yen was last the bulk of the acceleration in GDP in the fourth According to the council, the 28 million Austra-
at 130.28 per dollar. – Reuters quarter. – Reuters lian dollar (around $20 million) facility “blasts
Denmark becomes the first country to halt its Ford cuts 580 U.S. salaried and contract sewage with extremely high heat.” The Australian
COVID vaccination program employees as it restructures to focus on EVs Renewable Energy Agency provided $6 million in
Denmark has become the first country to halt its Ford Motor is cutting 580 U.S. salaried employees funding for the project. – CNBC
COVID vaccination program, saying it is doing so and agency workers as part of its ongoing Ford+ Central African Republic adopts bitcoin as an
because the virus is now under control. turnaround plan, the company confirmed Wednes- official currency
“Spring has arrived, vaccine coverage in the day night. Central African Republic has adopted bitcoin as
Danish population is high, and the epidemic has The cuts include approximately 350 salaried and an official currency, the presidency said on
reversed,” the Danish Health Authority said in a 230 agency positions, according to an emailed Wednesday, becoming the first country in Africa
statement Wednesday. statement. The reductions occurred largely in engi- and only the second in the world to do so.
“Therefore, the National Board of Health is now neering, as the Detroit automaker pivots from Despite rich reserves of gold and diamonds, Cen-
ending the broad vaccination efforts against vehicles with traditional internal combustion tral African Republic is one of the world’s poorest
Covid-19 for this season,” it said. People will not engines to electric cars and trucks that can require and least-developed countries and has been
be invited for vaccines from May 15, it said, different skill sets. gripped by rebel violence for years. – Moneyweb
although everyone will be able to finish their
course of vaccination.
– CNBC



Guest Column 24The AXiS XXV - Friday 29 April 2022

Hard & Soft Infrastructure Any attempt to revise the procedures is faced
By Girison Afia MRICS with resistance from people who have benefit-
ICT sector and research on the same can assist to root ted from the loopholes in it. Despite the
The hard and soft infrastructure development out corruption and bureaucracy in the supply chain struc- promises to ease the processing and promote
helps with regional integration by the creation ture. The ease of doing business require cross-border ease of passage, there is little progress made
of seamless ports of entry, which can be con- infrastructural development, link and approach. at the ports of entry to ease congestion.
solidated through one-stop clearance facilities Border and transport efficiency aims at quantifying the The one-stop borders with neighbouring coun-
and digitalized processes. The regional and level of efficiency of customs and domestic transport that tries are in some cases set up without support-
continental free trade areas can best be sup- is reflected in the time, cost, and number of documents ing hard and soft infrastructure.
ported through modernised physical, techno- necessary for export and import procedures. The proce- A one-stop facility would obviously carry a
logical and regulatory processes. The effective- dures are guided by rules and regulations some of which shared or partially shared soft infrastructure.
ness of regional trade blocks in Africa is still may have been formulated more than forty years ago. The level of engagement and links for emerg-
doubted because of the feasibility of these ing nations must be higher and faster than
agreements without proper infrastructural sup- Netflix shares plummeted developed nations because global competitions
port. The problem could be the failure by amid a sharp drop in protects no timewasters.
governments to involve businesses and lack of subscribers
leadership and versatile culture. The reviews Business and regulatory environment measures
done on the bi-lateral agreements and discus- T he world’s largest streaming service pro- the level of development of regulations and
sion are more of a political nature than facili- vider has announced a decline in its sub- transparency. The legal blue print can be a
tation of investment, remaining divorced from scriber base for the first time in a decade. source of bureaucracy if it is not updated with
the economic reality. Early this week news of the company’s excess the changes in global and technological trends.
In urban planning the hard issues are referred subscriber losses has sent a jolt in the market It is built on indicators of irregular payments,
to as blue prints. The scope of it encompasses mainly the entertainment industry, including its favouritism, government transparency, and
the physical layout and existence of facilities rivals as Netflix dominated the streaming service measures to combat corruption. Governments
from the natural environment, transport, build- for 10 years. Netflix had been elephant in the and authorities may struggle to formulate laws
ings, utilities and services. At a later stage, room as compared to its competitors such as and regulations that promote growth but the
process planning was introduced to define the Amazon Prime Video, Disney Plus and HBO issue can easily be tackled through a wide
transformational existence of social, economic, Max. The entity has accepted the downturn, stakeholder participation. Authorities tend to
political and technological aspects in relation taking the blame for its failure to minimize or stick to laws, rules and regulations that have
to the ecological and the built environment. crackdown on the issue of password sharing and been overtaken by the passed of time, change
Physical infrastructure measures the level of diversify its subscription packages in light of in economic, social and information dynamics.
development and quality of ports, airports, increased competition from rival platforms. Infrastructure development encompasses eco-
roads, and rail infrastructure. On the other Notably, the reasons behind Netflix’s woes are nomic, social, political, ecological and the
hand, the soft infrastructure refers to the much more obvious. According to statistics, the physical development of the whole develop-
border and transport efficiency as well as streamer stood alone as the world’s foremost ment spectrum.
business and regulatory ease. The scope of on-demand entertainment platform, followed by The transient nature of changes in develop-
transactions processed at the border would Amazon Prime Video. However, in 2022 the ment and globalization demands a shift in
require shared information technology scope to competition surged almost tenfold. This has leadership and approach to economic issues.
ease pressure on handling traffic and goods. expanded from the IP-rich Disney Plus and HBO African governments must take advantage of
Delays, would; thus, be reduced, saving time Max, and the competitors are even projected to the ubiquity of information through the media
and costs. knock down Netflix in terms of subscriber num- to develop their supply chain through hard and
Information and communications technology bers by the year 2024. But the likes of Apple soft infrastructure.
(ICT) is interpreted as the extent to which an TV Pus, Hulu, Showtime, and Paramount Plus Looking at it closely, soft infrastructure
economy uses information and communications have also begun to gather to the table. defines the ideas through which the physical
technology to improve efficiency, and produc- Exit from the Russian market following the infrastructure can be designed and developed.
tivity as well as to reduce transaction costs. It ongoing tension with Ukraine, the company has The social and economic players are also very
contains indicators on the availability, use, halted its operations in the country foregoing important for the success and profitable use of
absorption, and government prioritization of approximately 7,000,000 customers. In this case, infrastructural investments.
ICT. Imagine a truck full of goods from the the shockwaves ignited the continuous fall as Girison Afia MRICS is a chartered surveyor, a
port through inland weigh bridges and scan- some subscribers in neighbouring countries expect member of the Royal Institution of Chartered
ners to reach a border and be delayed for the entity to shut its services. Surveyors, researcher and a thought leader in
more than a week. Technology would help Secondly, headwinds from macro-economic, infla- real estate. Email: [email protected]
through the use of tracking devices and sen- tion in this case have driven away consumers due
sors would help forward clearance and easy to rapid increases in goods and services. During
passage of commodities. Investment in the the lockdown, streaming services became an inte-
gral part of daily lives as it was the biggest
source of entertainment when other recreational
activities were closed. With high costs brought
by inflation, price hikes on essential items forced
customers to forego or cut back on discretion
costs and this, in turn, hurt the business of
streaming services.

*To Page 25

Guest Column The AXiS XXV - Friday 2 April 2022 25

*From Page 24 Amazon, Disney and other various regional marks a decline of around 200,000 subscribers
players. This gives the entity a rational decision compared with the previous quarter. Most Net-
Plateauing of demand is another implication that towards its product, to put it back in a competi- flix subscribers are based in the United States
the company is facing due to account sharing. tive business space before the margin of losing and Canada accounting for over 75 million of
This act has diminished the entity’s revenue as subscribers widens. Netflix’s total global subscriber base.
potential subscribers gain access to streamers’ Apart from the loss, investors should not panic
services from those already subscribed. In this since the company is mainly focusing on reve-
case, the company has to re-network its system nue growth.
model of subscription, taking into consideration According to analysts, they suggested existing
password privacy. users should keep it in their portfolios for a
An estimated 100 million households are using year or two, after which the company is likely
accounts that they do not pay for. The company to make a turnaround.
stated that, when they were growing at a faster Nobody was expecting Netflix to announce a
pace previously, the issue of password sharing decline in subscribers. Individuals were expect-
was of less priority but now they have promised ing maybe a slowdown in subscriptions because
to work even harder. The company also said it losing subscribers is a big deal as it negatively
would attempt to jump-start growth by improv- impacts the company’s overall performance.
ing the quality of its programming and consider The company had approximately 221.64 million
introducing a low-price and advertiser-supported paid subscribers worldwide as of the first quar-
subscription option. ter of 2022 as depicted in the chart above. This
In addition, as mentioned above-stiff competi-
tion drags the company into losses as both old
and potential customers are slowly entertained
by outsiders also global giants including Apple,

ZSE WEEKLY

The ZSE extended its gaining trajectory in the week under review as hedge-seek-
ing continues to drive demand. The mainstream All Share Index notched by
23.59% to close at 29026.92 points, with gains spun across all the market's main
indices while heavily skewed towards market heavies which rose by 25.98%. The

bourse has repositioned as the best performing in Africa, boasting of a year-to-date
nominal return of 168.21%.
On a month-to-date basis the ZSE has garnered 83.03% gains, which is the highest
monthly outturn in over 23 months. This comes as the exchange rate has depleted

by -29% on the parallel exchange market, and -12% on the formal currency
market. However, the ZSE took a breather on Thursday, which is the first halt
since the beginning of the year, as investors took out gains in market heavies.

ZSE ASI 23,486.38 ZSE TOP 10 15,344.66 MEDIUM CAP INDEX 40,322.85
ZSE TOP 15 24,527.07 SMALL CAP INDEX 16,007.66 42,248.87
25,742.59 16,832.30 44,144.69
28,816.65 19,166.09 47,015.01
29,440.85 19,558.84 48,170.97
29,026.92 19,331.40 47,081.97
23.59% 25.98% 16.76%

17,232.26 503,410.25 ZWL INTERBANK 155.1419
17,959.55 521,871.64 155.1419
18,861.41 527,806.88 155.1419
21,297.02 547,731.16 159.3482
21,740.00 576,134.42 159.3482
21,468.17 590,028.07 159.3482
24.58% 17.21% 2.71%

On the US$ denominated bourse, VFEX, a total of US$47,478 exchanged hands
in the week under review, down from US$2.6 million in the prior week. Only
Padenga and BNC recorded trades in the week, with Padenga surging by 0.95%
to close at US$0.213/share while BNC plunged by -4% to settle at
US$0.048/share. BNC remains the worst performing stock on VFEX on a YTD
basis. On global markets, U.S. futures advanced and stocks were steady on Thurs-
day, amid a surge in Facebook parent Meta Platforms Inc.'s share price and more
pledges of economic support from China.
On the formal currency market, the local unit ZWL, at the close of the most
recent auction trading week, depreciated by -2.71% which is down from -3.3% in
the prior week, to close at 159.3482 per US$1 while the parallel market exchange
rate runs wild. The Central Bank has since announced it will be taking legal action
towards financial institutions and other private players alleged to be driving up the
exchange rate.

The AXiS XXV - Friday 29 April 2022 27

Markets watch

Zimbabwe dollar crushes as inflation
nightmare worsens

The Zimbabwe (ZW$) dollar fell by another The rate at which inflation is growing has raised Lagos on Tuesday.
noteworthy margin on the latest auction market fears of a possible return to hyperinflation wit-
heightening calls for a return to sole use of the nessed in 2008 and latest in 2020. The govern- Shilling drops further to 115.7 as CBK
US dollar as inflationary pressures continue to ment of Zimbabwe has been dormant to the calls for dollar rationing
mount. The ZW$ registered another 3% fall return of dolarisation. President Emerson Mnan-
against the greenback, the same margin it depre- gagwa was on record last week denying any The Kenyan currency traded on the back foot
ciated last week. To cope with the rising infla- possibility to return to the greenback. yesterday at 115.7 from 115.5 last week as it
tion, the central bank released a new 100-dollar However, the persisting currency volatility brings continued to respond to inflation rise and scarci-
note. Despite being the largest note in circula- back memories of the economic crisis of 2008 ty of US dollars. The Central Bank of Kenya
tion, the new note is less than 0.50 US cents when Zimbabwe's inflation reached historical (CBK) has directed commercial banks in the
using parallel market rates which currently stand levels of 500 billion%, rendering the local cur- country to ration dollar sales following a short-
at US$1:400 against the official exchange rate of rency worthless. age of the US currency.
159. The apex bank’s move is to protect reserves as
Last year, the government gazetted the SI 12 to the Kenyan shilling fell to Sh115.59 units to the
ZW$ performance in 2022 to date compel businesses to peg their prices in line dollar on Friday, having depreciated from
with the official exchange rate and threatened to Sh113.13 at the start of the year and Sh104.44
Meanwhile, Zimbabwe is again on the verge of penalize those failing to adhere to that directive. at the end of March 2020.
3-digit inflation according to the latest inflation This, however, yielded nothing in bringing cur- According to Business Daily of Kenya, the
stats released by ZimStat. Year on year Inflation rency stability, as the parallel market continued development has forced industrialists to begin
rose to 96.4% in April, up from 72.7% in March to determine the pricing of goods. seeking dollars in advance as the shortage puts
while monthly inflation rose sharply in April to a strain on supplier relations and the ability to
15.5%, up 9.2 percentage points from March Regional Markets negotiate favourable prices in spot markets.
signalling a sharp rise in commodity and Meanwhile, Kenya has hinted at scrapping a
services prices Rand weakens to 5- months low as plan to sell $1 billion of Eurobonds by the end
dollar gains momentum of June this year, citing rising yields globally
Ipnefrliaotdion stats in % over 7 months’ that will make the borrowing expensive. The
Rand continued its losing streak to touch 15.9 nation raised $1 billion in 12-year debt in June
against USD, its lowest registered in 2021, amid last year at 6.3%, in an issue that was five times
a stronger dollar as investors focused on growth oversubscribed.
risks and rapid US interest rate hikes. Domesti-
cally, rolling power cuts, flood damage and signs Pula further drops to 12 against the
of a Covid-19 comeback added to worries about US dollar
the country’s economic outlook. Still, expecta-
tions of continued monetary policy tightening by Pula registered a second consecutive drop this
the South African Reserve Bank limited further week on Thursday after crumbling by 0.36%
losses. against the USD to trade at 12. The Pula had
been unshaken at 11.5 for weeks buoyed by
Naira reverses gains, drops to 418.5 high commodity prices. Historically, the Botswa-
na Pula reached an all-time low of 12.36 in
Nigeria’s currency, reversed its last two weeks of April of 2020.
trading gains against the dollar, closing at Botswana’s annual inflation rate was at a near
N418.50/$1 on Tuesday at the official market. 13-year high of 10.6% in February of 2022,
For the last two weeks, Naira had been stronger unchanged from the previous month with the
than the US dollar in response to the Central main upward pressure coming from the prices of
Bank of Nigeria’s (CBN’s) stance on continuing transport alcoholic beverages and tobacco.
intervention in the forex market. However, it The Pula is expected to trade at 11.6 by the end
could not make it three trading weeks lucky. of this quarter, according to Trading Economics
Meanwhile, the Federal Government of Nigeria global macro models and analysts’ expectations.
listed collaboration, infrastructural development,
sustainability and provision of incentives as Kwacha remains unshaken at 17.4
factors required to grow the equipment and man-
ufacturing industry, saying it has introduced the Zambian Kwacha remained steady at 17.4 yester-
Import Duty Exemption Certificate (IDEC) to day which was traded last week against the
cushion the effects of the high cost of produc- greenback steadying four straight gains in a row.
tion. The Minister of Industry, Trade and Invest- Meanwhile, China committed to joining other
ment, Niyi Adebayo, disclosed this at the Equip- creditors in the International Monetary Fund
ment and Manufacturing West Africa 2022 Expo (IMF) Zambia debt restructuring process.
(EMWA) organised by Zenith Exhibitions in
Lagos on Tuesday.

Commodities In the week under review, newly refined Rus- 28The AXiS XXV - Friday 29 April 2022
sianplatinum and palladium were suspended from
Commodity markets ended the month trading in London, denying access to the metals' Nickel
on a downward trajectory biggest trade hub in the latest in a growing list
Weekly commodity pulse: of measures against Russian interests because of Nickle prices marginally gained 0.4% in the
the conflict in Ukraine. week as demand remained relatively high in
Gold Prices for both palladium and platinum surged as some other countries. In the week under review,
much as 11% and 1.2% respectively, with traders Russian metals producer Nornickel said its
Gold fell 5.4% on Friday and was set for its fearing the move could worsen a shortage of the first-quarter nickel production rose year-on-year
biggest weekly decline since mid-March as signs metal automakers use in exhaust pipes to reduce due to the recovery of its two mines after flood-
of a faster policy tightening by the Federal emissions. ing in 2021, while palladium output fell due to
Reserve lifted Treasury yields and the dollar. a high base effect.
Spot gold was down 0.9% to $1,934 per ounce, Copper Nornickel, the world's largest palladium producer
having earlier touched its lowest level in two and a leading nickel producer, kept its previous
weeks. The metal has lost 5.4% so far this week The copper price retreated 4.8% in the week as output forecast for 2022 unchanged despite diffi-
to settle at $1,878 per ounce from $1,986 the number of covid-19 cases rose in China, culties posed by the Western sanctions on
recorded the prior week. The safe-haven metals making investors nervous about the country’s Moscow. Nornickel has not been targeted by the
need a fresh fundamental spark to heighten economic recovery. China is the top consumer of sanctions. The company's January-March nickel
investor and trader concern, and it is just not copper globally, but it is facing factory shut- production rose by 10% to 51,534 tonnes, while
happening. downs across the country. copper output was stable at 91,414 tonnes.
Fed Chair said in the week, a half-percent- A copper fabricator in Henan that produces In other news, analysts foresee demand for
age-point interest rate increase "will be on the pipes and parts used in household appliances and nickel to increase to 3.02 million tonnes in 2022
table" when the U.S. banks meet in May, sug- medical devices said its sales were down 20% from 2.78 million tonnes in 2021 due to expect-
gesting it may use aggressive actions to tame to 30% in tonnage terms in the first half of ed increases in Indonesia and China.
soaring inflation. The hawkish tone helped the April from a year earlier.
benchmark U.S. 10-year Treasury yields extend In southwest China, Yunnan Tin Co., the coun- Brent/Oil
gains and also boosted the dollar index, although try’s largest producer of the metal, said it had
bullion is considered a safe-haven asset during halted production at its mining unit to comply In the week under review, oil prices surged 3.1%
periods of soaring inflation. A hike in interest with local government virus restrictions. to settle at $103.48 per barrel as the US dollar
rates to rein in the rising prices increases the In other news, Japan’s National Institute for Ma- was trending in a zig-zag line for the week.
opportunity cost of holding non-yielding bullion. terials Science (NIMS) has developed a new Oil prices saw modest gains as the week com-
conductive ink for use in printed electronics with menced despite a soaring US dollar, which
Platinum significantly improved resistance to oxidation. makes barrels more expensive and coronavirus
outbreaks in China clouded the economic out-
Aluminium look in the world’s biggest importer of crude oil.
Supplies remained tight in the world's largest oil
Aluminium prices soared 7.3% over demand-sup- producer, the United States, as government data
ply concern from the single largest consumer of showed stockpiles rose modestly last week as
base metals, China. The metals prices edged fuel stocks declined.
lower to settle at $3,045 per ounce from $10,315 However, China will soon cut demand as cases
recorded in the comparative week. of Covid-19 continue to surge and this will sunk
In other news, China's alumina exports to Russia oil prices through the decline in demand
surged over 90 times in March from the same Equity Axis research also believes that the
period a year earlier, customs data showed in the Ukraine war and surging inflation are also
week, as sanctions against Russia for its invasion destroying the oil demand.
of Ukraine cut off some of its traditional sup- The prospect of higher U.S. interest rates makes
plies. a strong U.S. dollar making dollar-priced com-
In March, China shipped 9,949 tonnes of alumi- modities like oil more expensive for other cur-
na to Russia, up from 104.5 tonnes the same rency holders and increasing risk aversion among
month in 2021, according to the General Admin- investors.
istration of Customs. Its total alumina exports
last month soared 180% year-on-year to 12,955
tonnes.

FINANCIAL MARKETS AT A GLANCE 2022

ZSE All Share Index ZSE Top 10 Index ZSE Small Cap Index Interbank Market Rate

21077.78 14050.75 473776.65 150.2157
28.1% 29.5% 6% -2.98%

ZSE Top 10 Index ZSE Small Cap Index ZSE Medium Cap Index

All Share index ZSE Top10 index All Share index Small Cap index All Share index
14050.75 21077.78
21077.78 Medium Cap index
473776.65
21077.78
33987.47

WOW 29.5% MOM 40% YTD 106.3% WOW 6% MOM 18% YTD 17.6% WOW 24.4% MOM 37% YTD 66.5%

ZSE Financials Sector ZSE Financials index ZSE Consumer Discretionary Index ZSE Consumer Staples Index
21077.78
All Share index 19067.57 All Share index ZSE Consumer Discretionary index All Share index ZSE Consumers Staples index

30858.99 21077.78
21077.78 24313.09

WOW 18.6% MOM 30% YTD 36% WOW 17.5% MOM 59% YTD 151.9% WOW 23.2% MOM 31% YTD 77.8%

ZSE Industrials Index (New) ZSE ICT Index ZSE Materials Index

All Share index ZSE Industrials Index (new) All Share index ZSE ICT Index All Share index ZSE Materials Index
41977.9 21077.78
21077.78 14388.99
23871.31 21077.78

WOW 19.2% MOM 29% YTD 26.1% WOW 53.8% MOM 53% YTD 155.6% WOW 8.2% MOM 39% YTD 64.7%

ZSE Real Estate Index ZSE Real Estate Index Interbank Market 39% JSE All Share Index 21077.78
11171.06 17.8%
All Share index 21077.78 Interbank All Share index JSE All Share index

WOW -5% MOM 49% YTD 27.4% WOW -0.7% MOM -1% 73801.88

YTD 0.1%

BSE All Share Index LUSE All Share Index NGSE All Share Index

BSE All Share index LUSE All Share index NGSE All Share index
21077.78 21077.78 21077.78

WOW -0.3% MOM 1% 7225.54 WOW 0.5% MOM 7% 6965.89 WOW 0.9% MOM -0.1% 47205.03

YTD 3.1% YTD 15% YTD 10.5%

Company Latest Price Previous Week Consumer Latest Price Previous Week Materials Latest Price Previous Week TOP 5 WEEKLY RISERS
Staples ZWL Cents ZWL Cents ZWL Cents ZWL Cents Sector ZWL Cents ZWL Cents
African Sun COUNTER PRICE CENTS CHANGE % CHANGE
AFDIS 28745 23500 AXIA 1047.76 900.08 ARTZDR 2000 1988.89
ARISTON 370.12 315.13 EDGARS 12862.61 9089.49 LAFARGE 13500 13500 Tanganda 17477.03 6737.65 63%
BAT 366000 365997.81 NTS 566.07 465.48 PROPLASTICS 4400 4200 AXIA 12862.61 4859.26 61%
CFI 15500 13005 RTG 840 840 TURNALL 720.45 764 Ecocash Holdings 11243.21 4135.71 58%
DELTA 32002.3 26525.46 SIMBISA 750 657.38 Willdale 418.51 325.17 NMBZ 2048.16 696.18 51%
DAIRIBORD 3998.44 3503.86 TRUWORTHS 29947.18 28202.55 RioZim 7591.25 7363.64 ECONET 20497.8 6859.24 50%
HIPPO 40000 30001.8 190 189.75
INNSCOR 38780.04 32103.33 ICT Financial Latest Price Previous Week TOP 5 WEEKLY FALLERS
MEDTECH 1700 1800 Sector Latest Price Previous Week Sector ZWL Cents ZWL Cents
MEIKLES 15440.16 13751.7 Ecocash ZWL Cents ZWL Cents COUNTER PRICE CENTS CHANGE % CHANGE
NATFOODS 205981.76 205675 ECONET 7610.16 First Capital Bank 770.3 708.05
OK 3996.2 3000.55 ZIMPAPERS 11243.21 14457.29 CBZ 11124.41 8900.65 GBFS 600 -60 -9%
SEEDCO 21266.29 18045.86 20497.8 250 FBCH 4991.22 4500 FMP 1155.66 -102.02 -8%
STAR AFRICA 189.76 150.55 Real Estate 320.09 FIDELITY 1560 1300 MEDTECH 1700 -100 -6%
TSL 13200 11200 Sector Previous Week FML 2002.5 1800 UNIFREIGHT 3257.5 -92.5 -3%
Tanganda 17477.03 12000.36 MASHHOLD Latest Price ZWL Cents GBFS 600 600 BAT 366000 -295.53 0%
FMP ZWL Cents 294.79 NMBZ 2048.16 1600
1250 ZBFH 6055.86 5500
320.01 ZHL 411.07 401.68
1155.66

JSE All Share Index BSE All Share Index LuSE All Share Index NGSE All Share Index

73801.88 7225.54 6965.89 47205.03
-0.7% -0.3% 0.5% 0.9%