The AXiS XXIV-XXX

The Zimdollar in existential crisis
Real estate buckles to economic crisis
The case of Zimbabwe's $600m ivory stash
Delta posts stellar FY21 performance

History repeats itself

#ISSUE: XXIX-XXX



The AXiS Friday 03 June 2022 #ISSUE: XXIX-XXX

The Food aid not
enough to
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PAGE 18

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Hap hazard policy pronouncements costs
Zimbabwe investment flows
This week saw the ZSE suspend the imple- sellers for at least 4 consecutive years up to
mentation of Statutory Instrument (SI) supply growth and the growing Treasury Bills 2021. While the biggest driver of the movement,
103A of 2022 barely 7 days after it was issuance and emerging budgetary imbalance. has been foreign currency challenges, it is the
gazetted. The Statutory Instrument in question Government retained its view that money supply lack of policy predictability, which has been the
pertains the trading of shares by investors on the was in check and that the auction market was catalyst.
Zimbabwe Stock Exchange (ZSE), Zimbabwe’s the best channel for allocation of hard currency. ZSE Foreign Contribution to total Turnover
main stock exchange. The SI introduced tighter It however admitted that the market was coming
measures pertaining the trading of shares and short of achieving price discovery, a factor which Zimbabwe Foreign Direct Investment Trend
these measures included trust account dealings would lead to higher premiums between the auc-
disclosure to the RBZ’s Financial Intelligence tion and the parallel market. Over the last 15 years the ZSE has completely
Unit (FIU), by the stockbroker and limited stock- What this piece particularly seeks to address is suspended the entire market trading twice, a feat
broker control on clients’ accounts. The most government reactions through policy, which is not seen anywhere else in the region. The ZSE
impactful element of the SI pertained to increase done with little probity and a lack of indulgence banned fungibility and chucked out stocks
in capital gains tax on shares sold within 3 to economic rationality. This has become very suchOld Mutual and PPC. Prior to that, it intro-
months of purchase to 4% from about 1.5%. The much a common spectre in government’s affairs duced vesting periods for fungible counters
capital gains tax on shares sold after 90 days under the current administration and interestingly, among other drastic measures, *To Page 5
was held constant at 1.5%. An introduction of this was equally the past administration’s undo-
the 4% tax implied that the total cost of buying ing. Zimbabwe is now ranked as the least pre- Lafarge poised
and selling securities within 270 days increased dictable operating environment in the world. The for earnings
to 7.13% from about 4%. Before the SI. degree of predictability diminishes with the rebound
The SI pertaining to the trading of securities on recurring policy goal post shifting. In the
the ZSE came in following the announcement of instance of the latest measures highlighted above, PAGE 20
a raft of measures, first announced by the Presi- government introduced these measures and barely
dent, designed to deal with a currency run and 7 days after part of the measures are put into Markets watch
a general economic instability. In one of our law, the law itself is suspend. What is even scari-
weekly issues, we extensively covered the impact er in the case of the securities SI highlighted PAGE 29
of the measures and put more focus on measures above is that the new law is not being scrapped,
such as suspension of banking lending activities. but suspended. This in itself heightens unpredict-
These wholesale measures were largely targeted ability, since the law can be reinforced, depend-
at stopping the currency freefall and reposition ing with the shifts in the currency sands beneath
the economy. From the measures announced it it.
was clear that government believed that the So far, the ZSE has highlighted that the Ministry
underlying factors driving the economy were in of Finance noted errors in the legislation which
good shape. The President began his address by it seeks to correct first before reinforcement.
highlighting that fundamentals were in shape and Assuming that these errors were indeed noted, it
that the country was sitting on increased forex would also follow that the set of measures were
balances as measured by the deposits sitting in not well considered, therefore resulting in the
Foreign Currency Accounts. He highlighted that errors that are emerging now. However, another
inflows from exports and remittances continued possibility is that the Ministry of Finance, having
to grow and that it had been largely running on sobered up, now sees the gravity of the damage
a budgetary surplus. the measure will do to the securities market.
Government believed that the plunge in the cur- Overall, the general cost of securities trading will
rency, which had moved on the informal market widen its gap to the rest of the region. The cost
from about 250 to 350 within weeks was a of securities trading had generally been higher
culmination of rent seeking, speculation and eco- for Zimbabwe compared to the region. At a cost
nomic sabotage. Government blamed all but itself of about 7%, the cost of trading is between 30%
for the currency weakness. It believed the public to 40% higher than the region. Portfolio investors
was speculating hence borrowing and piling some preferring Zimbabwe as a destination will have
on the stock market, eventually selling off and to make much more than those in the region to
demanding USD, while paying off loans. It also enjoy the same return from their investment. The
saw companies as culprits to the manipulation of higher cost is a deterrent to portfolio investment,
the exchange rate through speculative borrowings which has generally been declining over the past
and ramp up of stocks to levels higher than 7 years. Foreign investors have been seeking to
normal. There was little acknowledgement on exit Zimbabwe (ZSE) more than they have been
government’s part, on the impact of money willing to enter. Foreign inflows now account for
only 7% of total trades on the ZSE, down from
about 60% in 2014. Foreigners have been net

ZSE ASI 22,942.36 ZSE TOP 10 14,780.46 MEDIUM CAP INDEX 40,820.84 ZSE TOP 15 16,451.75 SMALL CAP INDEX 577,080.35 ZWL INTERBANK 173.2685
22,183.37 14,330.29 39,167.07 15,893.63 561,075.93 173.2685
21,863.24 14,095.90 38,838.95 15,601.72 541,386.23 173.2685
21,376.04 13,699.86 38,605.48 15,196.26 528,568.64 258.5404
20,986.91 13,494.55 37,572.53 14,948.06 514,446.77 258.5404
20,792.40 13,351.99 37,366.60 14,796.45 506,238.45 258.5404
-9.37% -9.66% -8.46% -10.06% -12.28% 49.21%

Economic News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 4

State of the economy: The Zim Food Security and Higher inflation
dollar is already dead
A few weeks ago, in a desperate attempt The government says it is going to implement
to regain macroeconomic and currency clysm that has exacerbated money supply a provision of Statutory Instrument 145 of
stability, the government introduced a growth(M3) and consequently, currency deprecia- 2019 in response to the low grain deliveries
raft of measures to stop the haemorrhaging of the tion. The government has yet again in stark fash- by farmers, which triggered panic shortly after
Zimbabwean dollar on the parallel market. The ion resorted to living beyond its means, and government officials declared the country
government has and continues to say that nega- printing money to fund infrastructure develop- secure. Secretary for lands and agriculture,
tive sentiment about the local currency and infla- ment projects while touting fundamentals as John Basera, insisted that the country was
tion heightened by pass-through effects emanat- sound. “food secure.”
ing from the Russia-Ukraine war is driving the He stated that “We are food secure on account
Zim dollar depreciation against the greenback. According to official data, the Zimbabwe Nation- of 1.8 million metric tonnes of grain produc-
Firstly, just last week- following the supposed al Roads Administration has already disbursed tion this year, plus 500,000 metric tonnes in
measures- the Zimbabwe National Statistics ZWL$17bn to a number of local governments. reserve.”
Agency (ZimStat) announced that annual inflation However, the government is now paying contrac- Last week, Kazakhstan began a six-month ban
rose to 131% in May, from April’s 96%, the first tors for major infrastructure projects with a 50% on white and cane sugar exports while sugar
time it drifted back to triple digits since July USD component, a direct contradiction to its cane mills in Brazil, the world’s biggest pro-
2020. The local currency has continued to stance on local currency macroeconomic support. ducer and exporter of sugar, were cancelling
weaken against the major currencies, especially sugar export contracts and shifting production
the greenback. This week, the Zimbabwe dollar Debt 31% 44% to ethanol in an attempt to take advantage of
was trading at ZWL$500:US$1 on the parallel the high energy prices. The estimated cancel-
market. The local currency was trading at a rate 20% Multilateral Creditors Paris Club Creditors ations could equate to 400,000 tons of raw
of ZWL$308:US$1 on the auction market and sugar.
ZWL$307:US$1 at the interbank. In essence by Non-partisan Creditors India is also reportedly considering placing
easing control on the official exchange rate and restrictions on sugar exports for the first time
allowing it to converge with an interbank rate, 5% in six years to prevent a surge in domestic
economic fundamentals have played out, acceler- prices. India’s ban is expected to target around
ating Zim dollar depreciation. Bilateral Creditors 10 million tons of this season’s exports. Earli-
er this month, Pakistan also imposed a com-
Inflation Zimbabwe’s debt crisis is worsening. The country plete ban on sugar exports, citing deep con-
cannot incur new debt from international finan- cerns about inflation while Russia banned
Furthermore, previous data inconsistencies from cial institutions and other creditors without clear- sugar exports until the end of August.
ZimStat have disparaged the credibility of official ing all arrears to creditors. Zimbabwe’s public On the ground the ramifications of the crisis
inflation data. Last week one of Zimbabwe’s external debt stock is currently hovering around have been felt by both industry and individu-
most respected economists said he believed that US$19 billion with arrears to the World Bank, als alike. Prices on the shelves have been
the country’s rate had already overtaken Venezu- African Development Bank, European Investment hiking rapidly, with bread climbing almost
ela’s 222%, making it the highest in the world. Bank and the Paris Club, among other financiers. weekly.
Steve Hanke, a US-based currency and inflation In terms of composition by creditor, according to Most economists agree that this is only the
expert recently projected the rate at 256%. We official data from the Ministry of Finance and beginning of the crisis. As the local currency
estimate that inflation is hovering just above Economic Development, 44% of external debt is continues to be rejected, forcing devaluation of
200%. It’s not a stretch to think that the most owed to Paris Club creditors, 31% to multilateral the local unit, basic commodity prices will
rational firms in the country already use internal- creditors, 20% to non-partisan creditors and 5% continue to rise absent subsidies by govern-
ly-generated inflation data. to bilateral creditors. ment. The low grain deliveries will also deal
Failure to meet international debt payment obli- a huge blow to the country’s fragile food
Broad money supply gations has left the country excluded from inter- security.
national financial markets, forcing authorities to About two week ago ZERA resolved to
tap into the domestic debt market. Although the review fuel prices upwards. The blending ratio
domestic debt market does not expose the coun- was also lifted to E15. Diesel 50 and Blend
try to foreign exchange risk, it has crowded out E15 are now ZWL499.56/US$1.74 per litre
private sector borrowing hampering investment and ZWL481.02/US$1.68 per litre respectively.
and output growth at a time when industry is Gasoline prices have been on the rise globally
already facing unprecedented policy measures in recent weeks due to the rising price of oil
and inflationary pressures. amid uncertainty over Russian supplies, stem-
In Zimbabwe, at least 35% of banks’ incomes ming from sanctions placed on the country
are generated from lending activities. This figure over the military operation in Ukraine and the
is even at a historical low and prior to hovering proposed embargo on Russian energy carriers.
around 60-70%, about 5 to 10 years ago. A Russia is among the world’s largest producers
couple of weeks ago, the monetary authorities of oil, which means that any disruptions to its
instituted a lending ban, putting industry capacity production processes inevitably have a global
utilisation at risk. impact. In the US, which no longer imports
Russian oil, gasoline costs recently climbed to
Ripple Effects on industry historic highs, while in Europe, diesel futures
have reached nearly double their five-year
Secondly, despite measures to tighten money Last year, local industry capacity utilisation rose average.
supply the reality on the ground seems to indi- to 56.25%, the highest level since 2012, but the According to data from the British Motorists
cate that broad money supply has been growing gains are set to be undone by inflationary pres- Association RAC, the costs of gasoline and
despite authorities insisting otherwise. In fact, at sures and reactionary monetary policy. According diesel in the UK reached new highs last
a recent post-Cabinet briefing question-and-an- to the President of the Zimbabwe National Friday, exceeding the previous records set
swer session Finance Minister, Mthuli Ncube Chamber of Commerce, Tinashe Manzungu, earlier last week. The cost of a litre of unlead-
said, the “Zimbabwean dollar is in short supply. "since inflation is not linear it ripples through the ed gasoline jumped to £1.71 (about $2.16), up
If you got 0% growth in the money supply, then economy differently and affects businesses differ- 31 pence, while the cost of diesel fuel rose to
this currency is not in abundance, but actually in ently but the denominator is that it disrupts busi- nearly £1.82 (about $2.30), up 29 pence –
short supply. So, what is driving the exchange ness planning and leads to lower investment,". driving up the cost to fill up the tank of the
rate is speculative behaviour in some of the mo- The relationship between inflation and employ- average family car to £93.69 ($118.32).
nopolies,” he said. Over the last couple of ment presents possibly the short-term aftermath We expect another ZERA hike in June as fuel
months, we have detailed the Treasury Bills cata of Zimbabwe’s economic bloodbath. Inflation costs remain high in the foreseeable future,
induces deduced aggregate demand which incites and not only due to the crisis in Ukraine, as
reduced production and inevitably leads to high energy costs were on the rise prior to the start
unemployment. Consequently, high unemployment of the conflict. Blending is an avenue that
will lead to less government revenue, causing a government is exploring to downsize the rising
vicious cycle of fiscal indiscipline. fuel prices but it will do little to help the
average family’s pocket.

5 The AXiS XXIX-XXX Friday 03 June 2022 Economic News and Analysis

*From Page 3 Mental Note Dont let the
unknown stop
which heightened uncertainty. take the risk. you from progressing.
The decline in foreign portfo-
lio inflows is similarly
reflected in the decline in
Foreign Direct Investment
(FDI), which is showing a
sustained decline and under-
whelming performance com-
pared to the region.
All this, in our view, is large-
ly a reflection of the state of
fundamentals. If an economy
has sufficient economic arse-
nal to defend its currency, it
requires little resort to tighter
measures such as capital con-
trol. When fundamentals are
right, speculators are burnt,
because the currency they
will be shorting proves to be
in short/ equivalent supply to
the forex, resulting in losses.
Speculators are abated by the
underlying situation which
keeps pointing towards forex
short supply. These mechanics
will not be aided by rhetoric
on FCAs or capital controls
on a sustainable basis. In the
process of tinkering on the
periphery, there is a real risk
of abating uncertainty as
policy is rushed and wrongly
crafted resulting in omissions
and commissions, which
makes Zimbabwe, not open
for business.

Economic News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 6

Real estate sector succumbs to the Mangudya-crisis

Seeking viable hedging in Zimbabwe, One of the factors Property values have been weighed down by
include heightened inflation along with disposable incomes. Periodi-
T“Panonetsa” sell-offs as investors cally, properties may be revalued to chase infla-
he real-estate sector in Zimbabwe is are panicking out of tion but disposable incomes have proved a failure
struggling to find its footing despite a the market following to the chase. This has a ripple effect on the
wave of possible recovery in late 2021. government’s influ- returns on property investments. As inflation
The sector was heavily hit by the COVID-19 ence on stock mar- sours, cost of living rises in nominal terms and
pandemic in 2020 to early 2021 as occupancy kets. dwindles in real terms. This means returns on
levels declined to a record low, globally, follow- The other factor, property investments, which are usually acquired
ing the introduction of remote-working which left which is the main with hard currency, tend to heavily plunge in real
commercial properties vacant. The pandemic also attribute, is the con- terms amid inflationary pressures. This has been
weighed on returns as incomes were subdued by tinued and anticipated the main cause of driving investors away from
the economic-activities-halt which led to low pro- persistence in the the market in recent months. Because inflation
ductivity and a recession in some parts of the depreciation of the raises the cost of everything, the cost of con-
world. Tourism sector was also put on hold for local unit, ZWL. The struction materials will rise as well. There's a lot
a longer duration during the pandemic era, and local currency which that goes into real estate construction, and if
this led to almost zero occupancy for tourism was introduced in inflation rises, all of those prices will rise as
properties including hotels. 2019 has been on a well. This will, however, fail to meet returns as
road of collapse since disposable incomes remain suppressed.
The pandemic-induced trade and movement its inception. The currency has been hit with With the government pinning down on ZSE to
restrictions were lifted and relaxed in mid of the triple digit annual inflation since introduction mitigate gains, while indirectly pinning down on
year 2021, and a recovery of each respective into the market. This has been exacerbated by the property market through weak fundamentals,
sector was imminent. On the Zimbabwe Stock the country’s dependency on imports while local viable asset classes and value preservation in
Exchange (ZSE), the overall market recorded a industries are more than 80 percent retail and Zimbabwe gradually sound foreign. Nonetheless,
nominal gain of 311 percent. However, the real wholesale while less than 20 percent manufac- investors should remain cautious in high-inflation
estate sector rose by 145 percent over the high- turing. situations, partly because the cost of borrowing
lighted duration, which was the 2nd slowest This has, over time, increased pressure on the will rise, placing downward pressure on cash
growth on the market after the financial sector, scarce foreign currency which has seen the flows and real estate demand if you wish to sell.
which also succumbed to a fundamental crisis in exchange rate of the ZWL to the United States It also raises the expense of new real estate
the country. The recovery was anticipated to Dollar (US$) going up on every single day to development. The good news for investors with
accelerate going into 2022 as normalcy was a high of ZWL 40 per US$ on the parallel single-family homes (SFHs), condos, and multi-
beginning to kick back in the property market. A market and ZWL 308 on the official market, family in their portfolios is that these asset class-
worse off devil was, however, sharpening knives using the most recent data. In general, interest es tend to outperform in inflationary environ-
after the pandemic. The crisis of the government rates rise in lockstep with inflation. When infla- ments. According to a Standford University study,
poised as the Central Bank, firing shots of weak tion rises, central banks often boost short-term residential real estate is historically an investment
fundamentals against the economy emerged and interest rates to reduce inflationary pressures. safe-haven during inflationary periods. This can
overtook the Covid-19 impact on the economy. Consumers are more likely to borrow when partly be due to the inelasticity of the investment
The President, on May. 7, announced controver- interest rates are low, which means they have portfolio.
sial measures aimed at stabilizing the economy more money to spend. Real estate prices rise in
and particularly the local currency. These mea- tandem with inflation as the cost of living rises.
sures included pinning down on ZSE activities In general, when inflation rises, housing and
and suspending the lending of money by banks other real estate asset values rise with it.
to private institutions and the government, albeit However, because mortgage and interest rates
short-lived. The market responded to these mea- are rising, this tends to exert downward pressure
sures by worsening off, prompting the govern- on real estate demand as debt becomes more
ment to do a U-turn, notably the suspension of expensive. The continued depreciation of the
lending. ZWL while the government mandates listed
companies to account in local currency means a
Using dependable statistics from the ZSE, the continued devaluation of assets. However, for
Real Estate sector had been on a growing trajec- current assets, particularly inventory, a continu-
tory since February 2022 before plunging down ous reevaluation is done across the market, thus
in May, along with other sectors on the market value loss is minimal. In the fixed and immov-
following the pronouncements by the President. able assets market, revaluations are not as
However, the Real Estate sector, closed May frequent and not as accurate due to the volatility
among the worst performing sectors on the of the currency. Therefore, properties have since
bourse at over 30 percent decline. 2019 lost almost half of their value due to the
volatile currency.
The recession in the Real Estate sector on ZSE
is attributed to a number of factors which all
bow down to weak fundamentals in the economy.

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7 The AXiS XXIX-XXX Friday 03 June 2022 Economic News and Analysis

Economic review: Operationalisation of SI 145 of 2019

I n response to the low deliveries of grain scribed to command agriculture or farmed inthe Militarization versus Economics
to the GMB since the start of the market- 2021/2022 season using state-sponsored inputs,
ing season on 1 April 2022 and as a mea- operationalisation of SI 145 of 2019 reinforces Government’s actions to rope in the military to
sure to avert side marketing by farmers, Zimba- the deterring effect of the GMB’s grain delivery impound maize is a clear indication that nation-
bwe’s Ministry of Lands, Agriculture, Fisheries, system. al silos are either dry or close to it.
Water and Rural Development sanctioned the In the same way the Ministry of Finance has
above statutory instrument with immediate Propaganda sought to converge formal exchange rates and
effect (24 May 2022). Outlined below is a brief permit more market influence on day-to-day
implication analysis of the new legal instrument. Pfumvudza was not as big a success as state trading rates, a more competitive grain delivery
government media portrayed it to be. The talk model should be adopted – as what appeared to
“Conducting grain busting operations of a bumper harvest by publications like the be on the verge of mass implementation via
at various non GMB depots” Herald andofficials has turned out to be state Zimbabwe’s Mercantile Exchange.
rhetoric. But as things stand, the prospects of receiving
History repeats itself Distress calls from MPs and village chiefs that 100% forex at a willing buyer-willing seller
their constituencies are facing food supply chal- determined price point are far more appealing
History once again repeats itself in Zimbabwe lenges were reflected in May 2022’s move by than the 30% portion being offered by the
with regards to food insecurity. In 2019, the government to allow duty free importation of GMB – a variance that will continue to encour-
government proclaimed that the country had key commodities such as maize meal - addition- age side-marketing of maize in the months
enough grain to satisfy national demand for the al indications that Zimbabwe is food insecure ahead.
next three years but within three months of the this year.
pronouncement, mealie meal in shelves was Proactive measures government can
empty and the WFP had to import maize direct- Risk exposure take:
ly from South Africa to supply National Foods
and Blue Ribbon so as to make 10kg bags of Food and resources can be weaponised as • Facilitate the maintenance of a conducive eco-
roller meal. In May 2022, Government facilitat- evidenced by the Russia-Ukraine crisis hence nomic environment that erodes the potential for
ed the importation of 400,000 metric tonnes of maize in the wrong hands can also be used as market arbitrage and incentives not to support
maize from Zambia and Malawi, a concerning a weapon against the state by means of private GMB delivery appeals and
indication of prevailing grain shortages and players hoping to make abnormal profits while • Through competitively compensated Agritex
poor conversion rates in terms of GMB deliver- compromising the government’s ability to officers deployed nationwide, earnest follow-ups
ies despite a host of costly incentives to farm- ensure there is national food security both by must be made on all maize production it spon-
ers. minimising supply-demand mismatches as well sors each season from land preparation stages
as through the maintenance of grain price to the crop’s harvest as a way of monitoring
Clarity stability this year. progress on its investment, promoting transpar-
ency and ensuring maximum yields are pro-
Clarity concerning which farmers are to abide “Setting up of permit inspections at duced.
to this statutory instrument should be crystal.- various points such as road blocks”
Considering that not all maize farmers sub

Zim’s trade deficit narrows by 68% Did you
know?
in April 2022 Tobacco also remained one of Zimbabwe’s
exports with it contributing 11.5% to the total
Z imbabwe’s trade deficit for April 2022 export value in April.
narrowed by 68% to US$49.9 million, Zimbabwe’s major imports remained mineral
from US$156.2 million recorded in fuels and mineral oil products which stood at
March 2022, the latest ZimStat trade data has 22.1% in April 2022, compared to 17.1% in
revealed. March 2022.
This was followed by machinery and equipment
During the month under review, the country’s at 13.1% which according to the Reserve Bank
total export value increased by 5% to US$587.2 of Zimbabwe's weekly foreign auction system
million from US$557.5 million in March while gets a significant share of foreign currency allo-
total imports value decreased by 11% to cation.
U$637.1 million from US$713.7 million. According to the data, other imports in April
2022 included vehicles electrical machinery
The country’s exports remained mineral domi- plastics cereals mostly rice animal and vegeta-
nated with semi-manufactured gold, nickel ble oils and fats pharmaceuticals paper and
mattes including platinum group of minerals paper products and fertilizers at 8.3%, 4.9%,
(PGMs), nickel ores and concentrates, industrial 4.5%, 3.6%, 2.8%, 2.7%, 1.9%, and 1.6%
diamonds, ferrochromium platinum unwrought respectively.
or in powder form and coke and semi-coke at
30.1%,22.8%, 14.7%, 5%, 4.7%, 2.4%, and
1.4% respectively.

“During April 2022, the country exported 2 963 “Notably, major imports in Zimbabwe were
kilogrammes of semi-manufactured gold valued aggregated to reach 91.5% in April 2022. Rice,
at US$176.9 million, compared to 2 200 kilo- which makes the bulk of cereal imports consti-
grammes valued at US$135.5 million in March tuted 1.3% in March 2022 compared to 2.5%
2022. in April 2022,” ZimStat said.

In the same month of April 2022, the country Meanwhile, South Africa remained Zimbabwe’s
exported 1,150.1 tonnes of nickel mattes valued major trading partner during the month with
at US$133.9 million, compared to 1,009.5 exports to South Africa standing at 40.6%, a
tonnes valued at US$110.2 million in March slight decrease from 42.9% in March 2022
2022,” ZimStat said. while imports from South Africa increased to
ZimStat added, “Besides the major minerals 43.8% from 42%.
usually exported, Zimbabwe also exported 103 The value of imports from Singapore increased
kilogrammes of industrial diamonds valued at to 16.4% during the month under review, com-
US$29.2 million in April 2022, compared to pared to 12.6% in March 2022 while imports
148 kilogrammes valued at US$45.2 million in from China increased to 13.6% in April 2022
March 2021.” from 11.6% in March 2022.

Economic News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 8

Investors staying a step ahead of economic downturn

F or investors throughout the world, the last These and other factors have altered the way negative influence on the stock values of many
few years have presented severe challeng- the globe invests. In such a difficult and turbu- companies. Annual inflation around the globe is
es. Investors continue to face unstable lent business environment, the following meth- anticipated to reach a 40-year high in December
macroeconomic situations as a result of the ods will detail how investors have been invest- 2022, as costs for gasoline, food, vehicles and
destructive impacts of COVID-19, the Russian ing and how they will look to earn large health care continue to rise.
war in Ukraine, and China's recent lockdown returns. Investors have already begun preparing their
measures, which have caused worldwide supply portfolios and creating expectations for the
chain bottlenecks. Independent of these con- The Long-Term Effects of COVID-19 future as a result of these developments.
cerns, investors must continue to invest with the on Portfolios Demand for safe-haven assets is increasing, and
expectation of large returns, regardless of global capital inflows into Protected Securities are
economic conditions. This article will look at The pandemic, as well as the Ukraine conflict, expected to reach new highs by the end of
how some investors have managed to remain may continue to influence financial portfolios 2022.
afloat and make a profit in difficult economic this year in a variety of ways. Many countries' Asset allocations will likely continue to evolve
macroeconomic circumstances. monetary policies are likely to tighten more, for several reasons.
and interest rates are expected to rise in many To begin with, equity markets remain unaccept-
countries to combat the problem of inflation. To ably volatile. Due to Covid-19, African stock
date, practically all SADC nations have hiked markets began to see greater volatility in 2020,
interest rates to combat inflation through their although investors continue to use these stock
respective central banks. Zimbabwe is already markets, such as the ZSE, to hedge against
generating headlines with interest rates as high inflation, as evidenced by rising participation
as 80%, yet y-o-y inflation of 131.7 percent, levels.
demonstrating that high interest rates do not
always keep inflation under control.

The graph above depicts how global inflation is The problems with the global supply chain are Second, the speculative equities bubble contin-
destroying all continents, posing a severe threat unlikely to be remedied anytime soon. Over 20 ues to expand, posing a systemic risk to the
to investors seeking to hedge against inflation million shipping containers sat idle at ports market. In terms of national GDP, stock values
in whatever manner they can. Since Covid-19, around the world, causing significant delivery have never been higher. With record-breaking
a lot of things have changed. Investors have delays. Major retailers have begun chartering stock prices, investors in Zimbabwe have begun
been pushed to look for ways to hedge against their own supply ships, putting smaller busi- to move away from major firms and into
poor economic conditions due to record-low nesses at a serious shipping disadvantage, with medium and small caps.
interest rates, huge supply chain disruptions, median freight charges quadrupling in 2021
persistent pandemic implications, climate change compared to 2020. Many investors have resorted to alternative
in action, and Bitcoin's all-time high in other Prices on some consumer goods have risen by assets as a way to diversify their portfolios.
situations. more than 20% this year as a result of the ship- One in every six persons has now invested in
ping situation. Shipping concerns have had a bitcoin. This trend is anticipated to continue; by

*To Page 9

African Elephant Summit: Why Zim can’t sell its $600m

ivory stash animals endangered species. Its principle aim is unwarranted decision-making processes”. For
to ensure that international trade in wil and example, there are some African countries, such
Last week, Zimbabwe invited 16 African plant specimens does not threaten the survival as Kenya, that insist that all ivory sales should
countries and a range of dignitaries to of the species. International trade in ivory has be banned to discourage any international trade
join its conservation cause at the African been banned since 1989, following a 10-year in ivory. 50 anti-ivory trade NGOs warned an
Elephant Summit. It opened its vaults contain- period in which African elephant numbers opening of the ivory market would decimate
ing 135 tonnes of ivory and rhino horn as it declined by 50%, from 1.3 million to 600,000. herds which near extinction in certain regions
called for the stockpile to be sold to fund the Two one-off sales of stockpiled ivory were in addition to "sending a dangerous signal to
conservation of its growing elephant population. allowed since the 1989 ban, to disastrous effect. poachers and criminal syndicates."
Since then, western media reports have suggest- At the time, the selling prices achieved were
ed that the summit was an attempt to $100/kg and$157/kg respectively following If Zimbabwe decides to leave CITES to be able
strong-arm the international wildlife trade collusion by official Chinese and Japanese to sell their ivory, any potential consumer coun-
organisation CITES into allowing the global buyers. CITES’s intention was to approve the try would also have to leave the convention or
sale of elephants and ivory. Only five countries ivory sales so as to undercut the black-market find itself excluded from trading in CITES-reg-
signed the conference declaration, undermining price of poached ivory. The idea was widely ulated species.
a continent-wide consensus to lead the discus- appreciated by African countries who stood to
sion in how to realistically fund conservation benefit from the arrangement but the plan failed The director department of Wildlife and Nation-
efforts. miserably. al Parks Botswana, Dr Kabelo Senyatso, iterated
Zimbabwe is currently facing rapid economic Instead of declining sales skyrocket and conse- that the Convention on International Trade in
decline and despite genuine elephant population quently led to an increase in demand and in Endangered Species of Wild Fauna and Flora
concerns, it would seem that the country is des- poaching. To put it into context, the 2008 (CITES) needs significant change. During the
perate to monetise its wildlife. That assessment ivory sale resulted in a 66% increase in illegal- summit he stated that "when you look at how
could be true, but Zimbabwe’s elephant popula- ly traded ivory and a 71% increase in ivory CITES is at the moment, the very people that
tion has thrived because of the country’s vested smuggling, as well as a 30% decline in bear the biggest brunt of living with the wild-
concern for wildlife. Together Zimbabwe and elephant numbers to 415,000 by 2016. life are not at the table. It's amazing that even
Botswana are home to 50% of the continent’s In 2019, Botswana, Namibia and Zimbabwe governments are struggling to be at the table
elephants. asked for the right to sell ivory acquired because unfortunately it's particularly western
It’s rather incomprehensible that the country sits through natural deaths, confiscations and cull- NGOs that are dictating where CITES should
on tonnes of ivory and tonnes of rhino horn ing. But that demand was rejected by a CITES head so it's a real issue”, he said.
with sufficient demand from Middle Eastern meeting in Geneva. This year, the South Afri-
and Asian countries for ivory and live baby can delegation notably did not sign the declara- Southern African countries are home to approxi-
elephants but cannot monetise seized ivory tion. Its current position is that it will not seek mately 293,000, or 70% of Africa’s elephant
horns to keep funding conservation. This piece to trade ivory under the current circumstances. population and Zimbabwe gathers the world's
aims to look at the possible reasons why Zim- Zimbabwe wants non-interference from CITES second largest elephant population. Countries
babwe still can’t sell its ivory to the internation- on domestic trade, sovereignty of states and with large elephant herds like Zimbabwe or
al community. their right to monetise local wildlife. It criti- Botswana remain ill-equipped to protect them
cised decisions influenced by “non-affected from poachers without money from ivory sales.
The CITES Dilemma nations” and animal welfare organisations, and
called for a review of CITES membership in tZioimn?babwe’s Ivory value: Fact or fic-
CITES is an international body that monitors d the face of its “continued unscientific and
If the Ministry of Environment were to be
found disingenuous about its ivory stockpile
data, it wouldn’t be surprising. Data inconsisten

*To Page 11

9 The AXiS XXIX-XXX Friday 03 June 2022 Economic News and Analysis

*From Page 8 sion. ESG investments were found to be less vol- garages, etc). Purchasing REIT shares in order to
negative influence on the stock values of many atile and capable of providing higher risk-adjusted gain exposure to the REIT's real estate invest-
companies. Annual inflation around the globe is returns in one study. ments and to have such exposure.
anticipated to reach a 40-year high in December As new investing opportunities emerge, ESG is Many corporations are discussing registering the
2022, as costs for gasoline, food, vehicles and likewise positioned to become more mainstream. first REIT on the ZSE, thus the next few
health care continue to rise. There were 552 ESG ETFs by the end of 2020, months will be exciting for many economic
Investors have already begun preparing their port- and 834 at the end of October 2021. Net cash agents interested in REIT investments. Investors
folios and creating expectations for the future as flows into ESG mutual funds and ETFs were who invest in publicly traded REITs through any
a result of these developments. Demand for larger than all cash flows from January to Sep- brokerage account can also buy shares in
safe-haven assets is increasing, and capital tember 2021. Due to the direction the world is non-publicly traded REITs through their plat-
inflows into Protected Securities are expected to moving with ESG strategies, we expect more forms.
reach new highs by the end of 2022. EST-related funds, ETFs, and other equities to
Asset allocations will likely continue to evolve trade on the ZSE. Crypto investments
for several reasons.
To begin with, equity markets remain unaccept- New Opportunities Investing in cryptocurrencies as an alternative to
ably volatile. Due to Covid-19, African stock gold to prevent inflation is also a realistic
markets began to see greater volatility in 2020, Everyone learned from the pandemic that no one choice. People are putting their money into
although investors continue to use these stock knows what the future holds. Although 2021 was Ethereum (34%), bitcoin (33%), a crypto fund
markets, such as the ZSE, to hedge against infla- a wildly uncertain year, there are already signals (23%), other coins (15%), and dogecoin (2%).
tion, as evidenced by rising participation levels. of hope for 2022. Though pandemic-related chal- (2 percent ). Bitcoin is sometimes referred to as
Second, the speculative equities bubble continues lenges will persist this year, investors will be "digital gold," and while its restricted supply
to expand, posing a systemic risk to the market. drawn to new asset classes and new opportunities should theoretically guard against inflation, it is
In terms of national GDP, stock values have never to make a difference as a result of them. unclear whether it will be a good inflation hedge
been higher. With record-breaking stock prices, Rising inflation has a significant impact on how in the long run due to its erratic volatility.
investors in Zimbabwe have begun to move away investors choose to invest. Inflation should be a Everyday investors may now invest in cryptocur-
from major firms and into medium and small concern for investors, and they should seek to rency owing to financial apps that make it
caps. safeguard their assets. Even if the average inves- simple. Users can only buy bitcoin on Cash
Many investors have resorted to alternative assets tor doesn't have millions to his or her name, App, a peer-to-peer payment service owned by
as a way to diversify their portfolios. One in there may be methods to emulate how the Square Inc. PayPal customers can buy bitcoin,
every six persons has now invested in bitcoin. wealthy invest their money, especially in light of Ethereum, bitcoin cash, and litecoin, among
This trend is anticipated to continue; by 2025, the the persistent inflation fears that affect us all. other cryptocurrencies. Users who have crypto-
entire value of alternative assets under manage- Due to the uncertain macroeconomic situation, currency on PayPal can use it to pay for things
ment is expected to exceed $17 trillion. investors have adjusted their investing strategy to on the app as well.
Financial technology developments are largely to curtail inflation.
blame for this growth. Smaller donations are Ienncerregaysing investments in alternative
being pooled into funds that represent an aggre- Building inflation-resistant portfolios
gated ownership stake, allowing digital investing Electric vehicle stocks are still popular invest-
platforms to avoid hefty direct investment mini- Inflationary pressures are more likely to cause ments, with investors pouring money into busi-
mums. By splitting an investment into digitally long-term issues than temporary ones. Global nesses like Tesla. . Although Tesla stock isn't
digestible chunks, tokenization has revolutionized inflation is projected to continue growing as a cheap, it is possible to gain exposure to the EV
how assets are provided, making them more man- result of the Russian-Ukraine crisis as well as market by investing in ETFs that invest in a
ageable for smaller investors. Chinese lockdowns. As a result, investors are put- range of EV-related firms.
ting money into investments like real estates,
EInScGreasAellocations Will Continue To such as industrial properties and apartment build- Bottom line
ings, public equities, or stock, in platform compa-
The year 2021 was one of the warmest on record, nies with pricing power (platform companies The lesson for investors is that the economic
and extreme weather occurrences are becoming include Amazon, Apple, and Airbnb), consumer situation is constantly changing, so it's only
more common as the world's temperature warms. staples, and streaming services to protect against natural for them to plan for the worst-case sce-
Meanwhile, the long-term environmental impact inflation. nario and discover ways to hedge against infla-
of the pandemic mask, glove, and chemical disin- tion.
fectant use is still unknown. REITS The issue of monkeypox is currently posing a
The pandemic heightened worldwide concern serious threat to global health, and it is unques-
about climate change. Many people are now more Real estate is a good inflation hedge. REITs are tionably something that will have a global
conscious of how their actions affect the environ- a type of real estate investment trust that allows impact on economies due to the large sums of
ment, as world leaders continue to work to you to invest in real estate without owning a money that countries will invest in dealing with
advance worldwide efforts against climate change. home (also known as Real Estate Investment the issues at hand, as well as in attempting to
This growing interest in environmental, social, Trusts). A real estate investment trust (REIT) isa find vaccines to combat the disease.
and governance (ESG) factors in investment deci- firm that invests in various types of income-pro-
sions is now evident. In reaction to Covid-19, % ducing real estate (shopping centers, condomini-
of wealth funds, insurance, foundations, and pen- ums, housing developments, hospitals, parking
sion funds polled boosted their ESG investments
in 2020, while 85 percent of company leaders
considered the pandemic as a "wake-up call" on
sustainability, according to another survey.
Retail investors continue to demonstrate a consid-
erable interest in sustainable investing; according
to a recent survey, the most important driver is a
beneficial influence on the environment, not
financial results. In Zimbabwe, the RBZ has made
it a requirement for banks to adhere to ESG
norms, implying that the same obligation could be
applied to other industries in the near future.
The high demand for sustainable investments is
expected to continue in 2022 and beyond, owing
to ESG's superior investment performance. More
than half of those polled believe ESG-integrated
portfolios will perform as well as or better than
non-ESG-integrated portfolios. Socially responsi-
ble companies are less likely to go bankrupt and
were more resilient at the start of the 2020 reces

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11 The AXiS XXIX-XXX Friday 03 June 2022 Economic News and Analysis Final Thoughts

*From Page 9 Zimbabwe’s cereal Mangaliso Ndlovu, Zimbabwe’s Environment
cies have been rampant in this administration. imports soar amidst Minister, was visibly dismayed by the
Zimbabwe’s Minister of Environment valued summit attendance at the Hwange Summit
the country’s stockpile of 130 tonnes of ivory Russia-Ukraine He stated that “It’s a disappointment for me,
and five tonnes of rhino horn at $600-million war crisis the attendance at the summit,” Ndlovu said.
or $500 million(pounds). “It’s a comfort, though, that the countries
According to other data from undisclosed Zimbabwe’s cereal imports for the month of that came have 65% of the world’s elephant
sources, unworked elephant ivory sells for April 2022 experienced a sharp increase as the population.”
about $92/kg on the black market, while rhino whole world grapples with the devastating Is that the only real solution to elephant
horn is currently selling for $8,683/kg. If we effects that the Russia/Ukraine war has on the conservation is to stop all international and
assume an optimistic wholesale ivory price of global supply chains, as well as possible food local trade? I think not! If funds from
$150/kg-$160/kg, this would value Zimba- inflation within the country. seized ivory are used to fund further conser-
bwe’s ivory stockpiles at in the region of Data released by ZimStat shows that cereal vation, despite the incessant risk of hiking
$19.5 million to $25 million. That’s is just but imports including maize increased from 1.7% in illegal demand, such effforts should be
a percentile of the minister’s estimate. March 2022 to 3.6% in April 2022 while rice, encouraged.
Once the ivory has left the African continent, which makes the bulk of cereal imports, consti-
price disparity widens even further. The value tuted 2.5% in April 2022 compared to 1.3% in Last year, the resulting human-wildlife con-
of the ivory that China bought in 2008 at the March 2022. flict led to an all-time high of 72 deaths.
last “one-off sale” for $157/kg was augmented The increase in maize imports was bound to Zimbabwe says that it has resorted to
by the Chinese authorities to traders at prices happen given the fact the country long ran out searching for alternative sources of funding
ranging between$800 and$1,500 a kilogram. of maize stocks despite the bumper harvest that because it can no longer afford to manage
This meant that the bulk of the profits filled was reported during the previous season. its elephant population.
Chinese government, and not African coffers According to new government estimates, the “The money raised from the ivory sales
whilst also creating a large illegal market 2022 maize harvest is expected to drop by 43% would be used to support elephant
which drove prices even higher. from last year's 'bumper' crop and this leaves conservation and affected communi-
a deficit of 300 000 tonnes that will have to be ties,” said an officail at the
It’s still illegal to sell seized ivory filled by imports, which have already gathered summit.
pace. A part of the funds would spe-
Zimbabwe and Botswana want to be Formal maize imports are expected to increase cifically go into relocating
allowed to sell ivory to offset the cost of although at below normal levels during the some of the elephants to
storing ivory, help finance conservation course of the outlook period as a significant countries that are trying to
and mitigate human-elephant conflict. 2022/23 national cereal deficit is anticipated. restore their elephant popu-
Elephants are listed on CITES’ The country is already experiencing macroeco- lations. Possibly these
Appendix 1 (no trade) everywhere in nomic challenges, compounded by increasing efforts would be directed at
the world except Botswana, Namib- prices of basic food, fuel, and fertilizers, as well the region.
ia, Zimbabwe and South Africa, as disruptions in global supply chains are Since 1991, Zimbabwe has
which were permitted a special expected to negatively impact low-income been selling elephant hunt-
exemption to list as Appendix households in both rural and urban areas. Spik- ing permits, capped at 500
11 allowing limited trade in a ing parallel market exchange rates will continue per year.
2008 once-off sale. However, contributing significantly to the rising cost of Under ideal circumstances,
these coujntries are barred goods and services Zimbabwe would certainly
from selling even seized Meanwhile, Zimbabwe’s major imports remained want an arrangement that
ivory because it incites mineral fuels and mineral oil products which would go beyond a one-off
poaching. stood at 22.1% in April 2022, compared to sale and allow for regular
17.1% in March 2022. sales of ivory extracted
The dilemma of ration This was followed by machinery and equipment from the hunted elephants.
hunting at 13.1% in April 2022. Other imports in April
2022 included vehicles (8.3%), electrical The efforts continue to face
The cost of feeding rangers machinery (4.9%), plastics (4.5%) have international condem-
and park staff is is quite Notably, major imports in Zimbabwe were nation.
high. The government opts aggregated to reach 91.5% in April 2022. “The summit is sending a
to subsidise the cost by dangerous signal to
feeding them with poachers, criminal syndi-
‘high-value’ species like cates that elephants are
elephants. The issue is mere commodities, and
obviously widely debated that ivory trade could
by the internationla conn- be resumed, height-
servation community. ening the threat to
According to undisclosed the species,” said
sources, Zimbabwean rangers a joint statement
shoot elephants (and other by 50 leading
wildlife) inside national biodiversity
parks, with annual quotas organiza-
higher than the surrounding tions.

trophy hunting areas.
It’s also believed that
the parks and reserves
are used to supply
other government
divisions, includ-
ing the armed
forces, with
meat rations.

Economic News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 12

Tobbaco Weekly Update Day 41
real danger for desertification.
(2022 Marketing Season) In working towards being compliant with the
Sustainable Tobacco Program, TIMB through a
recently introduced Sustainability Department is
responsible for designing, implementing & coor-
dinating the sustainability strategy, standards &
targets for Zimbabwe’s tobacco industry. Notably,
seedbed preparation for the 2022/2023 tobacco
season commenced on 1 June 2022.

In preparation for the 2022/2023 season, deep
ploughing as early as possible is a crucial step
towards the maximisation of decomposed plant
residue. The site should be kept free of weeds
between ploughing and fumigation, making the
first week of June the earliest and optimal period
for sowing tobacco seedbeds.

As a way of making sure SI 77 of 2022, crimi-
nalising side marketing of the cash crop is
adhered to,125 people have been arrested for side
marketing since the marketing season began on
March 30. TIMB has also deployed inspectors in
all tobacco-growing regions with a mandate to
investigate all illegal activities in the industry.

Below is a graph visualization for an annual
comparison with a focus on the top contractors.

B ased on accumulated contract and auction As of day 41, the volume of tobacco sold was
floor sales data as of May 31st 2022 (day 13.35% behind the prior year. In terms of value,
41) the above is the tabulated performance the 2021/2022 season was 4.40% behind the pre-
for tobacco sales on an aforementioned day. 41 vious year’s comparable period. The value of
days into the 2022 tobacco sales season and the inferior tobacco was US$131,562 – a figure
auction floor sales volumes stood at 8.04m kgs 30.38% behind the previous year’s comparable
which were valued at US$25.29m based on an data but a remarkable squander, however.
average price of US$3.15/kg. This metric is reflected in the monetary value of
Despite trailing behind prior year volumes, con- rejected bales as of day 41. Whilst tobacco is a
tractor trading has also been sturdy. Valued at lucrative venture that has changed the livelihoods
US$333.21m, the segment’s 111.91m kgs have of thousands of families, the unsustainable way
been sold at a seasonal average price of in which farmers tend to cure the crop is exten-
US$2.98/kgs. sively damaging the environment and creating a

13 The AXiS XXIX-XXX Friday 03 June 2022 Regional News and Analysis

Time for Africa to divest from water we have, it is a particularly complex situa-
primitive agro-formats tion, quite unprecedented.”
North Africa is the world’s second-largest wheat
importer, and harvests can swing substantially
from year to year except in Egypt, where produc-
tion tends to be more stable because it primarily
grows wheat under irrigation, a move more Afri-
can nations should invest in.

In Southern Africa, although rainfall in January
helped reduce seasonal moisture deficits and
improved vegetation conditions in most parts of
the region, the impact of drought and heat stress
on vegetation conditions is still evident in Zimba-
bwe, south-western Angola, north-western Namib-
ia, northern and central Mozambique, Malawi and
Madagascar.

In South Africa, the largest maize producer in the
region, conditions have been generally good and
maize production is forecast at an average level,
but the country has the looming problems that
might force it to reduce maize exports particular-
ly due to economic shocks caused by Ukrainian
War global-wise.

I t is high time that Africa divests from primi- Data from World Bank indicates that Africa will Africa imports most of its grain from Ukraine
tive agricultural methods if it wants to save have a population of 2 billion people by 2050, and Russia, nations currently involved in a geo-
its people from the looming starvation caused and agriculture will be central to feeding all of political war that has caused disruption in global
by a busload of factors, with global climate those people. However, with Africa remaining supply chains and saw a record rise in commodi-
change headlining them. It is the time that the clinching on natural rains to have greater yields, ty prices. This implies that importing will no
second largest continent starts to invest in inten- it will not escape the looming hunger. longer sustain Africa as it won’t only be limited
sive irrigation systems to power its agricultural East Africa, a region that is more agro-based has against demand, but also very costly.
sectors as droughts continue to haunt the conti- been facing a wave of droughts for the past five Worrisomely, the causes of droughts are mainly
nent. years. The latest joint report from Non-Govern- due to climate change, courtesy of fossil fuels
For countries to deliver on the food security and mental Organisations and meteorological depart- that are causing a depletion of the ozone layer
nutrition targets under the African Union’s ments within the region indicates that East Africa and causing global warming. Africa contributes
Agenda 2063 and the Malabo Declaration, collec- is facing a threat of starvation following four between two to three percent of pollution yet it
tive and individual actions are needed at all gov- failed rainy seasons. is the highest most affected by the effects.
ernment levels, from the private sector, and According to metrological experts, there is now China is, by a significant margin, Asia's and the
among farming communities to expand irrigation a substantial risk that the October-December world's largest emitter: it emits nearly 10 billion
across the continent—from small-scale schemes rainy season could fail. Should these forecasts tonnes each year, more than one-quarter of global
to farmer-led innovations and large-scale irriga- materialise, the already severe humanitarian emer- emissions. North America – dominated by the
tion systems. gency in the East Africa region would further USA – is the second-largest regional emitter at
However, the Malabo Declaration of ending deepen. 18% of global emissions followed closely by
hunger by 2025 seems to be lagging in time. In East Africa, the food security situation remains Europe with 17%.
Africa is known for rich agricultural soils, both alarming in South Sudan, and in Tigray, western However, Africa should start to invest more in
black and red soils which are suitable for farm- Afar and northern Amhara in Ethiopia. irrigation schemes at a large scale to deal with
ing while boosting 60% of arable lands. Food North Africa also experienced the worst droughts the impacts of climate change. Irrigation in
production in Africa continues to rely almost in history during the past two rain seasons with Africa has the potential to boost agricultural pro-
exclusively on rain-fed agriculture, leaving farm- wheat wilting while cities resorting to water ductivity by at least 50%.
ers and rural communities vulnerable to more rationing as North Africa’s grain belt suffered the 85% of Africans depend on agriculture for liveli-
erratic rainfall patterns and climatic extremes. worst drought in 30 years. hood. As a result, agricultural development is key
Sadly, despite having a global bigger share of Morocco recorded scant rains during the latest to ending poverty on the continent. That could
rich soils for agriculture, Africa remains a net rainfall season, the lowest rains in at least thirty allow places like Niger to shift from perennial
importer of food as its population continues to years according to reports while parts of Algeria sites of hunger into producers of food for the
multiply and triple both in urban and rural areas and Tunisia were dry during the normal rain regional market of more than 250 million people.
due to a climax of factors, religion, poverty, and times, recording worst droughts as well, running It can increase yields and production, protect
lack of effective family planning campaigns the risk of smaller harvests that may boost reli- against yield losses to variable rains, and enable
included. ance on foreign supply at a time of near-record cultivation in dry seasons and of potentially
Research indicates that African agricultural prog- food costs. high-value crops that consume more water. Crop
ress has grown by 160% over the past thirty Morocco faces an acute drought every two to yields in sub-Saharan Africa are often compared
years’ courtesy of country-level programmes such three years, compared with every seven to 10 unfavourably to those seen in Asia.
as the Ethiopian Agricultural Transformation years in the 1990s Financing institutions like AFDB should focus
Agency, cross-border initiatives like the Compre- Rachid Benali, vice president of the Morocco more on supporting irrigation schemes the same
hensive Africa Agriculture Development Pro- farmers’ lobby group Comader, is on record way they are supporting the energy sector. Gov-
grammes and support from Pan-African groups saying in February this year, “We are trying to ernments should start saving for irrigation and
like the African Development Bank, the African save what can be saved, spare the minimum of empowering farmers with irrigation equipment to
Union and the New Partnership for Africa's ease the stress of the food imports bill.
Development. Worrisomely, food production fails Nearly 65% of African imports are foodstuffs and
to keep pace with population growth. infusion of African agriculture with irrigation.

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Regional News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 14

Russia-Ukraine war threatens development progress
in Africa: UNDP
According to UNDP, food and fuel account for Africa’s gas producers, like Algeria, Libya, and
The United Nations Development Pro- over one-third of the consumer price index in Nigeria, are well-positioned to fill this created
gramme (UNDP) says the ongoing Rus- most African countries and the pass-through of demand gap.
sia-Ukraine war is threatening to derail consequent inflation will be swift and hard-hit- “But there are two immediate consequences of
development progress in African countries, push- ting, especially for vulnerable groups like the increase in the global demand for oil and
ing the 2030 Sustainable Development Goals and women and children. gas. First, it could undermine progress towards
the aspirations of the African Union’s Agenda African countries have also been affected by ensuring a just transition to sustainable energy
2063 further out of reach. the indirect impacts of the war which include, sources which are much more environmentally
imported inflation, difficult energy transitions, friendly.
In its latest report titled ‘The impact of the war and a potential geopolitical realignment. Second, it could limit the continent’s access to
in Ukraine on sustainable development in Africa’, natural gas in the near-term as African countries
UNDP said the war in Ukraine comes at a time As much as Africa stands in a position export their gas supplies to Europe,” UNDP said.
when African countries are still struggling to to also benefit from the The two immediate consequences will undoubted-
recover from the destabilising effects of the disruptions ly impact Africa’s economic development going
global COVID-19 pandemic, which caused deep caused forward, as it will have a huge impact on the
economic regression, significant loss of produc- continent’s energy transition.
tivity, worsening inequalities, planetary pres- With Africa currently fighting its way around
sures, and in some cases security challeng- making sure it produces adequate electricity
es. through natural gas considering the huge gas
“The impact of the war could push deposits that the continent has, exporting the gas
Africa into serious debt distress,
making countries less likely to meet supplies to Europe will leave them with few
their debt obligations. It could also gas supplies, derailing their develop-
increase inequality because high ment in the energy sector which is
food and fuel prices typically hit expected to also lead to better the
the most vulnerable households African countries’ economies.
hardest,” UNDP said.
Zimbabwe
“Reduced access to electricity and
cooking fuel would make more Since the Russia-Ukraine war com-
households multi-dimensionally menced, the country has not been
poor, while shrinking budgets may spared from its impacts as witnessed by
trigger households to dispose of their the rise in food and fuel prices.
assets, thus reducing their ability to Although the country has already been in a not
cushion themselves from future shocks. so good economic state before the war impacts,
Overall, these indirect effects would con- which according to analysts is due to poor gover-
strain overall economic activity and could trigger nance, it is arguable that the impacts of the war
social tensions and unrest.” have also contributed to worsening the situation.
by the The country has also witnessed a spike in infla-
war, espe- tion with year-on-year inflation going back to
The Russia-Ukraine war which started in late cially in three figures since June 2021 as it spiked to
February this year has at large affected global terms of the 131.7% in May 2022 from 96.4% in April 2022.
supply chains, threatening Africa’s food security growing The impacts of the war pose a significant threat
due to its high dependency on food and agricul- demand for to the country’s development agenda and have
tural inputs from the two countries. oil and gas the potential to derail the government’s to attain
an Upper Middle-Income economy by 2030.
The direct impact of the war in Africa has been from Europe-
trading disruptions, food and fuel price spikes, an countries
macroeconomic instability, and security challeng- as they seek
es. to secure new
providers, in
which Africa
Since the start of the war, food grain prices have fits well, the
continued to rise even higher as supply disrup- benefits are two
tions from Russia and Ukraine have also contin- folded as they also
ued to rock the global markets. have consequences.

Tussles with the European Investment Bank(EIB)

EIB In Zimbabwe actually covering those areas, the EU through the EIB has
opted to stop all lines of credit to the Zimbabwean public
The EIB(European Investment Bank) contributed more sector due to already existing areas and instead the
than €1.8 billion in support for private sector invest- investment bank has chosen to invest in the private
ment across Africa in 2021, accounting for 60% of sector directly.
total participation on the continent. The EIB has THE European Investment Bank (EIB) extended
contributed more than €2 billion in fresh finance a EUR12,5 million facility to NMB Bank as
in recent years to promote high-effect invest- part of its private-sector lending initiative for
ments. These so-called "high impact invest- Zimbabwe. The seven-year facility to support
ments" range from energy projects to agricul- business investment across Zimbabwe came
ture projects, to name a few. at a time when NMB Bank has been work-
This week beginning the 29th of May has ing on growing its agribusiness along with
seen vibrant participation by the EIB in its portfolio of exporters.
tandem with the EU is extending lines of First Capital Bank (FCB) also acquired a
credit to two banks in the Zimbabwean credit facility of EUR 12,5 Million from the
banking sector. These banks are NMB and European Investment Bank which is meant to
First Capital Bank. This brings the total boost the operation of small to medium enter-
number of banks that have benefited from the prises in the country. The funding is set to
EIB lines of credit to 3 including CABS which develop eligible investment projects undertaken
was the first bank in Zimbabwe to be extended by Small to Medium Enterprises (SMEs) and
the opportunity to benefit from this facility in MidCap companies under FCB aiming to accelerate
2021 as a measure of sustaining operations for economic growth in pertinent industries.
many companies in the local economy. THE European Investment Bank (EIB) unveiled a €15 mil-
Due to Zimbabwe having an external debt position of
MORE than US$16.9Billion and there being no clear plan of lion (US$18 million) seven-year facility to Zimbabwe’s biggest

*To Page 15

15 The AXiS XXIX-XXX Friday 03 June 2022 Regional News and Analysis

*From Page 14 EIB IN NIGERIA small and medium-scale enterprises space and
helping businesses unlock opportunities across
mortgage lender, CABS, to bail out thousands of The European Investment Bank in partnership local economies is another role the EIB plays.
firms that have been affected by COVID-19 in with the African Development Bank agreed to The investment bank business model has demon-
2021. CABS’ strategy with regards to this facili- support the creation of the new Development strated proven success to enhance private-sector
ty is to support private sector investment in Zim- Bank of Nigeria to strengthen lending for busi- investment across Africa and around the world
babwe and enable corporate, business and agri- ness and agriculture investment in the country. where other financing options are inadequate or
cultural clients to invest for the future and create This was initially agreed upon in 2018 showing absent.
economic opportunities. that the EIB is very interested in Agric projects. Private sector businesses are critical to the devel-
It can't be a coincidence that all the credit line The EIB finalized a US$20million equity stake opment of the Zimbabwean economy as these
facilities extended to the private sector via the in the new financing institution, alongside a possess huge potential for employment generation
banks seem to be targetting certain business US$50million equity participation from the Afri- and output diversification. Nevertheless, there has
models and in the Zimbabwean case, it's pre- can Development Bank. The EIB has invested in been under-performance of these businesses and
dominately agriculture. The EIB has some influ- many African countries but Nigeria is one of the this has undermined their contribution to econom-
ence over what businesses will get the funding biggest African economies, so it made sense to ic growth. Among the issues affecting their per-
via the banks, hence these 3 Zimbabwean banks include it in this article. formance, the shortage of finance, particularly
even though they are run on different principles investment finance, occupies a very central posi-
and objectives it's not surprising that all these Role of the EIB tion.
banks only feel safe investing in similar busi- New private sector investment is crucial to create
nesses. Agriculture, Agriculture-infrastructure, Challenges hindering private sector investment in jobs and enable the business to expand and limit-
fisheries, and milk products to name a few are countries like Zimbabwe and Nigeria are being ed access to long-term financing holds back eco-
some of the key businesses that FCB will invest addressed by the EIB. The Bank is playing an nomic growth. According to EIB statistics, It is
in according to the FCB commercial director important and catalytic role in providing funding estimated that only 5% of the total entrepreneurs
Mutemwa Ushewokunze. and risk sharing facilities to micro, small and and small businesses in Africa who contribute to
Those 3 so far are the only lines of credit that medium enterprises as well as small corporates. 50% of GDP can access credit in the financial
the EIB has extended to the Zimbabwean Private Oververcoming the funding gap in the micro,
sector through banks. *To Page 16

Term of The Week

' Effects on financial statements and ratios: a write-down
impacts both the income statement and the balance
Write-Down sheet. A loss is reported on the income statement. If the
write-down is related to inventory, it may be recorded as
Definition: an accounting term for the reduction in the a cost of goods sold (COGS). Otherwise, it is listed as a
book value of an asset when its fair market value (FMV) separate impairment loss line item on the income state-
has fallen below the carrying book value, and thus ment so lenders and investors can assess the impact of
becomes an impaired asset. devalued assets.
The asset's carrying value on the balance sheet is written
Understanding write-downs: write-downs can have a down to fair value. Shareholders' equity on the balance
huge impact on a company’s net income and balance sheet is reduced as a result of the impairment loss on the
sheet. Accounts that are most likely to be written down income statement. Impairment may also create a
are a company's goodwill, accounts receivable, inventory, deferred tax asset or reduce a deferred tax liability
and long-term assets like property, plant, and equipment because the write-down is not tax-deductible until the
(PP&E). PP&E may become impaired because it has affected assets are physically sold or disposed of.
become obsolete, damaged beyond repair, or property In terms of financial statement ratios, a write-down to a
prices have fallen below the historical cost. In the service fixed asset will cause the current and future fixed-asset
sector, a business may write down the value of its stores if turnover to improve, as net sales will now be divided by a
they no longer serve their purpose and need to be smaller fixed asset base. Because shareholders' equity
revamped. falls, debt-to-equity rises. Debt-to-assets will be higher as
well, with a lower asset base. Future net income potential
Write-downs are common in businesses that produce or rises because the lower asset value reduces future depre-
sell goods, which require a stock of inventory that can ciation expenses.
become damaged or obsolete. For example, technology
and automobile inventories can lose value rapidly, if they
go unsold or new updated models replace them. In some
cases, a full inventory write-off may be necessary.

Economic News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 16

*From Page 15 development financing mandate a new sense of sector or the public sector, they ultimately
urgency. The European Commission is now should benefit directly or the whole EU should
system. working on an ambitious new External Invest- benefit. The migration problem of
Other international financial institutions including ment Plan that could involve up to 88 billion Africans to Europe is a dire one and one that
the World Bank, Germany’s KfW and the French Euros. It aims to encourage investors, make has to be dealt with. Investment in the African
Agence française de développement (AFD) are technical expertise available and make it easier countries will be able to deal with the long
adamant about investing in the Zimbabwean to do business in developing countries. This is term migration problems in the long run.
economy and hence the opportunity presented by likely to increase the financing capacities of the Also, at this time of the Russian-Ukraine war,
the EIB is one that should be welcomed. EIB. the EU through the EIB might want to reduce
The problem is that often these projects, particu- dependency on Russia and switch to Africa for
Who is the EIB(European Investment larly energy projects, require resettlement, a agriculture products. \
Bank) complex process that not only involves moving
people’s homes physically but also changing GreenBonds
The European Investment Bank is the long-term their quality of life and inevitably interfering
lending institution of the European Union that with their cultural heritage. Since pioneering green bonds the EIB, the
makes long-term finance available for a sound world’s largest international public bank and the
investment to contribute toward EU policy goals. Why is the EIB investing in Africa largest issuer of green bonds, has continued to
The intervention is part of EIB’s strategy to scale support initiatives to increase investment in
up interventions across African markets to build In as much as the EIB looks like they want to climate-related projects and strengthen investor
resilience in the region’s companies during the encourage investments in places like Africa, the confidence in green bonds. The EIB aims to
pandemic as well as any other unique economic sad truth however is that the quid pro quo con- promote sustainable development, social respon-
conditions that could prove challenging for com- cept exists and for each funding, they make sibility and good governance.
panies. available either to the private
Issuing loans to projects that would rebuild
Europe was the initial mandate of the EIB at its Confluence of calamities to birth
inception in 1958 but that mandate has changed
over the years with the focus also shifting to the global economic recession
African markets. The bank presents itself as the
"bank of the European Union". Unlike the Euro- - IMF, World Bank warns
pean Central Bank (ECB), the EIB does not deal T he global economy was expected to
with fiscal policy but provides money and exper- rebound in 2022 due to the easing of Wednesday.
tise to projects that contribute to EU policy COVID-19 restrictions and infections Over the centuries there have been many simi-
goals. The bank lends money to projects in the that caused the global economy to operate in a lar fiscal disasters, economic crashes and global
fields of energy, transport, health or education teapot, shutting down industries and constrain- crises that have wrought havoc on national
that contribute to the development of EU coun- ing funds to buy medicine and count- finances and family incomes from the Credit
tries. Ten per cent of the EIB portfolio is invest- er-COVID-19 equipment and services. Crisis of 1772, to the Great Recession of 2008.
ed outside Europe. Noteworthy, most investments The financial crash and global recession of
in Africa are biased towards agriculture as However, the breather of the COVID-19 pan- 2008 was the worst economic disaster since the
opposed to “fintech” which is the popular invest- demic was compounded by a basket of calami- Great Depression of 1929 according to
ment choice for many investors. ties chiefly the Russian aggression in Ukraine research. The crash was triggered primarily by
After World War II, the bank began lending to which led to global supply disruptions of com- the collapse of the U.S. Housing Market.
projects that contributed to the reconstruction of modities and a ban on crucial exports by coun-
Europe. In 2014, the institution had more than tries. IMF added that, “As policymakers, and busi-
three thousand employees and had grown into the ness leaders head to Davos, the global econo-
largest international borrower and lender in the Before a two-year hiatus courtesy of the pan- my faces perhaps its biggest test since the
world, with a capital of 275 billion euros. The demic, globalisation tripled the size of the Second World War.”
bank finances projects with its resources, mainly global economy and lifted 1.3 billion out of
through debt recovery, and by managing facilities poverty according to reports. However, since “We have a choice: Surrender to the forces of
entrusted to the bank by the EU, such as the the war in Ukraine, countries have imposed geo-economic fragmentation that will make our
fund for countries in the African and Caribbean restrictions on food trade, energy and key com- world poorer and more dangerous or re-shape
group known as the Investment Facility.\ modities necessary for human survival. The how we co-operate.”
The European Investment Bank is the European war has undermined global integration with an
Union's investment bank and is owned by the increase in trade barriers which is a threat to Global consumer price inflation picked up from
EU Member States. It is one of the largest supra- global economic growth. 5.3% year-on-year in December 2021 to an
national lenders in the world. The EIB is a estimated 7.0% this May, a pace that the World
not-for-profit organisation which funds projects As a result, the global world is grounded with Bank believes will persist till September this
that achieve the policy aims of the European a possibility of an economic recession. year.
Union through loans, guarantees and technical
assistance. A recession, according to Investopedia is a The statement by IMF comes at a time Russia
The EIB was established to facilitate equitable term that refers to a significant decline in gen- had blocked Ukrainian grain shipments through
development in the EU through lending to eral economic activity in a designated region the Black Sea, while the largest food oil pro-
regions that are less developed and to support the and in this sense, an economic slowdown of ducer, Indonesia and the second-largest wheat
EU's internal market. The EIB is active in 140 all regions. An economic downturn affects peo- producer, India have both halted exporting their
countries throughout the world. It takes around ple’s lives through higher unemployment, produce. In the same time, the word’s econom-
10% of its investments outside the EU to support reduced economic activity, reductions in income ic giants, USA, China, UK and the Eurozone
the European Union's development aid and coop- and wealth, and brings greater uncertainty are experiencing record inflation rates and eco-
eration policies. about future jobs and income. This affects nomic slumps.
nations’ economic growth on a larger scale. Due to ongoing havocs, the oil-importing bill
The bad side of the EIB After a 5.8% rebound in 2021, global real for Sub-Saharan Africa has been projected to
GDP was projected to increase by 2.9% in spike by almost US$19 billion while countries
Despite EIB's due diligence, the ultimate respon- 2022 but the forecast was further revised with weaker economies are expected to witness
sibility for the impact on the ground appears downwards by 0.3 percentage points. However, a 0.8% deterioration in fiscal balances. Africa
blurred. More often than not in Africa, the insti- the latest revision is also subject to revisions imports 85% of its foodstuffs according to IMF
tution is not even the main lender; it tends to as the Russian war in Ukraine proves to be far and these ongoing calamities are to impede
help with financing gaps on big projects where from ending and trade embargoes likely to con- Africa’s economic growth. The African econo-
commercial banks can’t or won’t provide all the tinue for a period. my was projected to be the fastest-growing in
money. Also, the EIB is not always a direct These new geopolitical, financial and sup- 2022.
lender: it often provides credit to financial inter- ply-side shocks could tip the world economy Europe’s proximity to the war in Ukraine and
mediaries which in turn give out the loans. Alter- into recession. excessive reliance on Russian energy imports,
natively, it uses its Investment Facility to buy a “As we look at the global GDP, it is hard right along with soaring food and energy prices and
stake in funds, such as the African Lion Mining now to see how we avoid a recession, “World global supply shocks from Chinese lockdowns,
Fund, which in turn invests in mining projects in Bank President, David Malpass said on have led economists to downgrade Eurozone
Africa. At the end of the line, the people affect- growth forecasts substantially over the past
ed don’t even know the EIB is involved and few
of them write to the institution’s Complaints
Mechanism, the independent body which assesses
and investigates complaints related to the bank’s
actions.
Increased migration into Europe has caused panic
in the European Union and given the EIB’s



Regional News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 18

month. Reserve raised its policy rate by 50 basis points dismal in April where industrial production and
Eurozone inflation hit a sixth consecutive at its May meeting and signalled more forceful- service-sector output shifted from expansion to
record high in April, with the 19-member ly its determination to subdue inflation. The contraction as lockdowns curbed consumer
region notching an annual 7.5% rise in consum- dollar has been appreciating while the S&P 500 spending. Retail sales fell 11.1% year-on-year
er prices and piling pressure on the European index of stock prices has fallen 20% year to in April, while residential floor space sold
Central Bank (ECB) to begin hiking interest date. plummeted 42%.
rates. ECB leaders this week nodded toward Adding to that, high inflation is eroding real Despite declining COVID-19 cases, the govern-
rate rises at the July meeting. incomes and making households more cautious ment's dynamic zero-COVID-19 policy will
Growth in Eurozone was revised downwards about spending with real GDP growth projected remain in place through 2022, preventing a
from 4% to 2.7% and in the UK, real GDP to slow from 5.7% in 2021 to 2.4% in 2022, return to normalcy and limiting the effective-
over the final three quarters of 2022 is expect- down from April’s forecast of 3.0%. With real ness of new fiscal and monetary stimulus mea-
ed to falter. Eurozone retail sales, industrial GDP growth running below potential, the unem- sures.
production, and net foreign trade decreased in ployment rate is projected to rise from 3.6% in Liberal billionaire, financier George Soros, in
March, as the fallout of the Russia-Ukraine war April to 5.0% by 2025. his speech on Tuesday in Davos Switzerland,
took a heavy toll on consumer and business Meanwhile, COVID-19 restrictions have dealt a aimed at Chinese President Xi Jinping doubling
confidence. major setback to mainland China's economy down on his “zero-COVID-19” policy and asso-
Meanwhile, high inflation and rising interest which is also the world’s second-largest econo- ciated lockdowns, which he said have pushed
rates have dimmed the US economic outlook. my trailing behind the USA. After 4.8% the Chinese economy into a “freefall” since
US is the largest global economy. The Federal year-on-year growth in real GDP in the first March, and ultimately leading to global eco-
quarter, the economic performance turned nomic depression.

Food aid not enough to spare Africa
T he world is experiencing a food crisis
emanating from the Russia-Ukraine war to help Africa become food aid-dependent and “African countries should invest in modern
with many people now in dire need of thus initiatives to boost production capacity was irrigation and sustainable agriculture, infra-
concern is the growing impacts of climate going to be crucial in order to strengthen the structure and due to climate change, there
change which are heavily affecting Sub-Saharan continent’s resilience. is also need to invest heavily in industries
Africa and the global world at large. that will produce agricultural inputs includ-
Due to a convergence of these hardships, first “Companies around the world are already test- ing fertiliser and improved high-quality
world countries and middle incomes states ing high-tech solutions from climate-smart agri- seeds,” he said.
began to cut off exports to fill reserves to serve culture, for example, precision irrigation operat- If dependence on the West on food aid is
own nations, a development that is detrimental ing on power from renewable sources to verti- to end soon, there is a need to ramp up and
to African survival as it remains a net food cal farming, as well as the development of nan- adjust policies that affect agriculture.
importer and also relies on Western food aid. otechnologies which can cut the use of fossil Improving rural infrastructure such as roads
The World Bank, the International Monetary fuels when producing is crucial to raising productivity through
Fund (IMF), the World Trade Organization, and fer- tilisers, reductions in shipping costs and the loss of
other global agencies have warned that Russia’s perishable produce. Meanwhile, providing
invasion of Ukraine is a watershed for Africa’s
survival and that the imminent food crisis better incentives to farmers, including
would hit the continent most. reductions in food subsidies, could raise
The African continent has been the only agricultural output by nearly 5%.
continent that has not been able to feed Increased research into plant breed-
itself since the mid-1970 even though ing, which takes into account the
more than US$50 billion is reported unique soil types of Africa, is a
to be set aside for the continent major requirement,
annually.

More than three out of five he said. The The adoption of genetically
people in Africa are in need of challenge is to adapt farming in a modified (GM) crops is also
food aid as food production has warmer and drier age and thus innova- of great importance, because
not kept pace with population tive technologies will be crucial to high-yield GM crops are
growth and successive crop fail- leapfrog. There is also a need for the resistant to weather shocks,
ures. and Poor harvests are African community to accelerate inno- and they provide an opportu-
taking a toll on agriculture pro- vation and increase agriculture-focused nity to address food insecuri-
duction and excessive droughts technologies that will accelerate produc- ty.
are been experienced over the tivity. Research has shown that the
decades. use of genetically manufac-
The issues of climate change also During the same summit, the vice pres- tured crops reduces pesticide
have affected the way that farming ident of Tanzania, Philip Mpango, also use by 37%, increase yields by
was done, and so with the evolving said that Africa needs to invest heavily 22% and the farmer profits by at
times, the way that things are done in agriculture to meet food demands. least 68%.
should change as well in order to com- Apart from all this, Africa has the
plement the new climate. highest area of arable uncultivated land
All these issues have prompted debate on how globally (202 million hectares) yet most
Africa should wean itself off American and farms occupy less than 2 hectares. This
western dependence, and start producing more results from poor land governance and own-
for itself because frankly, food aid on its own ership.
cannot save Africa. Land reform has had mixed results on the
The solution to Africa’s food scarcity and food African continent but changes that clearly
security lies elsewhere rather than from the define property rights, ensure the security of
food handouts sourced from the agricultural land tenure, and enable land to be used as
surpluses generated in the first world countries, collateral will be necessary if many African
it lies rather in leveraging its competitive nations are to realise potential productivity
advantage in food production to feed its citi- gains.
zens and emerge with a solution to deal with The continent has great potential to stop
the current challenges. leaning on food aid, and govern the current
During the Davos summit being held in Davos, events that have taken the world by storm,
which started on the 22nd of May 2022, the now more than ever stepping up agricultural
president of the European Commission Ursula productivity is key if the continent is to
Gertrud von der Leyen said there was a need feed itself.

19 The AXiS XXIX-XXX Friday 03 June 2022 Business News and Analysis

Delta Corporation posts stellar FY2021 performance

Zimbabwe Stock Exchange-listed beverage enabled the better utilisation of existing produc- strained and will be addressed by the investment
manufacturer, Delta Corporation Limited tion capacity was made. in additional capacity which will be commis
posted a stellar performance for the year “The increase in the glass float allowed traders sioned before the end of the calendar year
ending 31 March 2022 buttressed by a strong to remove the restriction to exchange bottles at 2022.Volume at African Distillers was up 37%
sales volumes performance across its product the point of purchase. compared to the prior year driven by a strong
categories, which in turn culminated in positive There are opportunities for traders to moderate market pull and better product supply.
earnings results. pricing in foreign currency which remains “The last quarter of the year was affected by the
The beverages giant recorded a 57% increase in above-recommended levels,” Moyo said. shortages of glass bottles for ciders resulting in
inflation-adjusted revenue to ZW$110.1 billion During the year, a new brand, Sable Lager, was product shortages, especially the Hunters brand.
for the full year ended 31 March 2022 from launched in March 2022, to expand its main- The wine category was adversely affected by
ZW$68.8 billion in 2020. stream offerings and offer consumers a choice of limited trading in the on-premise consumption
In a statement accompanying the financial an easy-drinking lager and the Group is expect- channel during hard lockdowns,” Moyo said.
results, Group Chairperson, Sternford Moyo said ing a new packaging plant which is scheduled Schweppes Holdings Africa Limited’s volumes
over 50% of the revenue in Zimbabwe was in for installation in early 2023 to further address grew by 22% over the prior year, driven by
foreign currency enabling better availability of market supply demands. improved product supply and market recovery of
imported inputs supply. The sorghum beer volume in Zimbabwe grew by the Minute Maid Juice drinks which were not
Delta’s profit for the year surged by 52% to 43% for the year on improved product supply, available in the previous period.
ZW$16 billion from a comparative 2020 of market pull, and the resurgence of the return- However, juice shortages have resulted in the
ZW$10.5 billion. ablescud bottle while volumes at United National market undersupply of Mazoe Orange Crush, the
The Group recorded earnings before interest and Breweries South Africa benefited from the lifting mainstay of the business.
tax (EBIT) of ZW$25.4 billion which is 37% of the alcohol ban to record an increase of 63% Nampak Zimbabwe witnessed a sustained strong
above the prior year with the growth attributable over the prior year. demand across its business sectors with the pack-
to the volume recovery, replacement cost-based However, the volume at Natbrew Plc (Zambia) aging divisions being buoyed by the volume
pricing, and ongoing cost management measures. declined by 16% for the full year owing to limit- recovery in the beverages sector
Moyo highlighted that the Group’s foreign cur- ed access to the market under COVID-19 restric- Moyo said, Nampak Zimbabwe however experi-
rency exposure from the legacy debt arrangement tions and a resurgence of competition from the enced some challenges in sourcing key raw mate-
was reduced to US$10.8 million which is being illegal bulk beer offerings. rials such as resins and tinplate from the interna-
retired in line with the pre-existing arrangements Delta’s sparkling beverages operations volume tional markets and the COVID-19-related disrup-
with the Reserve Bank of Zimbabwe. grew by 65% over the previous year with the tions to international shipping and freighting.
business responding positively to the ongoing Looking forward, Delta is expecting the Zimba-
Meanwhile, Delta’s lager beer volume for the initiatives to recover market share through com- bwean operating environment to remain complex
year grew by 38% compared to the prior year, petitive pricing, focused market execution, and and challenging in the face of difficult choices
attributed to consistent product supply concerning consistent supply of brands, flavours, and packs. on economic policy, the unfolding global supply
both brand and pack. Moyo further highlighted that the supply of PET constraints, rising inflation, and uncertainties of
Under the lager beer operations, a significant packs under sparkling beverages remains con the COVID-19 pandemic.
injection of new returnable glass bottles which

Higher volume growth across all units key to

Zimplow’s ‘encouraging’ FY21 performance

HARARE – Zimplow Holdings Limited Commenting on this division’s performance,
(Zimplow), maker and marketer of a Manhambara said the business unit is steadily
diverse range of products for the con- growing towards being the leading distributor of
struction, infrastructure, and agricultural sectors agricultural equipment in Zimbabwe.
in Zimbabwe, reported a strong and encouraging “The focus is now on achieving convenience for
financial performance for the year ended 31 our customers from an aftersales perspective
December 2021 underpinned by 54% growth in through a highly engaged backup support team,”
inflation adjusted revenue to ZW$6,6 billion. he added.
A ZW$4,3 billion revenue was recorded in the
previous year ended 31 December 2020. Mealie Brand

In addition, the operating profit for the year Zimplow operates three (3) clusters, that is, the Mealie Brand posted an overall implement sales
under review grew by 222% to ZW$970,8 mil- Agriculture Cluster, Logistics and Automotive volumes growth of 21% and spares by 3%
lion in comparison to ZW$517,5 million recorded Cluster as well as the Mining and Infrastructure against the prior year, anchored by export perfor-
in the prior year. Cluster. mance in the year under review. Revenue grew
“This encouraging financial performance was The Farming division consists of three business by 34% and operating profit by 21% in real
achieved by volumes growth from all the group’s units; Mealiebrand, Farmec, and Afritrac which terms against prior year performance.
business units, with Farmec and Barzem posting oversee the manufacturing of animal-drawn Under the logistics and automotive cluster, Scan-
record performances,” Zimplow’s Chairperson equipment and tractors, and spare parts for agri- link recorded a strong performance despite
Godfrey Manhambara said in a statement accom- cultural equipment. numerous headwinds attributable to COVID-19
panying the financials. induced supply chain disruptions which negative-
The encouraging performance came despite the Farmec ly impacted the operations of Scanlink. Parts
Group facing supply chain distortions to its sales grew by 30% driven by strong demand and
recently acquired businesses, that is, Trentyre and The division posted growth in volumes across all revenue and operating profit grew by 15% and
Scanlink. The supply chain distortions were its main product lines. Volumes for tractors grew 145% in real terms against the prior year.
caused by COVID-19 induced movement restric- by 48%, tractor-drawn implements by 56%, parts
tions, which in turn affected the supply of freight sales by 30% and service hours by 22% in com- Trentyre
services. parison with the prior year.
“In addition, the Group faced challenges in the This resulted in overall revenue growth of 48% Trentyre grew its revenue by 15% and operating
timely remittance of payments to foreign suppli- and a growth in the Company’s operating profit profit by 193% in real terms compared to the
ers,” Manhambara said. by 69%, in real terms against the prior year's prior year. It posted a positive volume perfor-
“We are, however, quite pleased with the manner performance. mance driven by improved distribution channels
in which the Group responded to the various and stock availability. The volumes of Passenger
challenges from the trading environment.” Car Radial (PCR) tyres grew by 28% against the
prior year.

*To Page 20

Business News and Analysis The AXiS XXIX-XXX Friday 03 June 2022 20

Natural, economic factors *From Page 19 ating profit up by 30% and 7%
cripple RioZim’s production respectively in real terms, com-
capacity Improvements in stock availability pared to the prior year's perfor-
also propelled growth in volumes for mance.
Gold and diamond mining group, RioZim experienced a Truck, Bus and Radial (TBR) tyres
decline in both gold and diamond production during the by 23% against the prior year. Barzem
first quarter ended 21 March 2022 due to a combination
of factors including erratic power supply, floods, and a shortage of Meanwhile, under the mining and The business benefitted from the
foreign currency to finish up projects. infrastructure cluster, CT Bolts, government’s drive to support
The Group encountered persistent erratic power supply during the Powermec, and Barzem also record- infrastructure development which in
period resulting in capacity underutilisation and high production costs ed solid volume and financial per- turn culminated in increased earth
as it resorted to expensive power alternatives. formance. moving equipment sales at Barzem.
Mostly hit was the Renco Mine which saw gold production falling CT Bolts Overall, volumes of earth moving
by 21% compared to the same period in 2021. equipment sales grew by 84%
“Rehabilitation of the power infrastructure of the mine being carried The business unit achieved volume against prior year performance. On
out by ZETDC is progressing well despite delays due to logistical growth of 48% against prior year the other hand, the focus on pro-
and insufficient resources,” RioZim said in a statement accompanying performance driven by the drive duction by major mining houses
the trading update. towards establishing new market that use CAT surface mining and
Power shortages have been crippling RioZim's performance and are segments such as prepacked fasten- handling equipment resulted in
dated back to full-year 2021 when its gold production stalled by 7%. ers for the retail market, specialised increased fleet maintenance. Conse-
As a remedy, the Group is currently looking for new potential inves- mining bolts, and various other con- quently, parts sales grew by 75%
tors for the Sengwa coal power project which is based on a coal sumables. and hours sold by 65% against
resource of 1,3 billion tonnes, capable of generating up to 2 000MW prior year performance.
of power, almost as much as Zimbabwe's total installed capacity. Powermec On the outlook, Manhambara
Besides power shortages, there was no gold production at Dalny expressed confidence that based on
Mine during the period due to flooding of its pits and poor ground Volumes performance was subdued the performance as outlined above,
conditions which rendered mining activities insurmountable. to the low demand for alternative the Group has adequate risk man-
“The mine is scheduled to resume operations in the second quarter energy sources on the back of a agement systems and a viable busi-
after dewatering of the pits,” the Group added. relatively stable power supply ness strategy to withstand the fluid-
Meanwhile, Cam and Motor mine suspended operations for three through the national grid in 2021. ity and complexities of the coun-
months to 31 March from its nearby One Step mine as the mine Consequently, generator units sold try’s operating environment.
focused on the completion and testing of its Biological Oxidation registered a 16% drop from the prior “One of the key strategic matters
(BIOX) Plant to bring it to the commissioning stage. year. the Group is currently seized with
As a result, gold production for the quarter was subdued at 34% is the search for a new OEM of
below the same period in the prior year. However, the BIOX plant However, the performance of Power- earthmoving equipment to replace
was successfully commissioned on the 14th of April 2022 and is mec’s new Solar product range was the Caterpillar brand at the end of
projected to increase productivity henceforth. encouraging as the business unit the Distributorship Agreement on
Diamond production remained suppressed at 49% below 2021 pro- achieved a 167% growth against the 30 September 2022,” he added.
duction due to processing low-grade stockpiles throughout the period. prior year. The strong after-sales
Inadequacy of foreign currency which is delaying the completion of performance grew parts sales by
Project Crown Jewel which seeks to increase the current processing 72% and service hours by 22%
plant capacity to move to a ‘low-grade high volume’ played a signif- against the prior year, driving both
icant role in the diamond decrease. revenue and oper
“The Associate’s expansion project to upgrade the processing capaci-
ty of the plant is progressing well and is forecast for commissioning Lafarge poised for earnings
in the current financial year.” rebound
“The new plant will enable processing of high volume throughput Z In a trading
at lower grades to sustain production,” added the Group. update “The launch of the VRM will reposition
released last the company on a growth trajectory into
The Empress Nickel Refinery (ENR) remained under care and week, ZSE-listed
maintenance throughout the quarter. cement producer, the future which will have a positive
Going forward, the Group is optimistic about improving its fortunes Lafarge Cement Zim- impact on the company’s revenue
through increased production from its multimillion-dollar BIOX Plant babwe said the com- generation and profitability,”
despite the challenging operating environment. pany is due to com-
The economic environment in Zimbabwe is currently haunted by a mission the new Ver-
busload of problems that are detrimental to economic growth. The tical Roller Mill
economy is carpeted with a decaying local currency, exchange rate (VRM) in the second CEO, Geoffrey Ndungwa.
volatilities, and scarcity of foreign currency which is proving chal- quarter of the year,
lenging for the businesses to operate. This is also making local which will double
inputs uneconomic and increasing demand for foreign currency as capacity and improve
businesses are leveraging on imports of raw materials to minimise
increasing costs, a retrogression factor to macro-economic growth. the availability of raw materials.
Retention for exporters remains at 60% thus continuing to widen the
horrors of foreign currency insufficiency for the business community This comes after the company suffered a production and profit setback
to sustain and elevate projects. during the first quarter ended 31 March 2022 due to a busload of calami-
Power challenges also remain prevalent, a disaster the power utility, ties including shortages of foreign currency to ship-in raw materials and
ZESA is failing to find a permanent solution to. Though the govern- the effects of the roof-top collapse in October 2021 that damaged a
ment is confident that it will achieve electricity self-sufficiency by cement mill.
2023, companies should not be confident about that as a large chunk
of electricity continues to come from hydroelectric power.Therefore, The company’s Chief Executive Officer Geoffrey Ndugwa (pictured) said
companies should start to find credit bailouts and budget their funds the start-up of the mill is going to see an increase in production capacity
to produce and generate their power, either solar or coal-powered. and improve the availability of raw materials to the new DMO plant.
This is the only way companies will survive the curse of power “The launch of the VRM will reposition the company on a growth trajec-
shortages as energy is core to production. tory into the future which will have a positive impact on the company’s
revenue generation and profitability,” Ndugwa said in a statement accompa-
nying the trading update.

In order to make way for the new plant, one of the existing cement ball
mills was decommissioned during the prior quarter.

During the period, the company faced significant liquidity challenges that
hindered it from fully meeting its cash obligations. This affected business
operations resulting in unplanned downtime and, in some cases, a shortage
of materials to keep the plant running.

“As a result, foreign currency obligations have become increasingly diffi-
cult to meet and sustain,” said Ndugwa.

The October 2021 roof collapse also had a significant *To Page 21

21 The AXiS XXIX-XXX Friday 03 June 2022 Guest Column

Tharisa posts strong financial performance

despite market volatilities
C hrome and platinum group metals (PGM) age PGM basket price by 8.2% to US$2 592/oz. million from US$124.2 million in 2021.
miner, Tharisa posted a strong financial However, chrome concentrate sales for the
performance in the six months ended 31 half-year decreased by 8.4% to 816.4 kt. \
March 2021 notwithstanding the market volatility Other operating expenses amounted to US$24.8
which is impacting commodity prices and input The total comprehensive income for the period million (2021: US$21.6 million), an increase of
costs. amounted to US$112.6 million up from 14.8%. The major cost within other operating
US$109.8 million in 2021. expenses were employee costs at US$13.8 million
In a statement accompanying the Group’s finan- (including equity-settled share-based payment
cial results for the half-year period, the Johannes- Cash flows from operations before movements in expenses) (2021: US$11.5 million) comprising
burg Stock Exchange-listed integrated resource working capital for the period amounted to 55.5% of the other operating expenses (2021:
group said the acquisition of a controlling interest US$121.2 million. 53.3%).
in Zimbabwe-based Karo Mining Holdings, which
has been accounted for as a ‘business combina- “Working capital requirements including (i) an The tax charge amounted to US$22.7 million
tion’ had a significant impact on its financial increase in trade and other receivables of down from US$28.9 million in 2021, an effective
results and position. US$45.2 million, (ii) an increase in trade and charge of 18.2% compared to 27.7% in 2021.
other payables of US$3.8 million, and (iii) an Meanwhile, PGM production for the six months
Tharisa acquired a controlling interest in Karo increase in inventories of US$14.2 million, result- under review improved by 22% to 91,800 ounces
Mining in March this year as it advances its ed in net cash flows from operating activities from 75,100 ounces while chrome output was up
footprint in Zimbabwe in addition to Salene after tax of US$49.1 million,” the Group said. 6.3% at 776,700 tonnes from 730,700 tonnes.
Chrome also located in the Great Dyke region. Basic earnings per share for the half-year Going forward, the Group’s Chief Executive Offi-
The Group’s revenue for the period increased by amounted to US$32.7 an increase from US$21.4 cer, Phoevos Pouroulis said Tharisa’s focus for
6.5% to US$334 million from US$313.6 million in 2021. the remainder of the financial year will be to
in 2021 driven by an increase in chrome concen- Earnings before interest, taxes, depreciation anda- maximise PGM and chrome production while
trate selling prices with the average metallurgical- mortization (EBITDA) amounted to US$111.3 curtailing as best as possible above inflationary
grade selling price increasing by 20.7% to costs.

*From Page 20 AfCFTA and the quest for Zimbabwe’s

production and resulted economic recovery
in a backlog of pre-paid By Takudzwa Gwaze
orders that needed to be promote intra-African trade, diversify ly rural phenomenon, it has increased
satisfied before the O n 24 May 2022, President Em- and structurally transform the conti- relatively faster in urban areas leading
resumption of normal merson Mnangagwa, together nent’s economy, and pursue fundamen- to the urbanization of poverty. Zimba-
market supplies. with other SADC Heads of tal human rights and anti-poverty bwe’s international poverty rate (PPP
“Whilst the roof repairs State, co-chaired the “Friends of the goals. However, harmonizing national $1.90/person/day) was half the level in
were taking place, the African Continental Free Trade Area” priorities to achieve regional and sub-Saharan Africa in 2011, but by
company continued to (AfCFTA) at the World Economic global public goods will require firm 2019, it was on par with the rest of
produce clinker, manu- Forum in Davos, Switzerland. The political will, determination, and coor- the continent (42%). Inequality has
facture Dry Mortars and AfCFTA was lounged by the African dinating efforts by African political also increased over the last decade,
expand the retail fran- Union (AU) and signed by 44 of its leaders. with the Gini coefficient rising from
chise code-named Bina- 55 member states in Kigali, Rwanda, Assessing the distributional impact of 42 in 2011 to 50.3 in 2019, among
store,” added Ndugwa. on March 21, 2018. The agreement the AfCFTA agreement is crucial to the highest in the world.
Meanwhile, cement vol- was signed to create the largest free ensure the complementarity between
umes declined by 55% trade area globally as measured by the human rights promotion and trade Currently, Zimbabweans face com-
compared to the same number of countries participating. The liberalization. Such an assessment is pound and sequenced shocks, with
quarter in 2021 due to main objectives of the AfCFTA are even more relevant in light of a gener- Covid-19 being one of many adverse
the aftermath effects of undoubtedly ambitious. It seeks to al and growing skepticism towards shocks and trends.
the collapse of a cement remove tariff and non-tariff barriers on trade liberalization processes, fueled to
mill in October 2021. goods and services. The member states a large extent by a widespread percep- The Zimbabwean populace has
The company’s dry are intended to facilitate intra-African tion that the benefits of trade and glo- endured prolonged economic and
mortar volumes fell by trade, promote regional value chains to balization have not been equally policy shocks, compounded by climate
23% compared to the foster the integration of the African distributed. and harvest failures, price, and live-
same period last year continent into the global economy, and Therefore, for Zimbabwe to gain a stock diseases. This has led to resilient
due to the suppressed boost industrialization, competitiveness, competitive advantage in the pact, the households becoming more vulnerable
cement availability post and innovation, ultimately contributing government needs to adopt appropriate as they move sequentially through pre-
the damage to the to Africa’s economic development and policies to ensure that the potential ferred to less preferred to highly
cement mill. social progress. benefits of increased productivity and adverse coping strategies and living
“The company is confi- welfare deriving from the realization from hand to mouth.
dent that volumes will The pact connects 1.3 billion people of the AfCFTA are equally distributed.
recover and grow as the across 55 countries with a combined What’s in it for Zimbabwe A further concern is that the country
availability of cement gross domestic product (GDP) valued In February 2020, Zimbabwe officially lacks manufacturing and export diver-
stabilises, especially at US$3.4 trillion. It has the potential joined the African Continental Free sity because of a lack of competitive-
after the new VRM to lift 30 million people out of Trade Area (AfCFTA), which aims to ness and the high cost of exporting
start-up in Q2,” said extreme poverty but achieving its full create a single continental market for due to industrial capacity constraints,
Ngugwa. potential will depend on putting in goods and services and eventually de-industrialisation, and informalisa-
Resultantly, revenue fell place significant policy reforms and envisages establishing a customs tion.
by 18% during the trade facilitation measures in member union. The world Bank (2022) reports
period under review. countries. As the global economy is in that the extreme poverty rate in Zim- With deepening poverty, inequality,
Going forward, the turmoil due to the COVID-19 pandem- babwe increased steadily between human rights violations, and economic
group expects that ic, creating the vast AfCFTA regional 2011 and 2020, only declining in policy inconsistencies in Zimbabwe,
collaboration between market is a significant opportunity to 2021. how can the nation benefit from the
the industry and govern- help African countries diversify their The international poverty rate was AfCFTA agreement? In my view, the
ment will restore eco- exports, accelerate growth, and attract 22% in 2011 and was estimated to be country has low capacity across its
nomic stability and foreign direct investment. It is a crys- 40% in 2022. Although many argue key sectors of the economy to com-
brings sanity to the tal opportunity for the Republic of that poverty remains an overwhelming pete with the rest of the African
ailing economy. Zimbabwe to recover from its decade nations, although the AfCFTA offers
stick and carrot economy. The Zimbabwe an opportunity to recover
AfCFTA represents a window of from the economic turmoil caused by
opportunity for African countries to the coronavirus and decades of policy
inconsistencies.
*To Page 23



23 The AXiS XXIX-XXX Friday 03 June 2022 Guest Column

*From Page 21 Rural Green the political front, the government
Economies, appears to be in election mode ahead of
Monetary policy consistency is key to A Winning ESG the 2023 elections, which are expected
stable production and export capacity, to deepen polarization.
and AfCFTA should be a benchmark for Formula Furthermore, given the systematic
policy stabilization. Zimbabwe’s low attempts to dismantle the opposition,
manufacturing capacity utilization means By Kingston Kamba, CEO Solgas Energy Pvt Ltd continued repressions are dangerous.
that local industries cannot compete with The upcoming elections will likely fuel
regional peers such as Zambia, South The renewable energy industry requires a certain level factionalism in the ruling and opposition
Africa, Angola, and Namibia, which of commitment by local and international investors in parties, contributing to further policy
have enjoyed long periods of economic collaboration with public institutions for it to thrive. In paralysis and a continued political
and currency stability and policy consis- this regard, I will share an interesting approach to sus- stand-off. In its relations with the inter-
tency. tainable development in line with the provision of national community, continued denial-
The significant setbacks for Zimbabwe power or electricity to marginalised groups in the rural ism, diversions, delays, and confronta-
to benefit from the trade pact include areas through a green economy-focused strategy.The tional sanction rhetoric can be expected
low industrial capacity utilization, high United Nations Environment Programme (UNEP) from the ZANU-PF government, which
cost of doing business and complex defines the green economy as "one that results in will likely be accompanied by ceaseless
taxation procedures, policy inconsistency, improved human well-being and social equity, while mixed messages.
especially on monetary reforms, ineffi- significantly reducing environmental risks and ecologi- There is a need for a coherent interna-
cient foreign exchange policies, and cal scarcities. It is a low carbon, resource-efficient, and tional approach to Zimbabwe. The
porous borders that make it hard to pre- socially inclusive". difference in positions and techniques
vent smuggling. between the region and the larger global
The auditor-general reports that weak Painting a picture, the green economy is a functional community has not been productive. In
institutions with poor leadership, inade- system powered by low carbon emission infrastructure this regard, the growing criticism from
quate corporate governance, conflict, which allows for growth in employment and income to South Africa, especially from the Eco-
corruption, and technological lag as criti- be driven by public and private investments. This eco- nomic Freedom Fighters (EFF), provides
cal setbacks for Zimbabwe’s regional system sensitive model allows for enhanced resource opportunities for increased engagement
economic integration. These problems efficiency, reduced pollution, and participation of all between the area and the larger interna-
also occur in local authorities, which groups of the society in economic growth and suste- tional community. International actors
face corruption, misplaced priorities, and nance.China is regarded as a success story for the should strengthen the position of
poor-quality councilors. creation of green rural economies which was made pos- non-state actors in Zimbabwe, including
The economy's main challenges are high sible by the Renewable Energy Law passed in 2005 by using their leverage to promote their
foreign and domestic debt, poor infra- allowing for the creation of 1.5 million jobs by the end inclusion in high-level discussions.
structure, policy inconsistencies, political of 2009. As recorded by the United Nations Environ- The international community can still
uncertainty, corruption, and low capacity mental Programme, China’s output in this industry is play an important role. Still, it should
utilization. As a result of economic estimated at US$17 billion. accept that most engagements will not
woes, Zimbabwe’s economy is primarily be straightforward, require investments
informal, with an estimated 90% of the Kenya is also regarded as a success story in the social of time and resources, come with high
population working in the informal and environmental aspects of renewable energy poli- levels of risk, and be far from a guaran-
sector. Public enterprises rank among the cy-led development. The Feed-in tariff policy instructs teed success. This certainly applies to
worst performers and have become the utility authorities controlling the national grid to priori- the need for civil society and the inter-
epicenter of rent-seeking behavior to the tize the purchase of electricity from renewable sources national community to explore ways to
extent that their contribution to the at an incentivized tariff. Apart from encouraging invest- engage the military.
economy plummeted from around 60% ments, this has also led to poverty reduction through The Zimbabwean government needs to
to about 2% of GDP, with 70% of the rural employment as well as enhanced local develop- tailor and frame broader economic sup-
parastatals deemed technically insolvent. ment. port for AfCFTA implementation and
According to the 2020 Index of Eco- economic transformation, including
nomic Freedom, Zimbabwe’s economic Some of our corporates locally are failing to adopt sus- infrastructure support, digitalization,
freedom score was 43.1, ranking it the tainability strategies due to the nature of our supply national AfCFTA committees, and trade
174th freest economy globally. Zimba- chains. Let’s face it, it is difficult and almost next to facilitation committees. International
bwe ranked 45th out of 47 countries in impossible to proclaim that sustainability has been partners can support AU member states
the sub-Saharan Africa region. In addi- achieved by a certain company when some of its sup- to pursue the complementary economic
tion, the country continues to rank low pliers are still utilising outdated and unsustainable reforms that will yield the most signifi-
on other indicators, such as global com- methods in their operations.Supporting the development cant gains, again building on where
petitiveness (127th out of 141 countries, of rural green economies will also fix some of these there is political traction. Engaging with
2020) and ease of doing business (140th issues. For example, curing tobacco has been reported the private sector actors around potential
out of 190 countries, 2020). to be contributing immensely to the deforestation statis- opportunities and additional support is
As a way to fit into the AfCFTA agree- tics in the country. Farmers (some of whom are required to benefit the government
ment, the Minister of Industry and Com- out-growers for big corporates) need firewood to suc- implementing the AfCFTA agreement.
merce, Dr. Sekai Nzenza, in a speech cessfully carry out this critical process which deter- While physical infrastructures and
read by her deputy Raj Modi during the mines the price and grade fetched by the crop on the movement of people remain critical
industry and commerce meeting in Bula- market. areas for support to underpin the
wayo on 7th April 2022, indicates that AfCFTA, digitalization and the develop-
the government is still finalizing its However, the adoption of mini solar grids that can be ment of e-commerce seem to have
tariff offer under AfCFTA. The Govern- used to power more technologically advanced tobacco increasing traction. Most African coun-
ment has also developed the National curing systems is a potential solution. It will help tries, however, lack the legal and regu-
Quality Policy (NQP), which seeks to reduce deforestation, greenhouse gas emissions from latory ICT frameworks. External part-
address the challenges of the siloed burning fossil fuels, the risk of burning down barns ners could target support towards devel-
development of quality programs by together with the gold leaf which currently exists due oping regulatory environments for com-
ministries, regulators, and agencies. to old-school infrastructures, and the insurance losses petitive and harmonized regional con-
The NQP aims to establish a national that come with this particular risk. nectivity markets.
accreditation body and a market surveil- From the AfCFTA and advocate for
lance unit to assess the quality of prod- Mini solar grids are cheaper and more efficient for correct implementation. Already have
ucts produced in local industries to meet rural communities as they can provide electricity at a experience with supporting personal
the conformity standards of both local more affordable cost as opposed to connecting margin- sector development. The focus should
and international markets. The central alised areas to the national grid. *To Page 24 support many governments and interna-
question remains in implementing the tional partners, bolstering the private
policy and how it will contribute to NOTICE sector's sensitization and productive
delivering a stable economy spearheaded capacity building to implement the
by the AfCFTA agenda. To all our valued readers, we would like to inform you that in our latest publication of AfCFTA a reality.
The AXiS (Issue 30), we published two (2) articles under the guest column (page 23-25), one Takudzwa Mudzingwa Gwaze is a
Zeriymbabwe's roadmap to recov- with the title "Rural Green Economies, A winning ESG formula" and the second with the Public Policy Analyst and Consultant
title "Ine cient government policies hound the common man." Both articles carried the who can be contactable at 0771735370
At the beginning of 2021, the short-term and [email protected]
outlook for Zimbabwe is gloomy as the name of Mr Kingston Kamba, who is the CEO of Solgas Energy Private Limited.
country experiences a multi-faceted The rst article mistakenly included content not written by Mr Kamba, thus the views
crisis, which is likely to continue. On
expressed in the lead up to paragraph nine (9) do not belong to him.
Meanwhile, the second article was also incorrectly attributed to Mr Kamba. The article
belongs to a di erent guest writer and as such the views expressed do not represent those
of Mr Kamba, nor the organization (Equity Axis). We have an open editorial policy to

accommodate divergent views by di erent writers.
We apologize for the inconvenience caused especially to Mr Kamba and his associates.

We've since corrected the mistakes.
Thank you.

Guest Column The AXiS XXIX-XXX Friday 03 June 2022 24

*From Page 23 much-needed boost for the industry across the rural green economies or development in gen-
continent. eral.
Production and development can ensue with- The successful implementation of a green Shared value is a key pillar in sustainable
out having to go through the cumbersome economy will require the participation of development, and the triple-bottom line
processes involved in centralizing grid con- stakeholders from both public and private ispractically attainable. The people develop
nectivity. It is a way to collaborate with the institutions due to the fragile layered nature their community as paid employees while the
government in achieving the vision 2030 of the society and its needs. Political will- investor benefits from both the buy-in of the
goals while taking care of our own goals as power remains key in the construction of people and the completed investment project.
promised to the shareholders. such economies, therefore, we should take As we formulate strategies for participation in
What is the cost of all this, you may ask? full advantage of the devolution and special sustainable development, we must take an
The cost is a long-term investment that guar- economic zones policies that the government ESG-focused approach to consider the issue
antees efficiency, output, and growth of the has put in place. of rural to urban and urban to rural migra-
sector itself. After gold and nickel mattes, A simple example of how devolution can be tion.
tobacco is a leading foreign currency earner leveraged to stimulate development can be We have been experiencing economic whirl-
for Zimbabwe which makes it a mainstay for derived from how people are always com- winds for a while now, the impact of which
the economy, not to mention the companies plaining about poor service at public institu- we have seen and felt in both our work and
who have made it their core business and all tions. This is an issue that can be addressed personal spaces. While we all remain resolute
invested stakeholders. This is from a financial through collaboration in creating green econo- in the fight for survival from our posts in
perspective. From a social standpoint, com- mies owing to the dedicated participation of urban centres, many had to choose to contin-
munity development is a much-needed gain in corporates and other private organizations. ue this fight from their rural homes due to
rural Zimbabwe that will be fulfilled by such Private organizations have reached a certain circumstances beyond their control.
technological advancements. level of perfection when it comes to offering We may or may not have noticed this hap-
As a purpose-driven organisation, our busi- a seamless customer service experience. pening, but the statistics always tell the full
ness philosophy is deliberate in its orientation Through consultation and participation, this story. The disparity between the 2000 and
towards the development of rural Africa and too can be implemented by public institutions 2012 censuses shows a 3% decrease in the
the development of rural economies. We have if the private players take the opportunity to urban population. Of the populations that
committed to partner with other like-minded impart their expertise and know-how of quali- have migrated to rural Zimbabwe is a demo-
and purpose-driven organisations to cooperate ty customer service and quality goods deliv- graphic of young, able-bodied workers who
in projects that will see a reduction in energy ery to improve the service experience our can provide labour for the construction of
poverty. In essence, a solar power plant con- relatives and countrymen based in the rural solar power plants amongst other infrastruc-
structed in a rural community will help with areas receive from public institutions. Suc- ture that support the development of green
providing energy for agriculture to boost both cessful implementations in those smaller units economies.
input and output, household needs, sustenance could be developed and implemented in the Rural Zimbabwe is a melting pot and pos-
of school laboratories as well as libraries, larger towns and cities. sesses vast unutilised lands, both arable and
reduce deforestation which protects biodiversi- To the business-minded, the devolution non-arable however still viable for the con-
ty, and the list goes on. agenda can be seen as a gap to grow in reach struction of other developmental infrastruc-
However, financial input remains critical and as well as revenue while reaping both finan- ture. As it is, tourism can thrive with a little
is the major concern in the renewable energy cial and social impact benefits for the devel- effort from the communities therein, promis-
industry. IPPs are accredited, licensed, and opment of our nation. ing a lot of forex income that the sector
ready to serve. Our appeal to local banks, Designated Special Economic Zones provide attracts. All this is natural and already estab-
pension funds, private investors, and all other more incentives that help cushion part of the lished, imagine how much more we can
interested parties is to take a calculated risk associated with diversifying investments achieve when we decide to be intentional.
chance on this “greenfield” as it is a viable in these marginalized areas. Partnerships also Kingston Kamba is the CEO of Solgas
investment vehicle. lessen these risks and as Solgas Energy, we Energy Pvt Ltd, an Independent Power Pro-
In the same way, we require funding from are ready to establish mutually beneficial ducer in Zimbabwe. He can be contactable at
local investors, foreign financial facilities are partnerships that will result in the creation of [email protected]
also a great enabling factor for this industry.
Pledges were made at the COP25 Summit
and should they be honoured, will provide a

Urban Living & Mobility evidenced by theories like the urban land rent
theory and location theory, which conceptualize
By Girison Afia MRICS The first two travel options offer health benefits the connection between transport and urban land
through exercising although the security exposure use. It is impossible to abstract the vision of the
Z Daily mobility in the city requires plan- is high. A day-plan is centered around work, cities of tomorrow from that of the future config-
ning well ahead of time but unfortunately school and social errands expected of an individ- uration of their transport systems. The provision
the blueprint approach has been more into ual in a particular location. Facilities within a of mobility solutions for battling congestion, pol-
problem solving more than trending with eco- neighbourhood must provide adequate goods and lution and environmental degradation through AI
nomic and social developments. The increase in services to the satisfaction of consumers and ben- technology that is capable of providing better,
the number of people in town corresponds well eficiaries because locational presence is not faster, cleaner and cheaper ways to move around
with the promotion of public transport. Mixed enough without anticipated delivery in the expect- is the pillar, together with telecommunication and
use planning and development with the aim of ed quality. energy applications, of what we call smart cities
blending living, working, leisure and shopping The potential of new urban development to and the way forward for urban science
spaces is becoming more preferable compared to reduce the negative environmental effects of It is not only the structural context of land use
the alienated planning use zones of the early human activity in cities. Connected to concepts that influences travel behavior, but also individual
planning philosophy. The need to curb urban like ‘new urbanism’ or the ‘smart city’, studies land use preferences. People self-select them-
sprawl can also be managed through sustainable have investigated how the design, technology and selves in the context of relocation to be able to
urban management and efficient transport system. regulation of urban projects support objectives to translate preferences into actual travel behavior.
Health issues are at stake and activities such as reduce energy consumption, travel and emissions. This is where process planning comes in to
cycling can be used for both exercising and mo- The potential of such projects to shape ‘sustain- include the people and the societies that enjoy
bility benefits. Organized mobility and transport able’ mobility patterns is a particularly prominent the utility of planning benefit. As for emerging
system became an important aspect in in aspect of this discussion. Their central location, economies, it is necessary to marry urban plan-
inner-city regeneration when it became apparent density and mix of uses can provide the precon- ning and growth with mobility and accessibility
that accessibility to services, work and other ditions for short-distance commuting to work and than to wait until gaps start showing. The smart
facilities impacted on urban design and sustain- trips to other destinations. Moreover, high acces- and tech-cities require planning foresight, inclu-
ability. sibility to transit, favourable design and support- sivity and much consideration into sustainable
ive regulation (like demand management) enables existence of the built environment. The need for
Accessibility usually relates to central location in residents to make routine trips with convenient clean, quiet, safe and secure neighbourhoods,
relation to easy reach to public transport, vehicu- public transport, on foot or by bike – thus offer- indicates the way to foster smart cities and the
lar drive and parking. Proximity to schools, work ing alternatives to the car.Since transport is the way forward for urban science
and social circle are key influencers to accessibil- most decisive cornerstone for a city’s functional- Girison Afia MRICS is a chartered valuation
ity requirements. Shopping and leisure facilities ity, development and prosperity, revolutionizing surveyor, a member of the Royal Institution of
also determine accessibility and mobility deci- transport transforms the concept of the city. Chartered Surveyors and a thought leader in
sions. Daily travel and mobility are achieved Urban structure and transport system develop- real estate. Email: [email protected],
through cycling, walking, driving and use of ments are closely connected as Twitter: @AfiaGirison
public transport and the closer it is, the better.

25 The AXiS XXIX-XXX Friday 03 June 2022 Guest Column

Inefficient government policies hound the

common man In a bid to reduce fuel import bills and cushion
the economy from fuel crises, Zimbabwe intro-
By Zvikomborero Sibanda duced a fuel import substitution scheme in 2011
to blend petrol with ethanol. Since then, the
Z imbabweans are becoming used to vicious blending ratios have been fluctuating depending
cycles of cost-of-living crisis. The prices on the availability of ethanol in the local market.
of crucial products like fuel are rising Green Fuels, a company partly owned by the
frequently. Last week, the Zimbabwe Energy government is the sole producer of blending etha-
Regulatory Authority (ZERA) reviewed upwards nol in Zimbabwe.
the maximum pump prices of fuel. A litre of After halting petrol blending in January 2022 due
diesel is now costing US$1.74 (ZWL499.56) to adverse weather conditions such as rains which
from US$1.71 (ZWL283.87) while that of petrol resulted in inaccessibility of cane fields by
is now costing US$1.68 (ZWL481.02) from machinery, the regulator re-introduced blending
US$1.64 (ZWL271.85). on the 25th of April 2022 at E10 (10% ethanol).

It is, however, now ceremonial for ZERA to pub- The blending ratio has now been increased from The situation is being worsened by the govern-
lish fuel prices in Zimbabwe dollars because E10 to E15. At the same time, the price of petrol ment which is failing to provide adequate support
ZWL fuel market is now extinct. The entire fuel has also jumped by US$0.04. This is surprising to the vulnerable groups and marginalized com-
sector has fully dollarized as a result of the intro- because the government had initially promised munities. Furthermore, the negative multiplier
duction of the Direct Fuel Import (DFI) scheme citizens that prices of blended petrol will decline effects from the Russia-Ukraine war coupled with
by the Reserve Bank of Zimbabwe in 2019 at by US$0.07 as it increases the blending ratio a poor 2021/22 cropping season will continue to
the peak of fuel shortages in Zimbabwe charac- from E10 to E20 by the end of May 2022. exert excessive inflationary pressures, to the
terized by long winding fuel queues. Hence, instead of bringing relief to motorists, detriment of citizens’ welfare.
These are the days when the RBZ’s was insistent commuters, and businesses, the fuel import sub-
about maintaining the unsustainable fixed stitution scheme is actually working against Zim- According to the IMF, about a third of the popu-
exchange rate regime (US$1: ZWL1) leading to babwe and its economy. The ethanol market lation is faced with food insecurity in 2022. As
acute forex shortages as fuel demand outstripped itself, is also a closed sector with little competi- such, the government’s position that the economy
fuel supply. tion hence the high prices of this critical product. is doing so well when prices of basics are going
By not opening the ethanol sector to outside haywire is a clear mockery of the struggling citi-
Under the DFI scheme, importers are allowed to competition or promoting the participation of zenry.
use their free funds (US dollars) to import fuel more domestic players, the government through
and trade it in foreign currency. Despite promis- ZERA is again protecting the vested interests of Another example of pursuit of populism which is
ing to facilitate the importation of fuel to be sold monopoly capital and the politically connected driven by command economics is command agri-
in ZWL, authorities allowed the fuel sector to who are only after abnormal profits not consumer culture, a scheme that is not transparent as it is
fully dollarize yet the majority of Zimbabwe’s welfare or a sustained growth of the Zimbabwean largely difficult for one to ascertain the actual
motoring public, businesses and industries have economy. cost and beneficiaries of the inputs provided by
constrained access to forex. A progressive government would urgently under- the state under this scheme.
The ongoing Russia-Ukraine war is fuelling take structural reforms to root out pricing distor- This is tantamount to a waste of public resources
market jitters about a potentially huge supply tions in the fuel market. The continued pursuit of at a time when the government is facing a very
shock to food and energy markets which will command economics militates against the limited fiscal space. If one is to reflect on the
push global prices upwards. With Zimbabwe achievement of Vision 2030 - becoming an opportunity cost of this, they would realize that
being a net importer of crude oil, it means that upper-middle-income country with a per capita these wasted and abused public funds would be
the country is a price taker of these high global income above US$3 500 by the end of the year used for the provision of quality and affordable
prices hence perpetual increase in domestic fuel 2030. social services as well as safety nets to cushion
prices. Russia is one of the largest global produc- For instance, command exchange rate manage- the vulnerable and marginalized communities.
ers of crude oil, accounting for about 30% of ment through the auction system was leading to This is key for stable, inclusive, and sustainable
global crude oil exports. overvaluation of the ZWL thus promoting economic growth to be attained in line with
Due to its invasion of Ukraine, large oil-consum- rent-seeking behaviours, poor compliance with ambitions set out in the National Development
ing Western countries like the United States, existing regulations, and round-tripping. Strategy 1 (NDS1).
Canada, and United Kingdom have completely Consequently, with forex demand outstripping Therefore, to cushion the public and the economy
banned the importation of fuel of Russian origin forex supply on the auction market and the econ- from the negative multiplier effects of rising fuel
while the European Union, the largest common omy also being largely informal and the central prices, there is a need for the government to
market in the world, will likely agree on an bank and Treasury pushing large tranches of local embrace and promote competition -allowing the
embargo on Russian oil imports within the currency in the economy, the ZWL deteriorated participation of many players in fuel importation
coming days. massively against the greenback particularly in & retailing business as well as the ethanol sector.
the alternative markets thus fuelling price infla- In other words, the energy regulator should
Before the start of the Russia - Ukraine war on tion. always strive to strike a balance between the
the 24th of February 2022, the prices of fuel in The latest inflation statistics provided by the affordability of fuel and profit margins of busi-
Zimbabwe were exorbitant, way above the Zimbabwe National Statistics Agency (ZimStat) nesses, not the current set-up that is dispropor-
regional average. Last month I indicated in this show that in May 2022, prices have risen by an tionately tilted towards the latter.
column that this is because the fuel sector is one annual rate of 131.7% up from 96.4% recorded Also, the government should further reduce taxes
of the closed sectors in Zimbabwe monopolised in the prior month. This means that inflation has and levies it is collecting on imported fuel. More
by a few fuel importing companies, which are returned to the triple-digit territory for the first so, there is a need for sustainable and inves-
also large players in the fuel retailing business. time since June 202. This is the highest price tor-friendly policies that promote exploration in
In addition, government fuel taxes and levies, level in the entire SADC region and competing the extractive sector.
constituting nearly 40% of the pump prices are globally with war-torn countries like Syria. From Had these policies been in place over these years,
adding to the exorbitant price of fuel. a month-on-month perspective, price inflation oil and gas exploration in Muzarabani could have
Just like what is happening in the pricing of surged by 8.7% in May 2022, a moderation from been completed by now and the nation probably
grains above the market prices by the Grain Mar- 9.6% that was recorded in the prior month. in full swing petroleum mining thus reducing
keting Board (GMB), the fuel prices being set by As alluded earlier, the massive growth in prices dependency on imports.
ZERA are way above import parity prices. This is largely emanating from the massive exchanger- Zvikomborero Sibanda is an Economic Analyst
probably reflects that the energy regulator is cap- ate depreciation of the Zimbabwe dollar. Data for Zimbabwe Coalition on Debt and Develop-
tured by vested interests with an unrestrained show that since the beginning of the year to date, ment (ZIMCODD). He writes in his own capaci-
ability to impose punitive fuel prices under the the local currency is down by more than 60% ty, his views do not represent those of the organi-
guise of responding to the negative impacts of inboth the official and alternative markets. zation he works for. Email: bravosibanda@g-
the Russia-Ukraine war. With many Zimbabweans earning in local curren- mail.com. Twitter handle @bravon96
There is more to punitive fuel price increases in cy and salaries remaining largely constant, rising
Zimbabwe than the dynamics in the global crude inflation is plunging the majority of citizens into
oil market. abject poverty and this is widening societal
inequalities.

Turkey threatens to stall Sweden, Finland in Politics Around The World The AXiS XXIX-XXX Friday 03 June 2022 26
NATO talks
Delegations from Sweden and Finland were in Initially meant to last six months, Operation He said, “EIA has become a global decision-mak-
Ankara on Wednesday seeking to address Turkish Shujaa was extended on Wednesday despite an ing tool by policy makers in protecting the envi-
objections to their joining the NATO military earlier announcement by Uganda's military that it ronment with nations across the globe enacting
alliance. would pull out troops when the mission ended laws and setting stricter standards to ensure com-
Turkey objects to the accession of the Nordic unless instructed otherwise. pliance and Lagos State cannot be an exception.
countries, citing their perceived support for the
Kurdistan Workers' Party, or PKK, as well as the Shujaa spokesman Colonel Mak Hazukay told “It is, however, worrisome that while we continue
US-backed Syrian Kurdish militia, the YPG. Reuters the Congo and Ugandan armies signed to see improvements in the level of compliance of
Ankara claims such groups are a threat to its documents on June 1st to prolong their joint mili- the private sector players to the process, the same
security. tary operations into a third phase because the cannot be said of the public sector. Some LGA/L-
The two countries' applications to join the alliance threat was not "eradicated". – Reuters CDAs have continued to execute development
as a defense against feared aggression from Russia Kenya marks 59 years of self-rule projects in the state without EIA. – The Punch
would end decades of military neutrality. Kenya celebrated Wednesday 59 years of self-rule. Gambian government says it will prosecute exiled
Finland — which shares a 1,300-kilometer Thousands had gathered at the Uhuru Gardens of ex-president Jammeh
(800-mile) border with Russia — and its neighbor Nairobi to mark Madaraka Day. Gambia's government on Wednesday said it
Sweden have been disturbed by Moscow's inva- It is before a large crowd, dignitaries such as the accepted a recommendation by a truth and recon-
sion of Ukraine. – DW first couple of the Republic of Sierra Leone, the ciliation commission that exiled former president
Gambian government says it will prosecute exiled diplomatic corps, VP William Ruto and politician Yahya Jammeh be prosecuted for killings and
ex-president Jammeh Raila Odinga that the President addressed the other suspected crimes from his time in office.
Gambia's government on Wednesday said it nation. Attorney General Dawda Jallow said a special
accepted a recommendation by a truth and recon- "Madaraka Day is significant in our history prosecutor would oversee cases of abuses found
ciliation commission that exiled former president because it is on this day in June 1963 that our from Jammeh's 1994 to 2017 rule, which were
Yahya Jammeh be prosecuted for killings and founding fathers of our nation replaced the outgo- laid out in the Truth, Reconciliation and Repara-
other suspected crimes from his time in office. ing colonial government and formed the first tions Commission's (TRRC) report last year.
Attorney General Dawda Jallow said a special indigenous government of Kenya" The independent commission said Jammeh and his
prosecutor would oversee cases of abuses found If Uhuru Kenyatta presided over the Kenya henchmen were responsible for 44 specific crimes
from Jammeh's 1994 to 2017 rule, which were Defense Force parade in Nairobi, celebrations against journalists, former soldiers, political oppo-
laid out in the Truth, Reconciliation and Repara- resumed this year in all counties. – African News nents, and civilians, including killings and rapes.
tions Commission's (TRRC) report last year. Zelensky Will Be Tried As War Criminal if Russia Jammeh seized power of the tiny West African
The independent commission said Jammeh and his Captures Him nation in a 1994 coup. He was forced out after
henchmen were responsible for 44 specific crimes Asenior lawmaker in the self-declared Donetsk losing a 2016 election to the current president,
against journalists, former soldiers, political oppo- People's Republic said on Wednesday that the Adama Barrow, and fled to Equatorial Guinea. He
nents, and civilians, including killings and rapes. Russia-backed region intends to try Ukraine's has denied allegations of wrongdoing. – Reuters
Jammeh seized power of the tiny West African President Volodymyr Zelensky as a war criminal. World leaders ‘horrified’ by ‘murder of innocent
nation in a 1994 coup. He was forced out after Speaking to Russia's state news agency Tass, children in Texas
losing a 2016 election to the current president, Yelena Shishkina said the DPR would bring Leaders around the world condemned the shooting
Adama Barrow, and fled to Equatorial Guinea. He charges against the lawmakers who had led at an elementary school in Texas that killed 19
has denied allegations of wrongdoing. – Reuters Ukraine since 2014, when Russia's President children and two teachers, describing it as “sense-
CSs Kibicho and Mucheru plan to rig poll, claim Vladimir Putin annexed Crimea. These include less” and “inconceivable” and calling out and
Ruto allies Zelensky, former acting president Oleksandr comparing U.S. gun policy with that in other
Allies of Deputy President William Ruto have Turchynov and former president Petro Poroshen- nations where mass shootings are less frequent.
clashed with government officials over claims that ko, she said. Ukrainian President Volodymyr Zelensky, whose
Azimio la Umoja One Kenya Coalition Party flag- "Perpetrators of military crimes are not just country is battling Russia’s invasion, said it was
bearer Raila Odinga will win the August 9 presi- those who hold weapons in their hands and pull “terrible, to have victims of shooters in peaceful
dential election by 60 per cent of the vote. the trigger. Those are also generals, who issue time.”
They made the claims after Interior Principal Sec- orders, and presidents, too," said Shishkina, who Zelensky, speaking remotely during the World
retary Karanja Kibicho and Information and Com- chairs the DPR parliament's committee on crimi- Economic Forum in Davos, Switzerland, said he
munications Technology Cabinet Secretary Joe nal and administrative legislation. – Newsweek was “deeply saddened by the news of the murder
Mucheru said Mr Odinga was assured of a Rwanda accused of stalking, harassing and of innocent children in Texas.” His foreign minis-
first-round victory. threatening exiles in US ter, Dmytro Kuleba, said Ukraine “shares the pain
The officials attributed their views to data collect- Leaders around the world condemned the shooting of our U.S. friends” as his country also loses
ed by the National Intelligence Service (NIS).NIS at an elementary school in Texas that killed 19 “innocent young lives” because of the war.
falls under the security docket headed by Interior children and two teachers, describing it as “sense- Tuesday’s tragedy in Uvalde, Tex., was the deadli-
Cabinet Secretary Dr Fred Matiang’i.“There are less” and “inconceivable” and calling out and est mass shooting at an American school in nearly
people who will make noise for perception comparing U.S. gun policy with that in other a decade. The killings came less than two weeks
creation, which is far from facts. nations where mass shootings are less frequent. after another mass shooting at a supermarket in
We don’t deal with such perceptions; we deal with Ukrainian President Volodymyr Zelensky, whose Buffalo, which left 10 dead.
facts on the ground and they are saying very country is battling Russia’s invasion, said it was – The Washington Post
different things,” Dr Kibicho told Citizen TV on “terrible, to have victims of shooters in peaceful
Tuesday night.“If you ask me what the data is time.”– The Guardian Boris Johnson shifts to cost-of-living crisis
saying, I will give you as it is and the burden of response after partygate report
proof then shifts to you. If you think the data is
misleading, then tell me what you have. You Comply with environmental protection laws, govt Boris Johnson will try to shift attention to the
cannot criminalise someone for giving you infor- urges LGs cost-of-living crisis after the Sue Gray report laid
mation. If the data favours a particular person, it The Lagos State Government has urged authorities bare the raucous culture of drinking that led to
doesn’t mean that is the person I necessarily sup- of the local governments and local council devel- lockdown breaches in Downing Street.
port but it’s what the data is saying,” he added. opment areas in the state to comply with Environ- The Prime Minister refused to resign despite
– Daily Nation mental Impact Assessment policies while execut- accepting the “bitter and painful” conclusions of
ing projects in their communities. the senior official’s inquiry that revealed lurid
Uganda and Congo extend joint military opera- The Permanent Secretary of the Ministry of the details of partying in Government.
tion in east Congo Environment and Water Resources, Dr Omobolaji He said he “overwhelmingly” believes he should
Uganda and the Democratic Republic of Congo on Gaji, stated this on Wednesday during a stakehold- stay in power to tackle the nation’s challenges
Wednesday extended a joint military operation ers’ meeting with council managers and engineers including the soaring costs of food and energy.
launched late last year against Islamist insurgents in Alausa, Ikeja. Chancellor Rishi Sunak will announce a new
in east Congo, the operation's spokesperson said. Gaji explained that the ministry has adopted EIA package of support likely to include a discount on
Uganda sent at least 1,700 troops to its central as a formal process to identify the likely impacts energy bills funded by a windfall tax on oil and
African neighbour in December to help fight a that may arise from a proposed activity on the gas giants on Thursday.
violent rebel group known as the Allied Demo- environment, human health and social economic The publication of Ms Gray’s report a day earlier
cratic Forces (ADF) - the largest foreign interven- activities. led to fresh questions after it emerged she aban-
tion in Congo in over a decade aside from a doned her investigation into an “Abba party” in
United Nations peacekeeping operation. the Downing Street flat. – Evening Standard

27 The AXiS XXIX-XXX Friday 03 June 2022 Business Around The World

Africa’s Covid deaths to fall by 94% in 2022: The bloc had also tweaked agreements with Pfizer The Wall Street Journal reported Tuesday that
WHO analysis Inc (PFE.N) and German partner BioNTech SE in some members of the oil exporters' cartel were
Deaths on the African continent from Covid-19 April to delay vaccine deliveries by three months exploring the idea of suspending the OPEC+
are expected to fall by nearly 94 percent in 2022 as it gears up for a potential booster campaign in supply agreement with Russia. This would allow
compared to last year, modelling by the World the fall. – Reuters countries such as Saudi Arabia and the United
Health Organization (WHO) showed on Thursday. Six million Somalians hit by severe drought condi- Arab Emirates to step in and ease a supply crunch
2021 was the pandemic’s most deadly year in tions that pushed global crude prices above $120 a
Africa, with Covid-19 the seventh major cause of barrel this week.
death, just below malaria.
“Our latest analysis suggests that estimated deaths More than a third of Somalians have been hit by Saudi Arabia, OPEC's de-facto leader, had indicat-
in the African region will shrink to around 60 a severe drought conditions, which has started ed to Western allies that it was prepared to raise
day in 2022. … Last year, we lost an average of threatening lives and farming activity. its oil production if Russian output fell substantial-
970 people every day,” WHO Africa director Mat- “Some people are starting to die and the situation ly as a consequence of the sanctions imposed over
shidiso Moeti told a virtual news conference. is turning into a famine, Abdirahman Abdishakur the invasion of Ukraine in February, the Financial
– Moneyweb Warsame, a special presidential envoy for drought Times reported. – CNN
Futures climb on lower oil prices; private jobs response told reporters in the capital, Mogadishu. Kenya surprises with first rate hike in almost
report in focus “Urgent assistance is needed. seven years
U.S. stock index futures rose on Thursday as a The drought has also displaced nearly 700 000 Kenya’s central bank unexpectedly raised its key
pullback in oil prices lifted investor sentiment in people across the East African country, Warsame interest rate for the first time in almost seven
the run-up to a private payrolls report that could said. years to anchor inflation expectations as concerns
provide a clearer picture of the labor market. Aid agencies operating in Somalia have applied about commodity prices build.
Prices of global benchmark Brent crude were for $1.4 billion for drought relief but have so far The monetary policy committee increased the rate
down more than 2% ahead of a meeting of key received $58 million from donors, Warsame said. by 50 basis points to 7.5%, Governor Patrick
producers later in the day, with speculation swirl- – Moneyweb Njoroge said in an emailed statement Monday.
ing that Saudi Arabia may boost production. Brent Amazon to close Kindle bookstore in China That’s the first increase since July 2015. None of
crude had crossed $120 a barrel earlier this week US tech giant Amazon said Thursday that it will the five economists in a Bloomberg survey pre-
on the prospect of a European Union ban on stop operating its Kindle e-bookstore in China dicted the move.
Russia supplies. – Reuters from next year, closing the chapter on a massive The decision was taken because of “elevated risks
Walmart bets on its thousands of stores as it seeks consumer market. to the inflation outlook due to increased global
to take e-commerce market share from Amazon The e-commerce pioneer has in recent years commodity prices and supply chain disruptions,”
Walmart’s cavernous stores are known for aisles appeared to admit defeat to local Chinese rivals Njoroge said. – Moneyweb
of low-priced groceries, paper towels and apparel. such as Alibaba and JD.com, ending its online Record Chinese wheat prices raise risk of pricier
Now, those big boxes are hubs for its e-commerce retail operations for Chinese consumers in 2019. noodles
business, serving as launch pads for delivery Amazon's decision to pull the Kindle service Chinese consumers are likely to have to pay more
drones, automated warehouses for online grocery comes about eight years after it first set up an for food staples like noodles and bread this year,
orders and departure locations for direct-to-fridge official store for the e-book reader on Alibaba's as record wheat prices in the world's top consum-
drop-offs. Eventually, they will help pack and ship Tmall platform. er of the grain get passed on to food makers, trad-
goods for individuals and independent companies "Amazon will stop operating its Kindle e-book- ers and analysts said. Wheat harvested in China in
that sell on Walmart’s website through its store in China a year from now on June 30, recent weeks is being sold at around 3,200 yuan
third-party marketplace. 2023," the company said Thursday in a statement ($477) per tonne, about 30% higher than a year
“The store is becoming a shoppable fulfilment on Chinese social media platform Weibo. ago and the highest level on record, despite stable
centre,” Tom Ward, chief e-commerce officer for – eNCA demand.
Walmart U.S., said in his first interview since
stepping into the role. “And if the store acts like Zimbabwe rallies allies to push for legal ivory Surging farming costs and tight stocks have
the fulfillment center, we can send those items the trade pushed up prices that are also being supported by
shortest distance in the fastest time.” – CNBC Zimbabwe will this week press a drive to legalise worries that heavy rain last year could lead to a
Walmart bets on its thousands of stores as it seeks the ivory trade, inviting officials from 15 nations smaller crop. – Reuters
to take e-commerce market share from Amazon to meet in a national park that's a beacon of suc- US equity firm takes stake in New Zealand's All
Air travel in Singapore is recovering and has cess in protecting elephants. Blacks
reached around 40% of pre-Covid levels despite
China’s border restrictions, Transport Minister S. Hwange National Park is overflowing with US private equity firm Silver Lake secured a
Iswaran said. elephants, which now routinely wander outside the NZ$200-million stake in New Zealand Rugby and
China’s passenger traffic is significant for Singa- boundaries to feed, sometimes running into deadly its famed All Blacks on Thursday after provincial
pore, he said. Some 3.6 million Chinese residents conflicts with people living in the surrounds. unions overwhelmingly endorsed the deal follow-
travelled to Singapore in 2019, accounting for Zimbabwe and its neighbours in southern Africa ing years of wrangling. The vote by 89-1 ended
13% of total visitors, according to data from the have seen their elephant herds thrive in recent a heated two-year negotiation that pitted rugby
local tourism board. years and are now home to about 70 percent of bosses against the players' association and provin-
China remained among the top sources of visitors the continent's elephants. – eNCA cial rugby unions, amid concern about selling off
to Singapore during the pandemic, but that may part of the country's culture to foreign owners.
be changing as other countries relax border mea-
sures. In April, Singapore received just 5,000 visi- YouTube could be liable for unauthorised uploads Rugby is more than just a game in New Zealand
tors from China, less than 2% of total arrivals, if slow to act, German court rules and is seen as an integral part of the social
data showed. – CNBC fabric. – eNCA
Moderna delays COVID vaccine deliveries to EU Google's (GOOGL.O) YouTube and other plat-
by several months forms could have to pay copyright damages over Why Russia isn't hurting even as it cuts off
Moderna Inc (MRNA.O) said on Thursday it has unauthorised uploads even if the content was put Europe's gas
agreed to push back some COVID-19 vaccine online by a third party, Germany's top court ruled.
deliveries to the European Union by several The platforms would be liable only if they did not Russia's increasingly aggressive actions against its
months to later in 2022 or early next year. act quickly to block access once they had learned European gas customers are taking a toll. The
Shares of Moderna fell nearly 2% before the bell of illegal uploads, the court said in its ruling on country's natural gas exports have tumbled by
over the delay, even though the company stuck to Thursday. more than a quarter since January. But surging
its vaccine sales forecast of $21 billion for 2022. prices have kept Russia's coffers bulging as it
Delivery of the doses were originally planned in The case comes amid a long-running battle continues to cut off deliveries.
the second quarter, the European Commission said between Europe's $1 trillion creative industry and
in a statement. online platforms, with the former seeking redress Moscow's gas exports to countries outside of its
for unauthorised uploads. – Reuters Commonwealth of Independent States, which
includes 11 countries in Central Asia and Eastern
Oil prices fall as OPEC considers pumping more Europe, fell nearly 28% in the first five months
to make up for Russia of 2022, Russian state energy giant Gazprom
(GZPFY) said on Wednesday.
Oil prices fell on Thursday on reports that OPEC
could start to pump more crude to make up for a So far, Gazprom has cut off at least 20 billion
drop in Russian production caused by Western cubic meters of its annual gas supplies to custom-
sanctions. ers in six European countries Poland, Bulgaria,
Finland, Denmark, Germany and the Netherlands
because they failed to make payments in rubbles,
a demand. – CNN

28 The AXiS XXIX-XXX Friday 03 June 2022 Commodities

Weekly Commodity However, the Great Dyke Investments (GDI) prior quarter.
Pulse: Commodity project in Darwen dale, 65 kilometres west of the The latest quarterly pricing negotiations began
capital Harare, has the potential to become one late last month between Japanese buyers and
prices up over of the world's biggest platinum mines with the global suppliers, including Rio Tinto Ltd
demand-supply concerns capacity to reboot Zimbabwe's collapsing econo- RIO.AX and South32 Ltd S32.AX, and are
my, has stalled and now faces collapse for expected to continue until late this month. Japa-
myriad reasons. The Centre for Natural Resource nese buyers said the initial offers were too high,
Governance (CNRG), a civil society research and as local spot premiums were hovering at around
advocacy group, says in its latest report after a $140-$150 a tonne, reflecting slack demand from
protracted investigation it established the project automakers amid a global supply chain crunch.
is now stuck. However, there is concern that supply may be
disrupted by the deepening conflict between
Copper Russia and Ukraine and possible sanctions on
Russian aluminium giant Rusal RUAL. But
The copper price jumped 1.9% in the week as supply to Japan has been steady, and premium
China’s zero-covid strategy appears to be winding negotiations will be done on an assumption that
down. Officials in Shanghai announced an end the current conditions will continue.
to a two-month lockdown in the week. Chi-
na’scabinet announced a package of 33 measures Nickel
covering fiscal, financial, investment and industri-
al policies to revive its pandemic-ravaged econo- In the week under review, nickel prices margin-
my. The development could boost downstream ally increased by 0.5% to settle at $28,100 per
consumption, which was halted for months due ounce as demand for the metal in the battery
to the recent covid-19 outbreak. Copper for deliv- manufacturing on the side of the automotive
ery in July rose more than 5% from last week’s industry resumed production.
settlement, touching $4.5575 per pound ($10,050 In other news, the LME Clear incurred a $2
per tonne) at lunchtime Thursday on the Comex billion initial margin (IM) breach in March, as
market in New York. nickel prices skyrocketed in the aftermath of the
Russian invasion of Ukraine. The peak breach,
Gold On the supply side, Chile’s copper production fell which considers the theoretical scenario of the
in April, government body Cochilco said on largest clearing member not meeting its payment
In the week under review, gold prices rose from Thursday, with state-owned giant Codelco seeing obligations, is the highest on record for the cen-
a two-week low as investors looked toward the output down 6.1% year-on-year to 116,000 tonnes tral counterparty (CCP), according to the latest
safe-haven metal amid worries over an increase in and Collahuasi’s production dropping by a sharp publicly available figures. The previous peak
inflation primarily due to rising fuel prices, 26.5%. Chile’s environmental regulator initiated a breach occurred in Q4 2021, and it was $51.7
although a stronger dollar and higher U.S. yields sanction process against Antofagasta Minerals’ million in size Goldman Sachs, a financial
kept gains in check. Gold’s future price rose to Los Pelambres copper mine for deficiencies asso- services firm, expected nickel prices to rise by
settle at $1,872 per ounce from $1,842 recorded ciated with tailings management, the agency said 20% to US$36,500/ton by the end of this year,
in the prior week, representing a 1-week increase in a statement released on Wednesday. The com- but the price might be pulled down by funda-
of 1.6%. Investors now are desperate for more pany said it is reviewing the scope of the sanc- mental pressures afterwards.
safe havens than just treasuries and that is why tioning process to determine its next steps. Seri- Cobalt, lithium, and nickel, the three main
gold outperforming. Meanwhile, inflation may not ous infractions could mean a loss of the mine’s battery metals, have a long-term good outlook,
really drop if these energy costs are that elevated. environmental permit, closure, or a fine. Minor but they are likely to face an oversupply prob-
infractions can result in a written warning or a lem and a sharp correction later in 2022 and
fine. In this case, the maximum fine could reach 2023. However, the prices will potentially jump
7.5 billion Chilean pesos ($9 million). The mine again after 2024. The decrease in prices for the
produced 324,700 tonnes of copper last year. next two years was mainly because these metals
attracted a lot of investment for production
Equity Axis research thinks the risk of much Meanwhile, the world’s No. 2 copper producer expansion, so the speed of supply growth has
more aggressive tightening globally could really Peru is suffering increasingly violent community surpassed the demand, said, analysts.
fuel the gold trade. Other commodity analysts are protests against mines, as communities demand
seeing some short covering in the futures market higher benefits from the industry. Two fires broke Brent
and a little bit of bargain hunting in the cash out at key copper projects this week, hitting a
market after the recent selling pressure. In addi- copper mine and Southern Copper Corp’s Oil prices strengthened in the week after Euro-
tion, investors are also looking ahead to U.S. non- plannedLos Chancas project, amid escalating local pean Union leaders agreed to a partial and
farm payrolls and May’s inflation data for clues protests. Analysts expect supply to outpace phased ban on Russian oil. In the week oil rose
into the economy and outlook for the Federal demand next year, global copper supply will out- to $118 a barrel as increasing prices for fuels,
Reserve’s policy tightening path. pace demand over the next two years, helped by such as petrol and diesel, combined with linger-
several upcoming large mine projects. Equity ing concerns over supplies from Russia propelled
Platinum Research also anticipates slowing demand and crude to its highest level in two months. Brent
new supply could balance the market in 2023, crude, the international benchmark, hit $120.50 a
Platinum prices are back on track after sustaining while the medium-term outlook remains positive. barrel, up 1% ahead of the July contract’s expiry
3 straight weeks of losses, however, in the week on Thursday. US benchmark West Texas Inter-
under review the base metal-edged higher by Aluminium mediate rose by a similar amount to more than
8.5% to ease to $1,028 per tonne amid a resump- $116 a barrel. The rally in crude oil comes as
tion of the Chinese production sector. China is the Aluminium prices have been basically flat in supplies of refined products, such as petrol,
single largest global consumer of metals and recent weeks amid deadlocked price talks remain tight at major delivery hubs at a time
given the cease of the zero-covid law which had between sellers and buyers. In the week under when demand is expected to pick up steam in
once implemented in the country, metal prices are review, the base metal closed up to $2,724 on its many countries, including the US.
going to boom. last day of trading, however, a weekly decline of Lower exports of diesel from Russia, which
In other news, IT was noisily touted as a 1.3% was due to market imbalance. In the many western companies are shunning or cutting
game-changer for Zimbabwe's mining sector, and short-run aluminium, prices are going to shoot as back on following the invasion of Ukraine, have
the economy; a centrepiece of the government's production in the car manufacturing resumed. tightened markets even more so than crude. The
ambitious yet unrealistic US$12 billion targets for In other news, the global aluminium producers gas oil contract in Europe, a proxy for diesel
the industry by next year and catalyst to transform have offered Japanese buyer’s premiums of $172 and other distillates, is trading close to record
Zimbabwe into a knowledge-driven industrialising to $177 a tonne for July-September primary levels near $1,200 a tonne. Sky-high product
upper-middle-income economy by 2030. In its metal shipments, which would be between prices mean that motorists in many countries are
Vision 2030 document, titled Towards a Prosper- unchanged and 2.9% higher compared with the paying record prices for diesel and gasoline
ous & Empowered Upper Middle-Income Society current quarter, four sources directly involved in despite crude being well below its all-time high
by 2030, the government says: "This will be real- quarterly pricing talks in the week. Japan is of $147.50 a barrel, which it hit in 2008. The
ised through support for local processing of Zim- Asia’s biggest importer of metal. The premiums key US summer driving season kicked off on
babwe's diverse mineral resource endowment, for primary metal shipments it agrees to pay each Monday with the Memorial Day holiday. An
with thresholds for beneficiation and value addi- quarter over the London Metal Exchange (LME) easing of Covid-19 restrictions and government
tion spelt out. Envisaged investments involve ben- cash price CMAL0 set the benchmark for the subsidies have both helped to support demand.
eficiation of such minerals as platinum, chrome, region. For the April-June quarter, Japanese
lithium, nickel, diamond cutting and polishing, buyers agreed to pay a premium of $172 per-
copper, gold and coal, with the strengthening of tonne PREM-ALUM-JP, down 2.8% from the
linkages along the mineral value chain.

29 The AXiS XXIX-XXX Friday 03 June 2022

Markets watch

A country-mile decline for the Zimbabwe dollars

ZWL performance to date in 2022 Treasury yields following hawkish remarks from sent the headline rate to 16.8%, according to
a US Federal Reserve Governor. data released on the National Bureau of Statis-
The Zimbabwe dollar registered yet another mas- Meanwhile, South Africa's economic outlook tics. That’s the highest level since August.
sive decline of 6% against the greenback on the remains clouded by both domestic factors includ- Annual core inflation accelerated to 14.2%,
latest auction market held on Tuesday to settle ing recent flooding and electricity shortages, compared with 13.9% in the prior month
at ZWL 308.5201 against a single unit of the alongside risks from the war in Ukraine through driven by gas and liquid fuel costs. Prices
US dollar from ZWL 290.8876 traded last week, rising food and fuel inflation. climbed 1.76% against the previous month.
which was also the second record decline since Continued positive performance of the Rand Meanwhile, Nigeria’s Central Bank hiked
the auction market commenced. comes after the South African Reserve bank interest rates (IR) last work to deal with infla-
US$25.6 million was allotted from US$25 mil- hiked interest rates by 50 basis points to 4.75% tion. The Bank hiked IR by 150 basis points
lion allotted last week which was a meagre 2% as it battles to tame inflation. Higher commodity to 13% for the first time in six years to curb
increase. The rise in demand for United States prices particularly for the precious metals during the accelerating inflation and boost portfolio
dollars comes at a time when the parallel market the week also buoyed Rand's performance. inflows.
rate has widened between 500 and 520 to one Meanwhile, the country’s inflation for April The increase comes after Africa’s largest eco-
US dollar. month-on-month closed at 5.9% near the Central nomic growth rate slowed for a third consecu-
Meanwhile, year on year inflation was in the Bank’s ceiling of 3% to 6% ranges. Inflation rise tive quarter by expanding by 3.1% during the
uproar after crossing the 100% tally for the was driven by high food and fuel prices which three months to March from a 3.98% increase
month of May year-on-year to 131.7% from 96.4 are also a result of the Ukrainian War. during the last quarter of 2021.
% in April. A rapid increase in inflation marks Kenyan Shilling drops to 116.7 as inflation bite Meanwhile, Nigeria’s inflation hit an eight
the rising cost of living amid an anguishing cur- to 24-months high month-high in April after scaling up to 16.8%
rency. The Shilling traded on the back-foot at 116.47 exceeding the Central Bank’s range of
Month-on-month inflation rate for May 2022 against the greenback from 116.4 traded last between 6-9%.
also failed to gain remorse after gaining by 5.5 week Thursday. This was a response to the rise Kwacha trades at 17.3 against the US$
percentage points to 21% from 15.5% in April. in inflation which soared to 7.1%, which was The Zambian Kwacha continued on an upward
The pie-chat below shows inflation trends in % also a record high in two years as the cost of trajectory, closing near to equating the South
in 2022 food and beverages continued to rise sharply African Rand. Despite a boost from the pre-
partly affected by the war in Ukraine which has cious minerals which are trading on a higher
The pie-chat below shows inflation stoked energy and food prices. note, the currency is also finding strength due
trends in % in 2022 The inflation — a measure of annual changes in to the business community’s confidence in
the cost of living – rose from 6.47% in April, Hichilema’s leadership.
Regional Markets driven mainly by food, transport and fuel prices, Due to confidence in leadership, the Kwacha
Rand continues on a positive trajectory according to data released by the Kenya National forgo the nightmares encountered during the
The South African rand traded at 15.6 against Bureau of Statistics. reign of Lungu which saw Lafarge Cement
the US dollar from 15.7 traded last week. How- Meanwhile, Kenyan mobile money transactions Zambia reducing prices by 10% while the
ever it was lower than Wednesday’s performance have hit Ksh1.82 trillion in Q1 2022 according Anglo-American investors put on their old
weighed down by a firmer dollar and rising to the data released by the Central Bank of jackets in Zambia, ready to do mining busi-
Kenya, which is a record-high increase on a ness.
monthly basis. Pula drops to 12 despite the US dollar’s
Naira slips to 414.7 amid 8-month inflation momentum retraction
record high, IR hike of 13%
Sub-Saharan Africa’s biggest economy saw its The Pula dropped marginally to 12 on Thurs-
currency dipping to 414.7 against the United day against the greenback. The decline was
States dollar amid a surge in inflation. Nigeria’s despite the recession of the US Dollar’s per-
inflation rose to an eight-month high in April as formance and a rebound in precious metals
the cost of gas and food items such as bread and pricing. Botswana is the second-largest pro-
cereals climbed on the back of surging global ducer of diamonds, trailing behind only Russia
commodity prices. Annual food inflation acceler- which is under a tight grip of Western sanc-
ated to 18.4%rom 17.2% in March. The surge tions. This gives the country’s diamonds a
greater advantage compared to the competitor.

Designed by

Interactive Tincture



ZSE WEEKLY COMMENTARY

Following a month of slaughter in which the bourse lost over half of the gains made
since the beginning of the year, the ZSE began the new month of June on a high
note, continuing the recent week's recovery trend. As the market retraces record high

territory, the mainstream ZSE All Share Index gained 14.02 percent this week to settle
at 23747.5 points. Market heavies and medium caps stimulated the positive outturn
with gains of 18.29 percent and 2.74 percent, respectively, outweighing a -1.85 percent
drop in penny stocks.

ZSE ASI 22,942.36 ZSE TOP 10 14,780.46 MEDIUM CAP INDEX 40,820.84
ZSE TOP 15 22,183.37 SMALL CAP INDEX 14,330.29 39,167.07
21,863.24 14,095.90 38,838.95
21,376.04 13,699.86 38,605.48
20,986.91 13,494.55 37,572.53
20,792.40 13,351.99 37,366.60
-9.37% -9.66% -8.46%

16,451.75 577,080.35 ZWL INTERBANK 173.2685
15,893.63 561,075.93 173.2685
15,601.72 541,386.23 173.2685
15,196.26 528,568.64 258.5404
14,948.06 514,446.77 258.5404
14,796.45 506,238.45 258.5404
-10.06% -12.28% 49.21%

Hedge seeking has fueled the current upward trend, as the country's yearly inflation
touched triple digits, making it the world's worst. The ZSE had a nominal
year-to-date return of 119.43 percent at the end of the week. However, due to the
local currency's -184 percent depreciation in the currency auction market, African
Markets reported a year-to-date return of -23 percent in US$ terms.
Meanwhile, BNC and Padenga recorded trades on the US$ exchange this week, VFEX,
whereas the other two VFEX listed equities haven't seen any in over two months. A
total of US$20,958 was traded throughout the week, with Padenga up 3.6 percent and
BNC down by a record -16.8 percent.
The interbank exchange rate jumped 4% this week to ZWL$ 307.362 per US$ in the
interbank currency market, as the local currency continues to decline against the green-
back on a daily basis. The currency rate in the auction market jumped by 6.06 percent,
from ZWL$290.8876 to ZWL$ 308.5201 per US$. The two currency rates are bidding
to converge with the parallel market exchange rate of ZWL$ 500 per US$. The

black-market rate, on the other hand, is not slowing down as it ended the week at
around ZWL$ 500 per US$.



FINANCIAL MARKETS AT A GLANCE 2022

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

23,747.50 15,812.11 474,851.26 308.5201
14.02% 18.29 -1.85% -6.06

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

Medium Cap index

15812.11 23747.5 23747.5
23747.5 474851.26 38562.94

WOW 18.29% MOM 4% YTD 132.1% WOW -1.85% MOM -4% YTD 17.9% WOW 2.74% MOM -3% YTD 89%

ZSE Financials Sector ZSE Consumer Discretionary Index ZSE Consumer Staples Index

All Share index ZSE Financials index All Share index ZSE Consumer Discretionary index All Share index ZSE Consumers Staples index

23487.1 23747.5 28206.14
23747.5 23747.5
27105.92
WOW 2.4% MOM 11% YTD 67.5% WOW 10.4% MOM -17% WOW 11.7% MOM 5% YTD 106.3%
YTD 121.3%
ZSE ICT Index ZSE Materials Index
ZSE Industrials Index (New) ZSE Materials Index
ZSE Industrials Index (new) All Share index ZSE ICT Index
All Share index All Share index

WOW -2.9% MOM -19% 23747.5 WOW 31.1% MOM 5% 48994.25 WOW -5.4% MOM 8% 16910.76
20772.03 23747.5 23747.5

YTD 9.7% YTD 198.3% YTD 93.6%

ZSE Real Estate Index ZSE Real Estate Index Interbank Market 105.4% JSE All Share Index

All Share index Interbank All Share index JSE All Share index

23747.5 2% 23747.5
9487.64 70849.38
WOW 10.7% MOM -22% WOW 2% MOM -4%
YTD 8.2% YTD -3.9%

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

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

WOW -0.2% MOM -0.2% 23747.5 WOW 0.2% MOM -2.3% 23747.5 WOW -0.6% MOM 9.7% 52815.78
7216.81 6802.76 23747.5

YTD 3% YTD 12.3% YTD 23.06

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 34000 33000 AXIA 1680.88 1451.12 ARTZDR 2200 2200
ARISTON 390.51 397.42 EDGARS 12807.41 11096.19 LAFARGE 15025 15000 ECOCASH 13082.47 3272.73 33%
BAT 366000 366000 NTS 400 415.63 PROPLASTICS 6600 6800 ECONET 23925.09 5502.73 30%
CFI 26400 26400 RTG 1165 1165 TURNALL 400 430.5 DELTA 40000.04 8930.97 29%
DELTA 40000.04 31969.05 SIMBISA 790.32 700 Willdale 345.64 320.07 FML 2000.3 400.3 25%
DAIRIBORD 5700 5000 TRUWORTHS 22200.89 21565.07 RioZim 11000 11000 FMP 747 127 20%
HIPPO 32500.73 32500 200 175.22
INNSCOR 52553.11 44952.12 ICT Financial Latest Price Previous Week TOP 5 WEEKLY FALLERS
MEDTECH 2000 1980 Sector Latest Price Previous Week Sector ZWL Cents ZWL Cents
MEIKLES 17200 17000 Ecocash ZWL Cents ZWL Cents COUNTER PRICE CENTS CHANGE % CHANGE
NATFOODS 200004.68 220002.5 ECONET 9843.54 First Capital Bank 1000.08 994.17
OK 4200.46 4000.18 ZIMPAPERS 13082.47 18478.34 CBZ 11510 11500 UNIFREIGHT 3008.24 -491.76 -14%
SEEDCO 23000 23789.36 23925.09 550 FBCH 7099.74 7100 TANGANDA 24545 -3194.41 -12%
STAR AFRICA 175.9 176.34 Real Estate 550 FIDELITY 2000 2000 MASHHOLD 420 -52.5 -11%
TSL 8207 8500.44 Sector Previous Week FML 2000.3 1840 EDGARS 400 -40.04 -9%
Tanganda 24545 27321.84 MASHHOLD Latest Price ZWL Cents GBFS 1175 1175 NATFOODS 200004.68 -19997.82 -9%
FMP ZWL Cents 406.32 NMBZ 3008.92 3000
650.09 ZBFH 7105 7100
420 ZHL 543.72 535
747

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

70849.38 7216.81 52815.78 52815.78
2% -0.2% -0.6% -0.6%