The AXiS XXXIX

The The Gold fix genesis
ZSE hit beyond recovery
The fight for power imports
Ecocash Holdings registers worst Q1 performancee

The Master Plan

ZECO
#Issue: XXXXIX

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CONTENTS The AXiS 1st-5th August 2022

The Cover Economic news & Analysis

This week ZECO told its shareholders that it is 4 Will a new strategic direction turn ZECO’s fortunes
pursuing a new strategy as a company, which will 5 The Genesis of the Gold Fix
entail changing its operating model and business 6 Blockchain startup hope as Zim start-ups feature on funding map
focus. 7 Command economics hits ZSE beyond recovery
8 Ways of financing Governement Spending
The Genesis of the Gold Fix 10 ZESA and Eskom Fight for power imports from

The gold coin fix is in full swing and although it is Mozambique and Zambia
too early to make an accurate assessment of the
future of the coin, we can draw some insight 11 Cabinet: Government owes ZW$9.3 billion to farmers
from what we know so far. But first, what
problem are the coins trying to fix? for grain deliveries

11 FEWSNET: Exclusive US$ pricing, high ZWL price reduces

purchasing power, access to food

Business : News & Insights

12 Currency dilemma clouds EcoCash Holdings' new fiscal year
14 Tanganda says Inflationary pressures to remain on the rise

Command economics hits ZSE beyond Markets
recovery
17 Markets Watch
The government's interference in the stock 18 ZSE Weekly Commentary
market and contentious economic policies 21 Financial Markets at a Glance
intended to rein in the out-of-control inflation 20 Weekly Commodity Pulse
of currency exchange rates led to the ZSE's bear
run extending for the third month in a row. World News
Investor confidence and morale in stock markets
were derailed by government involvement and 15 Politics around the world
inconsistent policies.
16 Business around the world
Currency dilemma clouds EcoCash
Holdings' new fiscal year

The Group, which doubled its revenues in the
first quarter of 2021 while the mobile money
business which is its flagship asset, registered a
60% increase in transaction values and
registered one of its worst performances for the
period between March to May 2022,

ZSE ASI 16,613.09 ZSE TOP 10 10,271.70 MEDIUM CAP INDEX 33,061.00 ZSE TOP 15 11,303.14 SMALL CAP INDEX 498,980.65 ZWL INTERBANK 439.1103
16,594.91 10,265.73 33,019.62 11,308.19 496,827.15 443.8823
16,594.91 10,329.78 32,449.08 11,339.45 512,918.98 449.6571
16,363.20 10,131.26 32,410.63 11,151.63 517,463.15 455.0111
16,098.74 9,910.94 32,186.71 10,928.52 518,371.20 458.0672
15,919.77 9,757.23 32,180.27 10,766.38 512,386.23 460.7741
-4.17% -5.01% -2.66% -4.75% 2.69% 4.93%



The AXiS Friday 29th July 2022 4

& Analysis

Will a new strategic direction turn ZECO’s fortunes

T his week ZECO told its shareholders that have worsened and its reforma- ZECO profit trend US$m up to 2018
it is pursuing a new strategy as a compa-
ny, which will entail changing its operat- tion has stalled. ZISCO-
ing model and business focus. The shift, accord- STEEL, once Africa’s largest
ing to the company is necessitated by the tilting iron and steel-making company,
environment which renders the present model was established in 1942 and
unviable. Instead, the company’s scope is ventur- folded in 2008, just a year
ing into the property sector, an area, whose major after ZECO’s listing, scuttling
shareholder has vast experience. ZECO holdings the latter’s projection. The
is a Zimbabwe company controlled by Phillip company stopped operations in
Chiyangwa, who is also a politician and socialite. January 2008, following 3 suc-
Its present Rolling Stock business involves the cessive power outages from the
assembly and refurbishment of locomotives, the national grid coupled with
manufacture and refurbishment of railway wagons, cooling water challenges which
granby cars, coco pans and skips for the mining led to the cooling down of
sector. Coke Oven batteries and subse-
Since ZECO’s inception, the fortunes of its busi- quently the cooling down of the blast furnace. Its began to fall at drastic margins, resulting in mas-
ness have been closely linked to that of defunct operating units included the Buchawa Iron, Ripple sive losses.
state-related businesses, National Railways of Creek, the Limestone Quarry and Lanchashire Steel.
Zimbabwe (NRZ) and Zisco Steel. Given that The mining operation highlighted above supplied In a circular to shareholders, the company said
these entities have been out of business or operat- Zisco with Iron ore and Limestone. In 1956, iron the uncertainties surrounding the railway transpor-
ing business at a suboptimal scale with an anti- ore output from the company was 127,954 tons. By tation industry over the years and the closure of
quated fleet, in respect of NRZ, there is now 1957, this had doubled to 257,166 tons. In 1965, many mines and the informalization of the mining
little to hope for a brighter future. The Rolling the company employed up to 2,900 people. By sector have put paid to the Company’s prospects
Stock sector largely feeds from steel and iron, 1990, it employed about 5,500 people and indirect as a Rolling Stock company. what is particularly
which were the primary products produced by employment was around 50,000. It used to export compelling in ZECO’s case is that the company
Zisco Steel. Likewise, NRZ was the biggest cus- to Europe and Asia as well as neighbouring African has found a suitor for its rolling stock business,
tomer for the products manufactured and services countries. which means the funds realized from the sale, can
offered by ZECO, in yester years.
NRZ operates a dilapidated rail network system be rechanneled to the new line, averting a capital
which has an installed capacity to move 18 mil- The fate of these 2 fallen giants speaks volumes raise by shareholders at least at this respective
lion tonnes of cargo per annum but only moved about the economic challenges of Zimbabwe and point. The realized amount from the deal, at
two million tonnes in 2021. The underwhelming the ripple effects that the collapse of big and strate- US$4.5 million will partially be used for the pur-
volumes are a result of certain parts of the rail gic entities such as NRZ and ZISCO has on the chase of a residential piece of land measuring
system being unusable, reduced and dilapidated related sectors. There are many other examples of 365,395 square metres in Harare. A portfolio of
wagons and locomotive fleet and cashflow man- Zimbabwean companies which fell especially at the such a size is however not as compelling for
agement at the state entity. Most of the 2000 height of hyperinflation, whose impact reverberates stock market investors.
wagons under NRZ’s management are from the to this day. Thankfully some privately owned
colonial era and are no longer in use, some of mining companies which temporarily mothballed, The company will need to expand its portfolio in
which were supplied by ZECO. ZECO said it had were able to capitalize and reopen, during dollarisa- the region of other existing property companies in
supplied about 6500 to NRZ and some African tion. Be it as it may, for the companies which the space. The ZSE has 2 more listed Property
countries over its 6 decades of existence. remain, it is on them to reconfigure and charter a and property management companies and these
ZECO was listed on the ZSE at the height of new sustainable path to growth. For ZECO, it may are Mashonaland Holdings and First Mutual Prop-
hyperinflation in 2007 but has a history stretching have taken a while but the refocus is necessary for erties. In recent years, Dawn and Zimre Properties
as far back as 1948. It is at independence in 1980 survival, given that the business has been bleeding Investments have been reconsolidated. Chiyangwa
that the Zeco name was introduced from Resco. for a long time. is not new to the property sector and holds vast
As part of its value proposition to investors at the
point it listed in 2007, Zeco highlighted its exist- tracts of land and developments across Zimbabwe,
ing business with NRZ, stretching 5 decades, as ZECO’s Chiyangwa made overtures in 2015 to part- some of which are allegedly controversially
pivotal for its growth. It specifically aimed to get ner the potential winner among investors vying for acquired. It is likely that he will rechannel part
contracts for refurbishment and replacement of the the ZISCOSTEEL as a local shareholding in fulfil- of his land bank to ZECO but his exposure is
wagons. Between then and now, NRZ’s fortunes ment of the then empowerment law, that is after the high in the residential sector. The sector’s
company’s assets had been put on the market. From fortunes, particularly residential, have seen steady
that respective year onwards (2015), ZECO’s finan- growth, spurred by the diaspora. Diaspora remit-
cial fortunes began waning, justifying Chiyangwa’s tances scaled to about US$1.2 billion in 2021, a
interest in acquiring the assets of a strategic compa- record high. The housing backlog in Zimbabwe
ny which was in its value chain. From 2016 remains high, giving opportunities for new players
onwards, the company’s revenue and profitability such as ZECO.

5 The AXiS Friday 29th July 2022

The Gold Fix Genesis

L ast week the Reserve Bank of Zimbabwe loans. Of course, this was temporary and, with- Most analysts expected the gold fix to be
launched the Mosi-Oa-Tunya coins in an in10 days, the ban was rescinded, he said. clouded by secrecy and inconsistency but so
effort to reduce demand for U.S. dollars Essentially, the RBZ is trying to remedy the far, the RBZ has been commendably transpar-
dollars as a store of value, as the Zimbabwe liquidity crisis by deploying gold coins to mop ent and has implemented thorough background
dollar continues on a free fall. The Zim dollar up the excess liquidity. Which in hindsight is a checks when it comes to gold purchases.
has lost more than two-thirds of its value pretty competent monetary policy tool. Howev- Through “know-your-customer” procedures, the
against the U.S. dollar this year with official er, it remains to be seen whether it will be suc- RBZ is keen on ascertaining the client’s source
inflation standing at 257% in late July. cessful or not with negative sentiment, and and audit trail of funds. Purchasers must pro-
The RBZ says an additional batch of gold coins insufficient reserves standing in the way. vide bank statements to prove they had the
is on sale following a successful debut launch Will gold coins succeed? money on hand which discourages engaging in
in which 1,500 of the initial 2,000 coins The gold coins have liquid asset status, pre- arbitrage activities or foreign players trying to
released were sold out. With three-quarters of scribed asset status, can be used as collateral, launder their loot.
coins sold, it’s apparent that they were a hit and can be bought back at the instance of the Furthermore, the coins have a 6-month morato-
among individual and institutional buyers. holder. The coins are ideal for high-value trans- rium period from the date of purchase during
“A total (of) 1,500 gold coins were sold by the actions and with a purity of 22 carats, individu- which one cannot sell the coins but can use
bank’s agents during the first week of their al serial numbers and backed by a certificate, them to make purchases. Within that period the
release into the market, with 85 percent having they look poised to be custom fit as a store of RBZ expects that official and unofficial rates
been bought in local currency and the balance value since they can be bought using the local will have converged enough to eliminate arbi-
of 15 percent in foreign currency,” said John currency and at the interbank, willing buy- trage exploitation.
Mangudya, the central bank’s governor. er-willing seller exchange rate. Can the Liquidity crisis be remedied?
An additional 2,000 gold coins hit the market Gold is an internationally traded commodity Currently, a Mosi-Oa-Tunya gold coin is worth
on Monday. The 22-carat coin is now selling for and the fact that international buyers will only US$1 823.80 or ZWL805 745.35 using the
1,841 U.S. dollars, slightly up from its debut buy the coins in foreign currencies which interbank rate, currently at US$1:
price of 1,823 on July 25. The RBZ continues include the U.S. dollar, South African Rand, ZWL458.3653. Since the RBZ has so far
to announce the coin price every morning based and British Pound among others and the RBZ released 2000 coins, these will mop up approx-
on the previous day’s London Bullion Market is expressing the weight of the coin in troy imately ZWL1.6 billion. However, in order to
Association gold price, plus five percent to ounces rather than metric grammes used in the solve the liquidity problem, the RBZ needs to
cover production and distribution costs. country clearly reveals that the RBZ is going extract liquidity of around Z$400 billion from
The gold coin fix is in full swing and although the extra mile to follow international standards the market, with the remaining liquidity after
it is too early to make an accurate assessment To understand why almost the coins were pur- that manageable by “open market operations”.
of the future of the coin, we can draw some chased last week, you have to understand the Z$400 billion is equivalent to just under
insight from what we know so far. But first, investment landscape in the country. Most inter- 500,000 gold coins 25 July 2022 WBW’s rate
what problem are the coins trying to fix? national corporations/ investors are paid in the (date of coins issue) calculates to 496,435 gold
What problem are they trying to fix? local currency but have no avenues to expatriate coins. This means that to meet the coin number
The liquidity crisis is one of if not the biggest the funds back home. The only option they target of Z$400 billion then the central bank
problems created by monetary authorities since have really is to look for and buy the green- must release 19,094 coins weekly, and they
the introduction of the Zim dollar. They are back before expatriating the funds out of the have to sell all of them.
guilty of injecting too much liquidity too soon country. The challenge they then face is that Gold reserves
into the economy. When the Zim dollar was there is nowhere to access the foreign currency.
introduced three years ago, we had ZWL10 Certainly not in the banking system, so they are *To Page 6
billion in circulation but currently, there is a forced to turn to the black market/ parallel
reported Z$1 trillion in circulation. A 100-fold market which is illegal, further exacerbating the
increase in roughly 30 months! The liquidity liquidity crisis.
crisis has inevitably given rise to rent-seeking Therefore, by mopping up that excess liquidity,
activities and speculation. These activities have the parallel market is expected to starve of both
then trickled down into the black market where the Z$ and US$ and potentially prompting the
economic players have an insatiable thirst for rate to fall. Last week I expounded on the 50%
the greenback, thereby pushing the exchange premium obtainable in the coins because of the
rate to unprecedented levels. rate disparity between the parallel market and
Then secondly, is the M1 money supply cata- the interbank rate. However, if this policy tool
clysm. M1 money is a country’s basic money is able to drive the exchange rates to a point of
supply that's used as a medium of exchange. convergence or at least close to, the coins will
M1 includes demand deposits and checking be a success. But the question remains, will the
accounts, which are the most commonly used gold coins alone be enough to solve the liquidi-
exchange mediums through the use of debit ty challenge?
cards and ATMs. Of all the components of the
money supply, M1 is defined the most narrowly.
M1 does not include financial assets, such as
bonds. M1 money is the money supply metric
most frequently utilized by economists to refer-
ence how much money is in circulation in a
country.
According to Dr Admire Dube, a Finance Ana-
lyst, “when one uses the RBZ exchange rates,
subtracts USD from M3, and then calculates the
ratio of local bank loans to local M3, one finds
that commercial banks have “printed” over 85%
of all M1 local Z$ in circulation in the previous
30 months”
“This is estimated to be an unsustainable 50
times growth! For reference, during the same
time global money supply has gone up by just
0.5%. The numbers did not add up and thus the
abrupt decision to ban banks from issuing out

The AXiS Friday 29th July 2022 6

*From Page 5 are to potentially to stabilise the economy and coins will work to address some issues, but not all
restore confidence in the local currency enough of them.
Unfortunately, this is the ultimately the chal- to bring down exchange rates, and with that the Even if the exchange rate stabilises, the US dollar
lenge for the RBZ. Simply put, the apex bank insatiable demand for the strong greenback. and gold coin will remain preferred over the ZWL,
does not have any noteworthy gold reserves to Final Thoughts meaning at the point of sale, economic agents will
mint the necessary coins. This means it is mint- The question of whether the coins will work or want the former and not the latter. Will the RBZ
ing what it purchases directly from gold produc- not largely depends on the RBZ’s ability to be able to meet this demand? In order to do that
ers and also minting the coins outside the coun- meet the demand for the coins. Institutional the RBZ will have to raid the Foreign Currency
try, investors and large corporations have a massive Auction System of US$26.5 million each week.
To produce 19,094 gold coins every week, for incentive to purchase the coins as they are more The auction market already has a huge backlog
6 months, the RBZ needs about 15.6 metric accessible than the alternative greenback. For- and since the “auction” disperses about US$25 mil-
tonnes of pure gold which is half the whole eign investors will also turn to the apex bank lion weekly for all national competing needs, there
exported tonnage of gold for last year, 2021. for a store of value and to be able to expatriate is no possible way to meet this demand. Yet, this
Clearly, this is not governments’ intentions and funds back home. So, in hindsight, the gold is an unprecedented monetary policy move and it
they knew that before beginning the project. remains to be seen how it will play out.
That can only mean the authorities’ intentions

Blockchain start-up
Hope as Zim start-ups feature on funding map

Zimbabwe often lacks the necessary start-up Mapunga brainstormed his business idea after Vaxiglobal was co-founded by Dr Integrity
funding that start-ups from other parts of personally experiencing the debilitating obstacles Mchechesi, a medical doctor and public health-
the continent seem to have enjoyed in around opening a bank account and has since care innovator together with a physiotherapist and
recent years owing to its perennial macroeco- built FlexID on WhatsApp, which he called one public health expert Tsitsi Eunice Sifiyali.
nomic environment, a hostile investor climate of the "most ubiquitous platforms" for internet
and a negative investor perception among others. access in Africa. Having verified 1.2 million Vaxiglobal uses contactless biometrics to minimise
bank credentials in Zimbabwe over the past waste of immunisation resources, improve data
In 2021, Zimbabwe was missing from the circa three years, FlexID now focuses on scaling user quality with open standards and enable the
US$5 billion start-up funding received by inno- onboarding into the formal economy without scale-up of immunisation campaigns in African
vators across the continent but 7 months into compromising privacy. countries. The company’s solution uses a mobile
2022, there is a glimmer of hope. phone to scan patients’

According to faces and create digital
certificates in a cloud.
Business Insider, Zimbabwe often lags behind
the largest online
business publica- its neighbours in Foreign
Direct Investment (FDI)
tion, data from Inflows. Between
the Swiss Crypto
Valley Venture 2017-2019, South Africa,
Mozambique and Zambia
Capital, or CV generated US$12,1 billion,
VC, shows that
while African US$7,2 billion and US$2,1
billion respectively while
blockchain start- Zimbabwe attracted US$1,3
ups raised
US$127 million billion- ahead of Botswana’s
US$800 million.
in 2021 with
funding for the
first quarter of Venture Capital Funding for
African start-ups leap-
2022 alone frogged in 2021 as it grew
having already
totalled U$$91 2,5 times from the 2020
outturn, flying through the
million — a roof to set a new annual
1,668% increase
from this time record, the latest Briter
Bridges’ Africa Investment
last year. Report 2021 revealed.

A few Zimba- According to the report,
Venture Capital (VC) firms
bwean start-ups; invested around US$5
“Flex-ID” and
“ Va x i g l o b a l ” billion in 2021, the equiva-
lent to the combined Afri-
have put Zimba- can start-up inflows record-
bwe on the
start-up funding 24-year-old Zim fintech innovator Victor Mapunga (Far right) speaks as a panellist at the ed in 2018, 2019, and 2020.

map in 2022. World Economic Forum earlier this year. In 2021, Fintech dominated

Blockchain the continent’s start-up
funding at 62% while
start-up, FlexID Technologies (formerly Flex- The funding from Algorand is a giant leap for Healthtech and Biotech trailed at 8%, with logis-
FinTx), signed a ‘Simple Agreement For Equity’ FlexID as it will unlock synergies with the tics (7%), education (5%), and cleantech (5%)
(SAFE) with the Algorand Foundation earlier Algorand Ecosystem- arguably the world’s most rounding up the top five sectors by investment
this year, to further develop and scale their Self developed blockchain ecosystem which is now value. The majority of the deals were from Nige-
Sovereign Identity (SSI) platform. This undis- getting more recognition. Just recently, Algorand ria, Kenya, South Africa and Egypt with the high-
closed funding support followed Flex ID’s Algo- was named the official blockchain partner for est valued deal coming from Nigeria.
rand Foundation Development Award which the FIFA, the world’s football governing body.
team were awarded in 2020. Africa’s titillating market of over 1,2 billion
Vaxiglobal was also recently named among the people is proving to be a new horizon for a mul-
Victor Mapunga a 24-year-old ICT entrepreneur first winners of the Kofi Annan Award for Inno- titude of tech services like electronic payments,
and CEO of Flex ID made history in 2021 as vation in Africa which attracted 330 applicants agriculture, insurance, credit, software engineering,
he championed FlexID to become the first ever from 38 countries across the continent; receiving and e-commerce among others with projections;
Zimbabwean start-up to be recognised as part of US$250 000 in the process- according to new- Africa’s population will more than double to 2,5
the World Economic Forum Technology Pioneers zimbabwe.com billion by 2050.
list.

7 The AXiS Friday 29th July 2022

Command Economics
Hits ZSE Beyond Recovery

The government's interference in the stock
market and contentious economic policies
intended to rein in the out-of-control infla-
tion and exchange rate disparities led to the
ZSE's bear run extending for the third month in
a row. Investor confidence and morale in stock
markets were derailed by government involve-
ment and inconsistent policies.

Following losses of -18.7 percent and -14.2 per-
cent in May and June, respectively, the ZSE fell
by 16.2 percent in July. By the end of July, the
overall nominal gains for the year on the ZSE
had been reduced to 53.3 percent, translating to
a loss of -62 percent in US dollars. This comes
at a time when ZWL exchange rates on the
interbank have increased by more than 63 per-
cent since early May, when the bear run began,
and annual inflation reached 256.9 percent in
July. By the end of April, the ZSE was boasting
of a nominal year-to-date gain of 168%, which
converted into a gain of almost 100% in US
dollar terms.

The market had a series of recoveries near the recovery is dim. In each respective month, ther- As the ZSE becomes unprofitable, the Central
end of July, but they were quickly reversed by ate of consumer price inflation has been escalat- Bank has taken it a step further by launching
decreased liquidity with the introduction of gold ing, reaching a peak in July of 256.9 percent gold coins into the market in an effort to provide
coins, which absorbed liquidity in the very short annually and this is the worst in the world. investors with alternative asset classes that pre-
term. Meanwhile, the mainstream VFEX All Since the beginning of the year, the ZWL serve value. The price of the Mosi-oa-Tunya gold
Share Index on the US$ denominated bourse exchange rate to the US dollar has increased by coin is fixed to the global spot price plus an
strengthened in July by 5.4 percent, buttressing 283 percent on the auction currency market, internationally acceptable variation of +5% to
the 14.6 percent growth in June, to end at compared to a 300 percent increase on the par- cushion production expenses. Over ZWL 1 billion
121.58 points which is the second-highest level allel market. Due to the above-mentioned vari- from circulation went into bank deposits within
on record. Padenga, which increased by a star- ables, the ZSE equities have lost an average of the first week after the coins went on sale. How-
tling 17.4 percent and outweighed BNC's loss -62 percent in US$ terms since the year's com- ever, this cash will usually have to move into the
of -22.48 percent, was the main driver of the mencement, offsetting the nominal gain of 53.3 hands of the gold providers and therefore remain
performance on VFEX. Padenga leveraged its percent. in circulation in the long run. The feasible way
market size in driving overall performance ahead In US dollar terms, the ZSE boasted as the the Central Bank can maintain the constrained
of BNC despite a higher magnitude of loss in best-performing stock market in the world in money supply is by compensating the gold pro-
the miner. 2020 and 2021, respectively, as investors hedged ducers with foreign currency obtained outside of
Due to a lack of foreign currency in the official value in stocks that were chasing and rising the country. In conclusion, inflation will continue
market channels, and a lack of confidence in faster than inflation in an effort to conserve or to rise beyond projected levels, making it less
policymakers, VFEX remains less liquid. While retain value. The market ought to outpace infla- likely that the ZSE will be able to catch up.
Caledonia Mining Corp. did not register any tion and currency depreciation magnitudes On the upside, the crocodile skin maker, Padenga,
trades in the month under review and has strug- within the next five months, or less, in order to which is listed on the VFEX, boasts a
gled to attract considerable activity since its undo the loss it has already succumbed to. This, year-to-date gain of over 50% in US dollar terms,
listing on VFEX, SeedCo International recorded however, appears improbable given that the gov- offering investors a safe haven in real terms.
trading in just two sessions. The interbank ernment is working valiantly to seize market However, the counter can only push a certain
exchange rate for ZWL against the US dollar liquidity through the Central Bank. If liquidity number of shares due to supply and demand vari-
increased by 20% in July on the currency tightens sustainably as is being witnessed in the ables, which is the sole drawback thus far in
market, from ZWL370.965 to ZWL443.882. The short-term, this reduces the amount of money terms of liquidating one’s portfolio or investing
exchange rate also went up on both the auction that potential investors have to put in equities. huge sums.
and parallel currency markets by 14% and 23%,
respectively, exposing the interbank market as
the average of the two in terms of exchange
rate percentage movement.
In real terms, the near future outlook for a ZSE

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The AXiS Friday 29th July 2022 8

Lessons for government

How to finance spending
F inance Minister Mthuli Ncube announced
a $929 billion supplementary budget, of A welfare state must be highly
which 53 percent ($492.8 billion) is taxed to fulfil its obligations. Taxa-
intended to cover the cost of paying civil tion is used as a tool to achieve
servants. This announcement came against the specific societal goals, such as
backdrop of pressure from civil servants for wealth redistribution and the conse-
higher salaries and the deterioration of the coun- quent decrease in inequality. Sadly
try's foreign exchange dynamics. At the end of however in the Zimbabwean case,
June 2022, public and publicly guaranteed debt taxes tend to become less useful if
totalled ZWL$1.3 trillion, while public debt, the local currency is always eroded
which includes both domestic and foreign debt, by inflation. This is what forces the
remained at US$13.2 billion. treasury to always adjust taxes
In comparison to the approved Budget of upward in the battle to save the
ZWL$968.3 billion, expenditures are currently value of taxes.
predicted at ZWL$1.9 trillion, requiring additional
spending of ZWL$929 billion. Development plans 2008 when the local currency lost value at alarm- Thus, taxation is necessary not just
added USD 190 million to the projected ZW$1.7 instead of printing money due to the memories of to raise the funds needed to pay for
trillion in revenue collections by year's end. The ing rates. These three ways have to be used in a its rising administrative and social
proposed supplementary budget, according to the balanced manner. service costs, but also to lessen income and
finance minister, had a financing deficit of An open market operation (OMO) in macroeco- wealth disparities. Taxation is also necessary to
ZW$157,5 billion (1,5% of GDP), which would nomics is a procedure by which a central bank divert funds away from consumption, which
be filled through the sale of Treasury Bills and provides (or withholds) liquidity in its currency to would otherwise boost inflation. This is why
domestic loans. (or from) a bank or a group of banks. The central Mthuli Ncube has resorted to taxing methods
Among the forthcoming issuances is a $100 mil- bank can engage in a repo or secured lending that affect everyone as opposed to just formally
lion bond for infrastructure development that will transaction with a commercial bank, whereby the employed people because the country is highly
be issued through the Victoria Falls Securities central bank gives the money as a deposit for a informal.
Exchange (VFEX) (roads rehabilitation, health and specified period and concurrently takes an eligible Borrowings or Government Debt
irrigation infrastructure). A Special Drawing asset as collateral. This is the solution that is cur- Government debt may be viewed as an indirect
Rights drawdown from the International Monetary rently most preferred. The central bank can also debt owed by taxpayers because the government
Fund worth ZW$60,6 billion will be added to buy or sell government bonds (treasury bills in speaks for all people. Government debt can be
this. the case of Zimbabwe) or other financial assets divided into two categories: internal debt, which
However, the issue that is brought up is how the on the open market. is owed to domestic lenders, and external debt,
government should finance its spending. The most OMO is often the main technique used by central which is owed to international lenders. Govern-
common method of financing debt in Zimbabwe banks to carry out monetary policy. Aside from ments frequently issue securities like bonds and
is through treasury bills, however, it always providing commercial banks with liquidity and bills to raise money. Less reliable nations typi-
seems as though the decision-makers don't plan occasionally removing surplus liquidity from com- cally borrow money directly from commercial
for everything in advance and wind up increasing mercial banks, the typical goal of open market banks or international organizations like the
the debt load of the nation. This article will out- operations is to manipulate the short-term interest World Bank or the International Monetary Fund.
line the best ways for the government to pay for rate and the supply of base money in an economy Unlike local debt, external debt tends to cause
its expenditures. and thereby indirectly control the total money headaches for the country because money can’t
supply, effectively expanding or contracting the be printed like that.
According to the graph above, Zimbabwe has had money supply. This entails purchasing and selling In the 2022 national budget statement, Finance
budget deficits over the previous ten years, and government securities or other financial instru- minister Mthuli Ncube stated that the country
this condition needs to be handled for the govern- ments to satisfy the demand for base money at had an external debt burden of US$13,7 billion.
ment to plan its expenditures more effectively. the target interest rate. This implementation is This debt causes serious challenges for the
Ways of Financing Government Spending — Old governed by monetary targets like inflation, inter- country in terms of failure to source FDI as
and New est rates, or exchange rates. This has long been well as a failure of the government to fund key
According to conventional economics, there are the case in the context of Zimbabwe. projects which lead to economic growth.
three ways to fund government spending: Raising Preparation for budget The majority of government budgets are com-
taxes now, borrowing money now to raise taxes The government should create an expenditure puted on a cash basis, which means that
later, or printing money are all options. The fact budget before determining how to raise the neces- receipts are recorded as soon as they are
that the financial industry in Zimbabwe is severe- sary funds to cover expenses. Zimbabwean trea- received and expenses as soon as they are paid.
ly taxed is evidence of Mthuli Ncube's reputation sury should stop engaging in reactionary econom- Some people consider all of the government's
for turning to taxes. Printing money is always an ics and focus rather on proactive economics obligations, including future pension payments,
option, but the Treasury has resorted to issuing which means identifying problems beforehand and payments for goods and services the govern-
current debt through open market operations then solving them. Spending is, therefore, a key ment has contracted for but hasn't yet paid for,
factor in determining the public budget. Given to be debt. In this method, which is known as
this, it is believed that in government or public accrual accounting, liabilities are recognized
finance, the authorities first determine the coat's after they have accrued rather than at the time
size before setting out to gather the appropriate they are paid. This is a form of public debt.
fabric (through taxation, borrowing and deficit Seigniorage
financing). But when spending outpaces revenue, The gross income generated from the issuing of
the government must borrow money. When its money is known as seigniorage. It results from
expected revenue falls short of the desired level, the discrepancy between a coin's or note's face
it may reduce spending instead. value and the price of making, giving out, and
Taxation eventually removing it from circulation. Sei-
The mainstay of contemporary public finance is gniorage is a significant source of income for a
taxation. Its importance stems from the fact that small number of national banks, although it
it is the most important revenue, but also from accounts for a very small fraction of income in
the seriousness of the problems that the existing- sophisticated industrial nations. Zimbabwe is
tax load has brought about. The primary goal of highly dollarized. The local RTGS is always
taxing is to increase income. getting declined by people and this means that
the government can’t benefit from seigniorage if
the uptake of the local bond note is very low.

*To Page 9

9 The AXiS Friday 29th July 2022

*From Page 8

In a crisis before they can act. and efficacy, assisting it in prioritizing and allo-
Governments may find it very challenging to Making Better Budgetary Decisions cating available tax resources to the most crucial
recover financially when they get into such a Governments that primarily rely on sales tax reve- initiatives. Government should interact with the
hole. When municipal leaders try to balance their nue are scrambling to find a simple solution that public, gauge their expectations, and incorporate
budgets using cash reserves rather than by raising would allow them to cut costs without compromis- this feedback into their budgetary decisions by
taxes, they frequently make matters worse for ing the services they offer. Frequently, they will using priority-based budgeting.
their communities. This strategy does not perma- shrewdly turn to their enormous collections of cor- Intelligent Reserve Usage
nently address the issue; it just temporarily stops porate data for the answers, but they will quickly Each local government needs an emergency fund,
the cash bleeding. Since current expenditures discover that they are drowning in obsolete, disor- and these cash reserves should never be used for
exceed current revenue, it just postpones the ganized, and irrelevant data. These precise causes day-to-day activities. They should be used only
upcoming tax increase. account for somewhere between 70 and 80 percent for extraordinary circumstances, such as paying
However, tax increases also have their own set of all corporate business intelligence project fail- off debt. Banks like the EIB(European Investment
of drawbacks. It becomes very challenging to ures. Bank) have even stopped working with the Zim-
maintain raising taxes year after year if economic Zimbabwe policymakers are struggling to create babwean government because of its high propen-
growth hasn't kept pace with planned increases anything resembling an efficient budgetary road sity to default on loan payments as well as old
related to debt restrictions. A mass exodus of map when they are unable to extract meaningful loans that haven’t been paid for with no plan
citizens will eventually result from these steadily insights from the mounds of data they have collect- even being made on how to pay for those
rising levies, which will further worsen the situa- ed. To solve this problem, different ways can be arrears.
tion. adopted. In conclusion, Financial troubles are nothing new
The worst-case scenario for a local government Budgeting based on priorities for local governments, and some of their regular
balancing its budget is the resulting reduction in This methodology offers communities a thorough practices just make the issues worse. Local gov-
revenue base. Not to mention that even if the analysis of each program offered by the Zimbabwe- ernments may obtain more stability and visibility
economy starts to recover, the majority of gov- an government, together with information on costs and pave the way to a better future by combining
ernments must wait until they have created and innovative and strategic budgetary techniques like
implemented their yearly or biennial budgets priority-based budgeting.

The AXiS Friday 29th July 2022 10

ZESA AND ESKOM
Fight for power imports from Mozambique and Zambia

President ED to visit Zambia

E mmerson Mnangagwa, the President of Zimbabwe, will go to SAPP grid, they are unable to exchange excess energy with the rest
Mozambique and Zambia to protect the nation's electricity of the region, which leads to transmission problems.
import contracts from Eskom. Zambian and Mozambican elec- Current Power Challenges in Zimbabwe
tricity import agreements will be renegotiated by Zimbabwean Presi- With effect from January 1, 2022, the electricity rates were increased
dent Emmerson Mnangagwa. The mining industry in Zimbabwe by ZESA's power distribution arm, the Zimbabwe Transmission and
accounts for most of the country's energy requirements. Due to a few
of its members' inactive statuses on the global power grid, the South- Distribution Company (ZETDC). The intention was to use this
ern Africa Power Pool is not entirely functioning. to help collect money to pay for imports, however, the
The timing of Mnangagwa's trips coincides with tariff increase was insufficient. To import electricity
South Africa's attempt to displace Zimbabwe as and keep the lights on during rolling power outag-
a buyer of electricity from Mozambique and es lasting several hours, ZESA Holdings esti-
Zambia due to the country's current elec- mates that it needs at least US$17 million
tricity problem. To rescue the electricity each month. Electricity imported from abroad
contracts between Zambia and Zimba- is meant to supplement the nation's many
bwe, President ED is set to meet Presi- internal projects and power sources, such
dent [Hakainde] Hichilema of Zambia as hydropower.
in Livingstone in the upcoming Zesa must import power to meet local
weeks. Zimbabwe also receives demand, and they must levy hefty
power from Mozambique, and Zim- tariffs to cover the cost of the
babwe wants to retain the current imports. This, along with heavy
arrangement. demand throughout the winter and
The majority of Zimbabwe's ongoing maintenance projects at
energy requirements come from Kariba Dam, make obtaining electric-
the mining industry, specifically ity a significant concern. However,
from projects for important miner- experts claim that raising tariffs was
als including gold, platinum, not the solution.
chrome, coal, diamonds, and lithi- Mozambican dynamics
um. Power imports should continue The Southern African Power Pool
unabated because these resources are (SAPP) initiative, which attempts to coor-
essential to the nation's economic dinate the electrical sector at a regional
performance. level, will soon link Mozambique's electrici-
At the end of July, Zimbabwe's contracts ty grid to those of Malawi, Tanzania, Zimba-
with Electricidade de Mocambique in Mo- bwe, and Zambia, among other nations, facilitat-
zambique and Zesco in Zambia were set to ing energy transactions. Zimbabwe is now well-po-
expire. The nation's difficulty in meeting its sitioned to import electricity from Mozambique as a
monthly payment of $6.3 million (R104 million) result. The only difficulty would be finding the money
to Zesco for the imported power makes the renewal
scenario problematic. Therefore, if Eskom has the resourc- to import the electricity.
es to pay for these power imports, it only makes sense from an The EDM (Electricidade de Moçambique) is trying to determine the
economic and business standpoint for countries that supply Zimbabwe ideal financial infrastructure for the transport of power within the
with electricity to choose those that pay countries. southern region in collaboration with the World Bank and SAPP. To
The Chairman of the Zimbabwe Electricity Supply Authority, Gata attract and facilitate financing for the execution of energy
stated that because these contracts are long-term and competitively resource-sharing programs, the World Bank has been working to bring
priced, Zimbabwe "would stand to lose heavily." Gata has expressed all parties together, according to the EDM administrator.
concerns that Eskom would extend its agreements with Zesco and keep The completion of the interconnection projects between Mozambique
Zimbabwe out of the picture for years to come, thus immediate and and each of those southern African nations varies, and the utilization
decisive action is required. levels for each of the lines, which range in voltage from 400 to 450
Southern Africa Power Pool kilovolts, will also vary. The program's implementation will enable
The Southern African Power Pool (SAPP), the first formally developed Mozambique to realize its primary goal of becoming a regional power
power pool in Africa, was established in 1995 by member states of hub and generating more income. Mozambique will essentially
the Southern African Development Community (SADC). Even if there become a regional hub It only makes sense that Zimbabwe positions
are numerous issues, the main one is transmission because some of itself to be in a position to import electricity from Mozambique short-
the region's members do not participate in the global power grid. As ly.
a result, a lot of energy is wasted. The Southern African Power Pool (SAPP) program calls for the
According to specialists in power generation, SADC produces enough expansion of Mozambique's electrical system to include Malawi, Tan-
electricity to eliminate power shortages, but the business of distribution zania, Zimbabwe, and Zambia among other nations. The World Bank
lags. Because Angola, Malawi, and Tanzania are not connected to the is seeking finance for the region's energy transport infrastructures.

Did you Established in 1979, Border Timbers is an amalgamation of
know? three organisations, Border Eastern Forest Estates, Renfee
Timbers (Pvt) Limited and Forestry Management Services.

11 The AXiS Friday 29th July 2022

Cabinet
Government owes ZW$9.3 billion to farmers for grain deliveries

Government has revealed that it currently undoubtedly result in a reduction in grain deliv- are about 78% of the target area, and 50%
has a payment backlog to farmers eries as more farmers will be discouraged to above last year.
amounting to ZW$9.3 billion for all grain sell their grain to GMB despite adjustments “The area planted of 66 435.86 hectares is theth-
delivered to date. made in maize payments this year to entice ird highest since independence and is only
According to the Minister of Information, Publici- farmers. surpassed by plantings in 2004 (70 585 ha) and
ty and Broadcasting Services, Monica Mutsvang- This year, a tonne of maize was7 pegged at 2005 (67 261 ha).
wa, of the total grain delivered to date, which ZW$75 000 which translates to less than Wheat stocks were 79 820 metric tonnes for the
includes, wheat, maize, traditional grains and soya US$80 at the current parallel market rate which week ending 2 August 2021 and is sufficient
beans valued at ZW$23.19 billion, ZW$14.38 is trading at around ZW$950 per US$1 while until the next harvest which is expected to com-
billion has been paid to farmers. using the official auction rate, the amount trans- mence in September,” she said.
“All efforts are being made to ensure that the lates to around US$163, an amount which Meanwhile, pertaining the tobacco marketing,
backlog is cleared post haste,” Mutsvangwa said. farmer have cited to be low factoring the pro- cumulative sales were 199.6 million kilogrammes
The outstanding balance shows that the govern- duction expenses even after factoring the valued at US$555 million, compared to the 176
ment is not up to date in terms of settling farm- US$90 component. million kilogrammes valued at US$440 million
ers’ payments after deliveries, a situation which This underpayment is also one of the reasons that were sold during a similar period last year.
over the past years has led to the discouragement that have been demotivating farmers to sell According to Mutsvangwa, the prices paid were
of farmers to sell their maize to the Grain Mar- their maize to the GMB. 26.1% firmer than the previous year due to
keting Board (GMB). However, GMB recently increased the amount improved quality offerings by farmers.
Farmers have over the years bemoaned GMB to ZW$100 000 plus US$90 in a bid to encour- “On exports, 76 million kilogrammes valued at
delays in payments citing that the delays will age more farmers to make grain deliveries to US$295.5 million have been exported compared
result in the erosion of their dues since they are the Board. to the 83 million kilogrammes valued at US$273
paid in local currency which has been on a con- Mutsvangwa highlighted that 629 007 mt of million exported during the similar period the
tinuous depreciation and this, in turn, cripples maize, 11 381 mt of soya bean and previous year,” she said.
their preparation for the next season. 64 798 mt of traditional grains had been deliv- On seed cotton intake, a total of 82 189 metric
Last year, farmers were promised that their pay- ered to the GMB as of 2 August 2021. tonnes valued at ZW$4.6 billion have been
ments will be settled within 72 hours of grain Of the 85 000 hectares that had been planned received at COTTCO depots.
delivery but farmers still suffered the same ordeal for wheat, 66 435.86 hectares were planted for This intake has surpassed the 2020 figure despite
of late payments and it seems as if the same is the Presidential, National Enhanced Agricultural being 55% of the targeted deliveries. COTTCO
set to be experienced this year even though the Productivity Scheme (NEAPS)/Command/CBZ has paid ZW$690.87 million and US$1 296
The delay in payments coupled with the contin- Agro-Yield and Private Sector schemes which 588.00 to farmers.
ued depreciation of the local currency will

FEWSNET
Exclusive US$ pricing, high ZWL price reduces purchasing power, access to food

T he Famine Early Warning Systems Network drinks, and clothes are being priced in US$ for a resorting to bartering using grains and livestock
(FEWS NET) has revealed that as poorer time now the currency has been regarded to be the to access certain goods or services.
households typically earn income in the most preferable and ‘stable’ compared to the local “In addition, poorer households have therefore
in the local currency and have limited access to currency. begun intensified existing livelihood strategies to
the United States dollar, exclusive US$ pricing “Although the Zimbabwean economy is a multi-cur- cope. This includes petty trade, such as the sell-
and high ZW$ price volatility are reducing pur- rency system, with ZWL, ZAR, and USD in regular ing of smaller re-packaged food and household
chasing power and access to food. use, there is a growing demand in both the formal items, the intensification of vegetable production
This comes after Zimbabwe has been experienc- and informal sectors for payments to be only in for those with access to water, and artisanal
ing continued price hikes of basic commodities foreign currencies, given the volatility of the ZWL,” mining activities,” FEWS NET said adding,
since the start of the year mostly in local curren- FEWS NET said in its July update. “However, most livelihood strategies remain con-
cy as it has continued to depreciate against the However, the government in response to the US$ strained by low demand, limited capital, and high
United States dollar on both the formal and paral- pricing threatened to revoke licences from retailers transportation costs.”
lel market, hence necessitating the price hikes as who are engaging in such activities, but the threats According to the Zimbabwe Coalition on Debt
retailers race to catch up with the exchange rate have not been effective as the US$ pricing has not and Development (ZIMCODD) half-year report,
in order not to suffer a loss. stopped but rather spread to other retailers. for most households, typical livelihood strategies
According to FEWS NET, in July, the local cur- FEWS NET highlighted that despite the govern- will likely remain constrained, and income will
rency continued to depreciate sharply against the ment’s calls to benchmark commodity prices using remain below average. Meanwhile, FEWS NET
US$ with the auction exchange rate climbing to interbank rates and despite the increased risk of also noted that there are fears of shortages for
ZW$416 as of July 29 from ZW$366 at the end losing operating licenses if they use exclusive US$ some commodities if manufacturers, wholesalers,
of June and the interbank exchange rate increas- pricing, most businesses have continued to pursue and retailers hold back supplies and chose not to
ing over the same period to ZW$443 from US$ transactions to limit financial losses. sell unless they can do so in US$.
ZW$365. “However, limited supply of forex is forcing them The above if it comes to pass will pose food
However, the parallel market exchange rates saw to use parallel market exchange rates to access insecurity threats in the country and worse price
the steepest increases, jumping to around USD and this increased demand has contributed to hikes will be witnessed as demand for the com-
ZW$950 at the end of July from ZW$650 in spiking parallel market exchange rates and sharp modities will be high while only a few manufac-
June. ZWL price increases for food and non-food com- turers, wholesalers and retailers will be willing to
Last month saw consumers encountering a shock modities,” FEWS NET said.With most consumers sell them.As such, as Equity Axis Economist
as retailers started to price most basic goods in earning ZW$ denominatedsalaries, it is arguable once alluded, “The economy will rapidly but
US$ prices as they cited that the products were that they are now failing to cater for their basic covertly dollarise as every reasonable being will
being sold in US$ because the suppliers of the needs as they can no longer afford to buy the basic continue to transact in US$ as long as businesses
products were accepting US$ payments only. foodstuff which is now worrisomely expensive. continue to do so, which will worsen the eco-
Basic goods such as sugar, cooking oil, milk, As a result, households in rural areas are slowly nomic situation as the local currency will keep
falling in value relative to the US$.”

The AXiS Friday 29th July 2022 12

& Insights

Ecocash
Currency dilemma clouds EcoCash Holdings' new fiscal year

Harare- Zimbabwe Stock Exchange (ZSE) fluctuation in the exchange rate of two curren- “The Bank also revamped its *236# platform by
–listed diversified technological Group, cies that are applied to a business transaction adding new features to enhance customer experi-
EcoCash Holdings Limited saw its jour- like the US dollar and RTGS in Zimbabwe. ence and ensure a seamless customer journey.”
ney for the new fiscal year to February 2023 Since the begging of the year, the local curren- Insurtech
beginning at a slower, unconvincing pace as the cy has depreciated by 74%, shedding by a min- In the first quarter, the Life business broadened
currency crisis takes its toll. Formerly known as imum of 3% on weekly basis against the its service offering on the *900# platform in
Cassava SmarTech, the Group has registered its United States dollar on the RBZ-governed auc- response to customer feedback and as part of
worst first quarter performance since the re-intro- tion market while deficits have more than dou- our promise to enhance the bouquet of packages
duction of the Zimbabwe dollar in 2019. bled on the parallel market. that Ecosure offers. The number of add-ons
The Group, which doubled its revenues in the During the reporting period March and May options to the core product on the *900# plat-
first quarter of 2021 while the mobile money only, the Zimbabwe dollar regressed by 59% form increased to ten. The add-ons are being
business which is its flagship asset, registered a despite controversial policies that have been managed within the approved risk appetite
60% increase in transaction values and registered announced by RBZ and Treasury to bolster the limits.
one of its worst performances for the period ailing local currency. Of paramount importance is that the Life busi-
between March to May 2022, a gross perfor- “During the period under review, significant ness has started offering USD-denominated prod-
mance attributed to fiscal indiscipline from the exchange losses were recorded due to the ucts in the period under review and there is a
Central Bank and Treasury which saw the local weakening exchange rate with the local curren- steady growth of 3% on the uptake. The Group
currency falling to record lows against major cur- cy depreciating by 172%,” the Group said in a said it remains focused and committed to grow-
rencies, particularly the United States dollar. statement accompanying the trading update. ing this segment through providing inclusive
During the trading period between March to May Financial performance insurance solutions both within the life and
2021, the Zimbabwe dollar shed by 0.2% against As a result, the Group registered a mild non-life business.
the greenback in a space of three months. How- increase of 2% in volumes compared to the Other business segments
ever, during the three months to May 2022, defi- previous quarter driven by the FinTech business Vaya Technologies capped the quarter on a posi-
cits have widened to 59% against the greenback segment which remains the highest contributor tive note. The growth was anchored on the
due to high inflationary pressures that weakened to revenues as management continued to adapt HealthTech business as demand for health
the Zimbabwe dollar. business units’ operating models to both grow services continues to be high. The HealthTech
The continued growth in exchange losses is a and diversify sources of revenue. products are also being bundled with other group
result of confusion by the government over the Business operations review products as part of the Group growth strategy.
currency of trade. Mobile money business “Over 100,000 customers have been onboarded
In 2019, the government banned the use of US Pertaining to mobile money, the mobile money onto the MARS-EcoCash capitation model,” said
dollars and reintroduced the Zimbabwe dollar, business registered a 3% growth in transaction the Group.
which was not backed by either foreign currency volumes when compared to the prior quarter Outlook
reserves to support importers or confidence in the due to an increase in customer activity with a “The Group’s performance will remain con-
market. That put the Zimbabwe dollar in a spon- growth of 38% witnessed on wallet funding as strained by the deteriorating operating environ-
taneous position as it quickly lost ground against customers continue to prefer mobile transactions ment and we will continue to leverage our digi-
the greenback, while some notes were rejected by over other payment platforms. tal platforms to innovate and meet the changing
the market due to a lack of confidence. “The mobile money business is expected to needs of our customers. We believe that we have
That forced fiscal authorities to re-legalise the continuously improve its performance going the right products, strategies, and team to ensure
United States dollar in 2020 in a bid to bring forward driven by innovations, product bundling that the business can weather the current chal-
stability which was then realised. However, the within the Group and promotions to drive lenges and emerge stronger as the economy
authorities failed to give up on the Zimbabwe mobile payments,” said the Group. recovers in future.”
dollar, continuing to peg its rate against the US During the reporting period, EcoCash (Private) Deteriorating environment challenges explained
dollar on the RBZ-governed auction market a Limited launched its Domestic Money Transfer, Exchange rate volatilities
situation that resulted in gross shortages of a convenient option for sending and receiving Exchange rate distortions also far from being
foreign currency. The situation came as an arbi- US dollars across the country with its impact ending. The auction market continues to fail to
trage opportunity for the alternative market where expected in the subsequent period as the market allocate enough foreign currency to companies
the rate was decided by market forces. adopts the product. forcing them to run to the black market to fetch
As a result, the Zimbabwe dollar lost grossly Banking business the United States dollar at inflated prices. The
against the US dollar forcing companies to trace The banking sector saw a fingertip increase s auction market is likely to remain underfed like
parallel market rates, not formal market rates in it is currently haunted by record high-interest always as foreign currency remains a challenge.
determining prices. This was the only relief that rates, currently pegged at 200%. The inflation- This is despite the nation losing an estimated
was left to companies to cancel out losses. ary pressures have also made the banking busi- minimum of US$1 billion to corruption and side
However, the government quickly chipped in and ness a thorn in the eye as it has hugely affect- marketing of resources.
passed the controversial SI 127 instrument which ed the loaning business, long-term loans in par- The government is also reluctant from relaxing
forced companies to track the auction market rate ticular. As a result, Steward Bank’s inter- the surrender taxes or even at least reducing
in pricing despite the raw materials tracking the est-earning assets portfolio grew by 3% from them to 20% or 10%. This means companies
parallel market rate. the last quarter on the back of an increase in will continue to suffer from foreign currency
Such a price control mechanism, which was also underlying business and customer deposits. liquidity to import crucial inputs for productivity,
cemented in May when the introduction of gold “In the first quarter, the Bank launched the For- thus, fuelling the black market rate.
coins was announced resulted in companies incur- eign Currency Account (FCA) on Square, an
ring huge exchange losses as the local currency innovation that digitizes all FCA related trans- *To Page 13
continued to regress.
An exchange loss is triggered when there is a

13 The AXiS Friday 29th July 2022

*From Page 12 upsetting the equilibrium principle of supply Inflation trends seem to be far from ending as the
and demand balance, mostly to fund government public now has no confidence in policies passed
“The continuation of the gap between official initiatives towards elections. Currently, the RBZ by the government and the government itself.
and alternative market exchange rates in Zimba- has reduced the reserve money target to 5% for Behavioural economics seems to have overridden
bwe will however continue to weigh down real the quarter. However, broad money continues to economic policies and every economic policy
profitability as selling prices are linked to offi- rocket and it is not surprising to see the 5% passed by Treasury and RBZ receives a negative
cial rates while virtually all business costs track target being upset to finance election campaigns. sentiment from the market.
alternative rates,” the Group once said in a state- Data from RBZ shows that between the 2012 There are two ways of eradicating behavioural
ment accompanying the 2021 full-year results. August and 2013 August election period, the economics in Zimbabwe: dumping the Zimbabwe
2023 upcoming elections money supply increased by 6% from US$3.6 dollar to bring stability and the resignation of
The Group’s new fiscal year for the 2023 period million to US$3.9 million while from June 2017 finance gaffers, Professor Mthuli Ncube and John
collides with the 2023 harmonised presidential and June 2018 another elections period which Mangudya and George Guvamatanga. The market
elections. This is not good for the company. saw President Mnangagwa grabbing power, RBZ has no confidence in the Zimbabwe dollar, poli-
Zimbabwean election periods are characterised increased the money supply by 41% from cies put to prop up the Zimbabwe dollar and the
by violence based on history which scares away US$6.5 billion to US$9.1 billion with a month policymakers themselves.
investors weakening the market confidence. on month increase of 6.84%. That, however, led However, the government is not ready either to
Dirty politics does not only affect the investors' to inflationary pressures during the year weak- dump the Zimbabwe dollar or make the governor,
sentiment but also affects currency performance, ening market activity. Finance Minister and RBZ secretary resign. This
thus, the economy at large. This was testified in It is against that background the Group should means as long as the Zimbabwe dollar is in circu-
2008 when former President Robert Mugabe remain pessimistic that the dire economy is lation and Mangudya is the governor, trust and
resorted to violence in 2008 after losing an elec- likely to continue in a toilet given that confidence will not find themselves in the Zimba-
tion to his ten arch-rivals, Morgan Tsvangirai. exchange rates and inflation are already on an bwean economy. Hence, inflationary pressures will
The market went into panic, investors flew away upward trend. continue to bite the business community.
from the country. Industries were shut and the Rocketing inflation When the United Kingdom started lacking confi-
Zimbabwe dollar, known as Bearer Checks The Group defined inflation and exchange rate dence in their Prime Minister John Borison, the
depreciated to record lows. volatilities as two twin problems currently Pound, the strongest currency started depreciating
During the 2002, 2008 and 2018 elections, Am- haunting the economy. Zimbabwe remains up until he resigned. This means no matter how
nesty International reported that freedom of clouded with a busload of headwinds that pres- bold policies are put by the government, as long
expression came under increasing restrictions ents a challenging working environment. Despite as Treasury and RBZ are led by the current per-
while Journalists and lawyers were arbitrarily the government putting unlimited measures to sonnel, stability will not be attained. Therefore,
detained, beaten, tortured and threatened for bring the economy to normalcy, inflation contin- SeedCo has a real reason to worry and prepare.
reporting on political or human rights issues or ues to grow unbounded. Also, the Russian invasion of Ukraine will add
representing the victims of human rights viola- more drama to the Group’s performance through
tions. The government has been passing a lot of imported inflation. Zimbabwe imports its fertiliser
These electoral developments hurt the country’s measures including the suspension of lending from Russia. SeedCo, which specialises in seeds
investment opportunities and bring the market and the introduction of gold coins to contain the requires fertilisers to boom. However, disruption
into panic, which in the end hurts business per- skyrocketing inflation. However, the economy of supply chains will add costs to the importation
formance. responded negatively as inflation failed to take of the input as it remains scarce. This means
On the money supply front, based on history, a breather, breaking record highs in July 2022 inflation is far from ending.
Zimbabwe has a record of printing more money, to 256.9%.

Term of The Week

'' Liquidity Risk in Financial Institutions
Financial institutions depend upon borrowed money to a con-
Liquidity Risk siderable extent, so they are commonly scrutinized to deter-
mine whether they can meet their debt obligations without
Liquidity is the ability of a firm, company, or even an individual realizing great losses, which could be catastrophic. Institu-
to pay its debts without suffering catastrophic losses. Con- tions, therefore, face strict compliance requirements and
versely, liquidity risk stems from the lack of marketability of an stress tests to measure their financial stability.
investment that can't be bought or sold quickly enough to pre- Liquidity Risk in Companies
vent or minimize a loss. It is typically reflected in unusually Investors, managers, and creditors use liquidity measurement
wide bid-ask spreads or large price movements. ratios when deciding the level of risk within an organization.
Understanding Liquidity Risk They often compare short-term liabilities and the liquid assets
Common knowledge is that the smaller the size of the security listed on a company’s financial statements. If a business has
or its issuer, the larger the liquidity risk. Liquidity risk occurs too much liquidity risk, it must sell its assets, bring in addition-
when an individual investor, business, or financial institution al revenue, or find another way to reduce the discrepancy
cannot meet its short-term debt obligations. The investor or between available cash and its debt obligations.
entity might be unable to convert an asset into cash without .
giving up capital and income due to a lack of buyers or an inef-
ficient market.

14 The AXiS Friday 29th July 2022

Tanganda
Says Inflationary pressures to remain on the rise

Z SE-listed Tanganda Tea Company says by surging inflation on the backdrop of sharp , despite the geo-political instability in Rus-
inflationary pressures are expected to exchange rate volatility. Inflation increased from sia-Ukraine. However, production volumes were
remain on the rise driven mainly by the 72.7% as of 31 March 2022 to close at 191.6% 7% below the prior year following a prolonged
continued exchange rate depreciation and a general as of 30 June 2022, resulting in increased oper- dry spell at the onset of the season.
rise in global inflation. ational costs and reduced consumer spending Packed tea sales volumes declined by 5% due to
power,” the Company said in a trading update the global shipping and supply crisis and
Zimbabwe has been experiencing a rise in inflation for the third quarter ended 30 June 2022. depressed disposable income on the domestic
since the year started, with annual inflation surging market, while coffee export volumes increased
to 256.9% in July from 191.6% in June. The Company added, “The local currency by 14%.
The inflationary pressures have mainly been depreciated by 160.74% from March 2022 to Avocado production for the quarter increased by
attributed to external factors, including the impact June 2022 against the United States Dollar on 12% to 3 494 tonnes from 3 108 tonnes
of the Russia-Ukraine war and the continued rise the auction market.” achieved in the same period last year whilst
in global inflation. However, economists have been macadamia nuts harvested of 1 072 tonnes were
of the view that inflationary pressures are more of Tanganda highlighted that it is focusing on cost 2% above the prior year of 1 048 tonnes.
a result of internal factors, including continued management to mitigate the adverse impact of “Revenue from export of avocado fruit and mac-
depreciation of the exchange rate. rising inflation and exchange rate volatility to adamia nuts is expected to be recognised in the
profit margins. last quarter of the financial year,” the Company
The local currency has also been experiencing a said.
continued freefall against the United States dollar Meanwhile, the Company’s inflation-adjusted Looking forward, the Company is optimistic
on both the official market and the parallel market revenue for the quarter under review was 3% about its prospects during the last quarter of the
with it trading at ZW$458.36 against US$1 on the below the comparative period. financial year.
official market and at a range between ZW$900 to
ZW$950 for US$1 on the parallel market. Bulk tea export volumes achieved for the nine
months were 7% above the same period in
“The quarter ended 30 June 2022 was characterised 2021,

'

Politics Around The World The AXiS Friday 29th July 2022 15

Nigerian police bolster security in capital Abuja Theatre Command said it will conduct joint mili- The White House has warned that China may
with more manpower tary operations near Taiwan from Tuesday night, respond to Nancy Pelosi's mooted visit to Taiwan
Nigeria's police has deployed additional manpower and will test-launch conventional missiles in the with military provocations.
around Abuja to bolster security of "critical sea east of Taiwan. – The Independent This could include firing missiles near Taiwan, or
national assets and vulnerable facilities," its Taliban under scrutiny as US kills al-Qaida large-scale air or naval activities, spokesman John
spokesperson said on Tuesday, days after local leader in Kabul Kirby said.
reports of an attack at a checkpoint near the capi- The U.S. drone strike that killed al-Qaida leader Mrs Pelosi, the US House of Representatives
tal. Ayman al-Zawahri on the balcony of a Kabul safe Speaker, is on a tour of Asia. Taiwanese and US
Africa's most populous nation faces growing inse- house intensified global scrutiny Tuesday of media outlets say she plans to visit Taipei, but this
curity from an Islamist insurgency in the north- Afghanistan's Taliban rulers and further under- has not been confirmed by the US government.
east, kidnappings for ransom in the northwest and mined their efforts to secure international recogni- Taiwan is a self-ruled island, but claimed by China
armed criminal gangs roaming the country. tion and desperately needed aid. - which has warned of "serious consequences" if
Mrs Pelosi goes there. On Monday, China's United
Local newspapers reported last Thursday that sus- The Taliban had promised in the 2020 Doha Nations envoy Zhang Jun warned the visit would
pected Islamist militants attacked a military check- Agreement on the terms of the U.S. withdrawal undermine relations between Beijing and Washing-
point at an area bordering Abuja and Niger state, from Afghanistan that they would not harbor ton, Reuters news agency reported. – BBC News
killing some soldiers. – Reuters al-Qaida members. Nearly a year after the U.S. Philippines president says 'no intention' to rejoin
Kenya's election rips open scars of inequality, military’s chaotic pullout from Afghanistan, al-Za- ICC
corruption wahri’s killing raises questions about the involve- The Philippines has no plan to rejoin the Interna-
In the shadow of a glossy, thousand-dollar cam- ment of Taliban leaders in sheltering a mastermind tional Criminal Court, President Ferdinand Marcos
paign billboard, one of many across Kenya’s capi- of the 9/11 terror attacks and one of America’s Jr said Monday, with the tribunal's prosecutor seek-
tal, street vendors struggle to make even 200 shil- most-wanted fugitives. ing to resume a probe into the ex-president's deadly
lings ($1.68) a day and often pocket none. The safe house is in Kabul's upscale Shirpur drug war.
Kenya’s Aug. 9 election is ripping open the scars neighborhood, home to several Taliban leaders Rodrigo Duterte, who left office on June 30, pulled
of inequality and corruption as East Africa’s eco- who had moved into mansions of former top the Philippines out of the ICC in 2019 after it
nomic hub chooses a successor to President Uhuru Afghan officials of the toppled Western-backed launched a preliminary probe into his drug crack-
Kenyatta. The vastly rich son of the country's government. – Associated Press down, which killed many thousands of people.
founding leader, Kenyatta has deflected graft alle- Russia accuses U.S. of direct Ukraine war role in ICC judges authorised a full investigation into the
gations by calling for transparency but done little missile attacks anti-narcotics campaign last September, saying it
in a decade in power to enable it. Russia has accused the United States of direct resembled an illegitimate and systematic attack on
The vendors on a barren patch along Nairobi’s involvement in the Ukraine war, while the first civilians. – AFP
Outer Ring Road can hardly grasp the enormous ship carrying Ukrainian grain to world markets Russia says it could use nuclear weapons ‘if west-
amounts of money spent on next week's election. since Moscow's invasion is due to be inspected in ern countries try to test our resolve’
Few can. In Kenya, candidates aren’t required to Turkey on Wednesday. Russia's defence ministry, Russia on Tuesday told the UN that they could end
publicly account for campaign donations or spend- headed by an ally of President Vladimir Putin, up using nuclear weapons in response to “direct
ing. – The Independent said comments made by Vadym Skibitsky, aggression” by western countries.
Ukraine's deputy head of military intelligence, to Speaking at the month-long nuclear non-prolifera-
Senegal: Opposition claims victory in legislative Britain's Telegraph newspaper showed that Wash- tion conference, Russian diplomat Alexander Trofi-
elections ington was entangled in the conflict despite asser- mov said speculation that Russia has threatened to
The presidential camp and the opposition each tions it was limiting its role to arms supplies. use its nuclear arsenal against Ukraine is “utterly
stood firm on Monday in claiming to have won Skibitsky told the paper there was consultation unfounded, detached from reality and unacceptable”.
Sunday's parliamentary elections in Senegal, as between U.S. and Ukrainian intelligence officials The envoy said Russia would only use nuclear
the vote count continued. before strikes and Washington had an effective weapons “in response to weapons of mass destruc-
"What is undeniable is that we are the ones who veto on intended targets, but that U.S. officials tion or a conventional weapons attack that threat-
won this election," said Khalifa Sall, one of the were not providing direct targeting information. – ened the existence of the Russian state”. – The
opposition leaders, during a press conference of Reuters Independent
his coalition. "We won and we will not accept Face-to-face diplomacy crucial to steer US-China
that they steal our victory," he continued. ties clear of conflict Russian ammunition supply line ‘destroyed by
"The Senegalese have decided on a cohabitation When a crisis ensued six years ago over a proto- Ukrainian strike’, says UK
at the level of the National Assembly," also said col-breaking phone call between then US Presi- A Russian supply line connecting Kherson with
Déthié Fall, another leader of the movement, after dent-elect Donald Trump and Taiwanese President Crimea is likely to have been destroyed by a
listing a series of acquired constituencies. – Afri- Tsai Ing-wen, Beijing quickly dispatched its top Ukrainian strike, Britain defence chiefs have said.
canews diplomat to New York on a fence-mending trip. Ukraine struck the ammunition train, carrying Rus-
Cool head in a rough region, Kenya faces test in The hastily arranged visit in December 2016 was sian troops, on Monday near the Brylivka railway
election hardly a success by diplomatic standards, as Yang station in Kherson Oblast.
In his final weeks as president, Uhuru Kenyatta Jiechi, President Xi Jinping's top foreign aide, In their latest intelligence update, Britain’s Ministry
has been busier than usual playing peacemaker in failed to get a meeting with Trump or secure his of Defence said it was “highly unlikely the rail link
East Africa, thawing tensions with Somalia, inter- commitment on Washington's decades-old "one connecting Kherson with Crimea remains operation-
vening in Congo's crisis, and hosting talks China policy". al”.
between Sudan and Ethiopia. Embarrassed by the snub and Trump's subsequent It said Russian forces were likely to repair the
His enthusiasm for statesmanship has not gone questioning of previous US administrations' com- railway line within a few days, but it will remain
unrecognised -- Kenya's departing leader was mitments on the self-ruled island, Beijing did not a “vulnerability” for their logistical supply route
recently awarded the national order of Burundi, make Yang's trip public until days later. – South from Crimea into the Kherson region. – Evening
and gifted a resplendent sash from fellow presi- China Morning Post Standard
dents for his regional diplomacy. Pakistan election agency rules former PM Khan's Biden and US pundits must stop legitimizing Rus-
But with Kenyatta leaving office after almost a party received illegal funds sian and Chinese threats
decade, Kenya's allies are anxiously wondering Pakistan's Election Commission ruled on Tuesday Last week, spokespersons for Ukraine’s military
what is next for a country that has evolved into that former Prime Minister Imran Khan's party regretted that rigid conditions imposed by the Biden
a trusted ally and democratic anchor in a troubled had received illegal funds, his party spokesman administration prevent it from pushing Russian
region. – AFP and media said, which could result in the former forces farther back, even out of Ukraine’s territory
cricket star and the party being banned from poli- altogether. Ukraine’s defence minister, Olekseii
tics. Reznikov, said: “We promised our partners that we
will use their weapons only on Ukrainian territory.
China military to hold live fire exercises off In a case that has dragged on for years, Khan's … It’s a problem.”
Taiwan coast after Pelosi’s arrival in Taipei party was accused of receiving funds from abroad, The few HIMARS long-range artillery systems that
Beijing has announced its military will hold live which is illegal in Pakistan. Washington recently delivered to Kyiv have proved
fire exercises off the coast of Taiwan. Khan was not immediately available for comment highly effective in striking Russian command posts,
The announcement from China came within an but a spokesman for his Pakistan Tehreek-e-Insaf ammunition depots, and other high-value targets.
hour of Nancy Pelosi touching down in Taipei, (PTI) party denied wrongdoing. They could reap even greater success for Ukrainian
despite fierce opposition to the trip from Beijing. "We will challenge this ruling," the spokesman, forces if they were delivered in larger numbers,
The Chinese military has been put on high alert Fawad Chaudhry, told reporters outside the office more rapidly, and without the shackles Washington
and will launch “targeted military operations” in of the Election Commission of Pakistan in the and NATO have attached to these and other weap-
response to the visit, China’s defence ministry capital, Islamabad. – Reuters ons. – The Hill
said. China ready for show of force on Taiwan – US
Separately, the People’s Liberation Army’s Eastern

16 The AXiS Friday 29th July 2022 Business Around The World

Uber reports loss, but beats income expectations Services such as banking and telecommunications The government said that it had made two new
Uber reported better-than-expected revenue on were cut in Tigray days after the military pulled exceptions with respect to transactions related to
Tuesday, fuelled by strong demand for the San out a year ago. They are yet to be restored. – agricultural products and oil supplies to third
Francisco-based company's ride-hailing and food Reuters countries, which the EU has as well, in order to
delivery services that sent its shares upward. China to improve sci-tech services for rural popu- avoid any disruptions in payment channels.
Revenue more than doubled to $8.1 billion in the lation "The new measures primarily concern a ban on
three months through June, a 105 percent increase, China will launch a national campaign to better buying, importing or transporting gold and gold
at a time when many tech companies are strug- mobilize the science and technology sector to con- products from Russia. Services in connection with
gling to navigate global economic turbulence. tribute to the country's rural revitalization drive, these goods are also prohibited," a government
Still, the firm posted a net loss of $2.6 billion, according to a new set of guidelines. statement said. – Reuters
but investors shrugged it off and shares were up Jointly issued by the China Association for Sci- Sales of electric heaters soar in Germany amid
about 13 percent in early trading on Wall Street. ence and Technology and the National Rural Revi- winter gas crisis fears
– AFP talization Administration, the guidelines specify a Sales of electric heaters have surged as Germans
Impoverished Zimbabweans turn to scrap metal series of key tasks, including providing sci-tech prepare for a possible energy crisis this winter.
trade as inflation bites training, lectures and industry-specific guidance to Some 600,000 heaters were sold in Germany in
rural areas. the first six months of 2022, according to market
research firm GFK - a 35% increase from the
Shepherd Chowe pushes a cart filled with tins, Sci-tech associations at all levels are called on to same period last year.
iron rods and other metallic objects down a dusty lead grassroots sci-tech workers to join in the "There has been a huge increase in sales of elec-
pathway in Hopley, a poor settlement about 15 km work of rural revitalization. – XINHAU tric heaters in the last two months and the heaters
west of Zimbabwe's capital, Harare. [we] have on hand are running out," said Frank
Doring, owner of the Eisen Doring electrical store
It is 11 a.m. and Chowe, 46, has arrived at a Higher interest rates a 'bright spot' for Europe's in Berlin.
scrap yard where dozens of metal scavengers banks "I can't comment on when suppliers will bring in
await to sell their wares. For two sacks, Chowe new heaters," he added. "Because they are all
gets paid $6. European banks are hoping the boost to their busi- already exhausted. – Euronews
nesses from higher interest rates will be long-last- Twitter sends dozens of subpoenas to Elon
"I start moving around the township at 8 a.m. ... ing as they navigate the economic fallout of war, Musk's associates
asking people for scrap metal or anything metallic soaring inflation, and a looming energy crisis. Twitter is sending dozens of subpoenas to Elon
they are not using anymore," Chowe said, adding Musk's associates and financial partners as part of
that on a good day he takes home $40. – Reuters The German lender Commerzbank on Wednesday its lawsuit against the billionaire for backing out
reported a bigger-than-expected second-quarter net of his deal to acquire the company.
Ferrari lifts annual target after record orders profit that it said was especially helped by higher A US judge has granted Twitter a fast-track
interest rates. five-day trial set to start on 17 October after the
Luxury Italian carmaker Ferrari raised its financial billionaire said he was rescinding his $44bn
targets for the year on Tuesday after reporting Exhibiting a trend seen across Europe, Commerz- (£36.6bn) bid for the social media company on 8
record orders in the second quarter. bank's net interest income jumped 26% in the July.
period from a year earlier as longer-term interest Twitter was pushing for the court case to be heard
The iconic firm delivered a total of 3,455 cars rates rose in Germany and as the central bank in in September because it said the ongoing dispute
worldwide in the second three months of 2022, up Poland, where it has a big presence, hiked official was hurting its business.
28.7 percent on the previous year, according to a borrowing costs. – Reuters Its shares were trading as low as $32.65 on 11
statement. July, well below the $54.20 that Mr Musk had
Sri Lankans bide time as leaders seek fix for offered to pay for the company back in April. –
"The quality of the first six months and the economic woes Sky News
robustness of our business allows us to revise Boeing shares surge as it nears 787 delivery
upward the 2022 guidance on all metrics," said Sri Lankans who have endured months of fuel and resumption
chief executive Benedetto Vigna. food shortages are bracing for more pain as a Shares of Boeing jumped early Monday as the
newly installed government scrambles to find solu- aviation giant moved closer to final regulatory
"Also the net order intake reached a new record tions to the Indian Ocean nation's economic emer- approval to resume deliveries of the 787 jet.
level in the quarter." gency. The Federal Aviation Administration signed off on
Boeing's certification plan for the top-selling
Turnover jumped 24.9 percent to 1.29 billion Like many others, fish monger Gamini Malla- widebody plane, a person familiar with the situa-
euros ($1.3 billion), while net profit rose 22 per- warachchi says he is pinning his hopes on Presi- tion told AFP.
cent to 251 million euros. – AFP dent Ranil Wickremesinghe 's ability to revive the "Deliveries aren't imminent and there are addition-
Pakistan's inflation climbs to 24.9 pct in July economy and restore stability after months of al steps in the process that we will follow," this
turmoil and protests. person said.
Shares surged 5.8 percent to $168.60 early
Pakistan's consumer price index (CPI), a main “Things are really, really bad now and my life is Monday, reflecting enthusiasm at the restoration of
gauge of inflation, rose 24.9 percent year on year almost ruined,” said Mallawarachchi, who has revenues from a cash cow plane whose struggles
in July as compared to the same month a year given up on selling fish because he can't find fuel have crimped company finances for more than a
ago when it was recorded at 8.4 percent, accord- to get to the village where he used to buy it, and year. – AFP
ing to the figures from the Pakistan Bureau of anyway his customers were buying less and less. US manufacturing growth slows further in July:
Statistics (PBS) on Monday. – Associated Press survey
The US manufacturing sector continued to grow
People shop at a grocery store in southern Paki- Russia-Ukraine updates: Istanbul inspectors clear in July, but the pace was impacted by dimming
stani port city of Karachi on Aug. 2, 2022. grain ship headed for Lebanon demand while price increases have slowed dramat-
(Str/Xinhua) The first Ukrainian grain ship has entered the ically, according to an industry survey released
On a month-on-month basis, the CPI increased by Bosporus after being given the green light to pro- Monday.
4.3 percent in July as compared to an increase of ceed. The EU does not know how many Ukraini- And amid a tight American job market, hiring
6.3 percent in the previous month of June, the ans have gone home after being given protected slowed for the third straight month, but firms are
PBS figures showed. status. DW rounds up the latest. The first grain reporting less trouble filling open positions and no
The statistics said that high inflation is associated ship to leave Ukraine since the war began passed signs of layoffs, the Institute for Supply Manage-
with rising prices of food and non-food items inspection and was heading through the Bosporus ment's latest report showed.
including cooking oil, vegetables, pulses, wheat, en route to Lebanon on Wednesday. But firms continue to have trouble filling orders
rice, milk, electricity charges, motor fuels, con- Last month, Turkey and the United Nations bro- due to ongoing problems getting materials.
struction input items, and motor vehicle accesso- kered a grain and fertilizer export agreement ISM's manufacturing index dipped to 52.8 per-
ries. – XINHAU between Russia and Ukraine. It is hoped the cent, just two-tenths below the prior month, but
vessel en route to Lebanon will be the first of the lowest level since June 2020 during the pan-
EU, U.S. officials call for banking, telecoms resto- many which will ease a global food security demic downturn. – AFP
ration in Ethiopia's Tigray crisis.
European Union and U.S. officials said on Tues- The Razoni ship left the port of Odesa on the
day that "there should be no obstacle" to restoring Black Sea early on Monday carrying 26,527 tons
banking and telecommunications services to the of corn. It docked at the entrance of the Bosporus
country's isolated northern Tigray region. Strait on Tuesday night, before leaving on
Wednesday. – Deutsche Welle

War erupted in Tigray in November 2020 and Swiss adopt new EU sanctions on Russia, allow oil
spilled into neighbouring regions a year ago. The payments
fighting eased in March after both sides fought to The Swiss government imposed further sanctions
a bloody stalemate and the government declared against Russia over the war in Ukraine on
humanitarian truce. Amid reports of widespread Wednesday, in line with the European Union's
hunger, the government has allowed some humani- latest measures on gold and gold products, the
tarian aid to enter but fuel to distribute it has cabinet said.
been severely restricted.

The AXiS Friday 29th July 2022 1177

Markets
watch

Another record fall for the
Zimbabwe dollar
Barely one week after the gold coins to end a 14-year energy crisis which has intens- KRA in 2021 a 24% increase from Sh104.8
debuted in the market, the Zimbabwe Meanwhile, US$19 million was allotted this billion in 2020.
dollar witnessed a second record fall of week, down from the US$24 million allotted
9% since the beginning of the year to settle at last week signalling the scarcity of the green- Naira positive on parallel market
458.3653 on the latest RBZ-governed auction back in the RBZ coffers. This year, the govern-
market from 416.2890 during the prior week. ment announced that only bids for available Naira continued its good performance against the
This raise concerns over whether the gold coins funds will be taken. U.S. dollar at the parallel market on Wednesday
will be able to bring stability to the under-fired The highest rate received was ZWL 500 on the after crashing to an all-time low of N710.00 last
currency or is the manifestation that the Zimba- main auction while the lowest rate was ZWL week. Naira exchanged at N665 to a US dollar
bwe dollar and stability are parallel, never meant 420 against the single US dollar. compared to N670:$1 sold last week.
to meet. In the P2P window, the Naira gained N28
The gold coins were introduced by the Central Rand bounces from 2-year low against the greenback to sell for N660: US$1
Bank to ease inflationary pressures on the ailing compared with the previous day’s N682:US$1.
currency, a situation that has been fueling the The South African rand traded at 16.5 per A look at the cryptocurrency market showed a
black market activities bringing instability to the against the greenback, stronger than a two-year mixed outcome, according to data obtained by
local currency. low touched in late July, benefiting from a Business Post from the various crypto exchang-
However, this seems to be far from being weaker dollar. Still, fundamentals hold as the es.
achieved. Maybe the only way for the Zimbabwe currency is very sensitive to shifts in global Binance Coin (BNB) rose by 5.4% to sell at
dollar to have stability is its temporal abandon- market sentiment and the country battles with US$304.30, Solana (SOL) appreciated by 2.4%
ment. prolonged worker strikes, rolling blackouts and to US$39.27, Ripple (XRP) recorded a 1.0% rise
On the parallel market where most of the activi- flood damages in addition to growing global to trade at US$0.3726, Litecoin (LTC) went up
ty takes place, the Zimbabwe dollar has already recession fears. by 0.9% to close at US$58.71, while Cardano
widened losses to ZWL 900 while others charge (ADA) added 0.2% to sell for $0.5042, with the
a margin above ZWL 1000 against a single US The South African Reserve Bank raised the US Dollar Tether (USDT) unchanged at
dollar. key repo rate by more than expected 75 bps at US$1.00.
When the auction market commenced on 23 June its July 22nd meeting and signalled further .
2020, the Zimbabwe dollar started trading at aggressive monetary tightening ahead to tame
57.3582 but to date, losses have reached a peak the surging domestic inflation. Kwacha nails a record high
of 88%. Inflation topped 7.4% in June, the highest since
“The adoption of a foreign currency auction May of 2009. Meanwhile, the government is Zambia’s currency, Kwacha advanced to its
system is expected to bring transparency and effi- cutting fuel pump prices in an attempt to ease strongest level since September after the coun-
ciency in the trading of foreign currency in the pressure on household finances and cool infla- try’s official creditors agreed to provide financ-
economy,” RBZ Governor John Mangudya said tion. ing assurances the nation needs to secure final
during the launch of the auction system. approval from the International Monetary Fund
However, due to the deficiency of the auction Shilling dips as private sector slumps (IMF) for a US$1.3 billion bailout.
market to provide funds as it is underfed, the The Kwacha gained by 2.4% to 15.975 against
system has failed dismally to bring foreign cur- The Kenyan shilling dipped to 119.1 against the the dollar, making it the second-best performing
rency trading sanity to the economy, fueling black US dollar amid the Stanbic Bank Kenya PMI currency. The country’s US$1 billion of Euro-
market activities. edging lower to 46.3 in July 2022 from 46.8 bonds due 2024 advanced for a 10th straight
Due to some allotments that take long up to in June, pointing to the fourth consecutive day, rising as much as 0.3% to 60.9 cents on
9-weeks, companies have resorted to the black month of falling private sector activity and the the dollar.
market to source the greenback at inflated prices steepest since April of 2021, as uncertainty Zambia became Africa’s first pandemic-era sov-
fueling inflationary pressures. around the upcoming election and the impact of ereign defaulter in November 2020. A commit-
Because of fiscal indiscipline from the Treasury strong inflationary pressures dampened demand. ment from the nation’s bilateral creditors com-
and Central Bank, proper management of Both output and new orders fell at accelerated mittee on July 30 to negotiate a restructuring of
exchange rates has been unfounded while tighten- rates, while business confidence remained their debts cleared the way for the IMF board
ing broad money and provision of sufficient muted. More positive was the first rise in to approve an economic program for Zambia by
foreign currency to businesses remain a night- employment for three months. While rates of as early as September.
mare. This propped the ZWL to lose most of its inflation generally eased in July, they remained
fundamental duties such as acting as a measure elevated as higher costs for fuel, in particular, PULA cements the downward trend
of value, as a store of value and as a medium of drove prices higher.
exchange as the market prefers the stable US However, the banking sector registered the Pula traded at 12.5471 against the US$ on
dollar. highest tax contribution in five years, a survey Thursday. It is expected to trade at 12.67 by the
by Price Waterhouse Coopers (PWC) Limited end of this quarter, according to Trading Eco-
shows. The survey which was prepared in con- nomics global macro models and analysts expec-
junction with Kenya Bankers Association noted tations. Historically, the Pula reached an all-time
that banks paid a total of Sh129.52 billion to low of 12.85 in July of 2022.

ZSE WEEKLY COMMENTARY

In the week under review, the ZSE lost ground after having gained the week before
as more sell-offs sparked a bear run. The mainstream All Share Index fell by -4.17
percent to close at 15919.77 points in the first week of August. Heavy sell-offs in
market heavyweights and medium caps, which fell by -5.01 percent and -2.66 per-
cent, respectively, outweighed the 2.69 percent growth in penny stocks, which contrib-
uted to the losses.

August started out poorly as the stock market suffered an MTD loss of -4.07 percent
hardly a week into the month, extending the bear run to a fourth straight month.
Nominal year-to-date gains have been reduced to 47.1 percent, which equates to a
loss of -66 percent in US dollar terms. The negative trend comes as the Central
Bank fights tooth and nail to pin on liquidity, a strategy that has temporarily paid
off. Over ZWL1 billion was mopped up from circulation in the first week after the
introduction of gold coins. However, this money will eventually have to return in
circulation since gold producers have to be compensated. Adding on depressed liquid-
ity is the curtailed investor confidence and morale as a result of high inconsistency
from policymakers in Zimbabwe.

ZSE ASI 16,613.09 ZSE TOP 10 10,271.70 MEDIUM CAP INDEX 33,061.00
16,594.91 10,265.73 33,019.62
16,594.91 10,329.78 32,449.08
16,363.20 10,131.26 32,410.63
16,098.74 9,910.94 32,186.71
15,919.77 9,757.23 32,180.27
-4.17% -5.01% -2.66%

ZSE TOP 15 11,303.14 SMALL CAP INDEX 498,980.65 ZWL INTERBANK 439.1103

11,308.19 496,827.15 443.8823

11,339.45 512,918.98 449.6571

11,151.63 517,463.15 455.0111

10,928.52 518,371.20 458.0672

10,766.38 512,386.23 460.7741

-4.75% 2.69% 4.93%

Meanwhile, Padenga led performance on the VFEX, a US dollar-denominated
exchange, on rising 4.12% to settle at US$0.3235 per share while the other 3 counters
did not register any price movement. An aggregate of $15,339 was traded on the
bourse, which is a 16 percent decrease from the previous week's record.

The local unit, ZWL, continues to depreciate against the US$ on a daily basis. The
ZWL exchange rate rose by 4.93% against the US$ in the week under review from
ZWL439.1103 to ZWL460.7741 per each US$ on the sole legal currency market,
interbank exchange market. On the currency auction market, the exchange rate rose

by a staggering 10.1% to ZWL458.365. The

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use blogs get blog post get

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Content marketing gets Website with a blog tend to

3X MORE LEADS have 434% more indexed

than paid search ads pages
The average word count of
70% of customers would rather learn about top-ranking content is

the company via articles than ads between 1,140-1,285 words

47% of buyers viewed 3-5 places of content Companies that blog on a
before starting the purchasing process
regular basis recieive 97%
60% feel more positive about the company more back links

after reading thier blog

71% of B2b buyers said they consumed blog
content during their buyer’s journey

SOCIAL MEDIA AS CONTENT DISTRIBUTION STRATEGY

Engaging content is a top 3 reason why
people follow brands on social media

87% of marketers use social media as content 76% of people use thier Facebook feed to
find interesting content
marketirng delivery mechanism
63% of companies said posting media has
91% of B2B marketrs use Linkedin to
increased marketing effectiveness
distrubute content

Interactive Tincture 08677 197 791 equityaxis.net @ sianec.it[at]gmail.com

20 The AXiS Friday 29th July 2022

Weekly
Commodity Pulse

Gold (US$/oz) Copper (US$/t) Nickel (US$/t)

The yellow metal futures increased2.5% in the Copper prices fell in the week to settle at $7,773, Nickel futures have risen by 2.5% per ton
week under review to settle at $1,802 per ounce as traders and investors sold risky assets amid for two consecutive weeks in a row due
from $1,757 recorded in the prior week as escalating China-US tensions. to the weakening US dollar.
demand for the safe haven rose. It is its best The US House of Representatives Speaker landed According to market participants, the sub-
week in 3-week as the US economy technically in Taiwan during the mid-week in defiance of sequent rate hike of the US dollar was no
entered into a recession. The World Gold Council, Chinese threats. She is the first US House leader longer aggressive after a 3-yard rate hike,
which is typically bullish on bullion, said its out- to visit Taiwan since 1997. The visit is part of a and the weakening US dollar trend drove
look for the second half of the year was mixed broader trip to the Indo-Pacific including Singa- nickel prices to rebound.
at best. pore, Malaysia, South Korea and Japan focused on In spite of weak market demand for stain-
Equity Axis research is expecting that yellow mutual security, economic partnership and demo- less steel in China, the short-term macro
metals may perform positively in the coming time cratic governance. factors were expected to make nickel
given recession experience in bigger economies. The metals price has also been weighed down by prices fluctuate at a high level.
In addition, the tension mounting between US and weak consumption from China, and surveys
China may give fresh impetus to gold’s safe showed weak factory activity across the United Brent/Oil (US$/b)
haven appeal as tensions between the world’s two States, Europe, and Asia in July, adding to fears
biggest economies. . of a recession and a gloomy demand outlook.

Platinum (US$/oz) Aluminium (US$/t)

In the week, aluminium prices slumped by 2.6% In the week under review, oil/brent prices
amid supply pressure and subsided demand as a fell by 9.2% to ease at $95 per barrel
result industrial slowdown. from $104 recorded in the comparative
week trade.
Platinum prices further increase 4.3% to ease to On the first trading day in August, aluminium, This was pressured by concerns over eco-
$924 per ton from $886 in the last session as against the broad non-ferrous metal market with nomic weakness in the United States and
investors speculate the metals bullion. In other extensive growth, ended its four-day winning Europe that it would cut demand, but
news, Zimbabwe will double the royalty rate it streak, and once dropped 3% in day trading. In prices seesawed as the market also consid-
charges mining companies on the platinum group the overseas markets, the problem of high energy ered a tight supply.
metals (PGMs) they produce to 5% from January prices is still unsolved, which offers certain sup- The demand outlook also remains clouded
2023 in a bid to increase government revenue. port for aluminium prices. by increasing worries about an economic
In addition, South African gold and platinum And the expected production reduction resulted in slump in the United States and Europe,
mines were hailed for swerving fall of ground from high energy prices is like an edged sword debt distress in emerging market econo-
fatalities. They have made inroads into key health hanging overhead. Although overseas aluminium mies, and a strict zero COVID-19 policy
and safety challenges but there is a lot of work plants’ electricity supply is in the form of in China, the world's largest oil importer.
to be done in collaboration with the Department long-term orders, the power plants now suffer In other news, the Group of Seven (G7)
of Mineral Resources and Energy (DMRE) and heavy pressure from high energy prices. Hence it wealthy nations are looking at blocking the
organised labour. is unclear how the power plants will tackle this transportation of Russian oil among other
issue in the long run. options to deprive Moscow of bumper rev-
enues amid its invasion of Ukraine, unless
it heeds a price cap.

FINANCIAL MARKETS AT A GLANCE 2022

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

15,919.77 9,757.23 512,386.23 460.7741
-4.17% -5.01% 2.69% -4.93%

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

15,919.77 498,980.65 15,93139,0.7671
10,271.70 15,919.77
YTD 57.7%
WOW -5.01% MOM -26% YTD 43.2% WOW 2.69% MOM 3% YTD 27.2% WOW -2.66% MOM -21%

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

25125.06 24107.82 15,919.77
15,919.77 15,919.77 19460.96

WOW -2.8% MOM 0.9% YTD 74.2% WOW -4.6% MOM -16% YTD 87.8% WOW -7.6% MOM -31% YTD 31.5%

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

All Share index ZSE Industrials Index (new) All Share index ZSE ICT Index All Share index ZSE Materials Index

17948.17 1255,999109..6767
15,919.77
15,919.77
WOW 6% MOM -11% YTD 0.5% WOW 2.2% MOM -20% YTD 61.8% WOW -3.9% MOM -26% 12264.39

ZSE Real Estate Index ZSE Real Estate Index Interbank Market 28.1% JSE All Share Index YTD 35%

All Share index Interbank All Share index JSE All Share index 68610.57

15,919.77

15,919.77 -24%
12115.97
WOW -6.8% MOM -28% WOW -0.0003% MOM 3.4% YTD -6.9%
YTD 28.7%

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

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

7264.76 6909.55 50594.97
15,919.77 15,919.77
15,919.77
YTD 3.64% YTD 18.44
WOW 0.17% MOM 0.8% WOW 0.24% MOM 1% YTD 14.02% WOW 1.87% MOM -2.1%

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 33000 33295 AXIA 1709.09 1420 ARTZDR 1700 1700
ARISTON 235.51 220 EDGARS 7518.11 7993.36 LAFARGE 11998.24 12030 African Sun 1709.09 267.27 19%
BAT 242000 242857.14 NTS 600.03 626 PROPLASTICS 2500 2401.43 UNIFREIGHT 5000 650 15%
CFI 37000 37500 RTG 1175 1025 TURNALL 457.01 457 NTS 1175 150 15%
DELTA 22241.47 26477.02 SIMBISA 900 940 Willdale 261 252.5 GBFS 1700 200 13%
DAIRIBORD 3000 3034.44 TRUWORTHS 19995.08 21889.59 RioZim 9400 11000 NAMPAK 1200 100 9%
HIPPO 24700 24704.82 203.94 220
INNSCOR 29248.82 29996.23 ICT Financial Latest Price Previous Week TOP 5 WEEKLY FALLERS
MEDTECH #N/A #N/A Sector Latest Price Previous Week Sector ZWL Cents ZWL Cents
MEIKLES 10900 10700 Ecocash ZWL Cents ZWL Cents COUNTER PRICE CENTS CHANGE % CHANGE
NATFOODS 175000 175000 ECONET 5000 First Capital Bank 990.33 1052.86
OK 3000.91 2995.13 ZIMPAPERS 4909.02 15728.96 CBZ 13201.62 13500 DELTA 22241.47 -4288.3 -16%
SEEDCO 9000 9005.47 16445.16 459.18 FBCH 6062.5 6580 TSL 8500 -1500 -15%
STAR AFRICA 160 160.41 Real Estate 500 FIDELITY 2200 2200 RioZim 9400 -1605 -15%
TSL 8500 10000 Sector Previous Week FML 1740 1740 NMBZ 2000 -300 -13%
Tanganda 13858.15 15200 MASHHOLD Latest Price ZWL Cents GBFS 1700 1500 FMP 900 -119.78 -12%
FMP ZWL Cents 500 NMBZ 2000 2300
1019.78 ZBFH 12200 12200
499.59 ZHL 361.86 362
900

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

68610.57 7264.76 6909.55 50594.97
-0.0003% 0.17% 0.24% 1.87%

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