The AXiS LX

Border Timbers aims regional dominance Powercuts stem AFDIS volumes drive Ups and downs of 2023 Why Caledonia will surpass forecasted performance ........................................................................................ ........................................................................................ ........................................................................................ ........................................................................................ ........................................................................................ #Issue: LX  Lithium in a failed state Curse or a case for redemption

Financial insights at your fightertips. By a fortunate stroke of serendipity, it is an honour to receive the prestigious Capital MarketsMedia Coverage Award, just as The AXiS turns one year old. The award was nominated by a public poll and adjudicated by a judging panel, aiming to recognize journalism which is revelatory, and which has an impact. The award recognises the outstanding work of a media house whose articles have raised awareness and understanding of developments in the capital markets. For us, first and foremost, the prerogative is to be an industry leader in economic, business and financial analysis and reporting. It is a pleasure to be recognized for the frequency and depth of our reporting on developments within capital markets Capital markets reporting in the corporate and financial sector requires a critical voice that questions corporate practices and behaviour. However, following stakeholder theory, media have no financial stake in a company but play a crucial role in disseminating information and influence stakeholders, such as investors, and their decision-making processes. We pride ourselves in playing this crucial societal role, acting as watchdogs for industry because the distribution of information shapes financial markets. And as Dr Mthimkulu eloquently articulated, “We are the stewards of society’s futures and a such, we have an unmistakable reporting line to society”. We would like to thank Business Weekly and Financial Markets Indaba for recognising our hard work and our corporate partners and clients for believing in our vision. www.equityaxis.net EQUITY AXIS h Border Timbers aims regional dominance Powercuts stem AFDIS volumes drive Ups and downs of 2023 Why Caledonia will surpass forecasted performance

The equityaxis.net @equity axis @equity axis zimbabwe @equity axis @equity axis @equity axis 08677 197 791 aaronc[at]equityaxis.net @ EQUITY AXIS Financial Insighs at your fingertips CONTENTS The AXiS LIX 20 Jan 2023 In Focus 19 20 21 24 25 26 7 8 9 12 14 16 17 5 Lithium boom : A curse or a case for Zimbabwe’s growth Capital Markets Markets Guest Column World News Economic News and Analysis 32 35 33 36 28 CAFCA : Growth trajectory expected to accelerate in 2023 Border Timbers : Set to become Africa’s largest producer of �mber AXIA : Inches close to VFEX lis�ng AFDIS : Blackouts curtail RTD volumes growth Caledonia : Why it will pummel its 2023 produc�on forecast Ariston : Will export drive turn fortunes? Delta’s : Pessimism about outlook, and looming recession Bridgefort Capital : A trailblazer in strategy evolu�on Invictus Energy : Invictus Energy hopeful despite first miss Seed Co’s : Astounding recession performance Business around the world Poli�cs around the world Regional Economic watch Markets Watch Weekly Commodi�es Pulse ZSE Weekly Financial Markets At a Glance 30 31 37 The Cover Over the last few years, the commercial viability of electric cars has been validated and necessitat- ed by the emergence of lithium-ion ba�eries. Before lithium ba�eries were incorporated into electric vehicles, electric vehicles used lead acid and nickel cadmium and nickel metal hydride ba�eries. Compara- �vely lithium-ion ba�eries have a high power-to-weight ra�o, high energy efficiency and good high-temperature performance. Powercuts stem AFDIS volumes drive Wines and spirits producer and distributor, African Dis�llers’(Afdis) saw its Ready To Drink (RTD) category register the worst quar- terly performance during the third quarter ended 31 December 2023 due to the recurrent blackouts that derailed opera�ons during the period. RTD segment grew by 3%, the least from 41% growth regis- tered during the same period last year. Ups and downs of 2023 Though the government has enact- ed formal economic policies to provide tax incen�ves for business- es, access to finance for small businessthe informal sector remains prevalent in Zimbabwe. It is primarily mo�vated by extreme poverty and people's desire to be able to provide for their families. Poverty and high degrees of infor- maliza�on are highly correlated. Why Caledonia will surpass forecasted performance In the wake of a confluence of calami�es, ranging from disrup�on of global supply chains caused by the Russia-Ukraine War and rolling blackouts which are hi�ng hard on third-world countries, especially power-consuming industries such as mining and telecoms, Caledonia Private Limited Company, a gold mining giant listed on the Victoria Falls Stock Exchange (VFEX) says it targets to produce 97 000 ounces of gold in the full year 2023. Zimbabwe Stock Exchange Presiden�al Elec�ons Ahead : How to prepare, economically Making sense of RBZ’s latest report : Money supply woes Bard Santner : to give investment value in gold coins Adop�on of the yuan : The only remission for Zimbabwe’s economic cancer Poverty and a complex tax system : To exacerbate informaliza�on in 2023 Naviga�ng the recession : How the retail sector could sail through the economic downturn Brent crude: Oil Price outlook 2023 Climate Change: What to expect in SADC Vola�le Zimbabwe dollar : What is the missing link? ZSE ASI 21,624.47 21,665.00 21,835.43 21,861.40 21,817.48 22,111.38 2.25% ZSE TOP 10 13,349.26 13,385.60 13,495.76 13,464.31 13,440.98 13,673.25 2.43% MEDIUM CAP INDEX 43,623.29 43,608.44 43,911.33 44,359.31 44,241.80 44,418.55 1.82% ZSE TOP 15 14,851.04 14,868.59 15,032.59 15,011.56 15,007.45 15,212.95 2.44% ZWL INTERBANK 738.4115 746.6113 755.0467 764.5470 779.3101 780.7950 -5.43% SMALL CAP INDEX 469,419.34 470,857.53 474,100.21 477,354.34 474,841.81 474,633.98 1.11%

5 The AXiS LX Friday 27 Jan 2023 Lithium boom lithium-ion batteries. Before lithium batteries were incorporated into electric vehicles, electric vehicles used lead acid and nickel cadmium and nickel metal hydride batteries. Comparatively lithium-ion batteries have a high pow- er-to-weight ratio, high energy efficiency and good high-temperature performance. In practice, this means that the batteries hold a lot of energy for their weight, which is vital for elec- tric cars. Less weight means the car can travel further on a single charge. Essentially this reduces the overall cost of operating an electric vehicle when compared to fossil fuels. While other battery technologies and enhancements to present forms are being explored, lithium-ion batteries and their variations will likely domi- nate the market for at least the next 10 to 15 years. These global developments in lithium-ion batter- ies are a big deal in the local scheme of things particularly because Zimbabwe is one of the major producers of Lithium at number 6 and holds what is ranked as one the world’s largest reserves of lithium deposits. The magnitude of the reserves is yet to be fully quantified or specified by reputable organisations, but evidence of the mineral proliferation is replete in the number of new mining ventures and explorations currently at display in Zimbabwe. Lithium is a soft silvery-white and least dense metal. At present Zimbabwe produces 420 metric tonnes of lithium, largely containing petalite. Petalite has low iron compared to the most common lithium used in battery production, known as spodumene. Spodumene is preferred for lithium extraction due to its high lithium content. Data from the US National Minerals Information Centre shows that Australia is the globe’s largest producer of Lithium having pro- duced 40000 metric tonnes in 2020 compared to Zimbabwe’s 417 metric tonnes. Australia produces lithium largely containing spodumene. Other top producers include South American countries Argentina and Chile whose lithium is predominantly carbonate and chloride. Petalite is converted to spodumene and quartz by heating to ~500 °C. Over the last few years, the commercial viability of electric cars has been validat- ed and necessitated by the emergence of Zimbabwe’s resource base The true extent of Zimbabwe’s lithium resource base is not known. Much of the geological studies completed largely refer to pockets of reserves in Masvingo and Mashonaland. Bikita Minerals is the single largest lithium deposit in the world at approximately 11 million tonnes. With an ore grade of 1.4%, the resource can produce a total of 150000 metric tonnes of lith- ium. Assuming a 20-year mine life, Bikita Min- erals alone has the potential to produce 7500 tonnes of lithium valued at approximately half a billion US dollars. Bikita Minerals could easily become the second biggest company in Zimbabwe after Zimplats, which operates sever- al PGM-producing mines. Sinomine, a Chinese mining company acquired Bikita Minerals in 2022 for a sum of US$180 million and plans to expand capacity by 2m MTpa while also building a processing plant with a 1.2m MT per annum capacity. million. Prospect Resources developed Arcadia Mine from 2016 through to early 2022. The process progressed from initial discovery through resource definition, early-stage technical and economic evaluation, definitive feasibility study, offtake agreements, pilot plant operation and a strategic project financing process, which con- summated into the sale to Zhejiang Huayou Cobalt. Huayou is the world’s largest producer of cobalt and ion battery manufacturer. It recently went into partnership with the Chinese govern- ment to produce Lithium and manufacture Lithi- um batteries. The partnership also involved the acquisition of strategic Lithium focussed assets across the world. Sabi Star Lithium Mine in Zimbabwe’s eastern highlands is another prospect for the emerging metal. Another Chinese firm, Chengxin Lithium splurged US$77 million in 2022 for a 51% stake in the mine from Maxmind, a local com- pany. The company intends to build a process- ing plant valued at US$130 million. The base plant will have a capacity of produc- ing 1 million tonnes of unprocessed ore, which the company said deduces to 300,000 tonnes of A curse or a case for Zimbabwe’s growth *To Page 6 The upgraded plant will also produce spodu- mene. Another project of note is the Arcadia Lithium Mine which is projected to produce 212,000 tonnes of unprocessed lithium ore con- taining 6% spodumene concentrate. Essentially this deduces to 12720 MT of processed lithium, driving sales to about US$1 billion after factor- ing in 216,000MT of unprocessed petalite and 188000MT of tanta- lum per annum. At these estimated pro- duction levels, the mine life will be 12 years. So, for a period stretching 12 years, Arcadia Lithium mine could individually produce lithium metal valued at US$1 billion, a year. Huayou, a global leading cobalt pro- ducer, completed the mine takeover from ASX-listed Prospect Resources at a con- sideration of US$422

of concentrate ore. the output from this mine will be relatively higher than the earlier 2 mines, at full capacity. The government believes with value addition, the Buhera-based mine could turnover US$2 billion a year, after 2 years of operation. We are yet to get full production figures asresource base and mine life, for us to fully ascertain the feasibility of achieving the targeted numbers. Other promising projects include Mirrorplex in Shamva which is still in the exploration phase. the mine is speculatively sitting on 6 million tonnes of lithium ore and is working on stage 2 drilling. The project is already being touted as potentially Zimbabwe’s biggest hard rock lithium resource. In Bulawayo, Premier African Minerals owned Zulu Lithium and Tantalum Project is speculated to be Zimbabwe’s largest undeveloped lithium-bearing pegmatite. In 2022, the company received US$18,1 million from a Chinese clean energy company as part of a marketing and pre- payment agreement. Suzhou agreed to procure, and advance, spodumene concentrate worth US$34.6 million from Premier to enable the con- struction and commissioning of a large-scale pilot plant. Other notable exploration sites include the Step Aside Lithium project owned by Prospect Resources, the Kamativi Lithium project and the Kamativi Lithium mine. The outlook for Lithium The next decade is critical to the success of the lithium market with increasing and sustained demand coming from the global new energy markets. Growth in electric vehicles continues to drive lithium demand, but this rapid growth is testing the market’s ability to expand supply. Lithium demand will rise from approximately 500,000 metric tons of lithium carbonate equiva- lent (LCE) in 2021 to some 3 million tonnes in 2030. Despite COVID-19’s impact on the auto- motive sector, electric vehicle (EV) sales, the backbone of the surging demand for Lithium grew by around 50% in 2020 and doubled to approximately 7 million units in 2021. At the same time, surging EV demand has seen lithium prices skyrocket by around 550% in a year. By the end of December 2022, the lithium carbonate price had passed $75,000/MT and lithium hydroxide prices had exceeded $65,000/MT which compares with a five-year average of around $14,500/MT. all fundamentals point to strengthening demand for Lithium through 2030 and the coming decade. Will Zimbabwe benefit from the Lithium boon? Due to self-inflicted economic turbulence, Zim- babwe has largely missed the boom and boon in different mining subsectors. Gold which is an anchor mineral has consistently failed to live up to its billing, lagging production targets on smuggling, unorganised mining, currency volatili- ty and flip-flopping policy. The government had targeted 100 tonnes of gold by 2023 and in 2022 the country only achieved 36 tonnes. The dominance of artisanal miners, now accounting for almost 70% of total production submitted to government buyers, presents challenges to value propagation to State. Artisanal miners are paid 100% in forex and largely dodge royalties and corporate taxes, in turn depriving the fiscus. The gold sector was projected to become a US$4 billion one by 2023 and barely achieved half of that in 2022, making it a tall order to achieve the target with- out fundamental changes within 1 year. The PGMs sector is emerging as the lynchpin of export receipts and forex treasure trove, largely because the anchor players in the sector are large-scale, closely monitored by the govern- mentand highly organised from a corporate per- spective. Forex earnings from the sector are closely coming in at par with gold. Mismanagement of the diamonds subsector, where billions of dollars were reportedly lost, is the clearest example of gross incompetence, reluctance and lack of vision on the part of Harare authorities. Zimba- bwe is primed to have the world’s second-largest diamonds reserves and yet the mineral barely contributes in any significant way to the fiscus. The idea of beneficiation as is currently pursued by the government is positive, but what is essen- tial is the primary policy framework and deal structure guiding foreign investment and any related investments in the country. The policy should establish certainty, equity, and factor pres- ent to future payoffs and create externalisation and corruption foolproof. Ultimately, the climate plays a key role in attracting foreign capital and returning it. A less friendly environment attracts deep discounts to valuations of local resources and hence the ultimate return. Zimbabwe, yet again, has a chance of resetting through Lithium, but years of economic decimation have created a monstrous elitist system largely benefitting secu- rocrats, sympathisers and cronies of the ruling party while shutting out the majority. *From Page 5 6 The AXiS LX Friday 27 Jan 2023

7 The AXiS LX Friday 27 Jan 2023 ZSE-listed timber giant, Border Timbers, one of the largest timber pro- ducers in the region was not only buoyant in 2022 but posted a solid financial performance despite a chal- lenging macroeconomic envi- ronment, characterized by a surge in inflation and exchange rate volatility. The company is no stranger to turbulences, as it was placed under Judicial Manage- ment in 2016. However, on the 14th of March 2022 after Financial Highlights Inflation-adjusted revenue for the period was ZW$ 4.79 billion, an 11% upsurge from ZW$ 4.32 billion in the prior year. The increase was primarily driven by the consistent product quality of the company’s Kiln Dried Timber which resulted in better average selling prices. Border Timbers increased its infla- tion-adjusted basic earnings by approximately 358% over the last two years. This has been achieved through improved operational efficiapproval by the Shareholders at an EGM in January 2022 and the sub- sequent approval by the High Court, the company exited Judicial Man- agement. This of course led to the reinstatement of the board of direc- tors who took over the control of the company. Further, notwithstanding, the compa- nies’ strides in 2022, the covid-19 hangover, and the war in Ukraine continued to disrupt the global supply chain leading to an increase in commodity prices and resulting in higher production costs for the firm. Border Timbers Set to become Africa’s largest producer of timber to ZWL$ 21.3 billion. The profitability of CAFCA, which is listed on the Zimbabwe Stock Exchange (ZSE), London Stock Exchange (LSE), and Johannesburg Stock Exchange (JSE), increased by 262% in the financial year 2022 as com- pared to the financial year 2021. Forward pric- ing drove an increase after sales volume dipped by 14%, which was underpinned by a 47% improved operating margin. CAFCA is the only cable manufacturer in Zim- babwe. It is part of CBI Electric African Cables (RSA), which in turn is owned by Reunert Limited (RSA). The company manufactures and supplies cable and allied products for the trans- mission and distribution of electrical energy and information primarily in Southern and Central Africa. The construction and mining sectors saw a rise in activity in 2022, which was expected to influence sales, but a spike in interest rates hampered economic activity among corporate entities facing 200% loan rates, affecting CAFCA sales. Exports from CAFCA are also anticipated to decline due to the predicted global recession. The 822% increase in finance costs during FY 2022, which led to a slower growth in profit before taxes of 374%, was caused by an increase in interest rates from 80% to 200%. However, slower growth in income tax resulted in profit after tax (PAT) expanding to 405% and strengthening to 32%.For the 2023 financial year, CAFCA is expected to remain steady or even increase depending on the strategic deci- sions by management andtheir reaction to external factors given that the global economy is expected to go into a recession this year. With all things being equal the company will be able to remain profitable and create wealth for its shareholders in 2023. In terms of operating efficiency, CAFCA decreased their labour cost per unit of output by 7.5%, while their fixed asset turnover ratio also saw a 5.2% increase. These improvements are indicative of CAFCA’s increased focus on cost control and asset utilization. The 412% increase in total assets was highlight- ed by an increase in inventory and a revaluation of quasi-assets. Debt capital was also used to finance asset growth. Moving on to liquidity, CAFCA was able to raise its liquidity ratios by 6.8%, which is indic- ative of its improved ability to pay off itss- hort-term obligations with the funds on hand. Additionally, the cash flow from operations and investing activities improved by 12.7% and 18.3% respectively, signalling that CAFCA is proactively managing its resources to maximize the returns from its operations and capital investments. Overall, CAFCA's financial performance is improving, as evidenced by its improved ratios and cash flow. Whats on the horizon ? The extension of Zimbabwe's power grid requires additional and new capacity in the form of cables stretching miles and CAFCA is poised for short term exploitation. This will in turn sustain the current run. Hwange 6 and 7 are set to come on grid this year and this should result in a massive sales uptick for CAFCA. We therefore expect a more improved financial year leveraging on these projects. Improved forex availability on the local market will also aid in sourcing of inputs. AFCA regained profitability in 2022, with a profit margin of 32%, led by Cstronger revenue, which increased 440% Whats on the horizon ? markets CAFCA *To Page 8 7

Treated Poles sales volume was 10 169m3, a 7.4% improvement from 9 464m³, the prior year. During the period under review, 713 hectares (FY2021: 341 hectares) were planted, a signifi- cant improvement compared to the prior year. 2023 Outlook In Equity Axis’s view, Border Timbers Zimba- bwe is in a unique position to become the largest producer of timber in Africa. With a population of approximately 16 million, Zimba- bwe maintains a great global potential for the timber industry, primarily due to its abundant forests, and access to abundant mineral and human resources. Despite this potential, how- ever, the country's forest resources remain largely under-utilized and unproductive. This is mainly due to years of political and economic instability, as well as inadequate infrastructure and support. As a result, Zimbabwe has lagged behind in exploiting its natural forest resources and promoting economically sustainable forest management. This has hindered economic growth, increased poverty, and made it more difficult for local communities to benefit from the natural resources of their environment. From the company’s perspective, the product quality remains highly regarded in the market and the current marketing efforts will increase demand for the Company’s Kiln Dried Timber. Improved performance is anticipated in the Poles business due to increased demand for the product in the SADC region where rural elec- trification projects and infrastructure develop- ment projects are attracting financial support. Further, Poles sales performance is expected to be bolstered by the Mozambique, Botswana, Zambia, as well as the local market. Recapital- isation also remains a key priority with the company’s replanting program on course to reduce the unplanted area to the industry stan- dard of 5% in the next three years. nted strategies to reduce waste throughout their operations and improved their production processes to increase productivity. These efforts combined allowed them to achieve a substantial increase in profits. Inflation adjusted cash generated from operating activities was ZW$1.05 billion, a 12% improve- ment from the prior year. Inflation adjusted Cash and cash equivalents at the end of the period amounted to ZW$66 million, paring 20% from ZW$83 million achieved the prior year. Harvesting operations also performed very well. The company uses an outsourcing strategy on harvesting which has been instrumental in stabiliz- ing the sawmills log supply which has resulted in high plant capacity utilisation. All logs supplied to the processing plants were from the Company’s own plantations with no external logs purchased. Lumber production volume was 43 930m3 m3, down 4% from 45 871m3 in 2021. This was primarily because of low customer demand during the period under review. Lumber sales volume was 43 120m3, also down 12% from 49 047m3 in 2021. The reduction was mainly because of lower aggregate demand, primar- ily in the local market. Efforts are underway to expand the export market base with particular focus on Zambia, Mozam- bique, and Botswana. encies, increased output and improved forestry practices. The company has also invested in new technologies and infrastructure, which further increased productivity and consequently increased earnings. The inflation-adjusted operating expenses were 85% higher as compared to the previous period mainly driven by inflationary pressures. In order to contain costs in 2023, it will be important for the firm to look for ways to increase operational efficiency and reduce wasteful spending. This may include streamlining processes, negotiating better terms with suppliers, or finding alternative suppliers who can provide better prices. Addi- tionally, automated processes can help to reduce human labour costs and improve efficiency. Additionally, offering incentives to employees based on the performance of certain tasks can help to improve cost containment. Inflation-adjusted net profit before taxation surged to ZW$ 3.62 billion in 2022 from a ZW$ 5.59 billion loss position in 2021. Border Timber achieved a 165% profit increase due to careful management, effective cost-cutting, and a greater focus on innovative marketing strategies. They moved away from traditional advertising and instead adopted a more digital approach to marketing, allowing them to reach new custom- ers at a lower cost. Additionally, they implemeto ZWL$ 21.3 billion. The profitability of CAFCA, which is listed on the Zimbabwe Stock Exchange (ZSE), London Stock Exchange (LSE), and Johannesburg Stock Exchange (JSE), increased by 262% in the financial year 2022 as com- pared to the financial year 2021. Forward pric- ing drove an increase after sales volume dipped by 14%, which was underpinned by a 47% improved operating margin. CAFCA is the only cable manufacturer in Zim- babwe. It is part of CBI Electric African Cables (RSA), which in turn is owned by Reunert Limited (RSA). The company manufactures and supplies cable and allied products for the trans- mission and distribution of electrical energy and information primarily in Southern and Central Africa. The construction and mining sectors saw a rise in activity in 2022, which was expected to influence sales, but a spike in interest rates hampered economic activity among corporate entities facing 200% loan rates, affecting CAFCA sales. Exports from CAFCA are also anticipated to decline due to the predicted global recession. The 822% increase in finance costs during FY 2022, which led to a slower growth in profit before taxes of 374%, was caused by an increase in interest rates from 80% to 200%. However, slower growth in income tax resulted in profit after tax (PAT) expanding to 405% and strengthening to 32%.For the 2023 financial year, CAFCA is expected to remain steady or even increase depending on the strategic deci- sions by management andtheir reaction to *From Page 7 I n 2022, Axia made massive strides on the Zimbabwe Stock Exchange with the counter reaching a high of ZW$ 209.5701 in April. Over the past three months (Oct 20, 2022 - Jan 20, 2023), AXIA has traded a total volume of 6.14 million shares valued at ZW$ 526 million over the period, with an average of 97,486 traded shares per session. Axia began the year with a share price of ZW$ 111.2161 but has since lost 11.6% off that price valuation, ranking it 46th on the ZSE in terms of year-to-date performance. Axia Corporation Limited operates within the specialty retail, distribution and logistics sectors with three business units, namely: Distribution Group Africa (DGA), TV Sales & Home (TVSH) and Transerv. It is currently the ninth most valuable stock on the ZSE with a market capitalization of ZW$ 54.3 billion translating to about US$73.6 million at today’s interbank rate and accounting for approxi- mately 2.01% of the ZSE equity market. In November last year, a cautionary announcement was issued to the Shareholders of Axia informing them of the Company’s intention to delist from the ZSE. The ZSE granted authority to delist Axia’s shares from the ZSE subject to the Axia Board approval of the from the ZSE. The ZSE granted authority to delist Axia’s shares from the ZSE subject to the Axia Board approval of the listing of the Company’s ordinary shares on the VFEX:, the passing by shareholders of Axia of the resolutions, by the requisite majority, at an EGM to be held on Thursday, 2 February 2023 in terms of the Notice of the EGM published in the national press dated Thursday, 12 January 2023; and obtaining all such other necessary regulatory The Group is no stranger to turbulence as has been under judicial management and emerged unscathed. However, the group has consistently released solid financial results in recent years and its ability to maintain its finances and maintain a solid position in the stock market has been beneficial to its investors even in a volatile economy. Rationale for migration Axia has revealed its intention to migrate from the ZSE to the VFEX in order to gain better access to US capi- tal markets. The transition is a bold move and signifies the group’s com- mitment to providing services that meet the ever-changing demands of the global financial environment. Axia Inches close to VFEX listing *To Page 9 8 The AXiS LX Friday 27 Jan 2023 Source: AXIA cautionary statement AXIA Stock Perfomance

9 The AXiS LIX Friday 20 Jan 2023 *From Page 6 I n the wake of a confluence of calamities, ranging from disruption of global supply chains caused by the Russia-Ukraine War and rolling blackouts which are hitting hard on third-world countries, especially power-consuming industries such as mining and telecoms, Caledo- nia Private Limited Company, a gold mining giant listed on the Victoria Falls Stock Exchange (VFEX) says it targets to produce 97 000 ounces of gold in the full year 2023. The robust gold target in the outlook comes at a time when other giant mining firms like Sibanye Stillwater have cut their production guidance for the full year 2023 courtesy of recurrent floods in US Montana mines. In South Africa itself, Sibanye production continues to be affected by power shortages, a weaker Rand and the resur- gence of inflationary pressures. However, Caledonia, according to our analysis will beat the production forecasts and even garner more than projected despite an uncertain future. In its latest FY’2022 report, Cold mining giant, Caledonia reported a record gold produc- tion both on the first quarterly for FY2023 and for the full year ended 31 December 2022. The group posted a record annual gold production of 80,775 ounces for the full year ended 31 December 2022 from 67,476 koz ounces pro- duced in the full year to December 2021. The latest gold output beat the Group’s forecast of 80 000 ounces predicted by the Group in 2014 and 2022 respectively. This was a 19.7% increase. Quarterly gold production increased by 13.1% to 21,049 ounces, from the 18,604 ounces pro- duced during the fourth quarter of 2021. The pie chat, graph below shows the group’s 2021 vs 2022 production and 2023 guidance approvals as may be required, including the issuance of a letter of good standing by the ZSE to Axia. The proposed transaction will see AXIA trade from USD-denominated bourse, and that comes with it benefits and is primarily the reason why many ZSE-listed firms are migrating to the VFEX. These include revenue retention on incremental exports, the enhancement of regional pros- pects and potential mergers and acquisitions with own equity, the raising of additional capital in hard currency and dividends in US$. The VFEX is now seen as a quintessential platform for a trading environment not plagued by unwanted volatility and exchange rate disparities. For Axia, the VFEX will so also offer improved options for capital planning, lower exchange control risk, taxation incentives for shareholders and poten- tial investors and reduces potential valuation volatility - as the company’s market value will be determined in the stable US$ currency. Moreover, the VFEX offers lower trading costs of 2.12% compared to 4.63% on the Zimba- bwe Stock Exchange. 2023 Outlook From Equity Axis’s point of view, Axia has been an important player in the local economy for many years, and can continue to be a leader for economic growth and resil- ience during the upcoming 2023 recession. To ensure the company’s continued success, it is essential for to adopt a few key strategies. First, although the company has one of the most diversifies portfolio, the company should look to further diversity its products and service offerings across a wide range of areas. This includes identifying new opportunities to explore in the current market and emerging trends. From the Group’s perspective they maintain a positive long-term view and continue to seek opportunities to preserve and grow shareholder value. In 2023, the Group will focus on the execution and completion of the bedding and lounge suite production facilities, the opening of new retail stores and the optimisation of major distribution agen- cies in Zimbabwe and the region. To drive the impetus for growth in Zimbabwe and in the region as well as to protect and increase shareholder value, the board has proposed to move the Group Company’s share capital from the ZSE to the VFEX. The group believes listing on the VFEX will create an enhanced path- way to the participation of regional and international inves- tors while enabling further penetration of more regional markets. Wines and spirits producer and distributor, African Distillers’(Af- dis) saw its Ready To Drink AFDIS Blackouts curtail RTD volumes growth Caledonia Why it will pummel its 2023 production forecast (RTD) category register the worst quar- terly performance during the third quarter ended 31 December 2023 due to the recurrent blackouts that derailed opera- tions during the period. RTD segment grew by 3%, the least from 41% growth registered during the same period last year. This was further the least perfor- mance as opposed to 16% and 19% growth from wines and spirits segments. Zimbabwe experienced one of the worst blackouts in 2022 with some areas kept in dark for up to 18 hours. Excessive reliance on the Kariba dam, for which the authorities are failing to avail funds for its expansion and heavy reliance on the outdated power plants at Hwange Power Station has caused the power utility, ZESA, to only provide a maximum of 800 megawatts to the national grid against 2500 megawatts. Power-consuming companies like Econet Wireless Zimbabwe and Caledonia have resorted to the extensive use of genera- tors and solar to power their operations. However, many companies, not limited only to Afdis, RioZim and Ariston Hold- ings have remained stunned by power shortages resulting in reduced production. A 3% increase was the worst perfor- mance during the quarter as wines and spirits volumes shelved 16% and 19% ahead of the comparative period. Howev- er, growth was spared by the wines and spirits segments which grew volumes by 16% and 19% respectively. “Spirits category benefited from the focus on the affordable market segment as the business sought to regain share from cheaper and illicit products with wine volumes mainly driven by locally produced brands despite intense competition from imports,” the Company said. The com- pany registered a volume growth of 10% for the quarter and 11% for the nine months compared to the prior year. As a result, revenue for the quarter grew by 29% and 39% for the nine months in infla- tion-adjusted terms over the last year, neces- sitated by increased sales volume.“The oper- ating environment is envisaged to remain unstable however, management has put in place measures to exploit available opportu- nities to sustain market share, revenue and profitability growth.” The outlook for the full year 2023 in Zim- babwe remains dull due to ongoing infla- tionary pressures, rolling blackouts and foreign currency shortages at par. These, are exacerbated by the Russia-Ukraine war which is affecting the global supply chains courtesy of the Russian blockade on Ukraine’s products and Western sanctions on Russia. Within Zimbabwe, the situation is further risked by the election fever. Zimbabwe is set to hold parliamentary Nand presidential elections later in 2023. However, Zimbabwe elections are normally coupled with fiscal indiscipline (reckless expenditure by the government to finance election campaigns). The outcome will be excess liquidity of the Zimbabwe dollar on the market causing exchange rate disparities and inflation. Arrests of main opposition parties, selective application of law to political parties to hold election campaigns and politicising national aid to buy votes and torture and intimidation of opposition members all bring the market into panic, thus, affecting com- panies’ performance.Due to political polari- sation and weak economic fundamentals in the 2018 election period, FDI inflows declined to US$0.28 billion in 2019 from US$0.74 in 2018 and further down to US$0.19 in 2020. *From Page 8 *To Page 10

10 The AXiS LX Friday 27 Jan 2023 Record production output was obtained despite record power blackouts throughout the country which affected different mining companies, par- ticularly RioZim. Mining outfit, RioZim reported both diminished gold and diamond output due to excessive load-shedding that extended up to 18 hours in some areas. Mining firms’ nightmares are further exacerbated by the 40%:60% RBZ retention threshold on all exporting companies. Companies are forced to relinquish 40% of their export proceeds to the RBZ in return for the weaker Zimbabwe dollar hence, incurring forex scarcity to maintain and sustain operations. Caledonia operates the gold mining firm, Blanket Mine in Zimbabwe. Blanket started production in 1904 when early workers tended to mine the visible gold sections of the pay shoots out of the mine. Significant production milestones were in 1965 when Falcon- bridge acquired the property and increased gold production to an average of approximately 45 kg per month, and in 1993 when Kinross took over the property and built an enlarged Car- bon-in-Leach (“CIL”) plant with a capacity of approximately 3,800 tonnes per day (“TPD”) to treat an old tailings dump together with the run-of-mine ore. Gold production reached a level of 110 kg per month during the tailing treatment years from 1995 to 2007. On April 1, 2006, a wholly-owned subsidiary of Caledonia Mining Corporation completed the pur- chase of the Blanket Mine from Kinross. Caledo- nia has allowed Blanket to make considerable capital investments in its underground, surface and township facilities. These investments culmi- nated in the commissioning of the No 4 Shaft Expansion Project at the end of September 2010 which increased Blanket’s hoisting capacity from the No. 4 Shaft from 500 tonnes per day to 3,000 tonnes per day. Following the successful commissioning of the No. 4 Shaft Expansion Project in September 2010, the underground workings have increased production to approximately 1,200 tonnes of ore per day using both long-hole open-stopping and underhand stopping methods. Blanket No. 4 Shaft has been equipped with the first automated load- ing system in Zimbabwe which sequentially fills the two six-tonne ore skips which are hoisted from the 789m level to the surface. The use of this state-of-the-art automation reduces the risk of ore loading accidents and injuries, reduces man- power costs, minimises spillage, reduces skip loading times, increases hoisting capacity, ensures precise ore tonnage accountability, and enhanc- eswinder efficiency while lowering loading and hoisting costs. The double compartment No. 4 Shaft is the Blan- ket’s main shaft for hoisting ore to the surface from the loading stations at 510m and 789m below the surface, and it has a proven hoisting capacity of 110 tonnes per hour from 789m. The Jethro and Eroica Shafts and the No.5 and No.6 Winzes are used for transporting personnel and materials underground, and the No.2 and Lima Shafts are also used for hoisting ore to the surface. In August 2015 the Company announced the con- struction of a new central shaft going down to 1,200 metres from the surface, providing access for horizontal development in two directions on two levels below 750m. Thereby increasing pro- duction and extending the mine's life. The com- missioning of Central Shaft was completed in the first quarter of 2021. The Central Shaft was expected to increase annual gold production to 80 000 ounces, which was achieved in 2022. The shaft is further expected to provide access for further deep-level exploration which, if successful, may extend Blanket mine life beyond 2034.The central shaft which was completed and commissioned during the first quarter of 2021 for US$60 million beat the projected forecast of US$100 million. Despite the project being owner-built and fully funded through internal cash flow in an environment coupled with inflationary pressures, electricity challenges and an aggressive taxing policy, the corporation continued posting quarterly record gold production and investing in other various projects while annihilating budget constraints. To deal with blackouts, the entire underground and surface operations of the Blanket mine, except for the Lima Shaft, including the surface compressors and the No 4 Shaft Winder can be operated by the 10,000kVA standby diesel-pow- ered generating sets which were installed and commissioned in May 2011. This standby gener- ating station ensures that all mining and metallur- gical operations continue notwithstanding any interruptions to the electrical power supply from the grid. To further deal with power outages, The Group installed a solar plant which is being used as an alternative power source to offset electricity blackouts at Blanket Mine. While the central shaft’s project was in the pipe- line, pending completion, the corporation com- pleted the acquisition of Bilboes for US$65.7 million, a deal capable of positioning it as Zim- babwe’s biggest gold producer. Ore production from the Bilboes oxides project is expected to start in mid-February with expecta- tions to recover gold from the heap leach in March. The project had an initial capital require- ment of approximately $540,000, which was expended in 2022. The Group announced last year that it planned to invest US$250 million into developing Bilboes into a new mine while minimising the initial cap- ital investment and reducing the need for third-party funding. Meanwhile, capital expenditure at Blanket in 2023 is projected at US$9.6 million in respect of a new tailings facility (reflecting tightened regu- latory requirements) and a further US$9.8 million of deep-level capital development so that opera- tions can be maintained in future years. The Group expects that in 2023, approximately US$2 million will be incurred in the preparation of a revised feasibility study for the larger sulphide project at Bilboes with the cost of the projected capital expenditure for the Groupexpect- ed to be met from operating cashflows and in-country borrowings. Reports indicate that Bilboes has the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine against Blanket Mine’s production of 80,000 ounces of gold per year. In 2021, the cor- poration agreed to purchase the mining claims over the Maligreen for US$4 million, a property estimated to contain a NI 43-101 compliant inferred mineral resource of approximately 940koz of gold. The investment was a bold step toward the Corporation’s strategy of becoming a multi-asset gold producer in Zimbabwe, one of the last gold frontiers in Africa. "Production guidance for 2023 assumes that Blanket will broadly maintain the production rate achieved in 2022 and the guidance also includes the estimated production from the small oxides project at Bilboes where mining activity is expected to commence in February, and we expect to extract gold from the heap leach pro- cess in March.,” the Corporation’s Chief Execu- tive Officer (CEO) Mark Learmonth, said in a news release. “Over the last 18 months, the Company has built an attractive portfolio of assets with the acquisitions of Bilboes, Motapa and Maligreen. Blanket will continue to serve as a solid foundation for this growth, as we look to progress our assets with our long-term goal of becoming a multi-as- set gold producer,” Learmoth said. The graph below shows gold price movements, daily (using 23rd January 2023 stats), weekly, monthly and year-to-date against selected precious metals in % The future of gold remains cheerful as it is used as an investment asset by investors due to its value preservation aspect. Gold is an attractive investment asset used to hedge against periods of political and economic uncertainty. On the 23rd of January, Gold climbed above $1,930 an ounce, heading back to its strongest levels in nine months while spot silver was held above $24 per ounce, not far from a near nine-month high of $24.5. However, Platinum futures extended gains toward $1,100 in January, their highest level in ten months, as demand was forecast to outpace supply this year. The platinum market is expected to record a deficit of about 303,000 troy ounces in 2023, switching from a surplus in 2022, according to the World Platinum Investment Council. Supply is projected to rise by only 2%, while the demand's increase is estimated at 19%, boosted in particular by China's consumption of cars and jewellery. In Q4 2022, China stepped up its platinum buying, anticipating a pickup in its industrial and automotive manufacturing activi- ties. On the supply side, ongoing issues with adverse weather, labour union problems, and high energy prices led major platinum miners, includ- ing Sibanye-Stillwater in South Africa, to reduce their production guidance. Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion and vice versa. Historically, Gold reached an all-time high of 2074.88 in August 2020. *From Page 9

THE ALL-NEW LANDTREK The Legendary Peugeot is back The new LANDTREK Double Cab gives you a prestigious and distinctive look guaranteeing an intense drive whether o-road, carrying a heavy load or on the motorway. The LANDTREK has an ecient 1.9L turbo diesel engine producing 111Kw of power and 350Nm of torque. FROM $49,900 USD Landtrek 4 x 4 MT 1.9l Diesel Turbo Terms and conditions apply. Harare City Branch Cnr Julius Nyerere and Robson Manyika 0774 771 092 | 0242 756164 0242 758 395 Secure customer parking available PEUGEOT ZIMBABWE a division of [email protected] peugeot.co.zw Msasa Branch 82 Mutare Road Msasa Harare 0242 486 919 / 21 / 22 0733 988 335

12 The AXiS LX Friday 27 Jan 2023 Since 2020, Ariston Holdings has been reporting losses and the Group is currently exploring strategies to get back to profits. Ariston Holdings is a Zimbabwe Stock Exchange -(ZSE) listed firm that specialises in agricultural products, with tea being the flagship crop for the company. The graph below shows Ariston’s first quarter production over 3 years Having capped over 24 months in losses, Aris- ton Holdings has turned its footprint more on the export market to counteract losses being made in Zimbabwe markets due to an uneven operating environment. However, despite the economic environment being infested with a fast-depreciating currency, inflationary pressures and scarcity of foreign currency, other compa- nies in the same production line as Ariston, such as Tanganda Tea Company and Meikles Limited are posting robust performances. The main challenges facing Ariston Holdings according to their trading reports are first and foremost, a 40% export retention threshold ceded by exporting companies to RBZ in return for the under-fired Zimbabwe Dollar using the latest auction market rate, which is however overvalued. It is no secret that the taxation regime in Zimbabwe is hostile to corporates as big names like Econet Wireless, Delta Corpora- tion and RioZim also feel the same. However, these companies are also reporting not only losses but profits. RBZ is reluctant to remove the export retention threshold at 40% downwards as it is one of the ways the government is getting foreign currency to sustain operations. The RBZ governor has been on record several times crediting the 40% and it is unlikely that they will be changed up to 10% which many corporates are crying for. Ariston has been lamenting a volatile economic environment coupled with inflationary pressures and reactionary economic policies which are at most fragile. However, as it stands, inflation in Zimbabwe seems like is here to stay. Zimba- bwe’s industry is still weak, recording a trade deficit year in and out. With Zimbabwe continu- ing to be a net importer, it means it is produc- ing less hence unemployment will remain rife while forex shortages continue to loom. In 2022 the zimdollar lost 86% of its value against the greenback and has been on a down- ward spiral since its reintroduction in 2019. the decline in currency value brought down with it the erosion of purchasing power in turn damp- ening local demand. likewise the shift in globla demand for macadamia which had been a tradi- tional market for local macadamia, has resulted in reduced average prices and worse off earn- ings for the embattled agro focussed firm. the company, in a bid to restructure its balance sheet weaned off some of its assets in Nyanga, hoping to streamline and return to bottomline profitability. the ambition now seems so near yet so fart, given the evolving dynamics in global markets. The economic drawbacks which Ariston is bemoaning are likely to increase in intensity with the looming global recession and presiden- tial elections getting closer this year. However, the focus on exports, with increased foreign currency will be able to counteract some of the headwinds and even further diversify or get mergers. Having said that, Ariston further needs strategic manouvres to mitigate costs and increase returns for the shareholders. In a statement accompanying the trading update, Ariston Holdings said, “In this current year, the Group has increased its focus on improving tea quality so as to grow its export sales volumes as the local economy is expected to continue to face headwinds.” In a foreign currency-scarce economy, skewing sales towards exports will be an alternative to annihilating forex shortages and black-market premiums. During the first quarter ended 31 December 2022, the Group's tea sales registered a 229% surge while local sales were up at 102%. The graph below shows Ariston’s first quarter sales over 3 years The shift in focus will result in lower tea pro- duction than in the prior year in terms of over- all quantity but will result in higher volumes of export-grade teas than in the previous year. Increased export sales will translate to increased profitability which mitigates the effect of the low performance of the local market on the Group’s financial well-being. Results on the ground so far, have shown that this strategy will improve overall tea performance. However, load-shedding will continue to haunt Ariston and production costs will continue to loom. From Equity Axis’ perspective, Ariston needs to employ cost-cutting strategies to bolster its new export market initiative to record profits. Since 2021, production costs for the company have been rocketing pitting the company in record losses. Costs of production between 2022 and 2021 increased by 9% with operating expenses hitting a 9% decrease as well while between 2021 and 2020, production costs shoot by 30% with operating costs soaring by 72%. The Group lastly recorded a solid profit after tax in 2019 when both production costs and operating expenses were effectively contained. The graph below shows the Group’s production costs and expenses over four years To operate in a turmoil economic environment, big companies like Twitter, Tesla Amazon, Inns- cor Africa and Delta Corporation have employed mergers and acquisitions and diversification to increase economies of scale, and greater market share and thus, offset losses. Others have majored more in mechanisation, retrenchment, demerger and negotiating with top shareholders to put more money to recapitalise like what RTG did. Meanwhile, there was a 27% decline in revenue compared to the prior comparative period attributed to potatoes which were sold in Decem- ber in the prior year whereas, in the current year, these were sold in January 2023. “Further, the timing of poultry placements con- tributed to the revenue decline and the late season macadamia export in prior year boosted prior year revenue.” The Group “Overall, these issues are all about differences in timing and will reverse as the year progresses.” Due to the heavier rains received during the reporting period, the planting of potatoes was delayed to avoid losses normally experienced when the fields are too waterlogged for potato harvesting. As a result of changes in timing of potatoes, harvesting commenced in January 2023, whilst in the prior year, harvesting occurred in December. Thus, the timing difference resulted in a 32% decline in production volume as of 31 December 2022. On the other hand, the dry spell experienced in October 2022 delayed the start of the current year's tea harvesting period. Howev- er, this situation was temporary with weather conditions improving from November 2022 onwards. Total tea sales volume was ahead of the prior comparative period as the Group closed the financial year ended 2022 with some tea stocks which were sold in the current period. The global economy activity recovered from the impact of the Covid-19 pandemic while global shipping shortages have improved resulting in a 229% increase in export tea sales. Local tea sales volumes registered a 102% increase in volume as demand from local customers improved. With the harvesting of macadamia nuts beginning in March, volumes for early drop macadamia nuts were 91% ahead of prior comparative period. Banana production volumes had a 14% increase from the prior comparative period due to the heavier rains received in the current period. “Normal to above normal rainfall is anticipated for the rest of the year while the automation pro- cesses that were implemented during the prior fiscal year are expected to continue yielding improved quality for both tea and macadamia nuts,” the Group said. Ariston Will export drive turn fortunes?

          Infographic prepared by Interactive Tincture EQUITY AXIS          
          ­€ 
‚     ƒ The 2023 edition of the Dugmore Trophy also saw the involvement of female golfers and Tracy Humbira of Royal Harare was crowned the winner in the inaugural women's tournament. The 20-year-old Humbira nished with scores of 92, 80 and 75 and said she is happy with the win.    

 

, Delta Corporation says the future remains bleak due to an aggressive taxation system in a poor economic environment coupled with exchange rate distortions, inflationary pressures, a weak currency and recurrent electricity black- outs. However, the situation is likely to be tougher with the global recession looming. Zim- babwe registered a technical recession between 2019 and 2020 due to a record inflationary envi- ronment exacerbated by the COVID-19 pandem- ic. The graph below shows SADC’s VAT and cor- porate tax regimes Despite having one of the worst economic fun- damentals in SADC, if not Africa, Zimbabwe boasts one of the worst taxation regimes, cou- pled with political polarisation and reactionary fiscal and monetary policies to resuscitate a weaker currency, which is making the economic environment horrible for businesses to operate. Since the reintroduction of the Zimbabwe dollar in 2019, the currency faced extreme backlash from the market and to fight resistance, govern- ment has employed aggressive economic poli- cies. Delta expressed this in its trading update for the third quarter to full year ending 2023. Delta recorded growth across all its key segments. Revenue grew to 44% with a significant increase of local foreign currency sales at 70% as growth was registered across all sectors. However, the Group said, “The financial outturn in F23 could be affected by the foreign currency tax assessments arising from differences in inter- pretation of legislation on the currency of pay- ment of certain taxes.” The graph below shows Delta’s 3rd quarter per- formance and cumulative 9 months for full year 2023 There have been significant currency changes in Zimbabwe since 2018. These changes create some uncertainties in the treatment of transac- tions for taxes due to the absence of clear guidelines and transitional measures. Of signifi- cance are the exchange losses recorded on the change of the functional currency in terms of SI33/19. Besides, there are various taxation systems with various taxing mechanisms which are believed to be unfair by many lobby groups, the Confedera- tion of Zimbabwe Industries being one of them. Some taxes are payable only in US dollars in a US scarce economy, others in RTGS which are very few though while other taxes are payable in both currencies and using minerals as well. Exporting companies are further subject to 60:40% export retention thresholds where 40% is relinquished to the RBZ in return for the local currency at the latest interbank rate. Despite having one of the most fragile economies in SADC, Zimbabwe’s corporate tax is high at circa 25% trailing behind more advanced econo- mies like South Africa, Zambia, Namibia and Angola. With the introduction of RTGS currency in October 2018 which was confirmed as the sole transaction currency on 24 June 2019 without the support of fiscal measures as envisaged under the Transitional Stabilisation Plan, compa- nies incurred huge monetary losses resulting in a recession. The economy has faced a multitude of headwinds which culminated in reduced con- sumer disposable income and weak business per- formance. The authorities responded with a myriad of fiscal and monetary policy refine- ments that in some cases fuelled the meltdown. Between 2019 and 2022, Delta’s monetary loss increased by circa 2000% from ZWL358 million to ZWL7 billion in 2022. Between 2019 and 2022, the Zimbabwe dollar depreciated by 100% from trading at ZWL2.5 against the single greenback in 2019 to ZWL732 in 2022. Rapid Zimbabwe dollar depreciation has affected Del- ta’s performance, from losing ZWL2 billion in 2021 to ZWL7 billion in 2022. Since the introduction of the Zimbabwe dollar in 2019, various taxation systems have been employed by government on corporates to anchor its US dollar coffers and stabilise the local currency which, however, is still unfound- ed. The graph below shows SADC’s taxation mech- anisms, VAT and CIT Zimbabwe is one of the countries in SADC with the least GDP ranked among the poorest coun- tries like Malawi. This means productivity is never convincing due to an aggressive tax system, power blackouts and political intolerance. In 2022, Econet Wire- less bemoaned an unrealistic IMMT tax where it lost millions of dollars. Zimbabwe has a 15% VAT, circa 25% corporate tax and an AIDS levy of 3%. Zimbabwe presently operates on a source-based tax system. This means that income from a source within, or deemed to be within, Zimbabwe will be subject to tax in Zimbabwe unless a specific exemption is available. The maximum rate was 30.9 % and the minimum was 24%. Elections fever Meanwhile, in elections, Zimbabwe ones are known for being violent and lacking credibility from international monitors and opposition par- ties. Zimbabwe’s election periods are usually accompanied by fiscal indiscipline by the Cen- tral Bank through increasing ZWL liquidity in the market to fund government election pro- grammes. Between June 2017 and June 2018 an election period, RBZ increased reserve money by 41% from US$6.5 billion to US$9.1 billion with a month-on-month increase of 6.84%. Resultantly, the nation went into recession in 2019 coupled with acute shortages of foreign currency to import key products such as fuel, bread and cooking oil. Consumer spending decreased significantly which heavily affected company performance. Between 2019 and 2020, Delta recorded one of the least revenue increases of 10%, from ZWL7.6 billion to ZWL8 billion. During this recession period, Delta Corporation survived by killing competition through mergers, diversification and acquisitions. Political intolerance and polarisation Delta said political polarisation and intolerance are a concern for the group’s robust performance in future. Political intolerance especially for the opposition parties has become the main attrac- tion of the international community. For compa- nies to prosper, there is a need of resurrecting heavy industry and injecting more capital into the economy through FDIs and international cor- porations. However, due to political toxicity, selective application of law and corruption, Zim- babwe has been shunned by the international community resulting in a porous economy. Former President, Robert Mugabe has been blamed for human rights by the international community, particularly the West, leading to a decline in foreign direct investments. However, when President Mnangagwa came to power, he promised sanitisation of the whole political system which the United States, EU and the United Kingdom believe it is still unfounded. The Second Republic targeted to improve the image of the country, re-engage and engage the global community by improving the Good Coun- try Index (GCI), Country Brand Ranking and improve Global Travel and Tourism, Competi- tiveness Ranking and Global Happiness Index. However, the GCI faltered since 2019. The Good Country Index measures how much coun- tries contribute to the planet, and to the human race, through employed policies and behaviours. Second Republic’s efforts fell short as the coun- try got the worst performance by ranking, miss- ing the 98th targeted position to score 111 in 2021, worse than the 2019 performance. On the Competitiveness ranking, the country also regis- tered a failure by ranking 127 out of 140 instead of the targeted 114. The Global Competitiveness Index assesses the microeconomic and macro- economic foundations of national competitive- ness, which is defined as the set of institutions, policies, and factors that determine the level of imbabwe’s largest company by market capitalisation, a beverages giant listed on the Zimbabwe Stock Exchange (ZSE), Pessimistic on outlook and looming recession Z Delta *To Page 15 14 The AXiS LX Friday 27 Jan 2023 Lorem ipsum

productivity of a country. However, the GCI faltered since 2019. The Good Country Index measures how much coun- tries contribute to the planet, and to the human race, through employed policies and behaviours. Second Republic’s efforts fell short as the coun- try got the worst performance by ranking, miss- ing the 98th targeted position to score 111 in 2021, worse than the 2019 performance. On the Competitiveness ranking, the country also regis- tered a failure by ranking 127 out of 140 instead of the targeted 114. The Global Competitiveness Index assesses the microeconomic and macro- economic foundations of national competitive- ness, which is defined as the set of institutions, policies, and factors that determine the level of productivity of a country. The GHI for Zimbabwe was also off-route in 2021. The Happiness Index measures life satis- faction, the feeling of happiness in domains such as psychological well-being, health, time balance, community, social support, education, arts and culture, environment, governance, mate- rial well-being, and work and these are answered by the public. The GHI which targeted number 136 in 2021 out of 191 fell short to hit number 148. Of more importance was the flopping of the Country Risk Index which targeted to attain a grade CC in 2021 only to score Grade E which is the highest risk political and economic situation. The baseline target was grade CCC which is a high risk while the target was CC which is a medium risk. The CRI quantifies the risk of a shock such as an economic crisis or a sudden change in the political environment that would affect those conducting business within a country, territory, or special administrative region. As a result, Foreign Direct Investments fell dras- tically, from US$0.74 billion in 2018 to US$0.19 billion in 2020. This is the same year Delta Corporation recorded one of the least revenue growths. Meanwhile, power outages and water challenges courtesy of recurrent drought spells are major impacts that await Delta in 2023. Despite gain ing independence in 1980, old dilapidated infra- structure from Smith’s era is still used by ZINWA, the water supply body and ZESA, the power utili- ty. Relying on ZESA and ZINWA has become one of the worst nightmares for the Zimbabwean industry. Big firms like Delta, though in a different line of production such as Caledonia and Econet Wireless have long gone for solar and generators to deal with blackouts. Zimbabwe’s energy prob- lem will not end overnight as it requires billions of investments in solar energy and coal to end the power crisis. Will Delta survive the looming recession? Amid, these political and economic uncertainties shunning investments in the country which are likely to increase in intensity in 2023 due to the upcoming elections, World Economic Forum has predicted a possible global economic recession in 2023. In Davos, the majority of the World Eco- nomic Forum’s Community of Chief Economists projected a global recession in 2023, see geopoliti- cal tensions continuing to shape the global econo- my, and anticipate further monetary tightening. Almost two-thirds of chief economists believed a global recession is likely in 2023 of which 18% considered it extremely likely – more than twice as many as in the previous survey conducted in September 2022. During recessions, companies respond differently. Ian preparation for the looming recession, Twitter, Amazon, Google and Tesla have laid down thou- sands of workers to cut expenditures. Meta, Alpha Media Holdings and Ariston Holdings also cut the number of employees during recession periods. However, they also used the economic meltdown opportunity to broaden their footprint and kill competition through mergers, acquisitions and automation of processes. With Zimbabwe in reces- sion in 2019 and a global recession in 220, Delta Corporation remained productive and profitable though profits declined in 2020 due to COVID-19 restrictions. Delta responded to the COVID-19 pandemic through hybrid operations and increased automation of processes. In this way, a few work- forces with the help of machines ensured produc- tion kept moving. Delta further employed cost-cutting strategies to deal with production costs and expenditure, diver- sification and acquisitions as well as increasing borrowings to sustain productivity. Between 2018 and 2019, Delta’s finance charges plummeted by 258%, from ZWL5 million in 2018 to ZWL21 million in 2019, a year of recession. This means Delta borrowed more to sustain operations as its inventory increased from ZWL66 million to ZWL128 million in 2019. In 2020, finance charges further soared by 100%, from ZWL110 million to ZWL160 million in 2020 meaning the company did not cease extending its credit lines to sustain operations in a cash-stripped environment coupled with forex shortages and exchange rate disparities. To cement that, the results further show that Delta incurred less monetary loss during the recession than in other periods meaning it capitalised more on US dollar sales and US Dollar credit lines. Through the accumulation of loans and profits, Delta finalised the 100% acquisition of United National Breweries in April 2020 and increased its shareholding stake in Afdis to 50.1% in 2019, thus, increasing competitive advantage and econo- mies of scale. UNB is the leading brewer of tradi- tional beer and owns the Chibuku brand in South Africa. As a result, the company shelved a 19% increase in operating income and a 10% increase in revenue despite a 9% decrease in profit after tax. However, the liquidity ratio remained firm at 1.2 meaning the company was able to finance its obligations in a recession and move forward. In 2019, the liquidity ratio was firmer at 1.2 as well. With the acquisition of Schweppes Zimba- bwe, Delta has killed the competition in the drinks and alcohol market by 86%. With increased automation, a monopoly in the bever- ages sector in Zimbabwe and diversified foot- prints beyond, Delta will not be heavily affected by either the looming recession or elections. However, the biggest challenge for Delta in 2023 will be Insscor Africa. With the venture of Insscor into the alcohol business in the wake of a projected recession, this is the biggest chal- lenge for Delta. It is cognisant that many brands have failed to take on Delta but they lacked the capacity that Innscor currently holds. Ngoda traditional beer which was expected to challenge Delta in the opaque beer market when it launched in 2015 did little to dent Delta’s domi- nance while Ingwebu Breweries is also among the small players and it has been in existence for over a decade without any harm. Insscor Africa Limited unveiled an opaque beer under the Nyathi brand last year after injecting US$7,5 million into the project with much antic- ipation as the beer is set to roll out this year. Innscor is arguably the largest food manufacturer in Zimbabwe and is quite possibly the only listed player that is more vertically integrated than Delta. The business’ reach in the food sector allows it a steady flow of raw materials for the opaque beer while its extensive distribu- tion network could challenge the extent of Delta’s reach. Further, Innscor’s management is strategic given it managed to survive the two recessions, in 2019 and 2020 through the group’s continued expansion in several of the country’s food man- ufacturing sub-sectors over the last six years despite the volatile macroeconomic environment. Given its planned capital expenditure of US$58 million in the coming years, Innscor is also the only player in the industry with enough skin in the game to match Delta’s capital expenditure. With its strong capital base, Innscor is one of the few entities that can absorb losses in its sorghum beer operations long enough until its market penetration strategy succeeds. This is notwithstanding Delta’s competitive advantages that will dull Innscor’s possibility of dethroning the Chibuku brand’s strong market share which is a regional footprint, a strategic shareholder with market expertise and good taste. Delta has operations in Zambia and South Africa, and both regional operations manufacture sorghum beer. This is a competitive advantage because the operational diversity adds to the economies of scale, reduces earnings volatility, and provides an additional source of foreign cur- rency regardless of recent losses in its operations in Zambia and economic headwinds currently experienced in Zimbabwe. To crown it, based on our analysis, Delta will neither be greatly affected by the looming reces- sion nor elections fever. However, its main rival in the Chibuku domain is Insscor and it needs to play its cards wisely to continue having a greater market share. *From Page 14 15 The AXiS LX Friday 27 Jan 2023

16 The AXiS LX Friday 27 Jan 2023 To Page 17 Invictus Energy hopeful despite first miss his article will take a detailed look at Bridgefort's management strategies and Tfinancial results to examine how it has been able to navigate the Zimbabwean economic landscape against the backdrop of a drought-induced recession, a de-dollarized environment, the Covid-19 era, and the current economic climate. Bridgefort Capital was formerly known as Medtech Distribution. The company's full-year financial results from 2019 to 2021 are listed below. For 2022, the business had officially changed its trading name from Medtech to Bridgefort, and the only financial information accessible for that period was 2022's audited half-year financials. Interestingly, despite operating in different economic environments during the course of the five years under review, the company consistently maintained a profit. Profit after taxes decreased by 16% throughout the dollarization process(2018-2019), from US$1.037 million in 2018 to US$868K in 2019. Despite this decline in profitability, the company's turnover increased from US$12.3 million to US$70.48 million in 2019, and its operating profit skyrocketed by 352%, indicating that it had lower fixed costs and a better gross margin, which meant that it was growing its sales more quickly than its costs and giving management more discretion in setting prices. A great indication of excellent management this is. The extract above, examines revenue, operating profit, and profit after tax following de-dollarisation (2020-current). The company still enjoyed a prosperous period despite the introduction of RTGS as the primary account ing denomination. It is safe to assume that the profitability of the FY2022 financials will most likely be more consolidated and a figure greater than the previous similar period is projected given that the FY2021 financials are 9% higher than the HY 2022. The business recorded a negative operating profit in 2021, which is similar to an operational loss or higher-than-average fixed expenses. The increased trajectory of revenue from 2020 to 2022 is a strong sign that there will be more work for current staff. They frequently wind up filling in for workers who have quit. This reduces the amount of time available for routine tasks. New employees had to go through an adjustment phase during which they learn how to perform their duties. Productivity experienced a slight decline throughout this training period but this bolstered the effectiveness of the employees. The company's strong turnover during the recession in 2019 up until Covid-19 and post-Covid is explained by this increase in turnover. The company's performance during the past five years is depicted in the graph below. Background-2019 As the drought got worse in 2019, millions of people in Zimbabwe were experiencing misery, starvation, and anarchy as the economy was on the verge of "melting down." A population already under strain from shortages of essential groceries, fuel, and medications saw annual inflation nearly double to 175% in June, according to official numbers released in 2019. Many were reminded by the soaring prices of the economic catastrophe brought on by Mugabe's policies ten years prior when hyperinflation wiped out supplies of staple items and forced the southern African nation to abandon its currency. Due to a severe drought, there had been rolling power outages and additional hardships. Additionally, in an effort to eliminate subsidies, the government continually raised the price of petrol and electricity. To safeguard the local currency, the central bank increased interest rates to 50% and outlawed transactions involving US dollars. Bridgefort strategy-Cost Control By controlling and analyzing financial data, cost control is a technique for lowering business expenses. Consolidating costs enables businesses to forecast expenses more accurately and intelligently, determine where they may cut costs and spot areas where they are overspending. Bridgefort’s ability to pay off its current foreign debt of ZAR27,7 million (ZAR35.7 million) was negatively impacted by the macroeconomic environment but this was a blessing in disguise because the company decided to delay the payment. Delaying the remittance of foreign payments was a risk because it could have resulted in supply shortages and stockouts. The company took advantage of the uncertain macroeconomic and tradThe Invictus exploration process is turning into a gam- bling circus after the company announced that it has established new discoveries within the failed Mukuyu 1 body. In an update the company claimed discovery of more than a dozen more hydrocarbon zones, a few weeks after the drilling project hit a snag due to tech- nical complications. The latest finding comes on the backdrop of significant losses realised by investors including Mangwana Capital who risk losing invest- ments valued at US$16 million on the basis of a weak efficient market hypothesis (a process of insider trad- ing). The Australian Stock Exchange (ASX) listed Invictus Energy Ltd (IVZ.AX) began drilling one of two explo- ration wells for oil and gas in the northern part of Zimbabwe in Sep 2022. The oil and gas extraction company has been reporting at least USD$1 million in losses in successive years since 2019. The latest proclaimed discovery of oil deposits in a landlocked country does not increase odds of a successful finding, given the historical postulations around it. Gas and oil have long been touted as being present in certain parts of the country for almost a century but no substantial explorations had been done prior to the one being done by Invictus. The initiation of oil extraction at Invictus’ Mukuyu 1 rig generated investor frenzy with speculative bets driving volumes up by a significant margin. In the third quarter ending 31 Dec 2022, the company inject- ed AUD$ 25,225 000 (USD17,78 million) after a rights issue. The initiation of the failed Mukuyu-1 emerged as a success pillage option for a semi-in- formed public, which hailed the half findings as success. Odd of success are very narrow given that the compa- ny has already stretched its drilling beyond 4000 meters. In Africa, the average drilling depth normally ranges between 2500 feet and 4500 feet. Invictus Energy has exceeded the limit marking exceedingly deeper margins than average. The investment in the mining discovery carries a chunk of risks which a rational investor and the Secu- rities and exchange commission should not base the investment options on the proclaimed discoveries. The risks should be optimised either by having an indepen- dent assessment appointed by investment boards such as SECZIM or by banning the external funding of new explorations. The implications of publicly listing oil mine explora- tions draw unmatched investment risk which directly converges to the welfare of citizens. The uncertainty associated with predicting minerals resources, the investment cost of a mining operation that might not be recoverable, and the potential for changing regulations or taxes. There is also a risk that global politics and policies could adversely affect the stability of the region and its economic outlook. Furthermore, there is the risk of political turmoil, including civil unrest, which could lead to uncertainty about the future and the potential for instability in Zimbabwe. There is also the risk of expropriation, whereby the government of Zimbabwe seizes invest- ments, whether foreign or domestic. Although the potential oil and gas burst could enormously transform the mining and economic sector at large considering the lithium dominance discoveries, the two minerals however are indirect substitutes of one another as lithium product carries the capability to push Petro- leum out of the market in the foreseeable future. Alternatively, it could encourage other inves- tors to direct their capital towards lithium exploration, thus increasing competi- tion and driving prices down. Invictus Energy A trailblazer in strategy evolution BRIDGEFORT CAPITAL Overview of financials Extract of Bridgefort Capital Financials: Equity Axis Research

As companies gear up to face yet another pos- sible recession in 2023, it is prudent to anal- yse how companies have managed during recessionary periods in sionary periods in the past. Zimbabwe has recently suffered two consecutive recessionary periods. The first being in 2019 and the second in 2020, where the economy contracted by 6.5% and 5.3% respectively. The focus in this article is Seed Co (“the company”) and how they performed in 2019 and the mitigation strategies they employed. The recession in 2019 was induced by inflation, drought, and was exacerbated by cyclone Idai. This saw negative growth across key sectors and did not spare agriculture. Inflation during the period which had stood at 5.8% in December 2018 increased significantly to close at 521.3% in December 2019 as a result of shocks associated with the currency reform of 2019. As a result, product pricing could not be effected to catch up with inflation thereby present- ing a loss of real value per item sold during the year. Zimbabwe was also then affected by a severe drought which the Seed Co chairperson referred to as the worst drought in many years. Delayed and below average rains since the onset of the planting season in and across the southern African region severely dampened demand. The rains that came in late December were too late to rescue the situa- tion. This shock directly affected the company’s primary line of business. The seed uptake during the year was severely affected which was then reflected by a decline of 7% in maize sales (the biggest volume contributor-at 59% of total volumes). Other economic challenges which affected the operations of the Company in Zimbabwe during the period were foreign currency challenges, fuel shortages, and load shedding which all made farm- ing extremely difficult and weakened demand in the agricultural sector more generally. Despite these adverse environmental challenges, the company posted turnover of $73m which was 16% above prior year. This growth was however achieved by upward price adjustments necessitated by the inflationary environment that prevailed. The cost of seed production also increased, but the Company was able to implement cost containment measures and contain overheads at 7% higher that prior year levels. Operating profit and profit before tax for the period was at $24m and $27,6m, which was an increase of 11% and 15% respectively as com- pared to prior year. Although the primary crop declined in volumes, other categories (namely, Soya and other less significant categories) grew in volumes to contribute a cumulative 20%. A 4-per- centage point growth from 2018 figures. The success of Seed Co against the drought was due in part to its stock pile where the Company had adequate stocks to supply the market, despite the challenges experienced by growers and the dry spells experienced during the production season. This is a lesson they had taken from previous seasons where they had experienced product short- ages. Moreover the company’s investment into research and technology has enabled it to supply seed variants (such as the “ultra-early seed vari- ants”) which is demanded by farmers in erratic rain fall areas. Such innovations allow a product that can be demanded even in times of drought. A facet that served the company in the 2019 period, given that drought was experienced in both the Southern and East African markets. Such innovations are in line with the company’s competitive strategy of releasing new and better products that outcompete the competition. These efforts are supported by a focus on staff expertise where staff are encouraged to upskill. In the 2019 period the chairman, in his report, acknowledged those who had attained PHDs in the period. The conclusion is that to weather recession innova- tive solutions are required and expertise are neces- sary in order to carry them out. Preparation for future shocks requires current capital investments and sources of finance in order to afford these investments. This is exemplified by Seed Co Lim- ited’s successful unbundling of its regional busi- ness operations and listing on to the Botswana and Zimbabwean stock exchange in early October 2018. The company did this in an effort to increase their capacity to raise capital to finance research and development growth and expand opportunities in the seed business. For instance, the company embarked on a US$10m artificial seed drying plant project to mitigate challenges it had experienced with erratic weather patterns. Such innovations are crucial to hedging against climate changes in particular(which Zimbabwe has been increasingly experiencing), and adverse shocks more generally. Seed Co *From Page 16 A guide on how to stay above waters in a recessionary storm ing denomination. It is safe to assume that the profitability of the FY2022 financials will most likely be more consolidated and a figure greater than the previous similar period is projected given that the FY2021 financials are 9% higher than the HY 2022. The business recorded a negative operating profit in 2021, which is similar to an operational loss or higher-than-average fixed expenses. The increased trajectory of revenue from 2020 to 2022 is a strong sign that there will be more work for current staff. They frequently wind up filling in for workers who have quit. This reduces the amount of time available for routine tasks. New employees had to go through an adjustment phase during which they learn how to perform their duties. Productivity experienced a slight decline throughout this training period but this bolstered the effectiveness of the employees. The company's strong turnover during the recession in 2019 up until Covid-19 and post-Covid is explained by this increase in turnover. The company's performance during the past five years is depicted in the graph below. Background-2019 As the drought got worse in 2019, millions of people in Zimbabwe were experiencing misery, starvation, and anarchy as the economy was on the verge of "melting down." A population already under strain from shortages of essential groceries, fuel, and medications saw annual inflation nearly double to 175% in June, according to official numbers released in 2019. Many were reminded by the soaring prices of the economic catastrophe brought on by Mugabe's policies ten years prior when hyperinflation wiped out supplies of staple items and forced the southern African nation to abandon its currency. Due to a severe drought, there had been rolling power outages and additional hardships. Additionally, in an effort to eliminate subsidies, the government continually raised the price of petrol and electricity. To safeguard the local currency, the central bank increased interest rates to 50% and outlawed transactions involving US dollars. Bridgefort strategy-Cost Control By controlling and analyzing financial data, cost control is a technique for lowering business expenses. Consolidating costs enables businesses to forecast expenses more accurately and intelligently, determine where they may cut costs and spot areas where they are overspending. Bridgefort’s ability to pay off its current foreign debt of ZAR27,7 million (ZAR35.7 million) was negatively impacted by the macroeconomic environment but this was a blessing in disguise because the company decided to delay the payment. Delaying the remittance of foreign payments was a risk because it could have resulted in supply shortages and stockouts. The company took advantage of the uncertain macroeconomic and trading environment to delay payments of debts as a measure of controlling their costs which paid off. Due to strict cost control, the company was able to maintain its market share and sales even in the middle of such a financial calamity. This strategy has always been employed by the company to address challenging economic conditions. Change from Medtech to Bridgefort To prosper and expand, businesses need organizational transformation. The successful adoption and utilization of change within the organization are driven by change management. Employees are able to comprehend the shift, commit to it, and perform well while working it. On June 13, 2022, drug distributor Medtech changed its name to Bridgefort Capital Limited. Following resolutions adopted at the company's EGM in November 2021 that changed MedTech's capital structure, the firm decided to change its name. This goes hand in hand with the company’s strategy of change management. Change of management Along with the name change, Bridgefort also hired Sithulisiwe Ncube and Michael Nicholson as new financial directors. Nicholson has been in the business for more than 20 years as a Chartered Accountant. Ncube had eight years of experience and is a licensed attorney. In addition to Vernon Lapham, other Bridgefort directors include Pride Masamba, Christian Beddies, William Marere, and Oliver Lutz. The struggling medical and cosmetics supply company suggested changing its legal structure to become an investment holding company, which owns and controls operational enterprises under the Bridgefort Capital banner rather than holding any of its own operating units. After a promising start to 2020, the company found it difficult to give shareholders value as its shares fluctuated between 17 and 30 cents each. Due to the plans to alter the structure, it has been trading with cautionary remarks for the better part of the last two years. Looking ahead Given the impending recession, Zimbabwe's high inflation rates, and the nation's ongoing electrical issues, we anticipate Bridgefort Capital to keep improving its operating tactics and controlling expenses. If we think back to when interest rates of 50% were considered to be a record, they are now over 200% and are predicted to stay there, posing difficulties for the borrowing needs of the firm. The AXiS LX Friday 27 Jan 2023 17

ducers in the region was not only buoyant in 2022 but posted a solid financial performance despite a chal- lenging macroeconomic envi- ronment, characterized by a surge in inflation and exchange rate volatility. The company is no stranger to turbulences, as it was placed under Judicial Manage- ment in 2016. However, on the 14th of March 2022 after Financial Highlights Inflation-adjusted revenue for the period was ZW$ 4.79 billion, an 11% upsurge from ZW$ 4.32 billion in the prior year. The increase was primarily driven by the consistent product quality of the company’s Kiln Dried Timber which resulted in better average selling prices. Border Timbers increased its infla- tion-adjusted basic earnings by approximately 358% over the last two years. This has been achieved through improved operational efficiapproval by the Shareholders at an EGM in January 2022 and the sub- sequent approval by the High Court, the company exited Judicial Man- agement. This of course led to the reinstatement of the board of direc- tors who took over the control of the company. Further, notwithstanding, the compa- nies’ strides in 2022, the covid-19 hangover, and the war in Ukraine continued to disrupt the global supply chain leading to an increase in commodity prices and resulting in higher production costs for the firm.

The AXiS LX Friday 27 Jan 2023 19 & Analysis Zimbabwe is scheduled to hold presidential elections this year (2023) following the almost lapsing presidential term of the disruption to business operations due to the need for repairs or replacement of damaged property. In addition to physical damage, there is also the potential for disruption to business operations due to fear or intimidation caused by election-related violence. For example, employ- ees may be reluctant to come to work if they feel unsafe or threatened in their environment. This can lead to reduced productivity and decreased profits for businesses. Furthermore, customers may be reluctant to patronize busi- nesses located in areas where violence has occurred during elections. This can have a significant impact on sales and revenue for SMEs in affected areas. The economic impact of election-related vio- lence on SMEs can be further exacerbated by the political instability and economic uncertainty that often follows such events. Political instabili- ty can lead to increased taxes or other economic policies that make it difficult for businesses to operate profitably. Economic uncertainty can also lead to reduced consumer spending which affects the demand for goods and services pro- vided by SMEs. In addition, investors may be less likely to invest in businesses located in areas where election-related violence has occurred due to concerns about safety and secu- rity. In addition to the direct effects of violent poli- tics on businesses, there are also indirect effects that can be felt by investors. Political violence can create an atmosphere of uncertainty that makes it difficult for investors to make informed decisions about where to invest their money. This uncertainty can lead to decreased invest- ment in certain markets or sectors due to fears of instability or lack of return on investment. Furthermore, political violence may also lead to increased volatility in stock prices due to inves- tor panic or fear of further unrest. The impact of violent politics on companies and investors is not limited only to economic losses; it also has a psychological effect on those involved with the business or investment pro- cess. Fear and anxiety caused by political unrest How To Prepare, Economically *To Page 23 Presidential Elections Ahead sitting head of state who was sworn into office in 2018. Despite the global society not paying much attention to the horrendous race as has been seen in the past, the citizens of Zimbabwe are privy to the race being very violent and in some cases being a bloodbath. This has seen most investors and economic players in the country raising concerns of very high uncertainty in the economic course of the country post-elec- tions owing to prospective instability. It, there- fore, renders it key for an economic player to understand how violent and bloody elections affect the economy and the general order of the day. The impact of violent politics on companies and investors is a serious concern that comes as a reminder towards every presidential election in Zimbabwe, which takes place every 5 years. Violent politics usually have a direct and indi- rect effect on businesses, their operations, and the investments they make. This article will explore the various ways in which violent politics can affect companies and investors, as well as the potential solutions to mitigate these risks. Violent politics can have a direct effect on busi- nesses by disrupting their operations. Political violence can take many forms, such as riots, protests, or even terrorism. These events can lead to property damage, disruption of services, or even loss of life. In addition to the physical damage caused by these events, businesses may also suffer from lost revenue due to decreased customer demand or disruption of supply chains. Furthermore, political violence can also lead to increased security costs for businesses to protect their employees and assets. However, Zimbabwe is dominated by the informal sector which con- stitutes 88% of the overall economic activities in the country. The sector is characterized by a huge number of SMEs as opposed to big companies. Small to medium companies are usually exempted from corporate tax and also lack enough capital to carry out most activities known to be common in big companies, includ- ing coordinated security. This there- fore a significant portion of the economy is highly susceptible to either temporary or permanent disruption. As the political instability takes a toll on the economy, the SMEs in Zimbabwe will be susceptible to physical damage to business opera- tions and property. This can include vandalism, looting, arson, and other forms of destruction. In addition to the immediate financial losses asso- ciated with such damage, there is also the potential for long-term can lead people to make irrational decisions that may not be in their best interests financially or oth- erwise. This fear may cause people to avoid invest- ing altogether or make hasty decisions without con- sidering all available options. Fortunately, there are steps that companies and investors can take to mitigate the risks associated with violent politics. Despite the insurance business not being very common among SMEs in Zimbabwe, companies ought to ensure that they have adequate insurance coverage for property damage caused by political unrest and should consider investing in additional security measures during the election period. Investors should diversify their portfolios across different markets and sectors to mitigate risk exposure while still maintaining potential returns on investment. Additionally, investors should research any potential investments thoroughly before commit- ting funds in order to ensure they are making informed decisions based on accurate information rather than fear-based speculation about future events related to political unrest. The first step for businesses is to monitor the politi- cal situation in their country of operation. This includes staying up-to-date on any changes in gov- ernment, laws, or regulations that could affect their operations. Businesses should also be aware of any potential sources of political unrest and be prepared to respond quickly if necessary. Once a company has identified its risk exposure, it can begin to develop strategies for mitigating those risks. One strategy is diversification across multiple towns and/or regions so that if one market experiences political instability, it does not have a significant impact on overall prof- its or operations. Companies, particularly the vulner- able SMEs in the Zimbabwe economy, can also use hedging strategies such as financial markets, local or foreign, to reduce their exposure to currency fluctua- tions or price changes caused by the possible political instability in late 2023. Heading towards the elections, both small and large businesses should ensure that they are compliant with all applicable laws and regulations in Zimba- bwe. This will help ensure that they are not subject to any penalties or other legal repercussions due to changes in government policy or other forms of political instability. Additionally, businesses should ensure that they are transparent about their operations and activi- ties so as not to attract unwanted attention from authorities during times of unrest or upheaval. While big companies in Zimba- bwe have moved a mile in tech- nological advancement, SMEs should also consider investing in technology solutions that can help them remain resilient during times of political instability or uncertainty. For example, cloud-based solutions can help businesses maintain continuity If your business wants political stability,you’ve come to the right place!

20 The AXiS LX Friday 27 Jan 2023 The latest RBZ monthly report has some interesting takeaway points. Broad money supply closed the month of November at The RBZ report highlighted that 59% of the total money supply highlighted above was in Foreign Currency Accounts (FCAs). This means that the growth in money supply was also a function of the deposit base structure, where foreign currency-denominated deposits dominat- ed. An 83% annual depreciation of more than 50% of the deposits would guarantee an above 100% increase in money supply. Outside of ZWL$2 trillion from US$438 billion at the close of November in the prior comparable year. The movement reflects a growth of 373% year on year. This is shockingly staggering but expected in a hyperinflationary environment. The country closed the year 2022 with the highest inflation rate in the world at 243%, which in turn was derived from sharper exchange rate losses. The Zimdollar which was reintroduced in 2019, eased by 86% in 2022, its widest loss since its second return. The same data also shows that hard currency held by local and foreign banks as at the same date stood at US$1.1 billion. To arrive at the total, we add foreign notes and coins to balances held by foreign banks and foreign currency reserves held by the RBZ. The variance between the total FCAs and real USD balances at the end of November was at US$650 million. This means balances held as deposits in local FCAs are way too high com- pared to actual foreign currency real cash held by both local entities and individuals either within local or foreign-held accounts. Most transactions within the economy are now being settled in US dollars, which is about 70% of total transactions by value. A majority of these transactions are electronic suffice to say there are two forms of FCAs, the local nostro and foreign nostro. Credit created via the local nostro is purely a local currency disguised as foreign cur- rency. This anomaly will not come to light until the system is overwhelmed. It takes some years for this fissure to have a consequential impact on financial sector stability and currency value as was the case during dollarisation. The economy is skirting murky waters and may soon find itself in deeper ends where another currency failure may be inevitable. How long will it take to reach the breaking point? The average hard cash to FCAs balances is cur- rently at 60% and hovered around 65% for most of 2022. At peak post-dollarisation, the average stood at 70%. During dollarisation, the average began at 50% falling in successive years to a low of 3% in 2018. The Zimdollar was reintroduced in 2019. our sim- ulations show that levels below 40% are problem- atic but at levels below 20% the currency would have crushed. just US$120 per year and own a share of a gold coin. As an alternative, investors can purchase additional units at a fee of $15 each month. A withdrawal notice time of seven days and a mini- mum investment duration of 180 days are needed. The investment scheme allows investors to have long-term preservation in their savings given that gold has been the foremost store of value through- out the ages and performs well during times of economic volatility. According to the company, the minimum invest- ment in the Unit Trust will be equivalent of US$120 per year. port long-term savings by common Zimbabweans and significantly advance financial inclusion in line with global trends. The Mos-oa-Tunya gold coin was introduced on 24 June 2022 with the first batch distributed the following month to mop up excess liquidity in the market as well as ease the US dollar demand. The gold coin has since been trading at the minimum value of US$1,600.00 with the latest figures above US$2,000.00. The trading value however has always been floating above the average savings for a common Zimbabwean. Even a further reduced value of gold coins in November by the central bank is unaffordable for an average house- hold “The Bard Santner Gold Coin Unit Trust enables Zimbabweans to invest in an asset whose value is directly linked to the international gold price offering investors a platform to save while preserving value,” the firm’s executive director, Dr Alfred Mthimkhulu, said in a statement shared with the media Just like Tigere REITs which have given access to every investor who wishes to own a unit trust a unit property a chance, the new Gold Coin Unit Trust enables investors to invest a minimum of these factors, is sustained money creation through bank loans as well as base money growth which is at RBZ’s discretion to suit the government’s objectives. The last driver is perhaps the most important as it is largely within authorities' control and high powered meaning its impact on the net economic outcomes is pronounced and severe. Government securities grew by 400% over the 11 months to ZWL$198 billion, accounting for 10% of the total money supply. Hard Currency as a fraction of FCAs Another key takeaway which is perhaps the most important one of all the takeaways from the November report is an analysis of Foreign Curren- cy Accounts balances against real USD balances held by banks. The analysis is important as it reflects on the ability of banks to meet foreign currency obligations as and when they fall due. A sustained variance favouring lower real balances to FCAs shows a ticking time bomb for another currency collapse. According to the latest data released by the RBZ, total foreign currency accounts balances (FCAs) as at 30 November 2022, stood at US$1.85 billion (59% of M3 multi- plied by the exchange rate). Making sense of RBZ’s latest report Money supply woes Bard Santner to give investment value in gold coins Bard Santner, an asset, corporate finance and wealth management firm has launched Gold Coin Unit Trust to sup-

21 The AXiS LX Friday 27 Jan 2023 *To Page 23 Adoption of the yuan The only remission for Zimbabwe’s economic cancer China claims it will begin purchasing oil and gas in yuan as 2023 drags on, a move that may eventually put the dollar's position as the world's reserve currency in jeopardy. According to the Saudi Press Agency/Associated Press, Chinese President Xi Jinping stated that China will continue to buy significant amounts of oil and gas from Gulf states in the immediate term. Xi Jinping, the president of China, is promoting the settlement of energy trades in yuan in a move to consolidate the Chinese economy. In this piece, we'll examine how Zimbabwean policymakers might take advantage of this chance to strengthen the use of the yuan in the basket of the country's most widely used currencies. The adoption of the RMB/yuan during this period weakens the dollar and could boost the Zimbabwean economy. Global Economic Implications Long-term US dollar supremacy may be weakened if more trade is settled in yuan. A statement from the Chinese foreign ministry claims that the Chinese government has already decided to perform its settlement in the Chinese yuan, or RMB. The US economy is now the largest in the world by default since the US dollar currently accounts for the majority of global trade. The second-slowest rate of economic growth in China's history was recorded in 2022, a sign of the negative impact the nation's stringent coronavirus laws have had on the country's commer- cial sector. According to official data, the world's second-largest economy's gross domestic product (GDP) increased by 3% in 2022. Although far lower than the gov- ernment's 5.5% target, this is better than most economists had anticipated. Beijing quickly changed its rigorous zero-Covid stance end of 2022, though. The policy had a significant influence on the economy of the nation last year, but the unexpected easing of the regula- tions has caused a sharp increase in Covid cases, which threatens to also hinder growth in the early months of 2023. 2022's economic growth was the weakest since 1976, when Chair- man Mao Zedong, the founder of the People's Republic of China, passed away, except for the begin- ning of the pandemic in 2020 when full-year GDP increased by 2.2%. Experts have however expressed caution regarding China's economic data, with some stating that it is more appropriate to look at the trajectory of the data than the actual numbers to determine how the economy of the nation is doing. What it means for Zimbabwe Nigel Chanakira, president of the Zimbabwean Economic Society, is quoted in the most recent issue of the weekly Financial Gazette as saying that the multicurrency should continue to exist until 2030 to allow independent power producers to pay back equity participants, lenders, and investors. The US dollar is the most used currency in the multicurrency system, followed by the RTGS and then the Rand (partic- ularly in the Southern regions of the country), as many economic agents are still hesitant to use the local RTGS due to its tendency to fall sharply in value every week. Case of USD Zimbabweans are forced to purchase newer notes at a premium on the streets as a result of the market rejecting worn-out currency due to the use of US dollars in the economy. The importation of US dollars pres- ents a dilemma for policymakers as well because of the ruptured rela- tionship with the US government, which has resulted in the imposition of sanctions on the economy. The multicurrency was first used in 2009 during the GNU, and the new dispensation embraced it in 2018 since the local dollar had been avoided because of its inflation-driven loss in value. Zimbabwe is unable to print new US dollar notes since the US gov- ernment owns the currency entirely. Zimbabwe's inflation and exchange rate concerns have made the use and selection of currency a hot topic. On the market, though, both domestic (ZWL) and interna- tional currencies are accepted by the government. The bad side effect of utilizing the USD as a medium of exchange is the inability to obtain change, which forces many retailers to use barter trade, in which you trade a smaller-value good for a change. Case of the Rand Monetary Board A monetary union made up of South Africa, Namibia, Lesotho, and Swaziland are called the Common Monetary Area. All four of these currencies are valued and exchanged on par with the South African Rand, even though each of these sovereign states issues its currency. They are all under the control of the South African Reserve Bank. Zimbabwe must join this board to use the rand, and the RBZ must cede all decision-making authority to the South African Reserve Bank. Despite the seeming advantages this would bring, it is highly unlikely that this will ever happen. The adoption of the Rand has some effects on Zim- babwe, some of which present significant techni- cal difficulties. By adopting the Rand, Zimba- bwe would essentially become a member of the Common Monetary Area (CMA), which includes South Africa, Lesotho, Swaziland, and Namibia. The CMA is a binding contract with strict but reason- able requirements. Given Zimbabwe's current economic state, it is impossi- ble to see Zimbabwe achieving two of these responsibilities. Article 2 of the agreement outlines the first duty, which requires member nations (except Swazi- land) to back up local currency issues with foreign reserves and forbids the monetisation of fiscal deficits. The Swaziland Central Bank has kept more than enough foreign reserves to back up the whole amount of local currency it has issued, despite not being required to do so by law. It has added credibility and confidence in the agreement, which is a cru- cial component to its success, that all parties to the CMA have kept to it faithfully. Given its current foreign reserve issue, it is exceedingly doubtful that Zimbabwe, if it were to join the CMA, could uphold this clause. Thus, allowing Zimbabwe into the CMA would be a very dangerous decision that could jeopardize the legitimacy of the agreement. Any sensi- ble policymaker would want to steer clear of risks like these, particularly in the current eco- nomic climate. This brings up the second reason why Rand's adoption is extremely unlikely. Zimbabwe might theoretically choose to forego issuing any local currency altogeth- er to get around this requirement. The next section makes the case for why this alternative is very improbable, impractical, and politically unappealing. Either option would indicate that Zimbabwe would cede control over its currency and exchange rate policies while severely limiting its ability to exercise budgetary policy. From that point forward, Zimba start an economic recovery program would be best advised to at the very least have its monetary and fiscal policies available to it. This is since a successful combination of the two approaches requires care- ful coordination. It is improbable that an imported monetary policy that is unaware of the specific economic circumstances of the nation will be of much assistance. All things considered, Zimbabwe adopting the Rand would probably be a bad deal for South Africa and her CMA partners in that it would be bad for Zimbabwe and politically undesirable. Case of Commodities-backed currency Following Russia's invasion of Ukraine, the USD to ruble exchange

23 The AXiS LX Friday 27 Jan 2023 Ariston Holdings is a Zimbabwe Stock Exchange -(ZSE) listed firm that specialises in agricultural products, with tea being the flagship crop for the company. The graph below shows Ariston’s first quarter production over 3 years Having capped over 24 months in losses, Aris- ton Holdings has turned its footprint more on the export market to counteract losses being made in Zimbabwe markets due to an uneven operating environment. However, despite the economic environment being infested with a fast-depreciating currency, inflationary pressures and scarcity of foreign currency, other compa- nies in the same production line as Ariston, such as Tanganda Tea Company and Meikles Limited are posting robust performances. The main challenges facing Ariston Holdings according to their trading reports are first and foremost, a 40% export retention threshold ceded by exporting companies to RBZ in return for the under-fired Zimbabwe Dollar using the latest auction market rate, which is however overvalued. It is no secret that the taxation regime in Zimbabwe is hostile to corporates as big names like Econet Wireless, Delta Corpora- tion and RioZim also feel the same. However, these companies are also reporting not only losses but profits. RBZ is reluctant to remove the export retention threshold at 40% downwards as it is one of the ways the government is getting foreign currency to sustain operations. The RBZ governor has been on record several times crediting the 40% and it is unlikely that they will be changed up to 10% which many corporates are crying for. Ariston has been lamenting a volatile economic environment coupled with inflationary pressures and reactionary economic policies which are at most fragile. However, as it stands, inflation in Zimbabwe seems like is here to stay. Zimba- bwe’s industry is still weak, recording a trade deficit year in and out. With Zimbabwe continu- ing to be a net importer, it means it is produc- ing less hence unemployment will remain rife while forex shortages continue to loom. In 2022 the zimdollar lost 86% of its value against the greenback and has been on a down- ward spiral since its reintroduction in 2019. the decline in currency value brought down with it the erosion of purchasing power in turn damp- ening local demand. likewise the shift in globla demand for macadamia which had been a tradi- tional market for local macadamia, has resulted in reduced average prices and worse off earn- ings for the embattled agro focussed firm. the company, in a bid to restructure its balance sheet weaned off some of its assets in Nyanga, hoping to streamline and return to bottomline profitability. the ambition now seems so near yet so fart, given the evolving dynamics in global markets. The graph below shows the Group’s production costs and expenses over four years To operate in a turmoil economic environment, big companies like Twitter, Tesla Amazon, Inns- cor Africa and Delta Corporation have employed mergers and acquisitions and diversification to increase economies of scale, and greater market share and thus, offset losses. Others have majored more in mechanisation, retrenchment, demerger and negotiating with top shareholders to put more money to recapitalise like what RTG did. Meanwhile, there was a 27% decline in revenue compared to the prior comparative period attributed to potatoes which were sold in Decem- ber in the prior year whereas, in the current year, these were sold in January 2023. “Further, the timing of poultry placements con- tributed to the revenue decline and the late season macadamia export in prior year boosted prior year revenue.” The Group “Overall, these issues are all about differences in timing and will reverse as the year progresses.” Due to the heavier rains received during the reporting period, the planting of potatoes was delayed to avoid losses normally experienced when the fields are too waterlogged for potato harvesting. As a result of changes in timing of potatoes, harvesting commenced in January 2023, whilst in the prior year, harvesting occurred in December. Thus, the timing difference resulted in a 32% decline in production volume as of 31 December 2022. On the other hand, the dry spell experienced in October 2022 delayed the start of the current year's tea harvesting period. Howev- er, this situation was temporary with weather conditions improving from November 2022 onwards. Total tea sales volume was ahead of the prior comparative period as the Group closed the financial year ended 2022 with some tea stocks which were sold in the current period. The global economy activity recovered from the impact of the Covid-19 pandemic while global shipping shortages have improved resulting in a 229% increase in export tea sales. Local tea sales volumes registered a 102% increase in volume as demand from local customers improved. With the harvesting of macadamia nuts beginning in March, volumes for early drop macadamia nuts were 91% ahead of prior comparative period. Banana production volumes had a 14% increase from the prior comparative period due to the heavier rains received in the current period. “Normal to above normal rainfall is anticipated for the rest of the year while the automation pro- cesses that were implemented during the prior fiscal year are expected to continue yielding improved quality for both tea and macadamia nuts,” the Group said. *From Page 21 *From Page 19 during periods of disrup- tion by allowing them to access data remotely from anywhere with an internet connection. Additionally, automation technologies, where possible, can help businesses maintain opera- tions even when staff are unable to work due to disruptions caused by political unrest. Finally, SMEs should look for ways to build relation- ships with local stake- holders who may be able to assist during times of crisis. This includes local business associations which may be able to provide support through grants or loans as well as professional advice on how best to navigate difficult times and non-governmental organi- zations (NGOs) that may be able to assist with logistics or other neces- sary needs. rate fell precipitously, hitting a low of 135 rubles in March 2022. However, the Ruble has stabilized since that historic fall because it is now supported by com- modities like gold, proving that supporting a currency with gold can work. The Russian ruble fully recovered from the decline brought on by the sanctions imposed on its economy by the US government on April 22. Russia, which was subject to U.S. and EU sanctions, made an unex- pected action by fixing the price at 5,000 rubles for a gram of gold. Oil, natural gas, and other key exports would need to be paid for in rubles, the country's finance ministry declared. The Russians made a brilliant economic decision by requiring cus- tomers to visit the Russian central bank and pay gold to obtain rubles to conduct business. The ruble had been trading between 70 and 80 rubles to the dollar. Following the fines, it had fallen to 120. Now that it is trading at about 70 rubles to the dollar, the ruble has recovered. And it's due to the way the ruble and gold were tied. Russia's brilliant manoeuvre may jar American busi- nesses that have foreign clients or suppliers. Foreign business partners may require their American coun- terparts to pay in rubles or bullion because they need to swap gold for rubles to pay for inputs like energy, minerals, or fertilizers. Additionally, American busi- nesses might need to buy a lot of rubles to cover the cost of their inputs for factories, warehouses, or raw materials located abroad. Many economies had abandoned the gold standard as being outdated. To prevent the Zimbabwean dollar from collapsing and to reduce demand for US dol- lars, the central bank of Zimbabwe also released gold coins in July. In November, smaller versions went into circulation. Source: EQUITY AXIS RESEARCH The poor local currency is typically shunned by Zimbabweans in favour of U.S. dollars, which they believe are more widely accepted abroad and have a longer value retention rate. Mangudya expressed his desire for Zimbabweans to choose the gold coins, which are cur- rently available and cost roughly $1,800 each. Unfortunately, the gold coins have not been able to stop the local currency's value decline or to create stability. Source: EQUITY AXIS RESEARCH From the graph above, it is clear that the introduction of gold coins in July had little effect on the stabilization of the currency, as the value of the currency continued to decline monthly to the end of the year. The currency declined by 59% of the official auction market platform from the time the gold coins were introduced until the end of the year, proving that they were nothing more than marketing hype. Case of the yuan The use of the RMB/yuan could be one action that the central bank still tries to implement. Former president of Zim- babwe, R.GMugabe gave enormous emphasis to Zimbabwe's connections with China, especially after the 2003 standoff with the European Union that led to capital flight and an economic down- turn when looking at the history of Zimbabwean and Chinese relations. China has been said to as Zimbabwe's "sole significant foreign supporter" due to their principle of non-interference in inter- nal affairs, such as human rights issues; relations have increased in line with Zimbabwe's political isolation from the European Union.Zimbabwe's "Look East" policy, which aimed to deepen bilat- eral and commercial ties and give preference to investors from countries other than China—includ- ing Malaysia, Singapore, Vietnam, Japan, South Korea, India, and Russia—has become increasing- ly China-centric. Trade between the two nations was at a record $1.1 billion (£0.8 billion) in 2016, with China being the largest importer of cotton and different minerals as well as the largest buyer of Zimbabwean tobacco. Zimbabwe received in return imports of finished goods like apparel, elec- tronics, and others. Chinese government-owned construction companies have also been working hard to create infrastructure, notably Zimbabwe's $100 million (£75 million) National Defense Col- lege. Additionally, China agreed to finance a new Harare parliament with 650 seats last year, which was completed in 2022. Zimbabwe adopted the Chinese yuan, commonly known as the renminbi (RMB), as one of its offi- cial currencies in March 2014 when its central bank added the RMB, the Japanese yen, the Aus- tralian dollar, and the Indian rupee to the already-existing basket of currencies. Zimbabwe gave up on its currency in 2009 after it became completely worthless due to extreme inflation. Since that time, it has been employing a currency basket where the US dollar dominates. According to a recent report from the International Comparison Program, a global statistical initiative affiliated with the World Bank, China may overtake the US as the largest economy this year. The report predicted that many more nations will use the RMB to protect themselves from currency losses when transacting with China. The RMB is used as a reserve and settlement currency by some African nations, including the Bank of Ghana. As the RMB acquires increasing traction in international trade, the Nigerian central bank has already start- ed to convert more of its foreign reserves from dollars to yuan. Dollars make up over 85% of Nigeria's reserves. Additionally, to invest in Chi- na's bond market, the South African Reserve Bank inked a contract with the People's Bank of China. One of the nations where the rising demand for Chinese yuan has been noted is Mauritius. It would be advantageous for the local economy if the Zimbabwean economy stormed at this advantageous time with the yuan. Although the precise amount of reserves required to completely convert the Zimba- bwean economy from the dollar to the yuan is uncertain, a basic guide- line for stability states that the reserves should be sufficient to fund all necessary imports and commerce for the ensuing six months. Conclusion: How the Yuan Could Become a Global Currency China wants the yuan, its currency, to take over from the dollar as the world's reserve currency. It would have more control over its economy as a result. Despite serving as a reserve currency at the moment, some crucial conditions must be met before the yuan may replace the dollar in Zimbabwe. These conditions include: The RBZ must have foreign exchange reserves of at least $700 billion in yuan in total. The People's Bank of China (PBOC) must also loosen its peg to the US dollar and permit the free exchange of the yuan. The PBOC must be clear about its goals for the yuan going forward, and China's financial markets must become open. These are the prerequisites for the yuan to displace the US dollar as the primary medium of exchange in the economy. While this will be difficult, it may eventually result in economic stability for Zimbabwe. As a result of the strong economic ties between the two nations(Zimba- bwe and China), policymakers in Zimbabwe could start adopting the yuan as an alternative to the US currency. All the issues caused by the use of the dollar will be resolved by this action. The central bank must maintain its short-term reliance on the USD, add the yuan as a signifi- cant currency to the currency basket, and submit an application to join the Rand Monetary Union to achieve the best possible economic recov- ery.

small businesses, and employment opportunities, the informal sector remains prevalent in Zimbabwe. It is primarily motivated by extreme pover- ty and people's desire to be able to provide for their families. Poverty and high degrees of infor- malization are highly correlated. Extreme pover- ty in Zimbabwe has increased over the last three years, rising from 29% in 2018 to 34% in 2019, 49% in 2020, and 43% in 2021, according to Zimstat. This indicates that since January 2018, almost 2.2 million people in Zimbabwe have fallen into poverty. Although poverty is still mostly a rural phenomenon, it has developed substantially more quickly in urban areas, which has led to the urbanization of poverty. Harare, the country's informal activity hub, is one of the largest contributors to poverty statis- tics in Sub-Saharan Africa, a problem aggravated by the fact that most of the nations with high levels of poverty, including South Sudan, Soma- lia, Madagascar, and Burundi, are characterized by conflict, civil conflicts, or unrest. The informal sector frequently deals in unregis- tered goods and services and is unregulated, making it difficult to tax. As a result, it is esti- mated to be responsible for between 40 and 90 percent of Zimbabwe's economic activity. Com- panies listed on the Zimbabwe Stock Exchange are fighting an unjust war against the informal sector, which is stealing pricing power from Zimbabwe's household companies. In varying degrees, listed furniture and clothes companies, auto parts manufacturers, and food merchants have lost pricing power to the informal market, which relies heavily on low-cost imports and typically has lower trading expenses. Informal traders also typically have minimal to nonexis- tent running expenses such as rent. By some estimates, up to 75% of workers in Zimbabwe labour in the informal sector. The economic crisis that started in 2000 and left many people in poverty and without access to formal employment has played a role in this, to some extent. According to the Zimbabwe National Statistics Agency's (Zimstat) 2022 Labour Force Survey, 3.3 million Zimbabweans are employed locally, with almost 2.8 million of them relying on the informal sector for their livelihood as contrasted to 495 000 in formal employment. As a result of the informal sector's connections to the local and regional supply chains, a trading platform where millions of dol- lars are exchanged every day has been estab- lished. In 2018, the International Monetary Fund (IMF) conducted research that found that 60% of Zimbabwe's economy is informal second in the world only to Bolivia's 62.3%. In Zimbabwe, the formal and informal sectors have developed into two separate economies, with the former being prone to a complicated tax system and inconsistent monetary policies while the latter has little regard for either. The- World Bank estimates that Zimbabwe's economy contracted by 6.1% in 2019 and 6.2% in 2020 before expanding by 5.8% to US$19.2 billion in 2021. Small businesses are becoming more informal as a result of the recent economic uncertainty. Since the informal sector is mostly cash-based and fully dollarized, the dual econo- my makes it challenging for the government to control the economy through fiscal or monetary policy. In Zimbabwe, informalization is being sparked by a complex tax system, many tax heads to different government agencies, and regular renewals as entrepreneurs look for methods to reduce expenses. A local business must submit at least 51 payments to various tax heads, according to a 2019 assessment by the Zimba- bwe National Chamber of Commerce (ZNCC), in order to be deemed tax compliant. Limited automation (excessive paperwork), antiquated regulations, payment in many currencies, the requirement of travel to Harare or other cities to make tax contributions, and the involvement of numerous government entities all contribute to the complexity of local taxation. Because formal banking and digitization are less prevalent in rural areas, there is a higher level of informal- ization there. Over the last decade, there has also been an increase in the informalization of business opera- tions by players in the formal sector. Corporate entities are coming up with strategies to avoid paying taxes, offset the difference between the manipulated official exchange rates and the market rate, and avoid paying council levies by not banking cash proceeds, purchasing foreign currency on the black market, using parallel exchange rates in forward pricing, paying employees in hard currency, failing to file tax returns, externalizing cash, smuggling in raw materials, and fabricating imports and exports. In this regard, the tax registration process needs to be made simpler, and there is a pressing need to encourage fiscalisation by making the cost of fiscalisation deductible or by teaming up with commercial banks to spread out ZIMRA's fiscal- isation costs. This indicates that filing tax returns and making tax payments should be done quickly and conveniently online. The tax admin- istration must efficiently handle tax rebates and grant holidays when necessary for the few tax-compliant enterprises. Currently, the Zimbabwe Revenue Authority (Zimra) is intensifying its tax collection drive by implementing a block management system (BMS), a mechanism that groups potential taxpayers into geographical locations for easy management and tax collection. The national tax collector said the BMS entails zoning of taxpay- ers by geographical location and that will result in officials being assigned to manage the demar cated areas. The zones include city centres, flea markets, farms, industrial areas as well as infor- mal traders’ and rural business locations. By doing so, Zimra intends to build partnerships with all taxpayers who have been urged to coop- erate and support its officers in the implementa- tion of BMS. Zimbabwe's informal sector is a testament to the country's economic resiliency, but high levels of informalization are unsustainable for any nation because they reduce the Treasury's capacity to raise taxes, which results in inadequate public service delivery (dilapidated road infrastructure, power generation, healthcare, education, housing, water, and other amenities), as well as a reduced ability to pay back the country's debt) (increase in arrears). The informal sector is expanding, but even though it does not pay taxes, it must be allowed to use public services. High levels of informalization impede the econo- my's ability to borrow money and save money, as well as the expansion of the financial and insurance industries (decline in Banking sector lending and geographical presence). Additionally, informalization fosters and supports corruption and bribery. To guarantee sustainable economic growth, degrees of informalization must be man- aged to be below 40% of the GDP. Most transactions involving the exchange of agricultural commodities between farmers and merchants take place in cash, it has been noticed that developing countries with significant agri- cultural sectors also tend to have high levels of informalization. However, informality is also a source of vulnerability because millions of work- ers in the informal sector lack social and employment security, dependable income, health insurance, and savings, leading them to live pay- check to paycheck. These issues are all intimate- ly related to poverty. The informal sector in Zimbabwe has had a significant impact on the black-market activities and exchange rates of the Zimbabwe dollar since 2019. With the majority of the country's eco- nomic activity occurring in the informal sector, this has had a major influence on black market activities, such as the illegal foreign currency trade. This illegal trade has resulted in very high exchange rates for the Zimbabwe dollar and has caused a weak economy. The exchange rate for the Zimbabwe dollar is as high as 120:1 on the parallel market. Controlling the rogue exchange rate may there- fore be simpler if government efforts are focused on formalizing the informal sector. We have started the year with the parallel rate about double the interbank rate and inflation is antici- pated to exceed 300% in 2023, therefore the government must implement measures to reduce informalization in the country. hough the government has enacted formal economic policies to provide tax incen- tives for businesses, access to finance for To exacerbate informalization in 2023 T Poverty and a complex tax system 24 The AXiS LX Friday 27 Jan 2023

The AXiS LX Friday 27 Jan 2023 25 spike in oil prices), financial panics (like the one that preceded the Great Recession), rapid chang- es in economic expectations (the so-called "animal spirits"). Winter is coming this year for the third time in Zimbabwe after the 2019 national recession and 2020 global downturn The global economy may spill back into a reces- sion in 2023 as a result of tighter monetary policy and cutbacks on the government's COVID-19 stimulus spending. In the wake of COVID-19, governments moved in to cushion economies through stimulus spending as output and aggregate demand declined. Sustained stimu- lus meant higher leverage levels for most coun- tries and consequently the build-up to an infla- tionary outlook. Higher liquidity levels spontaneously inflated asset prices as evidenced by record equity market surges in 2021. The NYSE, LSE and JSE all reached record-high levels during the respective periods. The US pumped US$5.2 trillion in stimulus packages while the Federal Reserve cut the benchmark rate to encourage borrowing and also bought back its securities in a motion known as quantitative easing. Referencing the "Roaring Out of Recession" arti- cle by Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen, 17% of the public companies after the recession either go bankrupt, private or become subject to takeovers. However, 9% of the companies can flourish beyond the competi- tion line and outperform the industry of opera- tion if they strategically align their operations. A more recent analysis by Bain using data from the Great Recession of 2008 reinforced that finding. The top 10% of companies in Bain's analysis saw their earnings climb steadily throughout the period and continue to rise after- wards. A third study, by McKinsey, found simi- lar results. This article delivers an amicable panacea for the wholesalers and retailers in the Zimbabwean markets. This comes at a time when the import- ant sector players have been competitively deliv- ering unpleasing financial results. This has been the opportunity cost from the government play- ing restore legacy to the lost price stability. The road map for the wholesale and retail sector Firstly, businesses need to analyse their current situation and identify ways in which they can reduce their operating expenses. This could include cutting wages or reducing stock levels. The company that delivers lower expenses main tains a good revenue base which will sail the company through the economic downturn. Em- pirical evidence suggests that a company's expense management should extend beyond workforce retrenchment. Bain's research suggests focusing more on hour reductions, furloughs, and performance pay. Companies should also consider increasing their liquidity, by either increasing their savings or obtaining additional funding from external sourc- es. According to Rebecca Henderson, the rule when moving towards recession is to maintain enough liquidity to fund operations during the downturn. Funding options have to be explicitly not debt related. An example of recession prepa- ration was realised in the actions of Amazon during the early 2000 crisis. The bookseller sold $680 million in convertible which sustained and sailed the company through the dot-com bubble burst Additionally, companies should use this time to diversify their sources of revenue and consider new marketing strategies. Diversification is an important element of a company's financial strategy as it helps protect against the risk of higher inflation. By spreading investments across a variety of markets and asset classes, a compa- ny can reduce its exposure to a single market or asset class that could be affected by higher inflation. Diversification also gives companies access to different investment options that can be used to achieve the company's desired return. It is also important for Zimbabwean businesses to look for ways to reduce their overhead costs, such as electricity and labour. Additionally, it is important to focus on customer service as cus- tomer loyalty can help businesses survive a recession. Finally, businesses should also review their pricing and consider either lowering their prices or offering promotions and discounts to attract more customers. Shedding more light on Ok Zimbabwe opera- tions Ok, Zimbabwe has been racing to outstrip com- petition in the retail market despite the prevail- ing harsh economic environment for its opera- tions. This is on the back of its recent acquisition of the majority stake in Food Lover's Market, a popular Zimbabwean grocery chain, which is seen as a major step towards consoli- dating the retail sector in Zimbabwe and creat- ing economies of scale. This has been one step forward in preparing a striking a punch-back from the anticipated economic downturn. However, the company is still miles behind from winning the match as it needs to thoroughlylook into its labour relations, customer relations and its capital structure. The recently published 2023 half-year financials show a liquidity ratio of 1.14 which is close to the bench-marked ratio of 1:1. Looking forward into at least 6 months period of low sales volumes the group requires working towards expanding its cash base. Companies like Walmart, Apple, and Amazon have increased their liquidity ahead of the 2023 recession. These companies have increased their cash reserves and investments to minimize the financial risks associated with the recession. Recently, the online bookseller, Amazon is reported to have increased their spending on product development, recruiting, and buildinnew fulfilment centres. This strategy allowed them to capitalize on the resulting growth in the e-com- merce sector, which helped them remain success- ful during the economic downturn. Ok, Zimbabwe should also look into technologi- cal advancement, an expansion from the till operating system to self-service machines to minimise the opportunity cost than in a non-re- cession period. When the economy is in great shape, a company has every incentive to produce as much as it can; if it diverts resources to invest in new technologies, it may be leaving money on the table. A successful recession-prepared company was IBM in the 1980s. The technology-based compa- ny invested heavily in new technology, research and development, and employee incentives, anticipating a potential downturn. As a result, the company saw their profits more than double in the 1980s, while the industry as a whole struggled. In conclusion, Ok Zimbabwe should consider a variety of policies when preparing for the mac- roeconomic environment. These policies should be tailored to the company's individual needs, considering its objectives and resources. Strate- gies that the company could consider include diversifying its income sources, seeking new opportunities, budgeting to manage cash flow, improving organizational efficiency, and invest- ing in technology to strengthen its operations. Based on research, successful companies during recessions typically utilize a few common prac- tices and strategies. One of the most common policy strategies is to maintain a tight grip on liquidity management, this means having cash on hand and keeping debt levels low. Companies also often prioritize cash flow and cost-cutting. recession, defined as two consecutive quarters of negative economic growth, can be caused by economic shocks (such as a How the retail sector could sail through the economic downturn A Navigating the recession

The AXiS LX Friday 27 Jan 2023 26 *To Page 27 will be in the upcoming months, this combined with a potential recession in 2023 makes the oil pricing dynamics of interest. Inter- est rates worldwide increased in 2022. To combat the detrimental impacts of inflation, nearly all nations raised their interest rates. However, a few economies kept their primary benchmark interest rates constant, such as China (3.65%) and Japan (-0.1%). Russia attacked Ukraine, inflation spiked, and airline chaos ruled. Brent crude oil prices may possibly reach a turning point in 2023 as China reopens and supply progressively increases. We believe that oil will surpass natural gas and thermal coal when comparing the major energy sources, such as thermal coal and oil. We anticipate oil to continue to trade above $90. We anticipate that oil prices will rise to $100 and stay over $90 as 2023 goes on. Such an examination is necessary for two main reasons. First, the world's largest economy in terms of people, China, is reopening its market. This would probably cause the demand for oil to climb to its greatest level in a decade in 2023. This demand is anticipat- ed to be extremely high due to the growing demand from China as well as the recovery of demand from Covid-19 levels to pre-Covid levels. The measures of the European Union, which intends to impose new import restrictions of Russian oil, will also improve oil prices. This embargo was put into effect after the ceiling on Russian oil prices was established. Even as the Biden administration protests, Europe has also suggested lowering this threshold even further. As a result, the oil market is experiencing a period of extraordinary demand growth coupled with ongoing supply restrictions. Nigeria is increasing its production, which is good news for the supply side of the equation as Venezuela is slowly making a recovery. Nigeria's oil production is expected to increase once more in 2023 thanks to the announcement by Shell Petroleum Development Com- pany Limited (SPDC) that its 400,000 barrels per day (bpd) Forca- dos Oil Terminal would solidify its position after months of under- production and a significant drop in foreign exchange earnings from oil export due to crude theft and vandalism. The National Iranian Oil Company (NIOC) Chief Executive Officer (CEO) Mohsen Khojastemehr stated that the country is planning to increase its oil production capacity by 200,000 barrels per day (bpd) by March 2023.In Angola, The Angolan government expects an increase in crude oil production of around 32.8 thousand bar- rels/day in 2023, rising from 1.14 million in 2022 to 1.18 million barrels/day. PROJECTED FALLING PRICES The U.S. Energy Information Agency (EIA) forecast earlier this month that the average Brent crude oil price would decrease from 100.94 U.S. dollars per barrel in 2022 to 83.1 dollars in 2023 and 77.57 dollars in 2024.Already, Brent’s monthly average price fell by 34 percent from 122.71 dollars per barrel in June to 80.92 dol- lars per barrel in December last year. The market sentiment is believed to be caused by slower oil demand growth due to a weak global economic recovery, and rela- tively ample non-Organization of the Petroleum Exporting Coun- tries (OPEC) supply growth to replace potential Russian production loss, though OPEC and its allies, known as OPEC+, are trying to reverse the trend through its pricing power. SLOWER DEMAND GROWTH, LESS SUPPLY LOSS The ongoing weakening of the oil market is “definitely driven by the demand side this time. The EIA estimated that facing head- winds for global economic recovery, the global demand for liquid fuels may only grow by 1 percent from 99.43 million barrels per day (b/d) in 2022 to 100.48 million in 2023, and by 1.7 percent to 102.2 million in 2024. On the supply side, the EIA said that due to a production surge particularly in non-OPEC producers, the global liquid fuels supply would grow by 1.1 million b/d in 2023 and 1.7 million b/d in 2024, which is expected to compensate for an estimated 1.5 million b/d of Russian production decline due to sanctions. Meanwhile, the latest predictions of Russian production loss by both the EIA and OPEC are significantly lower than the initially EIA-estimated 3 million b/d, analysts noted.The EIA expected Rus- sia’s production of petroleum and other liquid fuels to decrease from 10.9 mil- lion b/d to 9.5 million in 2023 and 9.4 million in 2024 due to the sanc- tions.OPEC projected a much smaller decline of Russian annual oil production from 10.8 million b/d in 2021 to 10.2 million in 2024. Though Russia’s loss has been limited so far, experts noted that new sanctions may lead to a further decline this year.A price cap on Russian seaborne crude at 60 dollars per barrel agreed by the European Union, the Group of Seven nations and Australia came into effect last month. Russian crude has been trad- ing at a significant discount to Brent by as much as 30 dollars per barrel. OPEC REGAINS POWER In response to fast-changing market con ditions, OPEC+ countries, led by Saudi Arabia and Russia, in recent years have held frequent meetings to coordinate production adjustment.In April 2020, when the COVID-19 virus spread all over the world, OPEC+ decided to cut production of more than 7 million b/d, ushering in a 26-month Brent price hike from then 18.38 dollars per barrel to 122.71 dollars per barrel in June last year. Responding to the three-month Brent price falling since June last year, OPEC+ again decided in October-22 to reduce output by 2 million b/d, much to the disappointment of the Joe Biden administration struggling with high infla- tion when the 2022 U.S. midterm elec- tions were only one month away. OPEC oil production stood at 34.18 mil- lion b/d in 2022, making up about 34 percent of the global total, data from the EIA showed. In the long run, OPEC projected that its market share could be maintained at one-third up to 2030 and be increased to 39 percent by 2045. UNCERTAINTIES AHEAD Forecasting oil prices is very challenging since too many uncertainties lie ahead.Answers remain unknown as to whether there will be more harsh sanc- tions on Russia’s oil exports, whether infrastructure constraints and other bot- tlenecks will hold back the U.S. oil pro- duction surge, and whether Venezuela and Libya can meet their expectations in oil production hike. The year of 2023 is expected to be the beginning of a global commodity market rebound. nflexion points will occur in 2023 as the economy exits one of its most challenging phases in recent memory. As we I attempt to forecast how the prices of oil and fuel as a whole change in the typical weather patterns that have come to characterize local, regional, and global climates on Earth is referred to as climate change. The phrase is synonymous with a wide variety of observed outcomes that are a result of these changes. The failure to curb and adapt to climate change is "the most devastating" danger confronting communities worldwide, ahead of even weapons of mass destruction and water problems, according to the World Economic Forum's Global Risks Report 2021. With positive and negative ripple effects of climate change as global ecosystems are altered by climate change, it has an impact on every aspect of our lives, including the places we inhabit, the water we drink, and the air we breathe. And while everyone is impacted by climate change in some way, it is undeniable that some groups are disproportionately affected, including women, children, people of color, Indigenous communities, and the economically disadvantaged. Human rights are involved with climate. Climate change is having a profound impact on the Southern African Devel- opment Community (SADC). The region is one of the most vulnerable to the effects of climate change, with its population and environment already facing numerous challenges. As temperatures rise, droughts become more frequent and intense, and extreme weather events become more common, SADC coun- tries are increasingly feeling the effects of climate change. While the entire globe is coping with the difficulties brought on by the changing climate, Southern Africa is especially vulnerable to its effects. The Southern African Development Community (SADC) region is predicted to see greater land and ocean surface temperatures in the next decades than in the past, which will have an impact on the timing and severity of meteorological events as well as rainfall and winds. A variety of hazards to SADC's objectives for regional economic development are posed by climate change. Increased incidences of floods, cyclones, and droughts could harm infrastructure, obstruct livelihoods, ruin agricultural crops, and result in fatalities. he term "climate" refers to the seasonal, annual, or even decades aver- age temperature, humidity, and rainfall patterns over a long period of Ttime (often at least 30 years) in a region or globally. A long-term Oil Price outlook 2023 Brent crude What To Expect In SADC Climate Change:

The AXiS LX Friday 27 Jan 2023 27 been able to navigate the Zimbabwean economic landscape against the backdrop of a drought-induced recession, a de-dollarized environment, the Covid-19 era, and the current economic climate. Bridgefort Capital was formerly known as Medtech Distribution. The company's full-year financial results from 2019 to 2021 are listed below. For 2022, the business had officially changed its trading name from Medtech to Bridgefort, and the only financial information accessible for that period was 2022's audited half-year financials. Interestingly, despite operating in different economic environments during the course of the five years under review, the company consistently maintained a profit. Profit after taxes decreased by 16% throughout the dollarization process(2018-2019), from US$1.037 million in 2018 to US$868K in 2019. Despite this decline in profitability, the company's turnover increased from US$12.3 million to US$70.48 million in 2019, and its operating profit skyrocketed by 352%, indicating that it had lower fixed costs and a better gross margin, which meant that it was growing its sales more quickly than its costs and giving management more discretion in setting prices. A great indication of excellent management this is. The extract above, examines revenue, operating profit, and profit after tax following de-dollarisation (2020-current). The company still enjoyed a prosperous period despite the introduction of RTGS as the primary account *From Page 26 The SADC region is particularly vulnerable to climate change due to its geographic location. It is located in a semi-arid zone, where tem- peratures are already high and rainfall is scarce. This means that any changes in temperature or precipitation patterns can have a significant impact on the region’s environment and econo- my. In addition, many of the countries in the region are highly dependent on agriculture for their livelihoods, making them particularly vul- nerable to changes in weather patterns. Accord- ing to the 2021 Global Climate Risk Index, which looks at the real-world impacts of climate change over the last year and the last 20 years, five of the 10 countries most affected by climate change in 2019 were in Africa. Those five countries were Mozambique, Zimba- bwe, Malawi, South Sudan, and Niger. The impacts of climate change on SADC coun- tries are wide-ranging and far-reaching. One of the most immediate effects is an increase in extreme weather events such as floods, droughts, and heatwaves. These events can cause significant damage to infrastructure, crops, livestock, and human lives. In addition, they can lead to food insecurity as crops fail or live- stock die due to lack of water or extreme tem- peratures. This can have a devastating effect on communities that rely heavily on agriculture for their livelihoods. In addition to extreme weather events, climate change is also causing sea levels to rise around SADC countries. This has led to increased coastal erosion and flooding in some areas, threatening both human lives and property. Rising sea levels also threaten marine ecosys- tems by increasing salinity levels in coastal waters and reducing fish populations due to habitat loss. This has serious implications for fishing communities who rely heavily on these resources for their livelihoods. A few highlights noted over 2-years by Equity Axis indicate that several hundred thousand people were negative- ly impacted by the Tropical Storm Ana which hit areas of Madagascar, Mozambique, Malawi, and Zimbabwe in late January 2022. It also brought strong winds, torrential rainfall, destruc- tion, and damage. The Group also noted that another tropical cyclone, nicknamed Batsira, was formed in the Indian Ocean in 2022 and made landfall on the east coast of Madagascar after passing by Mauritius and Reunion. In the south-east of South Africa (KZN), severe flood- ing and landslides brought on by torrential rain- fall in April of 2022 resulted in the deaths of 448 people, the displacement of more than 40,000 people, and the total destruction of more than 12,000 homes. Roads, hospitals, and schools were among the infrastructures that were severely devastated. In Zimbabwe, cyclone Idai was not an isolated occurrence. The cyclone’s effects were amplified by a string of severe weather incidents that became more common. Before Cyclone Idai struck, Southern Africa had been in the grip of an El Nio drought that had been attributed to climate change. Resultantly, the ground became more vulnerable to flooding. Climate change is also causing an increase in temperatures across SADC countries which can have serious health implications for vulnerable populations such as children and elderly people who are more susceptible to heat-related illness- es such as heatstroke or dehydration. In addi- tion, higher temperatures can lead to an increase in air pollution which can exacerbate existing respiratory conditions such as asthma or bron- chitis among those living in urban areas with high levels of air pollution already present. Finally, climate change is having an impact on biodiversity across SADC countries with species being forced out of their natural habitats due to rising temperatures or changing precipitation patterns leading them into unfamiliar environ- ments where they may not be able survive. Climate change is one of the most pressing global issues of our time, and its effects are already being felt in many parts of the world. The Southern African Development Community (SADC) is no exception, as the region is partic ' ' Term of The Week Mining Royalty Understanding the term A royalty can be imposed as either a “net” or “gross” royalty. A net royalty allows for deductions of costs a company incurs to produce a marketable product whereas a gross royalty assesses the fee based on the total value of the minerals produced at a mine, without any deductions for costs. This growth in mining earnings coupled with increased royalty rates translates to more government revenue from mining royalties. Mining royalties promotes government reserves which cushions the economy in crises Miners in Zimbabwe are obligated to pay royalties to the State from the minerals they would have extracted. All issues regarding minerals in Zimbabwe are governed by the Mines and Minerals Act [Chapter 21:05] together with other ancillary legislation like the Reserve Bank of Zimbabwe Act [Chapter 22:15] together with the Finance Act. Through Statutory Instrument 189 of 2022, Royalties remitted to the Zimbabwe Revenue Authority in respect of gold and those minerals specified shall be paid on the basis of 50% in kind and 50% in monetary form. With regards the "in kind component", miners have to submit actual minerals they would have extracted continuing 50% of the Royalty pegged on them. The 50% monetary component would be paid up as follows; 40% in the Zimbabwean dollar (ZWL) currency and 10% in foreign currency. Prior to the promulgation of these regu- lations, royalties were paid only in monetary form. According to section 251 of the Mines and Minerals Act, miners are obliged to submit their royalty not later than the tenth day of each month. Any person who fails to pay their mining royalty to the Zimbabwe Revenue Authority shall be guilty of an offence and liable to payment of a fine and or imprisonment for a period not exceeding six months. A royalty is a fee that is imposed by local, state or federal governments on either the amount of minerals produced at a mine or the revenue or profit generated by the minerals sold from a mine. They are also defined as a charge that the government levies on the volume of minerals produced at a mine or the income or profit made from the sale of those minerals. These royalties are remitted to the Revenue Authority adding on to the state reserve . ularly vulnerable to the impacts of climate change. This article will explore how climate change is affecting SADC countries, and what steps are being taken to mitigate and adapt to these changes. In order to mitigate the effects of climate change in SADC countries, there needs to be a focus on adaptation strategies that can help communities cope with the changing environ- ment. One such strategy is improved water man- agement systems that can help reduce water shortages during periods of drought or flooding during periods of heavy rainfall. In addition, improved agricultural practices such as crop rotation and soil conservation can help farmers adapt to changing weather patterns and ensure food security for their communities. Another important adaptation strategy is improved disaster risk reduction measures that can help communities prepare for extreme weather events such as floods or droughts. This includes measures such as early warning sys- tems that can alert people when an event is likely to occur so they can take appropriate action to protect themselves and their property from harm. In addition, improved infrastructure such as dams or levees can help reduce the impacts of floods by providing protection from rising waters or diverting them away from vul- nerable areas. It is of vital importance to note that while climate change comes from natural course, human actions also hasten the process and con- tribute to the process. Therefore, monitoring human actions also means averting some devas- tating effects of climate change in SADC. In SADC, there are regional programs in existence to offer direction for coping with and reducing climate change. The member states are all part of the conventions intended on mitigating the impacts of climate change. These include a framework convention from the United Nations which promotes the reduction of emissions to lower global temperatures. The Ramsar Convention on Wetlands, on the other hand, also assists by focusing on the protection of globally significant wetlands, including a resolution on the impacts, adaptation, and miti- gation of climate change. The Convention on Biological Diversity, which has produced numer- ous rulings and technical reports outlining the connections between biodiversity and mitigating the effects of climate change, is also part of the measures implemented by the SADC board.

I n 2007/8, Zimbabwe experienced a record hyperinflation in modern economic history for a country in peacetime. The local unit was offi- cially dumped by authorities in 2009 after it was rejected by the market as economic agents started to favoured transacting in foreign currency dominated by the South African rand and the US dollar -the advent of dollarization reform (2009-2018). Although this reform relegated monetary policy arm of gov- ernment, it instantly cooled inflationary pressures to an extent that the nation experienced a period of deflation. After a decade, the government austerity measures and currency reforms which started in 2019 saw the re-branding of the ZWL, introduced through Statuto- ry Instrument 33 (SI33) of 2019. The local unit was codenamed ‘Real Transfer Gross Settlement’ (RTGS) dollar comprising of all bond notes and coins in circulation, mobile money, and bank balanc- es. On the first day of trading in the official inter- bank market early February, the RTGS dollar traded at ZWL/USD 2.50 before losing a staggering 62% of its value in only four (4) months to close June 2019 at ZWL/USD 6.60 (ZWL/USD 8.50 in alterna- tive markets). The continued excessive decline of the ZWL forced the promulgation of SI142 by Treasury on 24 June 2019 thus officially introducing the Zimbabwe dollar as sole legal tender for all domestic public and private transactions and settlements. It was however astonishing at the time that authorities could forge ahead with forced de-dollarization despite existence of a huge body of knowledge showing that success- ful de-dollarization only come when undertaken as a process not an overnight event. Also, the deterioration of the currency was largely emanating not from the use of forex but from excessive ZWL liquidity growth in the market. For instance, the Reserve Bank of Zimbabwe (RBZ) statistics show high powered money supply popular- ly known as reserve money (M0) burgeoning by a mouth-watering 170% between December 2018 (ZWL3.3 billion) and December 2019 (ZWL8.8 billion). High powered money holds the topmost position in monetary policymaking and since it is mostly currency in circulation with economic agents, it decides the level of liquidity and price level in the economy. As such, the management of high-powered money is thus very important to manage general price level. Consequently, ZWL depreciation heavily persisted with the unit losing an average of 63% in official market before the re-introduction of fixed exchange rate regime in March 2020. By June 2020, perpetual decline of the ZWL in alternative markets influenced authorities to ditch a fixed regime in favour of the Dutch Forex Auction System. In its formative months, the auction system managed to bring sanity particularly in the alternative markets with the ZWL gaining some ground in the third quarter of 2020 (Q3:20). Statistics show the ZWL reclaiming about 20% of lost value from an average of ZWL/USD 120 in July 2020 to ZWL/USD 100 in November 2020.The period also enjoyed a sustainable growth of money supply with reserve money growth registering a paltry 0.2% growth in Q3:20 relative 8.5% and 33% in Q2:20 and Q1:20 respectively. However, the stability was fragile as the nation returned to increased depreciation pressures in the Q4:20 partly in line with an unsustainable 47.4% jump in reserve money injected into the system. Fast forward to 2022, currency instability remained a challenge for Zimbabwe with ZWL losing about 84.1% of its value against the USD from ZWL/USD 108.67 in December 2021 to ZWL/USD 684.33 in December 2022. In response, price inflation spiked during the same period from 60.7% to 243.8% (annual terms). Granular analysis show that apart from the unsustainable monetary aggregates, price inflation in 2022 also emanated from poor 2021/22 cropping season and the ripple effects of the Russia-Ukraine war. A 2022 World Bank report show that at 353%, Zimbabwe had the highest food inflation globally. Also, the Bank estimated that about 40% of Zimbabweans were living in extreme poverty in 2022 as disposable incomes were decimated by ravaging inflation and income disparities magnified by a tattering curren- cy. After a brief moderation of ZWL decline in the parallel markets and inflation growth between July-October 2022, the trend reversed course start- ing in November 2022 likely because of elevated government spending associated with fourth quarter bonus payments and agriculture support as well as increased general demand. The local unit slid from ZWL/USD 800 in October to close December at ZWL/USD 900. In the same vein, monthly prices upscaled by 0.6 percentage points to close 2022 at 2.4% from 1.8% recorded in November. With so many risks to the 2023 economic outlook such as high corruption prevalence, general elections, unpredictable path of COVID-19 pandemic, and unending Russia-Ukraine war, it is likely that Zim- babwe will continue being trapped in vicious cycles of currency and price volatilities. From the foregoing, one can conclude that Zimba- bwe’s economic decay and entrenchment of citizens into poverty is largely emanating from poor economic management. This reasoning is informed by the fact that the country continues to experience increased forex generation. For instance, in 2022, Zimbabwe recorded its highest ever foreign currency receipts of US$11.6 billion dollars, up by 196% from the 2021 outturn of US$9.7 billion but ZWL plummeted in both mar- kets. Generally, forex generation is regarded as crucial in aiding currency management and build- ing of economic resilience. Therefore, to put the ZWL and prices on a stable path authorities should consider some of the following alternatives: Foster fiscal discipline: Unsustainable government spending leads to increased domestic borrowing which in turn crowds-out private sector investment and growth. All else constant, a flourishing private sector is key in employment creation, infrastructure development, output growth, and wealth creation. Also, monetization of unsustainable fiscal deficits, that is, government financing itself by issuing currency or non-interest bearing liabilities like Volatile Zimbabwe dollar: What is the missing link? bank reserves poses real risks. The risks include potentially high price inflation and encroachment on central-bank independence. RBZ independence: A number of empirical studies have established that the more independent (ability to make monetary policies which are not dictated by political considerations) a central bank is, the lower the inflation it allows without injuring growth and employment goals. Also, a target and operation- ally independent RBZ will have more credibility which is essential in reducing inflationary expecta- tions. Increase Official Use of ZWL: In recent months, the government has increasingly shown lack of trust in its currency as many public services have been dollarized. Yet, the government is the single largest consumer in the market. A policy shift requiring most local payments in ZWL will propel demand and use of the ZWL in the market as well as increase market confidence in the local currency. Agriculture sector: Generally, the Agric sector is the backbone of the Zimbabwean economy as it provides employment and income for 60-70% of the population and supplies about 60% of industrial raw materials. Also, food and beverages alone con- stitute about 30.1% of the all-items consumer basket. As such, the current financing model over relying on state support requires a complete revamp to ensure that citizens take farming as a business and reduce dependence on state. This will promote climate-smart agriculture. Domestic Resource Mobilization (DRM): Given her rich natural resource base, DRM will be one of the best ways of reducing Zimbabwe’s overdependence on borrowing and volatile aid. It also promote sustainable development as government fund its own development goals, finance gender-responsive public services, and reduce economic, social and gender inequalities.Economic and Structural Reforms: The government should swiftly implement these reforms to improve competition and market price discovery. The existing public institutions require reconfiguration in terms of the quality of personnel, operational procedures, and methodolo- gies. There is also a need to improve the quality of public taxation systems to encourage innovation and address the challenges of the poor population in the welfare state. More so, with reforms, fiscal authori- ties will be able to tighten public finance manage- ment systems to curb leakages from corruption and illicit transactions.Policy Consultations and Consis- tency: An inclusive multi-stakeholder engagement is crucial in reviving the broken social contract between government and citizens. This helps to avoid the ineffective top-down approach to policy making which injures policy ownership by other economic agents. Policy consistency is also key in boosting market confidence and building public trust in policymakers as they become assured that author- ities will not renege on their prior commitments. Zvikomborero Sibanda is an Economic Analyst for Zimbabwe Coalition on Debt and Development (ZIMCODD). He writes in his own capacity; his views do not represent those of the organization he works for. Email: [email protected]. Twitter: @bravon9 The AXiS LX Friday 27 Jan 2023 28 By Zvikomborero Sibanda

between 0.2% and 0.5% due to weakness in the economy and labour shortages, the report said. “There seems to be a view out there that Hunt suddenly has all this money to play with for tax cuts,” one government figure told the Times. “But that is not the view internally. The OBR figures suggest that the prospects for medium-term eco- nomic growth will actually be worse than they were in November.” Inflation is expected to fall during the summer, taking the pressure off the Bank of England to continue raising the cost of borrowing.-The Guardian Malaysia set to get first-ever Apple store as hiring push begins FApple Inc. has begun hiring employees for a retail push into Malaysia, preparing to bring its chain to the Asian nation for the first time. The company recently published job listings on its website for locations in Malaysia, seeking store managers, technical specialists and support staff, salespeople for businesses, and operations experts. The listings indicate that the positions will be for Apple’s own retail stores, not third-party reseller locations that have long operated in Malaysia. The move will bolster Apple’s presence in South- east Asia, where it already has stores in Thailand and Singapore.The company also recently started promoting job listings for its first location in India, which has been planned for several years. An Apple spokesman declined to comment. The job listings don’t indicate where in Malaysia the first store will be, but Apple is likely to start in Kuala Lumpur, the nation’s capital.-South China Morning Post Tesla reports earnings after the bell Wednes- day Electric vehicle maker Tesla plans to report fourth-quarter results after market close on Wednesday.Here’s what analysts were expecting as of Wednesday morning, according to Refinitiv: Earnings (adjusted): $1.13 per share Revenue: $24.16 billion In the year-ago quarter, Tesla reported revenue of $17.72 billion and adjusted earnings of $2.52 per share.Earlier this month, Tesla reported vehicle delivery and production numbers for the fourth quarter of 2022 that set a new record for the company, but fell shy of the company’s goals and analysts’ expectations, despite having cut prices on its cars in December to spur customers to take deliveries before the year’s end. Tesla reported 405,278 vehicle deliveries and pro- duction of 439,701 vehicles in the period ending December 31, 2022. Full year deliveries amounted to around 1.31 million, a record for Tesla, after the company started production at its new facto- ries in Austin, Texas, and Brandenburg, Germany. -CNBC Bank of Canada hikes rates, becomes first major central bank to signal pause The Bank of Canada on Wednesday hiked its key interest rate to 4.5%, the highest level in 15 years, and became the first major central bank fighting global inflation to say it would likely hold off on further increases for now. The 25-basis-point rise matched analysts' expecta- tions. The bank has lifted rates at a record pace of 425 basis points in 10 months to tame infla- tion, which peaked at 8.1% and slowed to 6.3% in December, still more than three times the 2% target. "We are turning the corner on inflation," Bank of Canada Governor Tiff Macklem told reporters. "We are still a long way from our target, but recent developments have reinforced our confi- dence that inflation is coming down." Canada's approach has until now matched that ofthe U.S. Federal Reserve, which ratcheted up its own target policy rate by 4.25 percentage points over the last year. The Fed is set to slow the pace of its hikes at a Jan. 31-Feb. 1 policy meet- ing and signal its battle against inflation is far from over. Royce Mendes, director and head of macro strate- gy at Desjardins, said Macklem and his team would keep rates on hold for at least the next few African Economies to Grow Faster than Global Projections in 2023-AfDB African Development Bank (AfDB) says the conti- nent’s economies are expected to grow faster than global projections this year.In its Africa’s Macro- economic Performance and Outlook report , AfDB said the continent’s GDP growth rate decelerated to 3.8 percent in 2022. It is expected to improve to four percent this year. The improvement, which will see the continent’s growth rate outpace global projections of 2.7 per- cent, “reflects continuing policy support in Africa and global efforts to mitigate the impact of exter- nal shocks and rising uncertainty,” the continental lender said. AfDB president Akinwumi Adesina said that this recovery and resilience of the continent’s econo- mies, however, come with “cautious optimism” as there are several headwinds still facing the globe’s emerging markets. “Global financial conditions have tightened and are projected to remain restrictive in the near term, compounded by increased volatility in global financial markets and persistent disruptions in global supply chains,” Dr Adesina said. According to the report, all the continent’s five regions remained resilient with a steady outlook for the medium-term, despite facing significant headwinds due to global socio-economic shocks. -Kenyan Wallstreet Uganda begins first oil drilling programme Britain’s financial watchdog has fined the UK sub- sidiary of Nigeria’s Guaranty Trust Bank 7.6 mil- lion pounds ($9.3m) for what it says are further failures in its anti-money-laundering systems and controls. “These weaknesses were repeatedly highlighted to GT Bank by internal and external sources, includ- ing the FCA, but despite this, GT Bank failed to take appropriate action to fix them,” the Financial Conduct Authority said in a statement on Tuesday. The watchdog said GT Bank has not disputed the findings and agreed to settle, making it eligible for a 30 per cent discount on the fine, down from the original 10.96 million pounds ($13.3m). “GT Bank’s conduct is particularly egregious as this is not the first time that the bank has faced enforcement action in relation to its AML con- trols,” the statement said. Gbenga Alade, managing director of GT Bank UK, said the bank takes its anti-money laundering obligations extremely seriously and noted the FCA’s findings with sincere regret, adding that the FCA found no instances of suspected money laun- dering. “We would like to assure all our stakeholders and the general public that necessary steps have been taken to address and resolve the identified gaps,” Alade said in a statement. In August 2013, the FCA fined it 525,000 pounds ($627,323) for run- ning afoul of the regulations.-Kenyan Wallstreet Drop in UK growth forecast limits chancel- lor’s budget wriggle room The government’s economic forecaster has cut its prediction for UK growth this year, limiting the Treasury’s spending firepower in the forthcoming budget, according to a report. In a move that will set the baseline for Treasury’s calculations before the budget in March, the Office for Budget Responsibility (OBR) is under- stood to have provided a preliminary outlook that shows a weaker rebound this year from a period of high inflation and falling living standards. Big budget giveaways look unlikely as Hunt forced to borrow more Read more According to a report in the Times, the OBR has told the chancellor he will have £9bn less income after a fall in tax receipts compared with a fore- cast made in November. OBR staff provide Jeremy Hunt with two indepen- dent assessments of the economy each year and how this will affect the government’s finances based on the Treasury’s spending plans. In a long- standing arrangement, the OBR gives an initial view to Treasury officials for them to begin the process of drafting budget proposals. In November, the OBR forecast that while the economy would shrink by 1.4% this year it would pick up next year, with GDP averaging about 2.6% over the rest of the forecast period. Howev- er, the OBR intends to reduce its forecasts by months. "As a result, we expect that this will be the final rate hike of this cycle, " he said.-Rueters Uganda launches first oil drilling pro- gramme, targets 2025 output Uganda on Tuesday launched its first oil drill- ing programme, its petroleum agency said, a key milestone as the country races to meet its target of first oil output in 2025.The Kingfisher field is part of a $10bn scheme to develop Uganda’s oil reserves under Lake Albert in the west of the country and build a vast pipeline to ship the crude to international markets via an Indian Ocean port in Tanzania. “The president [Yoweri Museveni] has officially commissioned the start of drilling campaign on the Kingfisher oilfield,” the Petroleum Authority of Uganda (PAU) said on Twitter, describing the development as a “milestone”. The East African nation discovered commercial reserves of petroleum nearly two decades ago in one of the world’s most biodiverse regions but production has been repeatedly delayed by a lack of infrastructure like a pipeline. The Kingfisher field, operated by the state-owned China National Offshore Oil Corporation (CNOOC), is expected to produce 40,000 bar- rels of oil per day at its peak, PAU said.-Aljazeera Croatian FSRU receives first LNG cargo from Mozambique State-owned terminal operator LNG Croatia has received the first LNG cargo from Mozambique since the launch of operations of the Krk FSRU-based facility in January 2021.LNG Cro- atia said in a short statement that the 2019-built 173,400-cbm, British Mentor, had arrived at the 140,000-cbm FSRU on January 23. The LNG terminal operator said that this is the 53rd LNG cargo in total and the first LNG cargo to arrive from Mozambique to the FSRU-based terminal.According to its AIS data provided by VesselsValue, the vessel owned by Kmarin and chartered by BP, loaded the cargo at Eni’s 3.4 mtpa Coral Sul FLNG located offshore Mozambique at the end of December. Eni shipped the first cargo from this FLNG in November, adding Mozambique to the LNG producing countries. BP takes all of the vol- umes produced at the FLNG as part of a long-term deal.Prior to arriving at the Krk FSRU-based facility, British Mentor was anchored offshore Piraeus in Greece, the data shows. European LNG demand spiked in the last 12 months as European countries look to boost energy security and replace Russian pipeline gas.Due to high demand, Croatia also decided to further increase the capacity of its FSRU-based LNG import terminal.-Club of Mozambique IMF Approves $105 Mn In Emergency Aid To Haiti The International Monetary Fund (IMF) on Monday approved emergency aid of $105 million for Haiti, which has long been mired in a humanitarian crisis that has been exacerbated by recent global inflation. The funds should enable the Caribbean country to "support those most affected by food price rises through feeding programs and cash and in-kind transfers to vulnerable households" said Antoinette Sayeh, the IMF deputy managing director, in a statement. The money was released through the IMF's "Food Shock Window," opened at the end of September for a period of one year.The mea- sure is used to provide rapid access to emer- gency funds to states facing food insecurity, particularly in the event of unexpected shocks in the import of grains or a sudden rise in prices. "With more than half the population already below the poverty line, Haiti faces a dire humanitarian crisis," said the IMF, noting that the Caribbean nation also faces a "health crisis" in the form of a cholera epidemic and "serious security problems," "Haiti is facing a dire humanitarian crisis and was hit hard by the economic spillovers from Russia’s invasion of Ukraine," said Sayeh. -AFP Business Around The World The AXiS LX Friday 27 Jan 2023 30

between 0.2% and 0.5% due to weakness in the economy and labour shortages, the report said. “There seems to be a view out there that Hunt suddenly has all this money to play with for tax cuts,” one government figure told the Times. “But that is not the view internally. The OBR figures suggest that the prospects for medium-term eco- nomic growth will actually be worse than they were in November.” Inflation is expected to fall during the summer, taking the pressure off the Bank of England to continue raising the cost of borrowing.-The Guardian Malaysia set to get first-ever Apple store as hiring push begins FApple Inc. has begun hiring employees for a retail push into Malaysia, preparing to bring its chain to the Asian nation for the first time. The company recently published job listings on its website for locations in Malaysia, seeking store managers, technical specialists and support staff, salespeople for businesses, and operations experts. The listings indicate that the positions will be for Apple’s own retail stores, not third-party reseller locations that have long operated in Malaysia. The move will bolster Apple’s presence in South- east Asia, where it already has stores in Thailand and Singapore.The company also recently started promoting job listings for its first location in India, which has been planned for several years. An Apple spokesman declined to comment. The job listings don’t indicate where in Malaysia the first store will be, but Apple is likely to start in Kuala Lumpur, the nation’s capital.-South China Morning Post Tesla reports earnings after the bell Wednes- day Electric vehicle maker Tesla plans to report fourth-quarter results after market close on Wednesday.Here’s what analysts were expecting as of Wednesday morning, according to Refinitiv: Earnings (adjusted): $1.13 per share Revenue: $24.16 billion In the year-ago quarter, Tesla reported revenue of $17.72 billion and adjusted earnings of $2.52 per share.Earlier this month, Tesla reported vehicle delivery and production numbers for the fourth quarter of 2022 that set a new record for the company, but fell shy of the company’s goals and analysts’ expectations, despite having cut prices on its cars in December to spur customers to take deliveries before the year’s end. Tesla reported 405,278 vehicle deliveries and pro- duction of 439,701 vehicles in the period ending December 31, 2022. Full year deliveries amounted to around 1.31 million, a record for Tesla, after the company started production at its new facto- ries in Austin, Texas, and Brandenburg, Germany. -CNBC Bank of Canada hikes rates, becomes first major central bank to signal pause The Bank of Canada on Wednesday hiked its key interest rate to 4.5%, the highest level in 15 years, and became the first major central bank fighting global inflation to say it would likely hold off on further increases for now. The 25-basis-point rise matched analysts' expecta- tions. The bank has lifted rates at a record pace of 425 basis points in 10 months to tame infla- tion, which peaked at 8.1% and slowed to 6.3% in December, still more than three times the 2% target. "We are turning the corner on inflation," Bank of Canada Governor Tiff Macklem told reporters. "We are still a long way from our target, but recent developments have reinforced our confi- dence that inflation is coming down." Canada's approach has until now matched that ofthe U.S. Federal Reserve, which ratcheted up its own target policy rate by 4.25 percentage points over the last year. The Fed is set to slow the pace of its hikes at a Jan. 31-Feb. 1 policy meet- ing and signal its battle against inflation is far from over. Royce Mendes, director and head of macro strate- gy at Desjardins, said Macklem and his team would keep rates on hold for at least the next few African Economies to Grow Faster than Global Projections in 2023-AfDB African Development Bank (AfDB) says the conti- nent’s economies are expected to grow faster than global projections this year.In its Africa’s Macro- economic Performance and Outlook report , AfDB said the continent’s GDP growth rate decelerated to 3.8 percent in 2022. It is expected to improve to four percent this year. The improvement, which will see the continent’s growth rate outpace global projections of 2.7 per- cent, “reflects continuing policy support in Africa and global efforts to mitigate the impact of exter- nal shocks and rising uncertainty,” the continental lender said. AfDB president Akinwumi Adesina said that this recovery and resilience of the continent’s econo- mies, however, come with “cautious optimism” as there are several headwinds still facing the globe’s emerging markets. “Global financial conditions have tightened and are projected to remain restrictive in the near term, compounded by increased volatility in global financial markets and persistent disruptions in global supply chains,” Dr Adesina said. According to the report, all the continent’s five regions remained resilient with a steady outlook for the medium-term, despite facing significant headwinds due to global socio-economic shocks. -Kenyan Wallstreet Uganda begins first oil drilling programme Britain’s financial watchdog has fined the UK sub- sidiary of Nigeria’s Guaranty Trust Bank 7.6 mil- lion pounds ($9.3m) for what it says are further failures in its anti-money-laundering systems and controls. “These weaknesses were repeatedly highlighted to GT Bank by internal and external sources, includ- ing the FCA, but despite this, GT Bank failed to take appropriate action to fix them,” the Financial Conduct Authority said in a statement on Tuesday. The watchdog said GT Bank has not disputed the findings and agreed to settle, making it eligible for a 30 per cent discount on the fine, down from the original 10.96 million pounds ($13.3m). “GT Bank’s conduct is particularly egregious as this is not the first time that the bank has faced enforcement action in relation to its AML con- trols,” the statement said. Gbenga Alade, managing director of GT Bank UK, said the bank takes its anti-money laundering obligations extremely seriously and noted the FCA’s findings with sincere regret, adding that the FCA found no instances of suspected money laun- dering. “We would like to assure all our stakeholders and the general public that necessary steps have been taken to address and resolve the identified gaps,” Alade said in a statement. In August 2013, the FCA fined it 525,000 pounds ($627,323) for run- ning afoul of the regulations.-Kenyan Wallstreet Drop in UK growth forecast limits chancel- lor’s budget wriggle room The government’s economic forecaster has cut its prediction for UK growth this year, limiting the Treasury’s spending firepower in the forthcoming budget, according to a report. In a move that will set the baseline for Treasury’s calculations before the budget in March, the Office for Budget Responsibility (OBR) is under- stood to have provided a preliminary outlook that shows a weaker rebound this year from a period of high inflation and falling living standards. Big budget giveaways look unlikely as Hunt forced to borrow more Read more According to a report in the Times, the OBR has told the chancellor he will have £9bn less income after a fall in tax receipts compared with a fore- cast made in November. OBR staff provide Jeremy Hunt with two indepen- dent assessments of the economy each year and how this will affect the government’s finances based on the Treasury’s spending plans. In a long- standing arrangement, the OBR gives an initial view to Treasury officials for them to begin the process of drafting budget proposals. In November, the OBR forecast that while the economy would shrink by 1.4% this year it would pick up next year, with GDP averaging about 2.6% over the rest of the forecast period. Howev- er, the OBR intends to reduce its forecasts by months. "As a result, we expect that this will be the final rate hike of this cycle, " he said.-Rueters Uganda launches first oil drilling pro- gramme, targets 2025 output Uganda on Tuesday launched its first oil drill- ing programme, its petroleum agency said, a key milestone as the country races to meet its target of first oil output in 2025.The Kingfisher field is part of a $10bn scheme to develop Uganda’s oil reserves under Lake Albert in the west of the country and build a vast pipeline to ship the crude to international markets via an Indian Ocean port in Tanzania. “The president [Yoweri Museveni] has officially commissioned the start of drilling campaign on the Kingfisher oilfield,” the Petroleum Authority of Uganda (PAU) said on Twitter, describing the development as a “milestone”. The East African nation discovered commercial reserves of petroleum nearly two decades ago in one of the world’s most biodiverse regions but production has been repeatedly delayed by a lack of infrastructure like a pipeline. The Kingfisher field, operated by the state-owned China National Offshore Oil Corporation (CNOOC), is expected to produce 40,000 bar- rels of oil per day at its peak, PAU said.-Aljazeera Croatian FSRU receives first LNG cargo from Mozambique State-owned terminal operator LNG Croatia has received the first LNG cargo from Mozambique since the launch of operations of the Krk FSRU-based facility in January 2021.LNG Cro- atia said in a short statement that the 2019-built 173,400-cbm, British Mentor, had arrived at the 140,000-cbm FSRU on January 23. The LNG terminal operator said that this is the 53rd LNG cargo in total and the first LNG cargo to arrive from Mozambique to the FSRU-based terminal.According to its AIS data provided by VesselsValue, the vessel owned by Kmarin and chartered by BP, loaded the cargo at Eni’s 3.4 mtpa Coral Sul FLNG located offshore Mozambique at the end of December. Eni shipped the first cargo from this FLNG in November, adding Mozambique to the LNG producing countries. BP takes all of the vol- umes produced at the FLNG as part of a long-term deal.Prior to arriving at the Krk FSRU-based facility, British Mentor was anchored offshore Piraeus in Greece, the data shows. European LNG demand spiked in the last 12 months as European countries look to boost energy security and replace Russian pipeline gas.Due to high demand, Croatia also decided to further increase the capacity of its FSRU-based LNG import terminal.-Club of Mozambique IMF Approves $105 Mn In Emergency Aid To Haiti The International Monetary Fund (IMF) on Monday approved emergency aid of $105 million for Haiti, which has long been mired in a humanitarian crisis that has been exacerbated by recent global inflation. The funds should enable the Caribbean country to "support those most affected by food price rises through feeding programs and cash and in-kind transfers to vulnerable households" said Antoinette Sayeh, the IMF deputy managing director, in a statement. The money was released through the IMF's "Food Shock Window," opened at the end of September for a period of one year.The mea- sure is used to provide rapid access to emer- gency funds to states facing food insecurity, particularly in the event of unexpected shocks in the import of grains or a sudden rise in prices. "With more than half the population already below the poverty line, Haiti faces a dire humanitarian crisis," said the IMF, noting that the Caribbean nation also faces a "health crisis" in the form of a cholera epidemic and "serious security problems," "Haiti is facing a dire humanitarian crisis and was hit hard by the economic spillovers from Russia’s invasion of Ukraine," said Sayeh. -AFP Business Around The World The AXiS LX Friday 27 Jan 2023 31

Markets watch U % on the latest RBZ-governed foreign currency auction market held on the 24th of January 2023. ZWL moved to 779.3101 from 732.0036 last week. That was the worst weekly performance since 2023 commenced and is further the worst since October 2022. Since the introduction of the Foreign Currency Auction Market, the Zimbabwe dollar has depre- ciated by 93% while since the introduction of the Zimbabwe dollar in 2019 as a legal currency, the Zimbabwe dollar has depreciated by 100% against the US dollar . The Zimbabwe dollar continues to lose ground against the American dollar despite aggressive and reactionary measures being employed by the Central Bank. On the Parallel Market (PMR) the rate continues in the region 1150-1250 against the US dollar making the convergence theory a misleading phe- nomenon. Meanwhile, US$13.9 million was allotted, down from US$14.5 last week. With elections heading close, continued fiscal indiscipline and a looming global recession, the Zimbabwe dollar is expected to continue losing ground while the demand for greenback shooting at unprecedented rates. Regional Markets Rand drops to 17.2 The Rand traded at 17.2 against the US dollar on the 26th of January 2023 holding close to the lowest in a month, amid heightened concerns over South Africa's power crisis. Power cuts have worsened during the second week of January after struggling state utility Eskom, responsible for generating more than 90% of the country's power, resolved to implement its worst-ever outages until further notice. On the monetary policy front, another slowdown in the US inflation rate reinforced expectations p from a 5% decline during the previous session against the United States dollar, the Zimbabwe dollar has tumbled by 6% that the Federal Reserve would ease the pace of rate hikes. Domestically, the South African Reserve Bank is forecast to maintain its hiking cycle, though at a slower pace, after raising interest rates by 350 basis points since November 2021. Naira appreciates against US dollar across markets The Naira appreciated by 0.1% on the formal market to 461.2 against the US dollar. Forex transactions valued at US$109.82 million were carried out during the session, US$2.22 million lower than the US$112.04 million recorded in the preceding session. Also, the Naira exchanged hands for N766 against the US dollar at the P2P market during the session, in contrast to the preceding day’s value of N770 indicating an improvement of N4. At the black market, the domestic currency appreciated against the American currency by N1 to trade at N748 compared with the previous day’s rate of N749. Meanwhile, at the interbank segment, the Nige- rian currency closed flat against the British Pound Sterling and the Euro yesterday at N567.21: £1 and N500.53: €1, respectively. Shilling worsens to 124.3 East African giant, Kenya saw its currency trading at 124.3, its worst performance against the United States dollar. Historically, the Kenyan Shilling reached an all-time high of 124.2. Meanwhile, the Stanbic Bank Kenya PMI increased to a three-month high of 51.6 in December of 2022 from 50.9 in November, as output expanded for the second month running, amid higher demand, favourable weather conditions and softer price pressures. New orders continued to rise, boosted by a rise in domestic demand. However, export growth disappointed, declining to a nine-month low. Employment increased at the fastest since March, with the backlogs of work decreasing for the second month in a row. At the same time purchasing activity rose for the fourth straight month, with the solid upturn leading to a further expansion of input stocks. On the cost side, input costs eased to a 12-month low, amid lower wage costs and stabi- lising energy prices. Output cost inflation slowed to the lowest since August. Business sentiment remained subdued amid concerns about the global economy. Kwacha hits 18.9 as power crisis wors- ens Amid subdued power supply, the Zambian Kwacha traded on the backfoot at 18.9, the worst performance since President Hakainde Hichilema took to power. Zambia is experiencing the worst power cuts due to reduced water levels at Kariba Power Station and the overhaul of other power plants to increase efficiency. Meanwhile, China has delayed Zambia’s debt restructuring plans with requests to have the country’s local-currency debt held by foreigners included in a deal that could set a global precedent, according to a senior US Treasury official. Pula settles at 12.7 against US$ Botswana currency, Pula traded at 12.7 against the US dollar on the 26th of January 2023. Meanwhile, Botswana’s annual inflation rate rose to 12.4% in December 2022, accelerating from 12.2% in the previous month, as prices increased for both food and non-alcoholic beverages (2.4% vs 2.3% in November) and transport (6.8% vs 6.6%). Meanwhile, costs remained steady for housing and utilities (0.9%) and miscellaneous goods and services (0.9%). On a monthly basis, consumer prices were up by 0.4%, rebounding from a 0.8% fall in November. ZWL tumbles by 6% on Auction Market The AXiS LX Friday 27 Jan 2023 32

ZSE WEEKLY COMMENTARY The ZSE reversed prior week's losses in the week under review owing to improved demand as investors anticipate real term returns amid a slow-down in inflation. The mainstream ZSE All Share Index surged by 2.25% in the week under review to close at a 7-month high of 22,111.38 points. Gains in the week under review were evenly spun across all the market's main indices as investor confidence improved across all sectors. The overall year-to-date nominal return scaled up to 13.43% which, however, translates to a decline of -3.5% in US$ terms as the local currency continues to depreciate at a widening margin. The ZSE is now the 5th worst performing bourse in Africa on a year-to-date basis in US$ terms. The VFEX, on the other hand, boasts of a 22% YTD growth, and has attracted more companies from ZSE as Axia, Innscor and SeedCo Limited are set to migrate to the bourse. GetBucks also announced its plans to completely delist from the stock market while ZBFH surrendered the operating license of its ZB Building Society after failing to meet the minimum regulatory threshold, both of which will significantly affect the financials’ sector on ZSE and respective EFT’s. On the US$ denominated bourse, VFEX, the All Share Index surged by 0.5%, but- tressed by BNC, NatFoods, Padenga and Simbisa which notched by 11.1%, 1.1%, 0.8% and 0.1% in that respective order. On the downside, SeedCo International slumped by a mild -0.1% in the week. An aggregate of US$70,052 exchanged hands in the week under review, down from US$75,448 recorded in the prior week due to liquidity constraints. Despite stringent measures by the government to curb the runaway inflation and exchange rate, the ZWL continues to lose its grip on both the formal and informal currency markets against the US$. The ZWL depreciated by -5.43% of its value in the week under review against the greenback to close at ZWL780.80 on the sole legal currency market (interbank). On the Reuters Auction market, the local unit depreciated by -6.1% against the US$ to settle at ZWL779.3101 at the close of the most recent currency auction trading week. The AXiS LX Friday 27 Jan 2023 33 ZSE ASI 21,624.47 21,665.00 21,835.43 21,861.40 21,817.48 22,111.38 2.25% ZSE TOP 10 13,349.26 13,385.60 13,495.76 13,464.31 13,440.98 13,673.25 2.43% MEDIUM CAP INDEX 43,623.29 43,608.44 43,911.33 44,359.31 44,241.80 44,418.55 1.82% ZSE TOP 15 14,851.04 14,868.59 15,032.59 15,011.56 15,007.45 15,212.95 2.44% ZWL INTERBANK 738.4115 746.6113 755.0467 764.5470 779.3101 780.7950 -5.43% SMALL CAP INDEX 469,419.34 470,857.53 474,100.21 477,354.34 474,841.81 474,633.98 1.11%

Copper (US$/t) In the period from Friday to today, the copper price has been slightly volatile. On Friday morning, the Copper futures market opened at an average price of around $9,324 per tonne. However, this price was quickly met with selling pressure caused by weak physical demand and uncertainty caused by the un- certainty in global crude oil prices. As such, on Friday, the Copper price fell to a low of around 9,330 per tonne, marking a decline of 0.06%. Further, on a year to date basis, Copper is down 4.02% Aluminium (US$/t) Aluminium prices have been on a roller- coaster over the last week, as initial optimism about a resurgent global economy was tempered by ongoing concerns about the ongoing risks of Covid-19. On Friday, 20 Jan, aluminium prices peaked at $2,611.00 a tonne on the London Metal Exchange, buoyed by the release of U.S. economic data that offered signs of recov- ery following the coronavirus pandemic’s shock to the economy. This marked a 1.09% increase from last Friday's price. Aluminium prices are down 6.06% since the start of the year. Nickel (US$/t) Nickel prices are up 42% since the start of the year. Nickel prices have been on the move recently, demonstrating marked volatility in the days leading up to Friday 27 Jan. After opening at $28,771 per tonne, nickel prices on the London Metal Exchange peaked at $29,427.00 today, a jump of almost 2.28%. This surge in the nickel price was attributed by analysts to ongoing optimism surrounding the global economic recovery, with the release of U.S. economic data providing an additiona Brent/Oil (US$/b) The Brent oil price has seen a broadly positive movement over the past six days. Last Friday, the price of Brent crude sat at $88.77 per barrel. Since then, it has steadily risen to reach today’s price of $88.96 per barrel, which equates to a 0.22% increase over the past six days. The cause of this rebound in oil prices can be attributed primarily to the steady increase in demand for oil. Weekly Commodity Pulse Gold (US$/oz) After a sluggish start on Friday, gold prices rose steadily throughout the week before ending with a slight downturn. The spot price of gold is currently at around 1,927.50 USD per ounce, with a marginal decline of 0.19% compared to the start of the Then week. Gold is up 5.25% year to date. Analysts are attributing the flat ending to lackluster demand, despite the sharp rally seen in the early days of the week. Platinum (US$/oz) The platinum price has had an interesting week as investors have been closely watch- ing prices over the past few days. The price of platinum started at $1,052 last Friday, but went up to $1,067 in the fol- lowing days, before falling to $1,019 today. This marked a 3.13% decrease from Fri- day’s price. This can be attributed to a decrease of buying interest in platinum, although the precious metal is considered to be a dependable asset. Platinum is up 5.48% year to date The AXiS LX Friday 27 Jan 2023 35 380.7 81.67 380.7 81.67 380.7 81.67 380.7 81.35 380.7 81.35 1,828.60 Daily % Change 20-Jan-23 1,928 23-Jan-23 1,929 24-Jan-23 1 ,935 25-Jan-23 1 ,925 26-Jan-23 1,930 27-Jan-23 1 ,925 WoW -0.19% YTD 5.25% 1,670 1,720 1,770 1,820 1,870 1,920 1,970 2,020 2,070 27-Nov-22 3-Dec-22 9-Dec-22 15-Dec-22 21-Dec-22 27-Dec-22 2-Jan-23 8-Jan-23 14-Jan-23 20-Jan-23 26-Jan-23 965.80 Daily % Change 20-Jan-23 1 ,052 23-Jan-23 1,056 24-Jan-23 1,067 25-Jan-23 1,046 26-Jan-23 1,023 27-Jan-23 1,019 WoW -3.13% YTD 5.48% 950 975 1,000 1,025 1,050 1,075 1,100 1,125 7-Dec-22 13-Dec-22 19-Dec-22 25-Dec-22 31-Dec-22 6-Jan-23 12-Jan-23 18-Jan-23 24-Jan-23 9,720.50 Daily % Change 20-Jan-23 9 ,324 23-Jan-23 9,356 24-Jan-23 9 ,315 25-Jan-23 9 ,315 26-Jan-23 9,330 27-Jan-23 9,330 WoW 0.06% YTD -4.02% 8,200 8,500 8,800 9,100 9,400 7-Dec-22 13-Dec-22 19-Dec-22 25-Dec-22 31-Dec-22 6-Jan-23 12-Jan-23 18-Jan-23 24-Jan-23 2,808 Daily % Change 20-Jan-23 2,611 23-Jan-23 2,637 24-Jan-23 2,651 25-Jan-23 2,659 26-Jan-23 2,639 27-Jan-23 2,639 WoW 1.09% YTD -6.00% 2,250 2,350 2,450 2,550 2,650 7-Dec-22 13-Dec-22 19-Dec-22 25-Dec-22 31-Dec-22 6-Jan-23 12-Jan-23 18-Jan-23 24-Jan-23 77.78 Daily % Change 20-Jan-23 88 23-Jan-23 88 24-Jan-23 86 25-Jan-23 86 26-Jan-23 87 27-Jan-23 88 WoW 0.22% YTD 12.91% 75.0 80.0 85.0 90.0 95.0 100.0 7-Dec-22 13-Dec-22 19-Dec-22 25-Dec-22 31-Dec-22 6-Jan-23 12-Jan-23 18-Jan-23 24-Jan-23 20,757 Daily % Change 20-Jan-23 28,771 23-Jan-23 28,110 24-Jan-23 28,782 25-Jan-23 29,182 26-Jan-23 29,427 27-Jan-23 29,427 WoW 2.28% YTD 41.77% 21,000 23,500 26,000 28,500 31,000 33,500 7-Dec-22 13-Dec-22 19-Dec-22 25-Dec-22 31-Dec-22 6-Jan-23 12-Jan-23 18-Jan-23 24-Jan-23

the start of the year. Nickel (US$/t) Nickel prices are up 42% since the start of the year. Nickel prices have been on the move recently, demonstrating marked volatility in the days leading up to Friday 27 Jan. After opening at $28,771 per tonne, nickel prices on the London Metal Exchange peaked at $29,427.00 today, a jump of almost 2.28%. This surge in the nickel price was attributed by analysts to ongoing optimism surrounding the global economic recovery, with the release of U.S. economic data providing an additiona Brent/Oil (US$/b) The Brent oil price has seen a broadly positive movement over the past six days. Last Friday, the price of Brent crude sat at $88.77 per barrel. Since then, it has steadily risen to reach today’s price of $88.96 per barrel, which equates to a 0.22% increase over the past six days. The cause of this rebound in oil prices can be attributed primarily to the steady increase in demand for oil. FINANCIAL MARKETS AT A GLANCE 2023 ZSE All Share Index ZSE Top 10 Index ZSE Small Cap Index Interbank Market Rate 7757.92 0.08% JSE All Share Index BSE All Share Index LuSE All Share Index NGSE All Share Index TOP 5 WEEKLY RISERS TOP 5 WEEKLY FALLERS AFDIS ARISTON BAT CFI DELTA DAIRIBORD HIPPO INNSCOR Bridgefort MEIKLES OK SEEDCO STAR AFRICA TSL Tanganda 26340 478.04 277960 43000 40301.89 4527.27 32205 72536.57 800 16010.73 3799.97 15000 190.49 5020.38 14517.5 26340 496.25 278990 43000 40208.15 4700 32205 64997.81 800 15000 3916.8 11845 220 5010.23 12828.57 Latest Price ZWL Cents Previous Week ZWL Cents African Sun AXIA EDGARS NTS RTG TRUWORTHS 2892.73 9836.55 950 1020 1201.17 243.25 3008.98 9801 960 1020 1200 243.25 Ecocash ECONET ZIMPAPERS 5098.1 13599.62 320.98 5500.04 13647.52 320 MASHHOLD FMP 808.16 1324.08 881.17 1300 ARTZDR LAFARGE PROPLASTICS TURNALL Willdale RioZim 1800 14375 4401.52 400 309 14010 1800 14375 3500 432 370 14010 First Capital Bank CBZ FBCH FIDELITY FML GBFS NMBZ ZBFH ZHL 1300 14500.63 6046.75 2400 2200 2000 4200 11295 685 1400.06 14013.51 6005 2400 2237.1 2180 4196.08 11289.41 680 Latest Price ZWL Cents Consumer Consumer Staples Previous Week ZWL Cents Latest Price ZWL Cents Materials Sector Previous Week ZWL Cents Latest Price ZWL Cents Financial Sector Previous Week ZWL Cents SEEDCO PROPLASTICS TANGANDA CAFCA INNSCOR 15000 4401.52 14517.5 23010 72536.57 3155.1 881.52 1917.46 3000 7539.5 DAIRIBORD ZIMPLOW STAR AFRICA Willdale GBFS 4527.27 2000.19 190.49 309 2000 -968.27 -324.81 -29.3 -41 -180 27% 25% 15% 15% 12% -18% -14% -13% -12% -8% COUNTER PRICE CENTS CHANGE Latest Price ZWL Cents ICT Sector Previous Week ZWL Cents Latest Price ZWL Cents Real Estate Sector Previous Week ZWL Cents 780.7950 -5.43% 474,633.98 1.11% 13,673.25 2.43% 22,111.38 2.25% 79725.46 0.28% COUNTER PRICE CENTS CHANGE % CHANGE % CHANGE 52599.65 -0.05% 7233.16 0.1% 22,111.38 13,673.25 ZSE Top 10 Index All Share index ZSE Top10 index WOW 2.4% MOM 58% YTD 11.1% 22,111.38 28481.18 ZSE Financials Sector All Share index ZSE Financials index WOW -0.2% MOM 10% YTD -0.7% 22,111.38 25699.54 ZSE Industrials Index (New) All Share index ZSE Industrials Index (new) WOW -0.3% MOM 27% YTD 20.7% 22,111.38 19171.49 ZSE Real Estate Index All Share index ZSE Real Estate Index WOW 6.9% MOM -21% YTD 8.1% 7757.92 22,111.38 BSE All Share Index BSE All Share index WOW 0.1% MOM 1.3% YTD 0.4% 7233.16 22,111.38 LUSE All Share Index LUSE All Share index WOW 0.1% MOM -1.4% YTD -1.4% 17.5% 49% Interbank Market Interbank All Share index 22,111.38 23754.25 ZSE ICT Index All Share index ZSE ICT Index WOW -2.9% MOM 60% YTD 35.6% 22,111.38 37827.24 ZSE Consumer Discre�onary Index All Share index ZSE Consumer Discretionary index WOW -0.01% MOM 36% YTD 6.6% 22,111.38 474,634 ZSE Small Cap Index All Share index Small Cap index WOW 1.1% MOM 4% YTD 5% 22,111.38 44,418.55 ZSE Medium Cap Index All Share index Medium Cap index WOW 1.8% MOM 33% YTD 21.2% 22,111.38 28622.09 ZSE Consumer Staples Index All Share index ZSE Consumers Staples index WOW 4.2 MOM 65% YTD 17.1% 22,111.38 15558.08 ZSE Materials Index All Share index ZSE Materials Index WOW 2.6% MOM 16% YTD 14.2% 79725.46 22,111.38 JSE All Share Index JSE All Share index WOW 0.3% MOM 7.1% YTD 9.1% 52599.65 22,111.38 NGSE All Share Index NGSE All Share index WOW -0.1% MOM 7.6% YTD 2.6%

Regional Political Watch Sinflation. The bank will, however, only replace the high-value currency notes last printed in 1991 before the Civil War in Somalia. The bank first released the new banknote designs in 2018 intending to print them the same year. The IMF has been also assisting the central bank with regulation and supervision of the financial sector to open it to new investors since 2018. It is also rebuilding capacity that has been hampered since the civil war began. The central bank intends to open new branches in the capitals of all federal member states by June, including Garowe, Baidoa, and Kismayo. ince the collapse of Somalia’s government in 1991, the regulator-maintained Treasury headquarters across the nation, where the sorting of tax revenues and banknotes took place. The branches will assist the central bank in collecting taxes, storing money, and serving as the federal states’ central fiscal agents. The branches will also be responsible for maintaining the value of the new money that will be printed by the central bank. Mozambique In 2022, Mozambique recorded the highest inflation since the illegal debt crisis, with “a price increase of around 10.28%”.The National Institute of Statistics (INE) revealed that “taking the 12-month average inflation as a reference, in 2022 the country recorded a price increase of around 10.2%. The Transport and Food and Non-Alcoholic Beverages sectors were the most prominent, increasing by around 16.83% and 12.89%, respectively”. The 10.28% figure is the highest average inflation recorded since 2017, at the height of Mozambique’s ‘hidden debt’ crisis, which triggered the suspension of International Monetary Fund (IMF) funding and culminated in the unsustainability of the country’s public debt and its suspension from foreign non-concessionary credit. Inflation that year reached 15.11%. Inflation for 2022 was almost double that forecast by the government, which had expected only 5.3%. The government forecasts that the cost of living will remain high in 2023, predicting inflation for the year of 11.5%. The INE, which in November changed its methodology for calculating the Consumer Price Index (CPI) by revising downwards the reference weights in use since 1989, made known that: “the data collected last December, in the cities of Maputo, Beira, Nampula, Quelimane, Tete, Chimoio, Xai-Xai and in Inhambane province, when compared with the previous month, indicate that the country recorded inflation of around 1.35%”. “The Food and Non-Alcoholic Beverages division was the highlight, contributing to the total monthly change with about 1.22 positive percentage points (pp). Analysing the monthly change by-product, it is worth highlighting the increase in the prices of tomatoes (10.0%), coconuts (14.7%), onions (13.0%), horse mackerel (2.9%), corn in grain (6.4%), live chicken (4.2%) and fresh fish (1.8%). These contributed to the total monthly change with around 0.89pp positive,” the INE details in CPI for December 2022. South Africa South Africa’s headline consumer inflation slowed to 7.2% year on year in December from 7.4% in November, in line with analysts’ forecasts, statistics agency data showed on Wednesday. Price pressures have been gradually easing in Africa’s most industrialised economy after inflation struck a 13-year high of 7.8% year on year in July. The South African Reserve Bank has raised interest rates to fight inflation at its last seven monetary policy meetings since its latest tightening cycle began in November 2021. The central bank, whose next rate-setting decision is due on Jan. 26, targets inflation of between 3% and 6%. On a month-on-month basis, consumer inflation was at 0.4% in December compared to 0.3% in November. Analysts polled by Reuters had expected it to stay at 0.3%. Core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, was at 4.9% year on year in December, from 5.0% the previous month. On a month-on-month basis core inflation was at 0.2% in December, compared to 0.1% in November. Ghana The Ghanaian cedi has been ranked the second weakest currency among the top 15 currencies in Sub-Saharan Africa. The Cedi also ended 2022 as the second weakest currency on the African continent with a year-to-date loss of 38.86% to the US dollar, according to Bloomberg. The Ghanaian Cedi has depreciated by 12.7%, making it the second weakest currency in the top 15 African currencies. The Governor of the Bank of Ghana, Dr Ernest Addison, at a Public Accounts Committee meeting stated that the pressure on the Ghanaian economy is the reason behind the depreciation of the cedi. According to myjoyonline.com report Dr Ernest Addison, however, expressed confidence that the government's policy of exchanging gold for oil will help reduce the demand for foreign currency in the economy and result in a stabilization of the cedi. Globally, the local currency placed 145th. The Sierra Leone Leone came 146th whilst the Argentina Peso and Sierra Lankan Rupee placed 147th and 148th respectively. They were classified as the currencies with the “Worst Spot Returns” by Bloomberg. INFLATION Ghana's consumer inflation rate surged to 54.1 percent in December, a record high, the Ghana Statistical Service (GSS) said. Samuel Kobina Annim, the government statistician at the GSS, who announced the increase at a press briefing, said the rise in the inflation rate was due to the increasing prices of food and non-food items during the month under review. “Food with a 43.1 percent share in the inflation basket increased by 59.7 percent in December from 55.3 percent in November," said Anim. He added that non-food items, with a 56.9 percent share of the inflation basket, recorded an inflation rate of 49.9 percent in December compared with 46.5 percent during the previous month. Meanwhile, inflation for locally produced items and imported items stood at 51.1 percent and 61.9 percent, respectively. Ghana has been confronted by soaring inflation and continuous currency depreciation since the beginning of last year, prompting the government to begin negotiations with the International Monetary Fund to seek a bail-out package of 3 billion U.S. dollars to support the ailing economy. Ethiopia Ethiopia's general inflation rate decreased to 33.8 percent in December, after reaching 35.1 percent in November 2022, the state Ethiopian Statistics Service (ESS) revealed Monday. In its monthly report, the ESS revealed the main factors behind last month's general inflation rate decline were decreases in food prices. In May 2022, Ethiopia recorded general inflation of 37.2 percent, one of the highest levels in recent years. Since then Ethiopia's general inflation rate has see-sawed, decreasing to 30.7 percent in September, but then climbing upwards to reach 35.1 percent in November last year. The ESS report mentioned in particular the decrease in prices of most cereal products as well as edible oil, meat, milk and eggs as part of the primary reasons for the general inflation decrease. The ESS report also revealed onions, garlic, tomatoes, cabbages, coffee beans and non-alcoholic beverages showed a slight price decrease in December. Ethiopia's food inflation in December stood at 32.9 percent, down from 34.2 percent the previous month. The ESS report further disclosed that Ethiopia's non-food inflation stood at 35.2 percent in December, a decrease from the November figure of 36.5 percent. Ethiopia's federal government as well as regional administrations have been implementing various efforts to control inflationary pressures with mixed results so far. Somalia The Central Bank of Somalia has announced plans to replace its bank notes, becoming the 3rd country to replace old bank notes after Kenya in 2019 and Nigeria in December 2022. The move is aimed at counterfeit bills, excess cash in circulation and The AXiS LX Friday 27 Jan 2023 37