The AXiS LXIII

NATFOODS SIMBISA BNCCALEDONIA SEEDCO PADENGA INNSCOR VFEX ZESA- a thorn in the nation's flesh Bracing for EV revolution Caledonia's alternative energy paying off What to consider for an investment plan ................................................................................... ................................................................................... ................................................................................... ................................................................................... ...................................................................................... #Issue: LXIII 

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 LXIII 18 Feb 2023 In Focus 17 19 21 23 7 8 9 12 13 14 15 5 Revisi�ng VFEX : Riding the short-term wave Capital Markets Markets Guest Column World News Economic News and Analysis 28 31 30 32 24 OK Zimbabwe : Performance remains subdued as retailer ba�les for lostground Auc�on market weekly review Nampak Zimbabwe Limited: power blackouts dampen performance Caledonia Mining : Investments in solar projects paying off Tanganda Tea Company : Drives up revenue figures despite bulky tea exports decline Hippo Valley Estates : Cane deliveries accelerated by improved yields Ariston Holdings Limited seeks greater export value : Quality over quan�ty is the name of the game in interna�onal markets Construc�on Industry : A diminishing phenomenon Amazon : Backtracks on Feb-2023 SA launch, as power cuts get worse Meikles Limited : paints upbeat outlook amid robust revenue figures Willdale : Sales Volumes suffocated by hawkish monetary policy 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 26 27 33 The Cover The Victoria Falls Stock Exchange is now in its third year of opera�on and there have been quite several interestng developments worth taking note of, over the period. At its 1-year mark, in an opinion piece, we concluded that the VFEX was showing all signs of failure, but hastened to note that the dura�on over which it has been opera�onal was insuf- ficient to draw a more informed conclusion. Caledonia Mining VFEX-listed mining oufit, Caldo- nia Mining Corpora�on’s latest investment in solar projects is paying off a�er the Company said it is producing more power than expected.The 12 MW solar project which was connected to the Blanket electrical grid in November 2022 is operatng be�er than expected and currently providing approxi- mately 27% of Blanket's average daily electricity demand. Brace for the EV wave The final approval is expected in March, but the European Parlia- ment has formally approved a law this week to effec�vely ban the sale of new ban the sale of new petrol and diesel cars in the European Union (EU) from 2035. The target is that by 2050, there won't be any petrol or diesel cars on the roads of the 27-country bloc. Inside Wealth In the latest monetary policy statement, the Reserve Bank- published that most transa�ons and payments are being se�led in US dollars as opposed to RTGS. Although the defacto regime is of a mul�-currency nature where both the US dollar and the Zimbabwean dollar (more commonly, the Real Time Gross Settlement, RTGS) are both legal tenders,the data suggests a strong and unquenchable demand for the greenback. Electric Vehicles : Brace for the EV wave Tobacco : favored on the roadmap to 2023 US$ billion 2023 revenue target: Economic spend : who is buying what, with which funds? Inside Wealth :What to consider when making an investment plan ZESA : A close look at the na�on’s electricity woes Russia-Ukraine War : Is South Africa ac�vely siding with Russia? Zimbabwe Economic Outlook: Here are the likely ups and downs of 2023 ZSE ASI 29,631.60 29,944.34 29,257.89 28,982.80 28,325.82 27,511.60 -7.15% ZSE TOP 10 18,844.57 19,085.82 18,446.25 18,199.89 17,567.80 16,922.02 -10.20% MEDIUM CAP INDEX 55,373.79 55,596.86 56,004.49 56,083.93 56,642.74 56,129.15 1.36% ZSE TOP 15 20,871.15 21,136.88 20,535.89 20,319.36 19,770.61 19,098.96 -8.49% ZWL INTERBANK 835.0978 838.8520 846.1039 850.0785 856.8403 860.7678 -2.98% SMALL CAP INDEX 511,401.70 518,724.23 518,723.45 518,737.11 518,742.25 541,277.99 5.84%

The AXiS LXIII 18 Feb 2023

5 The AXiS LXIII Friday 18 Feb 2023 Revisiting VFEX opments worth taking note of, over the period. At its 1-year mark, in an opinion piece, we concluded that the VFEX was showing all signs of failure, but hastened to note that the duration over which it has been operational was insuffi- cient to draw a more informed conclusion. At that respective time, the exchange had only managed to garner a single listing, which was SeedCo International. SeedCo International’s listing on the VFEX came along with the bourse’s opening and exactly 4 months after the trading of the company’s securities was sus- pended on the ZSE. The company together with other dual-listed companies, Old Mutual and PPC, were earlier suspended from trading on the ZSE after authorities had alleged that the currency crash was linked to trading in the respective shares among other causes. At the end of 1 year, indications were that the bourse was a near failure. ZSE Listing Timeline We revisit this subject, against a background of multiple companies showing interest and active- ly switching their listing from the ZSE, includ- ing some of the bigger names on the ZSE. While a similar number of listings were record- ed in 2022 as in the prior year, by the second half of 2022, more companies were showing firmer signs of contemplating a switch than in the prior year. In 2021, VFEX attracted 3 listings, which is the same as in 2022. However, a Natfoods listing materialised late in January 2023 and was first tabled in the second half of 2022. Several other companies are in the process of delisting orseeking shareholder approvals. These compa Given the expanse of mineral endowment, the proliferation of small-scale miners and the lack of long-term debt, the attraction of mining enti- ties was a natural guess. The current trend how- ever shows that little movement has emerged from that front. Only 3 out of the 8 VFEX listed entities are natural mining companies, 1 of which was prior to, listed on the ZSE. One of the 3 mining listings is a bond listing by Karo Mining, the first of its kind in Zimbabwe since 2015 when BNC raised US$20 million from the ZSE. Outside of Karo Mining’s bond, none of the companies listed on the VFEX came in through IP0s but rather through the introduction. Even for Karo, a bond listing is a bit different and cannot be compared to an equity IPO. A bond carries a promise of a preset interest on the amount committed which means it is safer and investors, in a volatile environment, may find it an easy pick. While the lack of IPOs mirrors the mere shift of companies from bourse A to B, where companies need not raise more money, it reflects an important dynamic which is perti- nent in the evaluation of the VFEX. The VFEX’s ability to raise capital on behalf of companies remains an unknown variable despite the promise of hard currency. This means a move of going for an IPO on the VFEX carries so much risk, such that compa- nies opting for the option, may attract poor valuations and suboptimal capital. The idea of when and where to list takes into consideration not only the prospects of the company but rather the environment under which capital is to be sourced and the appeal of the respective market. The appeal here is a reference to how liquid a market is and the depth of the respec- tive market’s liquidity. These are reflected in average turnover levels, investor profiles and recent IPO performances. The VFEX, measured by the levels of average trades as measured by turnover, is still highly- less liquid. By implication, this has the poten- tial of lowering valuations given weak demand, all else being equal. Yes, there are VFEX com- panies already showing some solid growth per- formance in real terms, but on average, the market has performed underwhelmingly in price-performance terms, given the low trades. Likewise, the aspect of investor profiles still reflects minor but gradually improving institu- tional participation. However, these institutions are all local and none foreign, which limits the extent to which the VFEX purse can stretch. Foreign portfolio flows have been dwindling over the years coming from a high of 65% in turnover contribution terms in 2014 to a measly 5% in 2022, that is according to the ZSE. This adverse trajectory may not shift in the very interim period where we expect foreigners to sit on the fence, reassessing the environment (poli- cy) and developments on the respective market (VFEX). Capping with the fact that the VFEX and its predecessor ZSE, has not seen any new listings (IPO) over the last decade, it would follow that the effectiveness of the market is not yet clear. nies include Innscor, whose shareholders approved the move from ZSE to VFEX, at an Extra Ordinary GeneralMeeting (EGM) held in Harare on Wednesday. Its spinoff, Axia, had already passed similar resolutions at an EGM held about 2 weeks back. Banking institutions FBCH and Getbucks are also plotting similar moves among others. The trek from ZSE to the VFEX will likely scale up, particularly in the current year. Does this invalidate our 1-year milestone view, that the Exchange was a near failure? As with all policy-related matters in Zimbabwe, the tide beneath shifts as fluidly as the day goes and policy shifts and adjustments are as sure to come as daylight. The VFEX in its primary sense had little to offer and inspire new listings. For a long, its primary allure was that of allowing companies to retain forex earned from incremental volumes above a set or known threshold. In a market where parallel market premiums are as huge, thereby undercutting profits from exports, the incentive on incremental exports was a tangible allure. Companies such as BNC and Padenga made their move premised on that very prom- ise. However, this incentive only sought to appeal to exporters, who in the very primary instance, were the only companies permitted to list on the bourse. In a more natural sense, there is always likely to be a higher number of non-ex- porting companies compared to exporting com- panies in any country. This means a boursehas little scope in terms of possihble companies to onboard. The natural picks would be mining companies, in need of huge capex outlays either for explorations, development or similar activi- ties. The Victoria Falls Stock Exchange is now in its third year of operation and there have been quite several interesting develRiding the short-term wave *To Page 6

At this point, we have yet to fully answer whether the 1-year milestone assessment was wrong. The assessment done at the respective time was based on the policies, rules and underlying economic factors at play as well as a fair degree of future projections. One fundamental shift noted since year 1, is that the VFEX has relaxed its rules to allow for companies which are not natural exporters to list on it. This means almost all the ZSE-listed companies now qualify for the VFEX listing. It is no longer a reserve for just exporting compa- nies. It is not clear why this rule has been changed but its export is that it fundamentally changes the expected number of companies to be listed. When the VFEX was established, the bourse said it was formed to raise capital for exporting companies, which would naturally earn forex from export sales and hence declare dividends in forex, compensating shareholders in the equivalent currency to which they would have invested. This made a lot of sense. Relaxing this rule, yes, increase the number of listings on the VFEX, but without much scrutiny, may result in a much bigger problem, when it comesto future dividends. At present, most companies would think it easy to project that future dividends will be covered in hard currency, given the evolving sales contributions between the USD and the ZWL. The portion of company earnings now due in forex compared to local currency is now higher at ratios of about 65:35. Assuming these levels are achieved by a good fraction of non-natu- ralised exporters listed on the VFEX, their short-term ability to pay dividends is non-ques- tionable but not their long term. The splits above can only hold as far as the USD remains a functional currency on the local market and its use is higher than the ZWL. With constant policy shifts, this is not guaran- teed and this means companies relying on local- ly earned forex to pay for dividends may face a challenge in future. Further economics around the payoffs between imports and exports given currency dynamics need to be fully appreciated. For example, a weak Zimdollar, makes export- ing cheaper, which means local companies (manufacturing) presently have a higher present value proposition in advancing exports, unlike in periods when the Zimdollar starts firming. In all cases, much of the efforts in diversifying into the region were borne out of the need to earn a stable value-preserving currency and to meet import needs. A change in the currency tide would possibly lead to the reduced attraction of foreign markets and the retention of hard currency as legal tender. Companies are however choosing low- erfees, potential future capital raise in forex and closure of the value gap (lower ZSE valuations attributed to weaker currency) as drivers to the VFEX. For investors, the primary driver for investing is value growth and not preservation, which is primarily sought through earnings and equity growth. This does not fundamentally change with the change in the respective bourse. Companies are becoming jittery due to huge share price losses suffered in the prior year and the view is most companies believe their ZSE share prices are way below their net asset value and further below the intrinsic value of their shares. The low liquidity levels which have the same effect of suppressing valuations, on the VFEX, may prove the moving companies other- wise even in the short term. VFEX is not the answer, it is the economy stupid. *From Page 5 6 The AXiS LXIII Friday 18 Feb 2023

Cumulative sales volumes for the 9 months period to December 2022 and the respective quarter to December 2022 eased by 9.37% CCumulative year to date (YTD) loss for the Zimdollar against the greenback, breached the 20% mark, after a 2.92% loss this week. and 11.33% respectively. The decline was attribut- ed to a dearth in consumer spending power. The outturn however compares less favourably to other industry peers such as TM Pick n Pay. Ok said it has been embarking on a volumes recovery plan which resulted in a 3% growth in December compared to the prior year. Despite some operational costs growth, OK said operating margins are in line with prior year. OK completed the acquisition of Food Lover’s Market franchise store. The company also opened its 1st in store pharmacy in Glen View and plans to roll out more branches during the last quarter of 2023. The terrain has generally been tough for OK. The company has been losing ground to competi- tion in conventional spaces. This is attributed to a lack of innovation in a market which is prone to intense downtrading against inflationary pressure. Going forward, the company will need to focus more technological innovations to capture savvy consumers and continue to work on products that satisfy the diaspora connection similar to the Kawena one of the past. Against players such as Pick n Pay, efficiencies in procurement route to market and sourcing of inputs will be critical. The YTD performance marks the unit’s worst performance since its reintroduction in 2019. The movement is largely indicative of a market in disequilibrium (mismatch between demand and supply of forex). A look at the data shows that the auction market is pacing up to the parallel rate post holidays, which is a typical sequential move. the parallel rate has been steadier since the resumption of auction trades but rose wild, breach- ing the 1000 mark, before the new year, a period over which the auction market was on break. The relationship between the 2, shows that the 2 mar- kets feed into each other. They both play a part in feeding forex supply onto the market. Essential- ly, this is an indication that the formal market has no capacity to satisfy demand by itself. Parallel Market Premium This is not so much of an unknown fact. What has been more important is tracking the variances between the 2 market. Data shows that the parallel market premium has hovered between 100% and 19% between 2022 and 2023 as shown in the chart on the lower left. Higher premiums are indicative of huge market disparities and a deep suppression of the formal market exchange rate. Sustainable premiums are those maintained below the 20% and the instance where this has happened over the last 12 months, was only very brief and less than 4 weeks in total. These levels are sustainable because they give less room to arbi- trage and rent seeking, which raises the costs in an economy. Further wider premiums are a disin- centive for exports as they widen losses on surren- der portions. This disincentive leads to production cuts and or losses to exporters. Lower and stable premiums can result in steadier depreciation of the currency, which the market can absorb through precise antic- ipations. With higher premiums, the auction market will always feel the pressure to ease at higher rates, resulting in higher volatility. The aim in a highly informal economy, should never be to eliminate the parallel market, but rather to ensure that there is a good degree of supply channeled through the formal market at least sufficient enough to cover the critical sectors of the economy. Readoption of dollarization also helps in rechanneling liquidity. Is real stability on the horizon ? The underlying assumption that there is a stability, which is a defective prognosis, has led to a wrong antidote. In-fact, authorities, in action have not shown that they are satisfied with the level of stability. Authorities are however caught in-between trying to defend a narrative and putting mettle to the narrative through substance. The challenge with substance is that it has real economic repercussions than just rhetoric. So, saying that the economy is now stable demands that policies which follow should mirror that trajectory. In the MPS, there was a decrease in the policy rate to 150% from 200%. The assumption is that inflation is going all the way down to those levels. Yet in 2022 it barely could drop to 200% levels. The RBZ says it’s a base effect, which should start to undo in the coming months, but the reality of the exchange rate is that the depreciation which is prevailing (fastest since 2019) will soon reflect through price adjustments. These price adjustments in ZWL are more fluid in a dual currency economy where agency seek to preserve value by benchmarking to the exchange rate. The interest rate for ZWL deposits should always be guided by ZWL inflation performance and the current performance supports sustained higher interest rates. The disparity between USD borrow- ing and ZWL borrowing and lending cannot be solved through lower interest rates in an inflation- ary environment. This has the potential to worsen the exchange rate through rent seeking and specu- lative borrowing. It is understandable that in an election year, interests are competing and there is an urge to lessen pressure on the populace through cheaper credit and higher economic activity, but the payoffs need to be kept in check to avoid a liquidity trap. We are not yet out of the woods and authorities should not only tighten but work in tandem with Treasury to increase economic activity by promot- ing investor friendly policies and good governance in the public sector. A better off fiscal outturn is imperative in the quest for achieving a stable exchange and inflation rate. The argument for lower interest rates seems to favour business, in terms of borrowings, but the payoffs in terms of exchange rate losses is higher and more conse- quential to sales over the mid to long term. These maneuvers should therefore be guided by a careful analysis of payoff and not sporadic and reactive adjustments which makes the environment volatile. 7 The AXiS LXIII Friday 18 Feb 2023 markets Auction Market Weekly Review 7 OK Zimbabwe Performance remains subdued as retailer battles for lost ground

Nampak Zimbabwe Limited power blackouts dampen performance 8 The AXiS LIX Friday 18 Feb 2023 This disincentive leads to production cuts and or losses to exporters. Lower and stable premiums can result in steadier depreciation of the currency, which the market can absorb through precise antic- ipations. With higher premiums, the auction market will always feel the pressure to ease at higher rates, resulting in higher volatility. The aim in a highly informal economy, should never be to eliminate the parallel market, but rather to ensure that there is a good degree of supply channeled through the formal market at least sufficient enough to cover the critical sectors of the economy. Readoption of dollarization also helps in rechanneling liquidity. Is real stability on the horizon ? The underlying assumption that there is a stability, which is a defective prognosis, has led to a wrong antidote. In-fact, authorities, in action have not shown that they are satisfied with the level of stability. Authorities are however caught in-between trying to defend a narrative and putting mettle to the narrative through substance. The challenge with substance is that it has real economic repercussions than just rhetoric. So, saying that the economy is now stable demands that policies which follow should mirror that trajectory. In the MPS, there was a decrease in the policy rate to 150% from 200%. The assumption is that inflation is going all the way down to those levels. Yet in 2022 it barely could drop to 200% levels. The RBZ says it’s a base effect, which should start to undo in the coming months, but the reality of the exchange rate is that the depreciation which is prevailing (fastest since 2019) will soon reflect through price adjustments. These price adjustments in ZWL are more fluid in a dual currency economy where agency seek to preserve value by benchmarking to the exchange rate. The interest rate for ZWL deposits should always be guided by ZWL inflation performance and the current performance supports sustained higher interest rates. The disparity between USD borrow- ing and ZWL borrowing and lending cannot be solved through lower interest rates in an inflation- ary environment. This has the potential to worsen the exchange rate through rent seeking and specu- lative borrowing. It is understandable that in an election year, interests are competing and there is an urge to lessen pressure on the populace through cheaper credit and higher economic activity, but the payoffs need to be kept in check to avoid a liquidity trap. We are not yet out of the woods and authorities should not only tighten but work in tandem with Treasury to increase economic activity by promot- ing investor friendly policies and good governance in the public sector. A better off fiscal outturn is imperative in the quest for achieving a stable exchange and inflation rate. The argument for lower interest rates seems to favour business, in terms of borrowings, but the payoffs in terms of exchange rate losses is higher and more conse- quential to sales over the mid to long term. These maneuvers should therefore be guided by a careful analysis of payoff and not sporadic and reactive adjustments which makes the environment volatile. Nampak Zimbabwe Limited Revenue hovers at 60% despite incurring record blackouts Caledonia Mining ΖQYHVWPHQWVLQVRODUSURMHFWVSD\LQJR΍ VFEX-listed mining outfit, Caledonia Mining Corporation’s latest investment in solar proj- ects is paying off after the Company said it is producing more power than expected. The 12 MW solar project which was connected to the Blanket electrical grid in November 2022 is operating better than expected and currently providing approximately 27% of Blanket's average daily electricity demand. The Company is expecting to hit a record gold production of 97 000 ounces in FY2023 bolstered by the acquisition of Bilboes for US$65.7 million, a deal capable of positioning it as Zimbabwe’s biggest gold producer. Ore production from the Bilboes oxides project is expected to start in mid-February with expectations to recover gold from the heap leach in March. However, against the latest solar project investment which is going to offset power challenges and reduce costs, the Company is set to even beat its FY production prospects. The pie-chat below shows the Compa- ny’s gold production guidance in 2023 in ounces In January 2023 alone, Blanket consumed 18,000 litres of diesel down from approximately 120,000 litres per month for the whole of last year. “Caledonia Mining Corporation Plc (“Caledonia” or the “Company”) is pleased to announce that its 12MWac solar project, which was connected to the Blanket electrical grid in November 2022, is oper- ating better than expected and is generating slight- ly more power than was anticipated; it currently provides approximately 27 per cent of Blanket's average daily electricity demand,” the Company said in a press release. “Whilst we can’t be certain that this quantum of improvement will be fully maintained as the year progresses, we are confident that we will continue to see an ongoing meaningful reduction to our diesel usage month on month, fully justifying our investment in solar power and delivering on our ESG strategy,” the Company added. In its latest FY’2022 report, Caledonia reported a record gold production both on the first quarterly *To Page 9 8 The AXiS LIX Friday 18 Feb 2023 ampak Zimbabwe Limited reported a 60% surge in its inflation adjusted revenue for Nthe 3 months period to December 2022. The surge in revenue, which in part was due to price adjustments, shouldered on a 3.3% increase in sales volumes. The company highlighted that the underwhelming increase in sales was due to production cuts in response to adverse electricity availability. The Company experienced a rolling 12-hour load-shedding at its unit Megapak and a worse off electricity outturn at CMB, a metals packag- ing subsidiary. The company said CMB had no electricity supply from the 18th of December 2022 to the end of December. The unit suffered a 1% decline in sales volumes. Unit performance The pie-chat below shows the Company’s unit performances On segment performance, volumes at Hunyani increased by 13.6% driven by improved tobacco case orders in the region and some carry-over of late-season orders from local tobacco merchants from the previous financial year. However, commercial sales declined by 4% due to continued challenges with paper supplies at SAPPI following a problematic start-up after their shut at the end of the last financial year Cartons, Labels and Sack divisions’ sales volumes plummeted by 15% due to the late arrival of paper and tobacco rolls and tea sacks and the delayed orders from flour millers. Megapak volumes went down by 10% due to recurrent power cuts which affected operations. At Carnaud Metalbox , the unit was only able to operate at 50% capacity producing only plastic products. Outlook On the outlook Hunyani projects that the environ- ment will remain tough, hurdled by usurious bor- rowing costs and power outages. Amidst the power challenges, Nampak adopted the use of generators to power its production lines, but these came short of adequate cover- age of plant operations as they are not designed to run continuously for 24 hrs. Zimbabwe’s power challenges which have been the order for over 2 decades worsened in the final quarter of 2022, after electricity produc- tion at the main source, Kariba Hydro, was grounded owing to lower water levels. Own electricity production is presently below 50% of demand. Other companies are investing in alternative energy to solve the power related challenges. Miner Caledonia has installed a 12MW solar plant which is supplying 27% of its power demand at Blanket Mine . The pie chart below shows the Compa- ny’s gold production guidance in 2023 in ounces The chart below shows the Company’s unit performances

9 The AXiS LXIII Friday 18 Feb 2023 Hippo Valley Estates Cane deliveries accelerated by improved yields Hippo Valley Estates, a ZSE-listed sugar producer, reported better cane deliveries from the Company's plantations (mill- er-cum-planter), with a 13% rise in comparison to the same period in the previous year. According to the trading update for the third quarter that ended on December 31, 2022, this was the case. This growth was primarily caused by a 6% rise in yields to 97.98 tonnes of cane per hectare, which came about as a result of better aerial spraying to manage yellow sugarcane aphid infestations and a larger area of cane harvested than the previous year. Due to the 234 hectares of cane that were carried over to the 2023–2024 season, private farmer cane supplies were 2% lower than the previous year. T Tanganda Tea Company anganda tea recorded a 48% uptick in inflation adjusted revenue in the wake of a 13% increase in local packed tea sales sales and a 37% growth in regional exports. The revenue growth was undercut by a decline in bulk tea exports and an economic slowdown coupled with currency volatility, erratic power supplies, and reduced agricultural output due to erratic rainfall spells courtesy of climate change. the overall surge in revenue performance could largely be a function of price increases on the domestic market, due to inflation To counteract erratic rainfall and power sup- plies, the company relied heavily on the irriga- tion systems and solar plants installed at 3 of the 5 estates. This likely gives Tanganda a com- petitive advantage against its main rival, Ariston Holdings. During the period from October to December 2022, the nation experienced erratic power sup- plies for up to 19 hours a day, curtailing busi- ness operations. The power situation in Zimba- bwe remains clouded by the failure of the com- missioning of Hwange’s Unit 7 on the 31st of January 2023; hence, the need for company to rely more on alternative power sources to increase production. The operational environ- ment has also been drowning owing to the adverse impact of the pass-through effect of global inflation as well as the country’s world-record inflation and exchange rate levels. Tanganda Tea operates 5 estates in Chipinge, which include Zona, Jersey, New Year’s Gift, Tingamira, and Ratolshoek, which is situated next to Ariston Holdings’ Clear Water and Southdown estates. The 6 estates are inter- cropped with tea, coffee, avocados, and macada- mia nuts on a collective 3000 hectares of land. The bulk of the crop is exported overseas, thus earning Zimbabwe much-needed forex. Despite revenue growth, bulky tea exports fell by 33% against the same period in the prior year, narrowing the total export value by a higher magnitude for the quarter. The company Exports dampen volumes performance *From Page 8 for FY2023 and for the full year ended 31 December 2022. The group posted a record annual g old production of 80,775 ounces for the full year ended 31 December 2022 from 67,476 koz ounces produced 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. Capital expenditure at Blanket in 2023 is projected at US$9.6 million in respect of a new tailings facility (reflecting tightened regulatory 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 prepara- tion of a revised feasibility study for the larger sulphide project at Bilboes with the cost of the projected capital expenditure for the Group expected to be met from operating cashflows and in-country borrowings. *To Page 11 argued this decline with the concentrated pro- duction in Dec. However, this decrease might be due to a decrease in demand for bulky tea prod- ucts in the markets the company serves, proba- bly on account of summer and the festive season, which demanded alternatives. On a positive note, the production of macadamia nut 325 tones helped to offset the decline in bulky tea sales. The aggregate amount of Maca- damia was exported, and this cushioned the rev- enue figures. The concentrated production of 52% in December did harm the exportation chain, thus the recorded decline did not reflect the actual performance. Tea accounts for the larger share of revenue earned from agriculture operations. In recent years, Meikles' spinoff undertook to invest in increased macadamia and avocado crops, which boosted the export revenue figures and brought the yield to 4,268 metric tons, selling at US 44 cents per kilogram in the international market. The agriculture group made packed tea sales volumes of 13% more than the sales of the same period in the prior year. This was exacer- bated by a regional tea consumption increase of 37% in the quarter compared to the same period in the comparison period. The bulky tea vol- umes, however, marginally decreased the total export revenue owing to an unevenly distributed production period concentrated in December. The company however have a slowing down the brand, the bulky tea export volumes. This brand has also narrowed its income value for the half year 2022, a period after the company unbun- dled itself from the Meikles group, after which the management creatively recovered and con- verted the declines into increases following the HY’22 results. The recovery of the narrowing bulky tea export volumes, however, was restored through the innovative introduction of Makoni, Resurrection, and Rosella herbal infusions onto the market in response to customer preferences, which saw the company record a 57 percent growth from 218 metric tons in the prior year to 343 metric tons for that period.

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*from Page 9 The volume of sugar generated by the milling operations decreased somewhat despite an increase in cane supplies overall. This was due to lower cane quality brought on by extended wetness brought on by rains that were received at the beginning of the season and hurt cane quality. As a result of the significant rainfall that occurred in December 2022, the wet weather also had an impact on the quality of the cane that was harvested. Rainfall makes it difficult to harvest cane and transport burned cane to mills, causing the cane to sit in the fields for longer periods and lose sugar content. Internal Issues and the Current Operational Climate One of the company's two production lines experienced a failure in November 2022, neces- sitating the early closure of the affected line for the remainder of the season. In preparation for the next season, repairs are now being made to cut down on the lost production time. The mill- ing season was prolonged to December 29, 2022, to account for the decreased production capacity and crush the remaining cane. The Triangle sugar mill also required the diver- sion of 27,001 tonnes of cane for crushing. The third quarter which is under review was never- theless hampered by persistent macro-economic volatility, which was characterized by unstable prices and exchange rates. The third quarter also saw a rise in the percent- age of foreign currency transactions in the nation and a restriction on the supply of the Zimbabwe dollar. In the hyperinflationary envi- ronment, the Company still faces a complex environment forcing it to adopt asset preserva- tion initiatives. Market Performance Within Zimbabwe's sugar sector, brown sugar is marketed by Zimbabwe Sugar Sales (Private) Limited (ZSS). For the nine months ending on December 31, 2022, the Company's share of the industry's total sugar sales volume of 397 055 tonnes (2021: 317 155 tonnes) was 52.26% (2021: 53.59%). For the same period, industry sugar sales into the domestic market totalled 278 106 tonnes (2021: 285 548 tonnes), which was 3% less than the same period the previous year. The reduction was caused by more import competition for sugar after the government lifted import duties on 16 basic goods, including sugar, in SI98. Sustainability measures Concerning National Tree Planting Day, the Company assisted in the planting of 3180 trees on the Hippo Valey Estate and 5917 trees in the nearby neighbourhoods to ensure sustainability aim to plant as many trees during the current season to equal the total number of employees at Hippo Valley Estates Limited and Triangle Limited by March 2023, or 16 000 trees.in the management and use of our natural resources. The Company and Triangle Limited aim to plant as many trees during the current season to equal the total number of employees at Hippo Valley Estates Limited and Triangle Limited by March 2023, or 16 000 trees. Looking ahead The industry's security of irrigation water will be further strengthened by the normal and above-normal rainfall predicted by the most recent national and regional weather forecasts. The Company expects to produce slightly more sugar than it did this season during the forth- coming 2023–2024 season. Due to sugarcane's lengthy cropping cycle, the effects of present cane growth and product development measures will become apparent in upcoming growing seasons. The current market- ing emphasis is still on maximizing returns, spe- cifically by giving local market demands top priority and allocating leftover stocks to premi- um regional and worldwide markets to create more foreign currency. Therefore, it is anticipated that there will con- tinue to be a local demand for foreign currency, which will help with the acquisition of imports of some specialized goods and services. Both local and foreign currency funding facilities with reliable financial institutions will be used to offset any potential impact of liquidity and cur- rency distortions on the Company's working capital. To prevent any more accidents or fatalities, the Company is still dedicated to adhering to safety regulations in the workplace. Work on environ- mental stewardship, the adoption of sustainable practices, and educating important stakeholders about the issue will go on. The continuing performance of the company depends critically on maintaining the focus on governance, control management, and significant risks. 11 The AXiS LXIII Friday 18 Feb 2023 ' ' Term of The Week Capital Markets Understanding the term The capital market is a market for long-term capital, as it brings together investors with excess funds and companies in search of long-term capital. Investment returns come in the form of dividends as and when they are paid by the companies. The returns are also in the form of capital gains or losses when the share price of a company goes up or down, respectively. The market is critical for fueling the productive sectors of the economy. The Zimbabwe capital market is subject to oversight by the Securities and Exchange Commission (SECZ), which is the apex regulator of the market. The Commission’s main objective is to protect investors as they trade in listed securities. The market is constituted by two registered exchanges: the Zimbabwe Stock Exchange (ZSE) and the Financial Securities Exchange (FINSEC). Zimbabwe Stock Exchange (ZSE): The Zimbabwe Stock Exchange (ZSE) is the backbone of Zimbabwe’s capital market with four indices that are * 1. All Share index- comprising average value of share prices of all companies on the market and better measures the performance of the same market as a whole. The ZSE All-Share Index tracks the performance of all companies listed on the ZSE. 2. Top Ten Index, comprising the 10 largest companies ranked by investable market capitalization as of the date of review the index measures the performance of the top ten listed heavyweight counters. It represents 65–80% of the full market value. 3. mining index, consisting of mining companies . 4. industrial index, consisting of companies other than mining companies. Financial Securi�es Exchange - came as the first Alternative Trading Platform (ATP) following the gazetting of policies by SECZIM in 2016. It utilises electronic trading to accommodate financial inclusion of a wide variety of securities and enhances financial inclusion. Capital markets are financial markets that bring buyers and sellers together to trade stocks, bonds, currencies, and other financial assets. They include the stock market and the bond market, which provide investment opportunities for people with entrepreneurial and saving ideas.

Quality over quantity is the name of the game in international markets 12 The AXiS LXIII Friday 18 Feb 2023 ZSE-listed agriculture company, Ariston Holdings Limited, has seen mixed per- formance across its business units. Its main product categories are tea and macadamia nuts. The third business unit can be seen as a grouping together of the rest of the company’s product offerings which, as stated in Ariston’s annual report, serves to diversify the business and hedge against the adverse impacts that occur in the main categories. Although it may be the intention of manage- ment to use this third category to hedge against downside risks, it may be that other categories are better suited in the current economic envi- ronment to protect company value. With that in mind, this article analyses the company’s full-year report that ended September 2022 and aims to access the comparative resilience of the three categories in light of the ensuing global slowdown. Ariston Holding Limited has six business units in the northern and eastern regions of Zimba- bwe. Southdown Estates consists of three tea estates with over 1 200 hectares allocated to tea plants, almost 60 hectares to bananas, and over 450 hectares to macadamia trees. Claremont Estate concentrates on growing pome and stone fruit, passion fruit, and potatoes; while Kent Estate focuses on horticultural crops, poultry, and livestock. The geographic spread of the business units means that they are affected by rainfall patterns differently. This is a strategic feat given that the erratic rainfall patterns that plague Zimbabwe can be better managed with one business unit not nec- essarily being affected by the same weather con- ditions as the other. In other words when rain- fall is scarce in the northern regions, for exam- ple, then it is possible that the eastern regions would still be experiencing rain. Consider potato farming which saw rainfall delays in the December period, consequently resulting in production and revenue shortfalls- when compared to the same period a year prior. In that period revenue had to be supplemented from other product categories, such as tea, which were geographically placed in areas with better weather conditions until the spell ended in January 2023. The unpredictability of Zimbabwean weather patterns makes the geographic positioning of the company’s business units a strategy for econom- ic resilience. The timing of production is an additional strate- gic feat. The choice of goods produced is key to ensuring all year-round revenues. Considering that the production of macadamia nuts is expect- ed to pick up in March, as stated in the compa- ny’s 2023 trading report, the product mix must be such that in the preceding months the other product categories are earning enough to main- tain overall profitability. The importance of having supportive product categories is also true during recessionary periods whereby individual product categories that face steeper slumps must be supported by product categories with relative- ly more resilient demand. Theoretically, the split between deciduous and staple crops (for example, bananas and potatoes, respectively) is an example of such a strategy. This logic follows other economic shocks such as inflation, where although general prices increase and the public tightens their purses, certain product categories that are relatively more price elastic will be affected worse than those which are price inelastic (for example, potatoes). Ultimately, not all product categories are affected alike. Because economic shocks impact one category more so than another, it is strategic to have a product mix with inverse responses to economic stimuli. A mix in terms of products produced for domestic consumption and products produced for the export market is an additional strategy to hedge against economic shocks. When domestic fundamentals are unfavourable, compa- nies which enjoy access to export markets may be able to provide comparatively better returns. Consider the current domestic economic envi- ronment where the inflation rate is soaring above 200%, meaning that demand is being constrained as the public’s purchasing power is undermined and weakened. Moreover, the cur- rency the formal sector receives compensation in is the local currency (namely ZWL$), which has been continuously depreciating since it was introduced in 2019 and thereby further weaken- ing the public purchasing power. Likewise, demand is further curtailed by the record-high domestic interest rates which con- tract the growth of the economy through the tightening of business spending. The cumulative result is weakened demand in the domestic market. A company’s ability to trade in interna- tional markets where demand may be relatively stronger allows the company to be resilient against a domestic slowdown/recession. Furthermore, with the currency shortages in Zimbabwe and with a significant proportion of costs such as fertilizers and fuel being predominantly purchased in foreign currency, it is beneficial for a company to export and receive foreign currency directly from abroad. This will ensure adequate foreign currency to finance operations without relying on the Reserve Bank Auction Market funds. A major export product in Ariston’s product mix is macadamia nuts. This has however been the worst-performing category among the above-men- tioned. The overall market for macadamia nuts has in the recent past seen low prices, which are expected to recover in 2024 according to the company CEO. The selling prices for macadamia nuts declined due to an increase in volumes available for nut cracking. Owing to lockdowns in China, the Chinese market remained largely unavailable to the rest of the world resulting in an oversupply for the nut cracking market with a decline in average selling prices. Unfortunately, due to the effects described above on the macadamia market size and demand, the average selling price declined by 21% when compared to the prior comparative average price. The weak performance of the macadamia market resulted in a contraction in company revenue of 12% to ZWL 4.1 billion. Moreover, the period in question saw lower macadamia nut yields. Macadamia production volumes declined by 14% when compared to the prior comparative period from 1,292 tons to 1,106 tons. However, there was an overall improvement in quality in line with the company’s strategy to focus on increasing export volumes. As was mentioned above, the company aims to improve quality and benefit from the increased value offered on the export market. Although there seem to be early indications of macadamia pro- duction volumes and quality as shown in the 2023 Q1 trading update, the global market for macadamia nuts is expected to remain below its average. Resilience is more likely to be expected in the tea category. From a relatively higher base, an improvement has been experienced in the average selling prices of both local and export tea and this is expected to continue. Moreover, the automation processes that were implemented during the 2022 financial year are expected to continue yielding improved quality for both tea and macadamia nuts. This will allow the company to exploit more of the gains expected in the market for tea. Ariston Holdings Limited seeks greater export value

A diminishing phenomenon Construction Industry The construction industry is a major con- tributor to the global economy. The indus- try is vast, with several activities such as construction, maintenance, repair, or replacement of fixed assets of various sizes. It is responsible for the creation of infrastructure, housing, and other essential services that are necessary for economic growth and development. Materials production, construction, building, and the built environment professions are the four primary sub-sectors of the sector. Each sub-sector focus- es on a certain area of the industry. The indus- try is also a major employer, providing jobs to millions of people around the world. This article will mainly delve into how the “building” sector of the construction industry has failed to thrive in Zimbabwe, with owners of the biggest com- panies in the industry pulling out too soon. The cement production sector, which is part of the construction family, is one of the richest industries in Africa, boasting of the two richest men in Nigeria, Aliko Dangote and Abdul Samad Rabiu. The two have managed to grow their wealth from racks to a billion-dollar empire in cement production, separately, through the viability of construction in the highly popu- lated nation. Despite diversifications, Dangote also flirts with the richest man in Africa status, attributable to his cement production business. However, back at home, in Zimbabwe, the cement production sector has failed to hold ground, let alone grow in line with the regional average yet in the same continent as Nigeria. What could be wrong? Fundamentals could emerge top on the list. The global cement company Holcim, which used to be the majority owner of Zimbabwe’s listed company, Lafarge Cement Zimbabwe, disposed of its shareholding in Lafarge in 2022 in what appeared to be an exit from the harsh economic terrain in Zimbabwe. This came as an episode in the series of companies and/or inves- tors leaving or withdrawing from Zimbabwe, including the oldest financial institution in Zim- babwe, Standard Chartered bank, which finally closed its doors in the country after more than a century of operation. Following the peer cement producer, the largest cement producer in Zimbabwe, Pretoria-Portland Cement (PPC), has been speculated to be up for grabs after more than two years of suspension from the local bourse, Zimbabwe Stock Exchange. While there may be speculations, it is not a secret how the industry has failed to enrich respective investors as is the case in neighbour- ing countries. The reasons for the failure of the industry to thrive in this economy are quite varied, and may however be largely attributed to the weak economic fundamentals which include a chain of rampant inflation. Inflation is an economic phenomenon that occurs when prices rise across an economy over time. It is measured by comparing changes in the cost of goods and services over time. When inflation increases, it means that prices are rising faster than wages or incomes, resulting in a decrease in purchasing power for consumers. This can harm businesses as well as individuals, as it reduces their ability to purchase goods and services at reasonable prices. Inflation has a direct impact on the construction industry because it affects both input costs (such as materials) and labour costs (such as wages). When input costs increase due to inflation, this increases the cost of production for businesses in the sector. This means that businesses must either absorb these increased costs or pass them on to consumers through higher prices for their products or services.Similarly, when labour costs increase due to inflation, this also increases pro- duction costs for businesses in the sector as they must pay higher wages to their employees. In addition to increasing production costs, inflation can also reduce demand for construc- tion services due to decreased purchasing power among consumers. When prices rise faster than incomes, consumers have less money available to spend on goods and services such as those provided by businesses in the sector. This leads to decreased demand for these products or services which can further reduce profits and investment in the sector. Annual inflation for Zimbabwe closed the year 2022 at 244%, which was the highest in the world. Despite these challenges posed by high inflation rates, there are still ways that companies in the construction industry can thrive. One way is by focusing on cost-cutting measures such as reduc- ing overhead expenses or using more efficient methods of production which can help reduce overall production costs despite rising input costs due to inflationary pressures. Additionally, companies in this sector should focus on increasing efficiency through better management practices such as improved use of technology which can help reduce labour costs while still maintaining quality standards. Additionally, com- panies should also focus on developing strong relationships with suppliers so that they can negotiate better deals on materials needed for production which could help reduce overall pro- duction costs despite rising input costs due to high levels of inflationary pressure across an economy. Another strategy a company in the construction space can implement to thrive in an economic terrain like Zimbabwe would be improving focus on quality rather than quantity. By provid- ing high-quality cement at competitive prices, construction companies can remain profitable even when prices are rising due to inflation. Additionally, focusing on quality will help build customer loyalty which will help ensure repeat business even during times of economic hard- ship. Construction companies also ought to invest in training their employees so they are better equipped to handle the challenges posed by high levels of inflation. By investing in training programs such as safety courses or spe- cialized skills training related to new technolo- gies or materials used in the industry, construc- tion companies will be able to better manage their costs while still providing quality services at competitive prices which will help them remain profitable even during times of economic hardship caused by high levels of inflation. On the other hand, Nigeria also has one of the weakest currencies in Africa, and yet a thriving construction industry. This can be linked to other driving factors which Zimbabwe could adopt. The construction industry in Nigeria is one of the most important sectors of the economy. It contributes significantly to the country’s GDP and employs millions of people. Several factors have contributed to the growth of the construc- tion industry in Nigeria despite a weak local cur- rency and these include government support. The Nigerian government has provided significant support to the construction industry through vari- ous initiatives such as tax incentives, grants, and loans. This has helped to encourage investment in the sector and has enabled companies to expand their operations and create more jobs. Another factor is also the appetite of foreign investors who have been attracted to Nigeria due to its large population, abundant natural resourc- es, stable policies and growing economy. This has resulted in increased investment in infrastruc- ture projects such as roads, bridges, airports, and power plants which have all helped to boost the construction sector. The demand for housing and other infrastructure projects is increasing due to population growth and urbanization which has created more oppor- tunities for construction companies in Nigeria. The Zimbabwean form of urbanization is the migration to other countries as Zimbabweans seek greener pastures abroad. This has led to slow growth of the construction industry as more and more families leave the country for other better economies. Labour costs are also relatively low in Nigeria compared to other countries which makes it attractive for companies to invest in Nigeria’s construction sector despite a weak local currency. The Nigerian government has also implemented various policies that have encour- aged foreign investment into the country’s con- struction sector such as tax breaks for foreign investors and incentives for domestic firms investing in infrastructure projects which have all helped boost growth despite a weak local curren- cy environment. Borrowing costs in Nigeria are also relatively low compared with other countries making it attractive for companies operating within the sector to borrow money from banks or other financial institutions at lower costs than borrowing from abroad even with a weak local currency. Another factor is that the Nigerian gov- ernment has implemented various initiatives such as public-private partnerships (PPPs) that have encouraged private investment into infrastructure projects which have all helped boost growth within the sector despite a weak local currency environment. The Nigerian government has also invested heavily into improving infra- structure across the country over recent years which has made it easier for companies operating within the sector to transport materials and person- nel between sites more effi- ciently thus reducing costs even with a weak local curren- cy environment. The construction industry plays an essential role in any econo- my but it faces unique chal- lenges when operating within an environment with high levels of inflation like Zimba- bwe. However, there are sever- al strategies that the sector can utilize which may help them remain profitable even during times when prices are rising due to economic hardship caused by high levels of infla- tion. 13 The AXiS LXIII Friday 18 Feb 2023

Amazon Backtracks on Feb-2023 SA launch, as power cuts get worse ithout an expansion strategy in Africa revealed by corporate headquarters, Wthe launch of Amazon's marketplace in South Africa appears to have been delayed. The South African branch of Jeff Bezos' empire was supposed to open in February, but it appears that date has been postponed until the end of 2023, just in time for the business's peak month of December. Even though the company has already reserved warehouse space and reached agreements with South African courier services and sellers of fast-moving consumer products, the deployment will be delayed until no later than Q3 or Q4. The corporation may have second thoughts because load shedding is a constant risk. It's much more likely that it's taking a breather after announcing plans to let go of more than 18,000 of its workers. The CEO of the store, Andy Jassy, said that Amazon had endured unpredictable and challenging economies in the past. The retail behemoth announced that its Nigeria rollout has totally ceased operations, but that South Africa's launch plan, code-named "Project Fela," is still moving forward, albeit at a later period than originally anticipated. When Amazon does eventually launch in South Africa, it’ll bring with it its Prime membership service and the ‘Fulfilment by Amazon’ service for third-party sellers in the country. Energy Crisis in SA The postponement of Amazon's entry into South Africa could be attributed to the country's electricity crisis, which may be causing investors to have second thoughts about operating Amazon in South Africa. In response to the ongoing energy crisis, President Cyril Ramaphosa declared a national state of emergency and stated he has appointed an energy minister to work only on putting an end to load shedding. The state of emergency took effect right away. It was published in the gazette just before Ramaphosa gave his seventh State of the Nation Address (Sona), in which he acknowledged that load-shedding had caused despair among South Africans but urged the nation to summon hope that it could be resolved. Examples of companies that have been affected by electricity challenges Case of PicknPay Pick & Pay, a supermarket retail operator, reported spending about R350 million on diesel to keep generators operating at its locations to avoid the effects of load shedding on its operations, despite significant sales growth. Consumer demand has decreased as a result of the continuous and worsening rolling power outages that South Africa has been experiencing for more than three months straight since the end of October, according to Pick n Pay. Customers are worried about food rotting at home. Across a trading update for the 43 weeks that ended December 25, 2022, the group, which has more than 1 910 outlets in South Africa, reported spending an extra R346 million on diesel compared to the previous period. On the day the announcement was released, the stock price had dropped by more than 7% to R48.54. Additionally, it claimed that rising expenditures for food waste and generator maintenance and repair have grown. To lessen the effects of South Africa's power crisis, the organisation said it is concentrating on an energy resilience plan, which includes negotiating with retail landlords to maximize solar installations and stepping up efforts to cut energy use. In addition to other measures, it is also taking a look at adding inverters and battery power solutions to operate supermarkets sustainably. A case like this shows that businesses are suffering severely financially as a result of SA's electrical problems. Case of Shoprite The Shoprite Group claims that between July and December of last year, it spent an "additional" R560 million on diesel for generators "to continue trading during load shedding stages five and six." During the second half of 2022, load shedding peaked at Stage 5 for about 15 days and at Stage 6 for about 13 days. In the six months, 42 days saw the implementation of Stage 4 at its peak. In a 24-hour cycle, power outages at Stage 6 may last up to 12 hours. Stores could easily lose power for more than 50% (six hours) of the trading day on days with Stage 6 in effect. To keep refrigerators and freezers operational, however, the generators must also run through the night. This explains why the costs are so high; using a generator will likely cost twice as much as using Eskom or a municipal power source. Like many other companies, the company has adapted to these brief, irregular power outages. Amazon accelerating expansion drive into Africa at the detriment of local players Digital streaming, cloud computing, e-commerce, and artificial intelligence are the main areas of interest for Amazon Inc., a multinational technology business based in the United States. One of the most valuable brands in the world, including Adidas, Nivia, and Jockey, the corporation has been cited as one of the most significant economic and cultural forces in the world. Amazon was anticipated to launch its e-commerce platform in Nigeria and South Africa in 2023. This is because it is every company's ambition to maximize commercial operations in terms of higher profits/revenues and at the same time germinating expansion. Local players are having trouble striking a balance locally. Due to the fierce competition that will undoubtedly result from Amazon, local players are finding it difficult to achieve a balance as the American giant looks for new growth levers. The punch will undoubtedly come, which is truly awful news for other African juggernauts already operating in the market. The top five African e-commerce companies—Konga, Jumia, Takealot, Kilimall, and Bidorbuy—will likely face fierce rivalry as a result of the aforementioned arrangement. The three e-commerce titans in South Africa and Nigeria are witnessing a rise in Amazon's aspirations within their borders. The US giant intends to introduce its popular marketplace in the two biggest economies on the continent. Diversification to Africa Because it is looking for new sources of growth to counteract the slowdown it experienced in the post-Covid-19 period, Amazon has increased its focus on the African continent. Its profits decreased from $14.3 billion during the same period last year to $3.3 billion in the second quarter of 2022, continuing the deceleration trend that was already visible in the first quarter. The company is now looking for new customers in new markets. And recover more retains, this may be the key driver behind the company's expansion into African nations. The following graphs show the entity's net revenue trends: The US behemoth has until now prioritized its data hosting business in Africa. The industry leader in cloud computing declared in April 2020 that it would be strengthening its current infrastructure by assembling several data centres in Cape Town into a "region." the product that made AWS the first source of income for the group. The organization, which is now hiring over 300 individuals in the nation, has also chosen to erect its continental headquarters in the nation's capital. Despite the roughly $300 million investment, the development project has been halted since March 20 as a result of the indigenous peoples' lawsuit against the regional developer. The perspective 60,000 square meter complex, which will be erected on more than 14 hectares of land, is thought to infringe on sacred lands, according to the association of diverse indigenous peoples. 14 The AXiS LXIII Friday 18 Feb 2023

Willdale Sales Volumes suffocated by hawkish monetary policy Meikles Limited paints upbeat outlook amid robust revenue growth iversified ZSE-listed outfit, Meikles Limited Zimbabwe remains optimistic Dabout future growth prospects after illdale Limited sales volumes declined by 2% for the third quarter ended 31 WDecember attributable to low product displaying commendable revenue growth and hospitality performance for the third quarter ended 31 December 2022. The graph below shows the Group’s performance in % The Group, posted a 40% revenue increase for the third quarter and 58% growth for the cumulative 9 months despite record power cuts and an aggressive monetary stance that curtailed the customers’ purchasing power. Revenue performance was anchored by the hospitality sector where room occupancy grew by 9.85% on quarterly basis and by 18.43% for the cumulative 9 months period. Revenue per available room increasing by 94% and210% in US$ terms for the quarter and nine months respectively. Optimism brews at a time the nation is heading towards the 2023 harmonised elections. Zimbabwean elections are on record coupled with fragile monetary policies to support government election programme initiatives. During the latest 2018 elections, broad money increased by 41% between July 2017 and July 2018 with a day-on-day increase of 6.84%. this resulted in renewed inflationary pressures of above 500% and lastly, the abandonment of the Zimbabwe dollar by the market. “The Group is optimistic about its prospects despite the evolving challenges in the operating environment,” the Group said in a trading update. However, one should note that the growth prospects are underpinned by the Group’s financial stability which remains strong with cash and bank balances amounting to more than US$19 million at the end of December 2022. In addition, The Group has no bank borrowings while both expansion and replacement capital expenditure plans continue to be implemented as the Group has adequate financial resources at its disposal.During the quarter under review, the supermarkets segment completed and opened two new stores, Pick n Pay Simon Mazorodze and Pick n Pay Madokero with branch network expansion and refurbishments funded from operating cash flows. However, sales volumes for the supermarkets segment decreased by 16.49% for the quarter but were resilient to the challenges in the operating environment and grew by 2.50% for the nine months period ended 31 December 2022. Sales were affected by the aggressive 200% bank policy rates by the Central Bank which curtailed consumer spending efficacy. In addition to that was electricity supply challenges that worsened during the period reducing operating hours while ramping up production costs as the Group resorted heavily to the use of generators. “Electricity supply challenges worsened during the quarter under review leading to increased use of generators and in some instances reduction in operating hours,” the Group said. With Zimbabwe missing the 2023 electricity self-sufficiency target and the addition of the Hwange’s Unit 7 to the national grid, power crisis remains a challenge. Besides that, excess reliance on the Kariba Power Station amid recurrent drought spells is a major disappointment. At Hwange, the ageing power plants are failing to function properly with more time channelled towards repairments than electricity generation. brick and clay companies have taken pricing power from the claws of Willdale. On the other hand, Zimra has raised claims for output VAT on the firm’s zero-rated bricks but the firm has joined forces with other industry players to object to Zimra’s interpretation of the law. In any calendar year, the rainy season is detrimental to Willdale business performance and contributes enormously to the firm’s earnings volatility. In this regards the firm’s management should look to diversify the firm to deal with the seasonality of the business model. Long spells of rainfall affect the continuity of business for the firm and management should note climate projections and work out structures that can help the business model to flourish. Hence climate change has a huge implication for Willdale’s business performance. across will push demand for bricks and other construction materials in 2023 hence pushing sales volumes and that’s insulating the firm’s profitability. Willdale’s profits are coming from non-cash items such as fair value adjustments.So as it stands Willdale is not generating any value for its shareholders and has not been a regular dividend payer. So even though the firm has positive Free Cash flows they are not enough to support and sustain both Capex and leasing obligations. Operating costs are rising at a faster rate than revenue and are eating into earnings and free cash flows. Between FY2015and FY2022 sales over capital, the ratio averaged 86% which means that the revenue being generated against capital is low which leaves the firm with low return on capitalmargins. Further to that more than 30 registered uptake due to constrained liquidity brought into play by tight monetary policies meant to stabilize the exchange rate and run away inflation. Further, production levels dwindled for the quarter in line with working capital. High borrowing rates which have just been reduced from 200% to 150% are making it uneconomic for the firm to finance the business through borrowings. Hence profitability for the firm is expected to weaken due to low stock availability. Electricity woes have also further crippled the firm’s stock level. Going forward a global recession is likely going to further weaken the firm’s profitabilitysince building projects in the country are heavily reliant on internal remittances which will be low due to a slowdown in the global economy. Otherwise, a proliferation of cluster housing 15 The AXiS LXIII Friday 18 Feb 2023

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17 The AXiS LXIII Friday 18 Feb 2023 & Analysis Electric Vehicles Brace for the EV wave he final approval is expected in March, but the European Parliament has formally Tapproved a law this week to effectively Zimbabwe Lithium Production Data Advise to Zim Schools of Motor Mechanics Polytechnics and colleges that offer motor mechanics training must be by now busy revamping their course outlines to meet this new trend. Focus now must be majoring on the servicing and repairs of hybrid cars upwards to EVs obviously with a 'little' background of what they were already doing. Old-school mechanics are still around and will experience their cars fading away in the next coming few years. However, those who have joined the industry 10 years and below ago must brace for refresher courses if they are to remain relevant. This a fact considering the already influx of hybrid vehicles and few EVs that are ALREADY in our market. Which manufacturer would still want to keep producing vehicles to be completely banned in 12 years in the EU? I predict that five years is more than enough to see serious players continue investing their energy in a fading industry sector. EVs are here to stay and everyone must be ready to jump in. The other fear or argument currently is that EVs are still pricey compared to what we have already been consuming. Yes, costs are still on the higher side but will eventually fall once there are enough EVs on the road creating benefits of scale. Tesla, a major EV player, claims that it can recycle up to 92% of the materials inside its batteries and has said that none will end up in landfills. support through car purchase subsidies and its strong position in the battery industry. Batteries account for 40% of the EV's total cost and these batteries are made of, in order of importance, either lithium, cobalt, or nickel. China is the third-largest producer of lithium and controls 60% of global battery-grade lithium refining capacity. Australia produces more than 50% of the world's lithium and China accounts for over 90% of Australia's lithium exports. Chile is the second largest lithium producer accounting for around 25% of global production. Africa in the mix Cobalt is the next best mineral for EV battery production and the Democratic Republic of Congo (DRC) is the best producer accounting for over 50% of global production. The bulk of Tesla's raw material supply comes from the DRC. Cobalt comes from Glencore which operates in the DRC copper mine in the Katanga region where cobalt is produced as a by-product. This is something positive for the continent. Again, China due to this rare earth material possession is the second-best cobalt producer accounting for over 6% of global output. Canada comes third at around 5.9% production. Zimbabwe is not forgotten On the most precious EV battery material, lithium, Zimbabwe proudly appears on that list ahead of the USA but behind Argentina. The country accounts for 1.5% of global production and authorities should work around maximizing on such God-given strengths. Analysts think that if the country's resource is fully exploited, the country can meet 20% of the world's total lithium demand, heralding a serious economic boom. In December 2022, the government banned unprocessed lithium exports to build domestic processing capacity to take advantage of surging global prices. As a country of "ifs", if the measure is properly administered, we can enjoy good fruits. However, it is critical to note that over recent years most Zimbabwe lithium mines were purchased by Chinese companies as they cemented their global possession of the mineral. ban the sale of new petrol and diesel cars in the European Union (EU) from 2035. The target is that by 2050, there won't be any petrol or diesel cars on the roads of the 27-country bloc. The measure is part of the global response to global warming caused by greenhouse gas emissions which are perpetuated by fossil fuels among other non-clean energy sources. The move is a huge victory for the planet in its quest for cleaner energy under the net zero strategy and will effectively massively change lives, more specifically so for Zimbabweans, if optimally harnessed at the national level from a supply-side perspective. The EU law set a 55% cut in carbon dioxide (CO2) emissions for new cars sold from 2030 compared to 2021 levels, raising the existing target of a 37.5% decrease according to a Reuters report. The EU which has 500 million citizens, seeks to support EV production just like what is happening in the US where the administration has availed a $369 billion subsidy scheme towards green production. The other fear according to the media is that the EU is concerned that companies will move to the US to take advantage of the facility. Carmakers in Europe will now at least have a timeframe in which to switch production to electric vehicles (EVs). The China Pressure That said, China seems to be already leading in the EV race and other bigger economies have serious homework to do to match that level (if ever that will be possible). In 2022, China sold 5.67 million EVs and plug-ins according to the China Passenger Car Association helped by state subsidies and a shift by buyers necessitated by high oil prices which made older cars expensive to own. According to Wall Street Journal, more than four million all-electric Chinese vehicles were sold, five times more than that sold in the US in 2022, cementing China’s place as the world’s top EV market. Why China will remain the global EV leader What will cement China's top position in the EV industry is the Chinese government's vigorous

The AXiS LXIII Friday 18 Feb 2023 19 *To Page 20 n the latest monetary policy statement, the Reserve Bank published that most transactions Iand payments are being settled in US dollars as opposed to RTGS. Although the defacto regime is of a multi-currency nature where both the US dollar and the Zimbabwean dollar (more commonly, the Real Time Gross Settlement, RTGS) are both legal tenders, the data suggests a strong and unquenchable demand for the greenback. The result of this is a continuous decline in local currency value which adds to an already inflationary environment. This demand is in part attributed to the low level of confidence the public has in the local curren- cy, which unlike the gold standard that ruled the day in times past is now backed solely by the monetary decisions of the Central Bank and the Treasury. This implies that the monetary authori- ties must inspire confidence in their policy if any long-term stability is to be realized. The difficul- ty stems from the fact that the Zimbabwean eco- nomic instability is in part owing to non-mone- tary behavioural factors. The crash of 2008 which resulted in unprecedented hyperinflation and the loss of many people’s livelihoods is still a pertinent factor in the assessment of public confidence in the monetary authorities and subse- quently the local currency. As stated by the RBZ governor, Dr Mangudya, behavioural factors must be considered in any assessment of the local economic situation. It is these same behavioural factors that in this article are posed to be a driver of the depreciation of the local currency. According to the above, it follows that the gen- eral public does not have the incentive to save obacco pushes the government’s export revenue targets closer to realization as the Tprospects are cornering the maximum output realization. This is on the back of but- tressed regulations by the Tobacco Industry Mar- keting Board (TIMB) in the farmers' interest, as well as positive rainfall trends that have seen the quarter record an average level of 49% above the prior year in the 2021–2022 season. The eased Chinese COVID restriction is another greenlight for the maximum yield, as the econo- my imports at least 34% of the local tobacco. Zimbabwe is one of the biggest exporters of tobacco in Africa. The top countries to which Zimbabwe exports tobacco are China, the Demo- cratic Republic of the Congo, Zambia, and the United Kingdom, with exports to China account- ing for the largest percentage of total tobacco. Zimbabwe’s tobacco exports are targeted to reach US$ 1 billion in 2023 with many factors such as rising demand on the foreign market and favorable operating environment being influential in this outlook This article analyzes how the environment and the regulatory bodies have been paving the way for the attainment of the preset objections. The Tobacco Industry Marketing Board (TIMB) recently banned the licenses of four tobacco con- tracting companies that were leasing their licens- es to suspended merchants. The suspended com- panies owed farmers as much as $1.6 million. This was a disincentive to the productive sector, as the market had no protective measures against such actions. In January 2023, the Competition and Tariff Commission (CTC) published a new matrix for a review of the tobacco pricing matrix in order to give farmers better prices for their product and protect them from unfair competition. The price floor is meant to protect farmers' basic income against the abuse of buyers who influ- ence the price. "In competition analysis, customer-supplier rela- tionships between farmers and buyers of agricul- tural produce are a cause for concern." "In such instances, farm produce buyers abuse their market power through arrangements that dictate low prices for farm produce to ensure they make huge margins by buying low and selling high," high-yielding tobacco varieties and increase crop production by up to 25%. It is hoped that this new variety will lead to more efficient and profit- able tobacco production in Zimbabwe while also improving the livelihoods of the people involved in the industry. The government has implemented several tax reforms to encourage investments in the tobacco industry and has instigated the establishment of various support networks to provide counseling on management strategies to tobacco producers. In the 2023 national budget, the government waived the cooperative tax for farmers. This coupled with increased tobacco price on price floor basses is a huge incentive that will excel in deliveries. The Tobacco Research Board (TRB) has called on all tobacco growers, contractors, and agrochemical companies to do early land preparation to ensure better yields. This is in preparation for the 2023-2024 season that will gear up the yield rate toward attainment on the NSDS 1. In addition. The government has also poured agriculturally based policies into their 2023 National Budget, which includes reducing taxes on tobacco prod- ucts, introducing subsidized fertilizer and seed packages, increasing public awareness campaigns, and establishing crop insurance programs. This has seen the farmers occupying more than 167,765 hectares, according to a Herald report. Additionally, the regulator will also provide finan- cial assistance to smallholder farmers through loans and grants to help them with production and marketing. Finally, the regulator will partner with commodities and research institutions, like univer- sities and research institutes, to better understand the unique needs of the tobacco sector. Using the PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) model to assess the relevance of Zimbabwe's projected US$1 billion tobacco exports, the sector is on the right course considering the above-discussed factors. This target could help narrow the long-suffering deficit in the country, as exports have been overshadowed by imports for the past five years. However, the government should shift more toward valuing beneficiation, as the studies have shown that cigarette importation by Zimba- bwe is of greater magnitude than row tobacco leaf exports. the CTC said in the article titled: "Role of competition policy and law in mitigating climate change." The recently published Metrological Service Department report has elucidated that Zimba- bwe recorded an average level of 49% above the prior year in the 2021–2022 season. Rain- fall patterns have an effect on the cultivation and growth of tobacco crops. Rainfall is important for the quality, yield, and quantity of the crop because it grows best under certain soil and climate conditions, and without the right amount of rainfall, tobacco crops can suffer. Thus, a current report by the MSdepart- ment has been a good indicator of the upward trend towards objective realization. Additionally, the government has enacted the Tobacco Transformation Plan, which seeks to localize tobacco funding and grow the tobacco market to $5 billion by 2025. In addition, the plan would increase value addition and benefi- ciation from the present 1% to 30% to create USD 5 billion by 2025, while also investigat- ing new and alternative crops to increase the viability of tobacco. Dr. Shadreck Makombe, president of the Zim- babwe Commercial Farmers Union, said the tobacco transformation plan was a constructive step that, if properly carried out, would expand the business. In the meantime, growers have already sold 149 million kg of their harvest, which is 24% more than they did during the same time last year. China’s relaxation of lock- down regulations might result in a surge in demand for local tobacco farmers, making the transformative plan more realistic and feasible. Furthermore, the Government of Zimbabwe has recently been focusing on improving bilateral relations with other countries in the region to strengthen its tobacco exports. Specific exam- ples include the signing of a memorandum of understanding with Belarus in January 20203 to promote the bilateral trade and investment of tobacco products, and a renewable energy agreement to cater for recently suffered load shedding that has seen famers resorted to using generators and coal as alternatives during the curing season because of rolling electricity out- ages.The government of Zimbabwe has reached an agreement with China in 2022 to introduce Who is buying what, and with what? The nature of spending in the economy Tobacco favored on the roadmap to 2023 US$ billion 2023 revenue target

20 The AXiS LXIII Friday 18 Feb 2023 in the local currency and therefore does not invest using local currency, since investment follows savings. This is verified by the MPS which showed that deposits at banks were skewed in favour of the US dollar. This data shows a weak demand for RTGS relative to the demand for US dollars. In the context of the aforementioned, increases in the supply of RTGS will result in inflationary pressures. Given that if the data suggests the general public is not responsible for the high-value transactions inlocal currency, it stands to reason that it is the govern- ment that is driving spending in RTGS and thus inflationary pressure. Historically, government spending has been a significant driver of annual money supply growth. In the latest weekly report published by the RBZ, the value of transactions processed through the National Payment Systems (NPS) decreased by 12.30% to ZW$550.01 billion during the week ending 6th January 2023, from ZW$627.16 billion recorded in the previous week RTGS transactions, which made up the largest share of NPS transactions in terms of value (standing at 83%) declined by 7.24% to ZW$457.91 billion in the reporting week, from ZW$493.67 billion recorded during the week ending 30th December 2022. In terms of volumes, overall transactions households and businesses not having the incen- tive to hold the RTGS nor being the big spenders of the local currency, the government is the big- gest participant in the Zimbabwean dollar market. As it settles large amounts to pay contractors, salaries, and other expenditures; it increases the amount of money in circulation. Although there remains debate on this matter, it is widely accepted that an increase in government spending is one of the factors that economists say can drive inflation. The disagreement however lies in the level of the impact. In the case of Zimba- bwe, the impact is significant. Increases in gov- ernment spending affect inflation through exchange rate dynamics. As the money supply increases following the increase in government spending, contractors, staff, and all other recipients of RTGS dollars turn to the parallel market to conserve value, and their demand drives up the value of the greenback. This results in a depreciation of the local currency. As the economy wises up to the depreciation of the currency in the parallel market, prices adjust upwards to hedge against the loss in value. RTGS prices are then quoted in line with the parallel market US dollar equivalent. The dominating informal economy is made up of beauty salons, public transportation services, and other small-scale enterprises which operate out of the regulation of the government strengthens this trend.The long-term solutions to the exchange rate and inflation problems that have plagued Zimba- bwe are twofold in the opinion of this article. Firstly, the government must increase its efforts to garner public demand for the RTGS. Through initiatives such as the sale of gold coins in RTGS. Secondly and finally, the government must intensi- fy the efforts to align the official exchange rate with the parallel market rate. This is because a distorted official rate that does not mirror the eco- nomic realities will result in an increased parallel market activity where RTGS earners rush to get as much value as possible as soon as possible in the parallel market. This will exacerbate the depreciation of the RTGS and cause upward price adjustments. www.equityaxis.net EQUITY AXIS Equity Axis Head Office 32 Lawson Avenue, Milton Park, Harare, Zimbabwe t: +263 (08677) 197791 c:+263 773 782 392 | 773 037 422 [email protected] Follow us    
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        ­ €‚‚ ƒ   „ Financial insights at your fightertips. decline by 11.62 from 15.11 million recorded in the preceding week to 13.36 million. Mobile-based transactions dominated NPS transaction volumes at 76.82% of the total, whereas RTGS volumes made up 1.23% of total NPS transactions. This indicates that there is a large proportion of the population uses mobile-based transactions to settle low-value transactions. Such purchases tend to be day-to-day consumption spending, for example, groceries and the purchase of airtime. Large purchases, in terms of value, are settled in RTGS as the data seems to suggest. Such pur- chases at the household level may include the payment of school fees and at the business, the level may include the payment of staff and the payment of inputs produced locally. Nonetheless as was explained, the incentive of households is not geared toward the demand for RTGS. The payments that are conducted in RTGS at the household level are of low value as stated in the preceding paragraph. Moreover, at the business level, US dollars also garner more demand than the local currency given that many businesses purchase inputs in foreign currency. The foreign currency shortages also drum up demand for the greenback. With both

21 The AXiS LXIII Friday 18 Feb 2023 who is buying what, with which funds? Economic spend A close look at the nation’s electricity woes ZESA *To Page 22 Making an investment strategy is a crucial first step towards financial security and free- dom. The objectives, risk tolerance, and time frame must all be carefully considered in the process. It is crucial to devote the time necessary to thor- oughly research on and comprehend the many investment options, as well as the risks involved with each one, in order to make sure that your investing strategy is effective. To ensure the investment strategies are optimised and effective, one needs to address questions like how does the investment work; what are your goals; what are the risks of this investment; how much do you expect to earn on this investment; how long do you plan to invest; what are the costs to buy, hold and sell the invest- ment and what other investments do you have already? The first step in creating a successful investment plan is to establish your goals. What do you aspire to achieve with your investments? Are you look- ing for long-term growth or short-term gains? Do you want to build wealth or generate income? Knowing what you want to accom- plish will help you determine which investments are best suited for your needs. It’s also important for young investors to set clear investment goals before creating an investment plan. Investment goals should be specific and measurable so that you can track your progress over time and effect necessary adjustments and changes as needed. Common investment goals include saving for retirement, building wealth over time, or generating income through investments such as dividend stocks or real estate rentals. Once you have established your goals, it will be easier for you to determine which types of investments are best suited for achieving them.While most would assume the success of investments or an invest- ment is solely reliant on economic factors, it is imperative to consider one’s risk tolerance before drafting a befitting investment plan. Risk toler- ance is the amount of risk one is willing to take on in order to achieve the set financial goals. As everyone has different levels of risk tolerance, it is therefore important to assess your tolerance level before making any investments. Generally speaking, younger investors tend to have higher risk tolerances than older investors because they have more time for their investments to grow and recover from any losses. However, it’s still import- ant for young investors to understand their own risk tolerance and make sure they are comfortable with the level of risk they are taking on. Different types of investments carry different levels of risk and potential reward. For example, stocks are gen- erally considered more risky than bonds but can also offer higher returns over time. Understanding how much risk you are willing to take on will help you make informed deci- sions about which investments are right for you. Your time horizon is another import- ant factor when creating an invest- ment plan. Your time horizon is the amount of time you have until you need access to your money or until you reach your financial goal. Gener- ally speaking, the longer your time horizon, the more aggressive you can be with your investments since there will be more time for them to grow and recover from any losses. On the other hand, if you have a shorter time horizon then it may be best to take a more conservative approach with your investments since there will be less time for them to grow or recover from any losses. One’s time horizon is another important factor when creating an investment plan. Short-term investments may be suit- able if you need access to funds quickly, while long-term investments- may be better suited for those who have a longer timeline and can afford to wait for returns on their money. Once you have established your goals and determined your risk tolerance and time horizon, it’s time to start researching different types of invest- ments that may be suitable for your needs. There are many options avail- able, which can be classified into traditional investments and alternative investments. Traditional investments include stocks, bonds, mutual funds and ETFs (exchange traded funds) among others, while alternative investments include real estate, com- modities, and etcetera. It’s important to understand the pros and cons of each option before making any deci- sions about which ones are right for you. Creating a diversified portfolio is one of the most important steps in creat- ing an effective investment plan. Diversification helps reduce overall risk by spreading out investments across different asset classes and sectors so that if one type of invest- ment performs poorly, other parts of the portfolio can still generate returns or cushion losses from other areas of the portfolio that may not be performing as well as expected at any given time period. Asset allocation is another key factor when creating an investment plan. Asset allocation refers to how much of each type of asset (such as stocks, bonds, cash) that you should invest in order to achieve your financial goals in the most efficient way possible while still managing risk appropriately. Generally speaking, younger investors should focus on growth-oriented assets such as stocks since they have more time for their investments to grow over the long term while still managing their overall level of risk appropriately by diversifying across different asset classes (stocks vs bonds vs cash). It is also important to monitor your investments regularly. This means staying up -to -date on market trends, researching new opportunities, rebal- ancing when necessary, and making necessary adjustments when needed. By monitoring your investments regu- larly, you can ensure that they remain aligned with your goals and objec- tives.Creating an effective investment plan requires careful consideration of various factors such as goals, risk tolerance, timeline, and diversification. Taking the time to research different types of investments available, under- standing how much risk each carries, monitoring performance regularly, and making necessary adjustments when necessary can help ensure that your investment plan is successful in achieving its desired outcomes. Investing is an important part of financial planning, and it can be a great way to build wealth over time. However, investing can be a complex and intimidating process for young people who are just starting out. It’s important to understand the basics of investing before you start, and to create an investment plan that is tailored to your individual needs and goals. In this article, we’ll discuss what a young person needs to consid- er before creating an investment plan. It’s also important for young investors to consider tax implications when creating an investment plan since taxes can significantly impact returns over the long term. For example, certain types of investments such as qualified dividends or capital gains may be taxed at lower rates than ordinary income which could result in greater overall returns after taxes are taken-into-account. Additionally, certain types of retirement accounts such as IRAs or 401(k)s may offer tax advantages that could help reduce taxable income in the future which could result in greater overall returns after taxes are taken-into-account over the long term as well. With limited supply and diminishing revenue, the state-owned electricity company ZESA Holdings is set to experience a cash flow crunch. In 2023 alone, the country's 5 power units produced an average of 630 Mw of electricity compared to a peak demand of 2200 Mw. ZESA had to restrict output at its Kariba hydro- electric project due to low water levels, which con tributed to the present power crisis in Zimbabwe. The lake level has been rising as a result of an increase in local rainfall activity, and on February 15, 2023, the useable storage—a portion of the lake that may be utilized to generate electrici- ty—had increased to 9.18% from 0.8% on January 1, 2023. The increase thus far has had little effec- ton power generation at the Kariba South Power Bank Station, which has been generating an aver age of 260 Mw since the beginning of the year. On the other hand, the Hwange thermal station which is supposed to be playing second fiddle to Kariba has been the biggest contributor to power generation in the country averaging 380 Mw. The Munyati, Bulawayo and Harare Power Stations have been consistently failing to step in to augment total power generation in the country.

*From Page 21 generation in the country. supplies, such as solar and wind, to reduce the climate exposure of high-capacity hydro-power schemes Hwange: Units 7 and 8 expected to stabilize the energy crisis Commissioned between 1983 and 1986, Hwange is the country’s largest coal-fired power station with 980MW installed capacity. However, the plant now produces less than half its capacity. It is fed with coal from the adjacent Wankie Col- liery, via a 6km conveyor belt from the open-cast mine, and also from the Makomo and Coalbrick mines. However, the coal supply has been erratic and the old plant breaks down often. Water for the plant is pumped from the Zambezi, 44km away, and the development of the 42km pipeline project that connects Deka High Lift Pump Station to Hwange Power Station, is being under- taken to enhance the operationalisation of the Hwange Thermal Power Station, which is being boosted with 600MW capacity under a US$1,4 billion investment. Zesa, says the market should expect a steady supply of electricity in the second half of the year when the Hwange Thermal Power Station units 7 and 8 would have been commissioned to inject a combined 600 megawatts into the national grid. After the two units are commissioned, Zesa has said that it will embark on another project of reha- bilitating the existing six units to restore their capacity to 980 megawatts. At the moment they operate at half capacity. Munyati: At a standstill after a corruption stunt Five kilometres off the Harare-Bulawayo road, some 30km near Kwekwe, the Munyati Power Station was built in 1946, the same year as the Nuremberg trials after World War 2. The thermal station had a capacity of 120MW initially but now has a capacity of under 20MW. The station is lying idle. Desperate to revive the plant, the government sought new partners to add 60MW. Jaguar Overseas was 2015 awarded the tender to re-power the plant, a project which entailed replac- ing 15 boilers with modern technology, refurbishing 2×50 megawatt steam turbines, overhauling cooling towers, water treatment plant, civil works, dredging and rehabilitating a weir on the Munyati River for water supplies to the thermal plant. However, the firm has failed to secure funding to rehabilitate the power plant. It emerged that the Indian firm has only managed to raise only 15 percent of the required funding. Harare Power Station: At a standstill after a corruption stunt The crumbling power station, which lies in the once vibrant Workington industrial area, is 77 years old. It was built during the battle of Stalingrad during World War 2. It does not produce any power. The first station, with a capacity of 21MW, was decommissioned in 1970. In 2014, the government decided to revive stage 2 of the plant. The third station is producing a third of its capacity due to boiler plant breakdowns. For work on refurbishing the second station, ZPC chose Jaguar Overseas, yet again, for the US$73 million contract. The project is yet to take off. Bulawayo Power Station eroded by owner- ship battles The iconic towers at Bulawayo’s power station rise above the city It was due to the smoke rising from the Bulawayo power station’s towers and from other thriving industries that the city came to be known as “KoNthuthu Ziyathunqa”, the place of the rising smoke.The Bulawayo plant was commissioned in 1947, and for years was an iconic marker of the city. It has a capacity of 90MW, but at best now only sends out 18MW. At the end of last year, the Bulawayo City Coun- cil US$60 million in royalties. (BCC) insisted that they will only part with the title deeds of the Bulawayo Power Station if the Zimbabwe Power Company (ZPC) concedes to pay. The two institutions have been engaged in legal battles over the ownership of the power station with the local authority claiming that the power utility was legally its tenant Other challenges Generating power is a major problem for Zimba- bwe, but so is transmitting it. The power utility loses 17% of its power due to aged transmission and distribution infrastructure. However, much of the network remains in decay. The network distri- bution system is well past its expiry date; it was meant to last 20-25 years but it is now up to 45 years of age. It is not something Zimbabwean consumers, hit by eroded wages and high prices, want to hear; we pay too little for power. ZESA has previously said it was failing to generate enough revenue due to low tariffs. Customers are paying US9,2c kWh, excluding exporters, and can be paid in local currency at the prevailing interbank rate. Exporters, with effect from October 1, 2022, started paying US10,12c per kWh. The World Bank carried out a study on the coun- try’s power tariff regime and recommended a cost cost-reflective of US15c kWh. The low tariff is one of the major issues keeping energy investors away. ZERA has licenced a huge number of independent power producers, but the projects have remained grounded as the low tariffs make no business sense for them. Investors also demand a bankable power purchase agreement (PPA), a long-term offtake agreement with a creditworthy buyer of the electricity. Zesa is not seen as creditworthy enough to allow debt repayment and a predictable, sustainable revenue stream. Low tariffs, it is said by mining industry players, are one of the reasons Aliko Dangote walked away from a plan to partner in the Sengwa power project. Dangote had held preliminary talks for the project via the Black Rhino Group, then the infrastructure investment unit of major US private equity firm Blackstone. Conclusion on the energy struggle in the country From just looking at the current state of the 5 power stations in the country we can conclude that Zimbabwe has just not invested adequately into energy, especially in closing its base-load deficit, and the country is still not preparing enough for the future. With climate change, reliance on hydro for base-load has been exposed as unwise, especially at this time. As the world moves away from coal, Zimbabwe will find it increasingly hard to secure funding for thermal. The World Bank 2013 stopped fund- ing coal plants, while HSBC, Europe’s biggest bank, has recently announced it would “stop financing new coal-fired power in all countries around the world”. Top banks such as BNP Pari- bas and ING have also stopped lending to coal investors. In 2023 Zimbabwe still does not have a renew- able energy policy, meaning there’s no structured plan for investment in that area. The potential for solar is big but still held back by bureaucracy and graft. Where energy contracts have been given, they have at times, been handed to entities with no credibility. As long as Zimbabwe does not prepare and invest better in energy, the country must prepare for many more years in the dark. 212 The AXiS LXIII Friday 18 Feb 2023 A close look at power stations in the country shows that underinvestment and corruption have dragged Zimbabwe into darkness. Kariba: Climate Projections key to avoid- ing the current Kariba dilemma After Kariba Dam was built in 1955, the first gen- erator was commissioned at the site in 1959. By 1962, all six generators had been installed, with a capacity of 666MW. Capacity was later upgraded to 125MW per unit. In 2013, Zimbabwe signed a US$533 million 20-year deal with China’s EximBank to expand the Kariba power plant. China’s Sinohydro got the con- tract to add two units at Kariba, with a total of 300MW, to increase capacity to 1050MW. The project was slowed down by concerns in China over Zimbabwe’s poor record of paying debts but was completed by March 2018. The commissioning of the two new units ended power cuts and allowed Zimbabwe to reduce power imports. However, as is now evident, Kariba is vulnerable to poor rainfall, a growing reality due to climate change.generation in the country. Kariba’s hydro power plant produces 65% of Zim- babwe’s energy, according to the Zimbabwe Power Company, the generation subsidiary of the Zimba- bwe Electricity Supply Authority (Zesa). Kariba, whose capacity is 1,050MW, has been underper- forming because of low water levels. Climate change is affecting water inflows into Kariba Dam, raising a debate on its effect on hydroelectric power generation across the world. The recent events at Kariba dam highlight how climate variability is threatening hydro-power gen- eration, which adversely impacts economic growth and development. If warnings and climate projec- tions are ignored, there is a serious risk of design- ing infrastructure that is not suitable for the climate of the future. To help make energy systems more resilient, we need to understand how climate change will continue to impact hydroelectric gener- ation. Zimbabwe should integrate other renewable energy

23 The AXiS LXIII Friday 18 Feb 2023 Russia-Ukraine War Is South Africa actively siding with Russia? s the world was about to take a breather from a subsiding pandemic, another con- Asequential wave of geo-political tiff On Monday, the Russian military frigate "Admiral Gorshkov" docked in Cape Town harbour ahead of naval exercises hosted by South Africa between the 17 and 27 of February. It is the second such operation involving the naval forces of Russia, South Africa and China, and the first since 2019. While the South African government has not commented on the schedule, "the fact that it happens on the anniversary of the Ukraine war is just extremely awkward," said Pauline Bax, deputy program director for Africa of the International Crisis Group. South African Foreign Minister Naledi Pandor at first condemned Russia's invasion of Ukraine. But President Cyril Ramaphosa forced her to retract her statement and receive her Russian counterpart Sergei Lavrov with all honours at the end of January. The reasons go beyond old ties resulting from Moscow's support for the ANC during the struggle against apartheid. Both governments share the view that the international order does not reflect present reality, "and that there should be a more equitable distribution of power," said Jo-Ansie van Wyk, professor of International Politics at the University of South Africa (UNISA) in Pretoria. South Africa is also interested in strengthening ties with Russia and China as permanent members of the United Nations Security Council, where the African continent has long called for more of a voice. South Africa is part of the BRICS group with Russia, India, China and Brazil. Originally started as a forum for trade ties among rising economic powers, BRICS has become increasingly used as a platform to challenge the dominance of global superpowers. as climate change and the just energy transition, were discussed. Indeed, judging from what was claimed to have been discussed and the events that followed, pointed out that they failed to agree on certain issues. Following the Phala Phala saga, which was confirmed on 2 June 2022, the value of the Rand to the USD was little changed. But as of September 2022, the Rand saw one of its massive peak on the USD to an extent that it even met a 15.94 to US$1. However, as the year progressed, the noise for the President to step down became louder and the value of the ZAR to USD sharply fell from 15.95 to 17.68. on the other side of the world geopolitical tension between China and the US heightened Nancy Pelosi’s visit to Taiwan. The visit was despite a warning by China, that no US official at Pelosi’s level should visit Taiwan. At present South Africa appears to have publicly joined the duo of Russia and China and the invitation of Ramaphosa by Biden in the U.S. in September 2022 could have been overtaken by Xi Jinping’s meeting with Ramaphosa in November of the very same year. South Africa, Russia and China are set to have naval drills, which is a preparation for War, but what War? This has caused hostility between South Africa and the western states. Against this background, the USD/ZAR pair is experiencing massive stress levels. The USD/ZAR has risen to 18.60 and is still set to rise. Such a stance has brought to light the preferred position of Ramaphosa even though South Africa claims that their military drills are nonaligned with the War in Ukraine. emerged, unanticipated, taking the world by surprise. This was the Russia-Ukraine invasion, which began in earnest almost 1 year ago, on 24 February 2022, resulting in the first full-scale war in the civilised world since the 2nd World War about 50 years ago. The invasion has caused tens of thousands of deaths on both sides and instigated Europe's largest refugee crisis since World War II. As a result, several sanctions were imposed on Russia by the West, and America impacted its trade relations with most of the world. Given Russia’s position among the world’s top oil exporters, the consequence of its action and the reciprocal measures, disruption to economic order has caused a convolution in indicators such as inflation, unemployment, economic growth etcetera. Africa in general has taken a neutral stance, while countries such as India, China and most of the Arab world have also invoked a reluctant stance, which in most instances has rattled the West and America. In September 2022, The President of the Republic of South Africa Honourable Cyril Ramaphosa was invited to the United States of America by President Joseph Biden. The two leaders deliberated on a range of critical issues of national, regional and global importance during their bilateral meeting, where trade, investment, global peace and stability, health, as well Interactive Tincture   08677 197 791 [email protected] equityaxis.net +263 777 661 891  
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The AXiS LXIII Friday 18 Feb 2023 Zimbabwe officially ditched its local currency in 2009 and adopted a multicurrency regime dominated by the United States dollar (US$) -what became known as dollarization. Dollarization is a generic term used by economists when a coun- try substitutes domestic currency with foreign currency as a legal tender. The full dollarization period was span over a decade (2009-2018) before authorities reintroduced the Zimbabwe dollar (ZWL) in 2019. However, by end of 2022, statistics show that the economy had largely re-dollarized (entrenched US$ use) and is on course to full dollar- ization. This is despite some de-dollarization efforts by authorities. But one may ask: What causes dollarization? Is dollarization good or bad for the domestic economy? In this piece, I try to address the foregoing questions as this help explore the sustainable way forward for Zimbabwe. 1. Status Quo The 2023 Monetary Policy Statement has shown that the economy has largely re-dollarized. RBZ statistics show that of the total banking sector deposits, 64.2% are foreign currency accounts (FCA) deposits. Also, Zimbabwe National Statistics Agency’s (ZimStat) estimates at the Classification of Individual Consumption by Purpose (COICOP) divi- sion show that in 2022 76.56% of transactions were done in US$ with a balance of 23.44% done in ZWL. Surveys by CZI, an industry body, also established that on average domestic foreign curren- cy sales contributed about 66% of private sector businesses' forex earnings. Based on this, RBZ posits that Zimbabwe is in a dual currency system. This is, however, arguable because official statistics normally exclude the informal sector. The informal sector is estimated to constitute about 60% of the economy and informal traders largely operate in cash. Also, businesses - formal and informal alike - in some cities like Mwenezi, Ngundu, Chipinge, Bulawayo, and large parts of Matebeleland provinc- es are using other currencies like the South African rand ahead of the US$ or the ZWL. To me, this shows that the country is no longer a dual but a multicurrency regime with the US$ at the epicenter. 2. What causes dollarization? Dollarization can be by a de facto market process or through an official government decree. Historical- ly, nations have dollarized as part of economic reforms to infuse macroeconomic stability -the case for Zimbabwe. During the height of 2008 hyperin- flation, it became so difficult to gauge market prices to an extent that the government stopped publishing official inflation statistics with independent estimates showing monthly inflation hovering above a billion percent. Again, re-dollarization being currently expe- rienced in the market is a response to ZWL fragility and skyrocketing inflation. In both cases (2008 and 2019), price instability largely emanated from the Reserve Bank of Zimbabwe’s (RBZ) weak exchange rate management and Treasury’s fiscal indiscipline. When there is economic instability and high infla- tion, economic agents (agents hereafter) are forced to diversify and protect their assets from domestic currency devaluation risks. There are two (2) main reasons behind agents’ demand for foreign currency assets: currency substitution and asset substitution. Currency substitution means that foreign money is essentially used as both a medium of exchange and Re-dollarization of the economy: Is this the right path forward for Zimbabwe? government in delivering a goldilocks economy which is key to improving standards of living. The relegation of monetary policy also means loss of seigniorage revenues. This is a profit a government can earn by issuing currency, especially the difference between the face value of notes and coins and their production costs. Seigniorage revenue can also relate to the interest rate central bank charges from lending commercial banks money. The seigniorage loss can be caused by “stock” cost, that is, as US$ is introduced and ZWL withdrawn from circulation, RBZ will be forced to purchase the stock of ZWL held by banks and the public thus effectively returning the seignior- age it accrued over time. Also, RBZ would give up all future seigniorage revenues that stem from the flow of new currency printed annually to satisfy money demand.Furthermore, although dollarization can eliminate the banking sector's vulnerability to devaluation risk, it can not avoid all sources of the banking crisis. In case of such crises, dollarization largely impairs the government’s lender-of-last-resort function thus inhibit- ing RBZ to respond to financial emergencies. Typi- cally, a central bank is the ultimate guarantor of the stability of payments and financial systems in case of a systemic bank run. While RBZ may be able to provide short-term liquidity to individual banks in distress, dollarization can make it lose the ability to deal with a sudden run on deposits throughout the banking system. A central bank can only undoubtfully guarantee all claims under any circumstance when it can print currency as needed. So, once this ability ceases to hold, the lender of last resort function becomes too limited. Also, a country like Zimbabwe with thin foreign currency reserves might lack resources to respond to unforeseen contingencies like climate change-induced droughts, disease outbreaks, and flooding. Moreover, dollarization hurts small open developing economies like Zimbabwe by rendering their domestic companies uncompetitive. The use of a strong curren- cy like the US$ increases the domestic cost of production since factors of production are priced in the foreign currency against regional counterparts pric- ing in their relatively weak currency. The huge exchange rate differentials also make locally manufac- tured goods expensive in the eyes of foreigners while making foreign-produced goods cheap in the eyes of locals. This may lead to the importation of non-essen- tial imports leading to unsustainable trade deficits. For instance, ZimStat shows that between 2009-2018, Zimbabwe experienced a huge deficit averaging US$2.5 billion per year. In addition, dollarization in a developing country set up promotes the dumping of foreign goods and the externalization of forex. Over time, this leads to acute forex shortages in the official channels. 5. Way Forward The balance of benefits and costs of dollarization is usually two-handed. However, by reflecting on the status quo and distinguishing between short-run and long-run periods, one may establish that both dollar- ization and a mono-currency regime (de-dollarization) are part of the policy package that is needed by Zim- babwe to attain durable stability. Which proposal then best suits the short-run? Which best suits the long run? This becomes the gist of next week’s column. 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 a unit of account. Since high inflation or hyperinfla- tion increases the cost of using the domestic currency for transacting purposes, agents will be prompted to be on the lookout for cheap alternatives. Asset substi- tution entails agents’ risk and return considerations between domestic and foreign currency-denominated assets. Generally, forex-denominated assets provide insurance against macroeconomic risks. 3. Benefits of dollarization Zimbabwe is facing an unsustainable public debt stock and is experiencing debt distress. Debt distress is when a country faces challenges in paying its cred- itors and a debt restructuring is required. With over 80% of public debt in foreign currency, the fragility of ZWL increases debt servicing costs and propensity to default. Economic literature posits that the immedi- ate benefit from the elimination of devaluation risk by dollarization is the reduction in the country's risk premium on foreign borrowing. In other words, with dollarization, interest premiums owing to currency devaluation risk will likely disappear. The elimination of the currency risks, however, does not guarantee a substantial reduction in the default risk premium on foreign currency-denominated debt. Apart from raising borrowing costs, a currency crisis can also wreak havoc on the domestic economy. In theory, the exchange rate affects inflation, that is, a massive ZWL depreciation is likely to cause inflation to increase. Hard data shows that when the ZWL plunged by 12% on average per month in both the official and parallel markets between February 2019 and December 2022, annual headline and monthly inflation averaged 306% and 12% respectively. While it is conceivable that dollarization won’t eliminate risks of external crises, it indeed holds the promise of steadier market sentiment. This is because the elimi- nation of currency risk tends to limit the incidence and size of contagion episodes. Durable price stability offered by dollarization also helps clamp deepening poverty and widening income inequalities. According to the latest World Bank estimates, the unaffordable prices of basic goods in 2022 plunged about 40% of the population into abject poverty. More so, although dollarization may make it difficult to insulate the domestic financial sector, it helps estab- lish a sound financial sector while making economic integration of the domestic economy into the global economy much easier. The use of a common curren- cy propels market integration as it lowers transaction costs and trade restrictions -the use of widely accept- ed currency reduces volatilities. All else constant, dollarization encourages foreign companies to invest for the long term taking advantage of stable currency which gives them a stable income stream that is not subject to exchange rate fees and frequent fluctua- tions. Last but not least, by rejecting the possibility of inflationary finance through dollarization, Zimba- bwe might strengthen its financial institutions and promote positive local and foreign investor sentiment. 4. Risks of Dollarization The biggest risk posed by dollarization is the loss of autonomy as the country’s monetary policy will now be dictated by a foreign country. A monetary policy is a list of actions a country's central bank seeks to undertake to influence the quantity of money in the economy and how much it will cost economic agents to borrow. It is implemented through various tools including among others interest rate adjustments, trad- ing of government securities, and altering the statutory reserve requirements. This policy helps the govern- ment manage inflation or unemployment and maintain currency exchange rates and financial market stabili- ty. As such, losing this policy arm will constrain the By Zvikomborero Sibanda 24

2023 RULES OF GOLF: 5 KEY CHANGES The R&A and the USGA have released the most recent edition of the Rules of Golf, effective January 2023. HERE ARE 5 KEY CHANGES New Rule — Modifications for Players with Disabilities Handicap on Scorecard (Stroke Play Only) Ball Moved by Natural Forces Replacing Damaged Clubs Simplified Back-onthe-Line Relief These modifications are now part of the Rules and are in eect for all competitions and all players who fall under the categories covered in new Rule 25. You are not required to put your handicap on your scorecard and there is no penalty if you return your scorecard in a competition with an incorrect handicap, as this is now the Committee’s responsibility. This change is consistent with other penalty reductions, such as reducing the penalty for playing an incorrectly substituted ball from the general penalty to one stroke. When using this relief option, you are required to drop your ball on the line, and it may roll up to one club-length in any direction. If your club is damaged during a round (except in cases of abuse) you may replace it, repair it or continue to use it. When your ball is at rest after taking relief and then rolls into another area of the course due to natural causes, there is no penalty, and you must replace it. For more information on the Rules of Golf, please visit usga.org or randa.org.  
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been hindered by drought, high input costs, and quelea bird infestations. To address the shortage, millers imported at least 1.5 million 90-kilo bags of wheat last year to replenish their stock. Local wheat production for the current season was lower at 1.2 million 90 kg bags compared to 1.8 million last season. Last year in October, Kenya received 51,000 tons of wheat from Ukraine, making Ukraine’s share of the commodity in the Kenyan market comprise around 15 per cent of the overall Kenyan wheat import balance. -Kenyan Wallstreet US-China chip war: ASML says China employee stole data The Dutch firm says it has since reported the breach to authorities in the Netherlands and the US. However, the company added that it does not "believe that the misappropriation is material to our business." ASML is one of the most important firms in the global microchip supply chain. It makes machines that produce the world's most advanced chips. Chips, or semiconductors, which are used to power everything from mobile phones to military hardware, are at the centre of a bitter dispute between the US and China. "We have experienced unauthorised misappropria- tion of data relating to proprietary technology by a (now) former employee in China," ASML said in its latest annual report. "As a result of the security incident, certain export control regulations may have been violated. We are implementing additional remedial measures in light of this inci- dent," it added. ASML did not name the former employee or give details on which export control regulations may have been violated. The firm did not immediately respond to a BBC request for comment. The Chi- nese embassy in Washington did not immediately respond to a BBC request for comment. -BBC Chinese retirees take to streets over plan to cut health benefits Hundreds of retirees have taken to the streets of the Chinese cities of Wuhan and Dalian to protest against cuts to medical benefits, following rare demonstrations in November that led to the end of China’s controversial “zero-COVID” policy. In the central city of Wuhan, videos posted online on Wednesday showed hundreds of mainly elderly people outside the city’s central Zhongshan Park. One video from Wuhan, home to about 11 mil- lion people, that was verified by the Reuters news agency, showed protesters and uniformed security guards pushing and shoving each other. In the northeastern city of Dalian, hundreds also took to the streets to protest the health insurance reforms, the AFP news agency said, citing a local witness. “Give me back my medical insurance money,” they could be heard chanting in one video, which AFP geolocated to the city’s Renmin Square, where a number of local government buildings are situated. Protests are rare in China but public anger does sometimes erupt, including widespread protests last year against the strict anti-pandemic measures that had been in force for nearly three years under the zero-COVID policy of President Xi Jinping. -Aljazeera The U.S. could run out of cash to pay its bills between July and September The U.S. government will run out of cash to pay its bills sometime between July and September unless Congress raises the nation's $31.4 trillion debt ceiling, the nonpartisan Congressional Budget Office projected Wednesday. But the agency said the timing remained uncer- tain, and the government could find itself unable to meet its debt obligations even before July should it face a shortfall in income tax receipts. The U.S. government must borrow money to pay off its debt, and Congress would need to raise the current debt ceiling to avoid a potentially devas- tating debt default. But Republicans have said they will not agree to do so unless the govern- ment also cuts spending. The CBO estimate came a day after U.S. Treasury Secretary Janet Yellen warned again that "a South Africa’s inflation dips below seven per- cent Inflation in South Africa slowed for a third con- secutive month in January, dipping below seven percent after hitting a 13-year peak last year, data showed Wednesday. Consumer prices rose 6.9 percent last month com- pared to January 2022, after a year-on-year increase of 7.2 percent in December, the national statistics agency StatSA said. Inflation around the world is easing after striking the highest levels in decades last year as Russia’s invasion of Ukraine drove up energy and food prices. Inflation in South Africa reached 7.8 percent in July last year, its highest in 13 years. Monetary chiefs in South Africa, the continent’s most industrialised economy, have been raising interest rates for more than a year to tame rising prices. The latest hike, last month, took the benchmark rate to 7.25 percent, hitting the appetite for invest- ment. The central bank expects inflation to slow to 5.4 percent in 2023, compared to 6.9 percent last year The Guardian China boosts imports of fuel oil blended from Russian barrels Federal Reserve Governor Lael Brainard said Chi- na's independent refineries are ramping up imports of discounted fuel oil blended from Russian bar- rels to use as low-cost feedstock amid a shortage of government crude oil import quotas for some of them, according to trade sources and data. Western sanctions over Russia's invasion of Ukraine, including the looming Feb. 5 embargo and price cap on refined products, have been pushing Russian fuel oil barrels eastward into Asia at attractive discounts since last year. These have been flooding the ship-to-ship transfer hubs of Malaysia and United Arab Emirates' Fujairah since the second quarter of 2022. Traders blend these barrels with other oils to rebrand the fuel oil's country of origin, clearing the way for ship insurance and financing that would otherwise be banned under the sanctions, trade sources said. Discounts offered on these fuel oil cargoes help to improve margins at Chinese independent refiners and replace crude that some companies are unable to import without quotas, the sources said. The trade also provides a way to get Russian oil to market and bring much-needed export earnings to Moscow. "We've been looking at Russian fuel oil since December. It is cheap and does not require (crude) import quotas," said an executive with an indepen- dent refiner in eastern Shandong province. The refiner has not received any government crude quotas for the past year or so and buys mostly straight-run fuel oil to produce diesel and gasoline, said the executive, who declined to be identified as he was not authorised to speak to the media. These blended fuel oil barrels were last traded at about a $5 discount to benchmark crude ICE Brent on a delivered Shandong basis, said one source. -Rueters Kenya Imports Wheat from Russia Due to Rising Global prices Kenya has imported wheat from Russia, coincid- ing with the nation’s current struggle with wheat shortages resulting in high prices. A consignment from the Port of Novorossiysk in southern Russia arrived through Mombasa ports on February 7th 2023, and another shipment from Russia is expected to arrive on February 12th 2023. The import of wheat into the country is expected to help reduce the prices of wheat flour, which is currently retailing at around KES 200 per 2-kilo- gram packet due to a shortage caused by the Ukraine-Russia war disrupting the supply chain. Russia and Ukraine are significant global producers of wheat. Still, according to the Agriculture and Food Authority (AFA), local production has default on our debt would produce an econom- ic and financial catastrophe." Speaking to a National Association of Counties conference, Yellen said a federal default would cost jobs and boost the cost of mortgages and other loans. "On top of that, it is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security," she added. -NPR De La Rue Kenya stoppage triggers chequebook crisis Kenyan banks are facing a logistic crisis of supplying customers with cheques after domi- nant banknotes and security printer De La Rue announced plans to freeze local operations from March 31. The banks are scrambling to seek alternative printers as the lenders advise their customers to stockpile cheques after the multinational made the shock announcement on Jan- uary 20 to suspend operations on low business. The moves by the local banks will stoke the debate over the future of cheques as their pop- ularity falls significantly in favour of electronic money transfers, debit and credit cards as well mobile money services like M-Pesa. Equity Group has asked customers to make bulk orders for chequebooks as they seek a replace- ment for the multinational that dominates a business that has other players such as Sintel Security, Punchlines Ltd, Ellams Products and Tally Solutions. The lender has asked its customers to place sufficient orders lasting a minimum of six months as Absa Kenya puts a similar notice on Thursday as its mulls over seeking orders from South Africa. KCB reckons it will fall back to other vendors in the wake of the freeze notice from the UK security printer. -Business Daily Airbus Targets 720 Deliveries in 2023 Airbus slowed the production ramp-up of its best-selling A320neo-family jet and targeted 2023 jet deliveries in line with its original esti- mate for last year as the world's largest plane- maker bowed to industrial pressure on supplies. The France-based group also targeted an adjust- ed operating profit of 6.0 billion euros ($6.4 billion) in 2023 after posting a stronger than expected 5.627 billion for last year, up 16% from 2021 and helped by positive pension effects. The new targets for single-aisle jets confirm a shallower trajectory disclosed by industry sources last month, with the goal of 65 A320- neo-family jets a month slipping to end-2024 and the rate of 75 slipping to 2026 from "middle of the decade". "We are adapting our production to match supply," Airbus Chief Executive Guillaume Faury said on Thursday. Industry sources have said Airbus is currently producing 45 of the workhorse jets a month. Revenues rose 13% to 58.763 billion euros, buoyed by higher deliveries compared to the previous year and a strong dollar. Airbus delivered 661 jets last year, up 8%, but fell well below its original target of 720 units, which was later trimmed to 700 and ultimately abandoned weeks before end-year. In a results statement, Faury blamed an "adverse operating environment that prevented our supply chain from recovering at the pace we expected". -US News World Bank chief steps down months after Dems demanded resignation Trump-appointed World Bank Chief David Malpass is stepping down from the organiza- tion by the end of June, months after House Democrats called on him to resign following comments that implied climate change denial. “This afternoon, I shared with the World Bank Group’s Board of Directors my intention to step down by the end of the World Bank’s fiscal year,” Malpass said in a statement announcing the decision. Malpass came under fire after his response during a United Nations (U.N.) event in New York last year, when he was asked if the “manmade burning of fossil fuels is rapidly and dangerously warming the planet.” “I don’t even know. I’m not a scientist,” Mal- pass said. Environmentalists pounced on Mal- pass’s statement, arguing he was a climate change denier. -The Hill Business Around The World The AXiS LXIII Friday 18 Feb 2023 26

superyacht last Tuesday," lawyer Errol Eldson, told AFP. An application to auction the assets has been filed. A Cape Town high court in 2021 ordered Obiang - the son of the iron-fisted President Teodoro Obiang Nguema Mbasogo - to pay Janse van Rensburg around R40-million in damages. The lawyer said his client had been hired by an Equa- torial Guinea politician, Gabriel Angabi, "to set up an airline" in the oil-rich but impoverished coun- try. After nearly two years of setting up the airline and "everything in place and aircrafts were ready to start flying", the businessman was called by Angabi for what he assumed would be the airline launch, according to Eldson. "When he got there, Angabi said 'we don't want to do this anymore, we want our money back'," said the lawyer. Having spent all the money on the project, Janse van Rensburg failed to refund Angabi, who is allegedly related to the first family. "He picked up the phone to vice president Obiang and within 10 minutes the rapid force intervention was there… they picked Daniel up and threw him into Black Beach prison". -eNCA Political aides hacked by ‘Team Jorge’ in run-up to Kenyan election An Israeli disinformation specialist hired to run covert dirty tricks campaigns in African elections hacked political advisers close to Kenya’s presi- dent, William Ruto, in the run-up to last year’s election, an investigation can reveal. The interference did not prevent Ruto winning the poll, nor the peaceful transfer of power in Kenya, but the revelation highlights the growing risks posed by the involvement of bad actors and paid operatives in the relatively new democratic sys- tems and institutions across Africa. Tal Hanan, a self-described “chairman” of “Team Jorge”, an Israeli operation run from an industrial park 20 miles north of Tel Aviv, boasted to under- cover reporters that he was able to disrupt elec- tions through black ops and disinformation services. Days before Kenya’s 2022 election, he gave a demonstration of his capabilities, showing how he could use hacking techniques to infiltrate the mes- sages of political advisers. Hanan’s operations were exposed on Wednesday by the Guardian and an international consortium of reporters led by the French nonprofit Forbidden Stories. In a statement about the investigation, Hanan said: “I deny any wrongdoing.” During his meetings with undercover reporters, Hanan never explicitly confirmed he had been hired to work in Kenya and, if so, who his client might be. However, when demonstrating Team Jorge’s capabilities to the journalists, who were posing as prospective clients, Hanan appeared to show them “live” demonstrations of hacks target- ing three aides close to Ruto, who was a presiden- tial candidate at the time. One involved an apparent infiltration of Gmail; the other two involved Telegram accounts. -The Guardian US says Bangladesh sanctions to remain until police reform The United States will not lift sanctions on an elite Bangladesh police unit accused of extrajudi- cial killings until it is reformed, a top US envoy visiting the country has said. State Department Counselor Derek Chollet visited the South Asian country this week where he discussed security cooperation with government representatives in Dhaka. The diplomat is one of the most senior US offi- cials to travel to Bangladesh since Washington sanctioned the Rapid Action Battalion (RAB) over human rights violations. "If there's an erosion in democracy anywhere, it starts to put a limiting factor on what we can do together," Chollet said at the conclusion of his trip on Wednesday. "We are committed to continuing to help Bangladesh strengthen the rule of law and security," he said of the sanctions. "Until we see accountability, until we see sus- tained reform, we are not going to be able to turn the page on this." Dhaka and Washington normal- ly have warm relations. They cooperate on securi- ty issues and Bangladesh often votes alongside the United States at the United Nations. But the United States and other Western governments have expressed concern over the political climate in Bangladesh, where Prime Minister Sheikh Hasi- na's party dominates the legislature and runs it virtually as a rubber-stamp parliament. Around 2,500 Bangladeshis have allegedly been killed by security forces since Hasina came to power in 2009, according to rights group Odhikar. The RAB is accused by rights groups of killing political opponents and staging gunfights to deny victims due legal process. The government denies the allegations of disap- pearances and extrajudicial killings, with one min- ister saying that some of those who went missing in fact fled Bangladesh. The US sanctions, imposed in December 2021, include asset freezes and visa bans on seven top current or former RAB officials. Chollet met with Hasina in Dhaka and is concluding his South Asia tour with an official visit to Pakistan.-France24 Russia fires barrage of missiles at targets in Ukraine Russia again pummeled Ukraine with a barrage of cruise and other missiles on Thursday, hitting targets from east to west. Ukrainian authorities said one of the strikes killed a 79-year-old woman and injured at least seven other people. Russian forces used a variety of missile types, firing 36 in all in a two-hour overnight burst, said Ukraine’s military chief, Valery Zaluzhnyy. He said Ukrainian air defense batteries shot down 16 of them — a lower rate of success than against some previous Russian waves. Ukrainian authorities said targets in the north, west, south, east and center of the country were struck. The head of Ukraine’s presidential office, Andriy Yermak, said Russian forces “changed their tactics” for the strike, deploying what he described as “active reconnaissance” and “false targets.” He gave no details. But Russian forces may be seeking ways to get past Ukrainian air defenses that have been strengthened by Western-supplied weapons systems and have had high rates of suc- cess against previous Russian barrages of missiles and killer drones. One of the overnight strikes caused casualties and destroyed homes in the eastern city of Pavlohrad, the regional governor said. Gov. Serhiy Lysak said a 79-year-old woman was killed and at least seven other people were wounded, including two who were later hospitalized. -AP Turkey quake revives debate over nuclear plant being built A devastating earthquake that toppled buildings across parts of Turkey and neighboring Syria has revived a longstanding debate locally and in neighboring Cyprus about a large nuclear power station being built on Turkey’s southern Mediter- ranean coastline. The plant’s site in Akkuyu, located some 210 miles (338 kilometers) and 245 miles (394 kilome- ters) to the west of the Feb. 6 tremors’ epicenters, is being designed to endure powerful tremors and did not sustain any damage or experience powerful ground shaking from the 7.8 magnitude earth- quake and aftershocks. But the size of the quake — the deadliest in Turkey’s modern history — sharpened existing concerns about the facility being built on the edge of a major fault line. Rosatom, Russia’s state-owned company in charge of the project, says the power station is designed to “withstand extreme external influences” from a magnitude 9 earthquake. In nuclear power plant construction, plants are designed to survive shak- ing that is more extreme than what’s been previously recorded in the area they’re sited. The possibility of a magnitude 9 earthquake occurring in the vicinity of the Akkuyu reactor “is approximately once every 10,000 years,” Rosatom told The Associated Press via email last week. “That is exactly how the margin of safety concept is being implemented.” -AP SADC strengthens its democratic processes by including NSAs and CSOs in its peace and security architecture The Southern African Development Community (SADC) in 2022 made significant progress towards strengthening the democratisation process in the Region through trainings on electoral assis- tance and including Non-State Actors (NSAs) and civil society in its peace and security architecture. As a result, a total of 44 NSAs were trained as Long-Term Observers, and these included repre- sentatives of civil society, parliamentarians and senior officials of Electoral Management Bodies (EMBs). This was in line with a critical provision in the revised SADC Principles and Guidelines Governing Democratic Elections (2021) on diversi- ty in the composition of the SADC Electoral Observer Missions (SEOMs). Member States nominated the representatives of civil society, senior officials of EMBs and parliamentarians, in addition to government officials, for the first time, to participate in SEOMs deployed to cover the Angolan and Lesotho elections held in August and October 2022 respectively. These actions sought to improve the quality of SEOM reports and increase their credibility in the future. This was done through enhancing SADC’s capaci- ty for electoral assistance which falls under Result Area 1 of the Support to Peace and Security in the SADC region programme (SPSS), a European Union (EU) funded facility which seeks to pro- mote peace, security, stability and democracy across the Region in line with the SADC Treaty; and to strengthen the SADC peace and security architecture in the areas of conflict prevention and resolution and public and human security, in line with the Regional Indicative Strategic Development Plan (RISDP) 2020-2030. -SADC News Ukraine war live updates: EU announces new Russia sanctions package; Ukrainian children sent to Russian ‘re-education’ camps, study says Heavy shelling in eastern Ukraine continues, as Kherson, Bakhmut and Donetsk have reported multiple injuries and at least one death. Mean- while, a new report from the Conflict Observatory, in partnership with Yale University’s Humanitarian Research Lab, alleges Russia has forced more than 6,000 Ukrainian children into “re-education” camps. The report, titled “Russia’s systematic program for the re-education and adoption of Ukraine’s chil- dren,” outlines what it calls the Kremlin’s system- atic efforts to abduct children, prevent their return to Ukraine and “re-educate” them to become pro-Russia. NATO members are also in Brussels for their last day of talks, during which they pledged to contin- ue support for Ukraine. Still, despite months of pleas from Kyiv for fighter jets, getting them appears unlikely. Daria Herasymchuk, commission- er of the President of Ukraine for Children’s Rights and Rehabilitation, said that Russian forces have forcibly removed more than 16,000 children from Ukraine. “We cannot forgive the fate of more than 16,000 children who were forcibly removed from the territory of Ukraine. Actually stolen. And these are only those we know for sure,” Herasymchuk said, adding that the number of missing children could be higher. -CNBC Yacht, homes of Equatorial Guinea VP seized in SA Two homes and a superyacht belonging to Equa- torial Guinea's vice president have been seized in South Africa after a local businessman sued for unlawful arrest and torture, a lawyer said Monday. A high court ordered the seizure of Teodoro Nguema Obiang Mangue's properties, along with his superyacht docked in Cape Town. The orders arose from a lawsuit by South African businessman Daniel Janse van Rensburg. He said he had been unlawfully detained and tortured for 491 days in a notorious Equatorial Guinea jail when a business deal went sour in 2013, his lawyer told AFP. "We attached (seized) two houses...in Cape Town in a formal application two weeks ago and the Politics Around The World The AXiS LXIII Friday 18 Feb 2023 27

Markets watch U Market commenced on the 10th of January 2023. On the latest Auction Market held on the 14th of February 2023, the Zimbabwe dollar shed 3% against the greenback to ZWL856.8403 from ZWL831.8147 in the previous Auction Market. Since the Auction Market commenced on June 2020, the Zimbabwe dollar has depreciated by 93% while since the Zimbabwe dollar was re-introduced in 2019, the local currency has shed by 100% against the single greenback. Among other factors, the Zimbabwe dollar continues to succumb to blackouts, reactionary fiscal policies and policy inconsistencies by the RBZ. Most of the measures being passed by both the Central Bank and the Treasury tends to backfire instead of meeting expectations. For instance, the latest 50 percentage basis points cut-off is likely to increase the ZWL liquidity through increased borrowings thus, putting pressure on the Zimbabwe dollar. Meanwhile, the highest rate received for the US Dollar was ZWL930 while the lowest was ZWL855 both up from ZWL890 and ZWL830 during the prior trading session. This signals how companies want to get rid of the Zimbabwe dollar ahead of the upcoming general elections. From US$19 million allotted last week, US$20 million was allotted translated to a circa US$1 million increase. Pressure for the greenback con- tinues to spike for importing companies despite the latest revision of the retention thresholds for companies, from 60% to 75%. This attests to the perspective that the Central Bank needs to at least increase them to 90% or COMPLETELY remove them to release pressure on Auction Market. The Zimbabwe dollar is expected to continue dipping due to recurrent electricity blackouts, widening trade deficit and reactionary-half-baked economic policies ahead of the 2023 Presidential elections. Regional Markets Rand dips closer to 3 months low The rand depreciated to 18 against the US dollar, its lowest since early November 2022, amid a nder-fired currency, the Zimbabwe dollar has widened year-to-date losses by 18% since the Foreign Exchange Auction stronger greenback and a deteriorating outlook for South Africa's economy caused by the ongoing power crisis. Sustained power cuts enforced by the state-owned power utility Eskom to curb a total grid collapse continues to plague businesses and undermine economic growth while also fuelling inflation. Eskom recently stated that rolling blackouts would likely persist for at least two more years as it overhauls its ageing, mostly coal-fired plants. According to South African Reserve Bank estimates, the electricity crisis costs the country as much as ZAR 899 million per day. The central bank changed its annual economic growth fore- cast to 0.3% from 1.1%, with Governor Lesetja Kganyago saying power disruptions would shave 2 percentage points off output growth. Naira shaves off 10 percentage points as inflation soars to 18 months high Naira continued the depreciation streak on the formal market by shaving 10 percentage points, from 450 last week to 460 on the 16th of February amid a high inflationary environment coupled with forex shortages, corruption and weak economic fundamentals. The annual inflation rate in Nigeria accelerated to 21.82% in January 2023, the highest since September 2005, from 21.34% in the prior month, against market expectations of a further slowdown to 21.3%. Soaring food prices and a weaker naira currency were the main drivers. Prices of food, which is the most relevant in the CPI basket, recorded an upturn to 24.32% in January from 23.75% in the prior month. On a monthly basis, consumer prices surged by 1.87%, the most in almost 16 years, after a 1.71% increase in the previous month. Shilling continues nosediving Est-African strongest currency, Kenyan Shilling depreciated further to 125.6 from 124 last week amid forex deficiencies and recurrent erratic rainfall seasons. Meanwhile, fuel prices will remain unchanged for the month ending March 14, providing Kenyans with some relief from the high cost of living. On Tuesday 14th February 2023, the Energy and Petroleum Regulatory Authority (EPRA) decided to keep the fuel prices in Nairobi unchanged, with petrol remaining at KES 177.3 per litre, diesel at KES 162 per litre, and kero- sene at KES 145.94 per litre. Additionally, EPRA opted to continue with cross-subsidisation, which involves charging motorists more for petrol to keep diesel prices steady. Kwacha dips to 19, worst since Janu- ary 2023 Zambian currency, Kwacha depreciated to 19 against the greenback, its worst performance since January 2023. Historically, the Zambian Kwacha reached an all-time low of 22.65 in July of 2021. However, Kwacha is expected to find some stability going forward amidst the restoration of the normal power supply. Zambia Electricity Supply Corporation Limited says the 12-hour load-shedding has ended and the nation is set to resume normal electricity supply. This was revealed by ZESCO’s Managing Director, Victor Mapani during the weekend to the media. During his inauguration, President Hakainde Hichilema, just like his counterpart, President Emmerson Mnangagwa promised to end the power crisis. On the 4th of January 2023, ZESCO introduced 12-hour load-shedding as production has reduced to 400 MW from 1080 MW due to reduced water levels at Kariba. However, load-shedding in Zambia was not just because of Kariba’s water level problems but also due to the annual maintenance of the Maamba Collieries Limited Power Plant which produces up to 150 MW. On the 31st of January 2023, ZESCO leashed out plans to import a total of 280 MW from Mozambique and the Southern African Power Pool (SAPP) to ease power rationing for up to 3 months, giving more time to the Kariba dam to gain momentum. Pula further drops despite inflation easing Botswana Pula eased to 13 against the greenback from 12.2 traded last week, its record loss in 2023. Currency depreciation comes despite a decrease in inflation. Botswana’s annual inflation rate increased to 9.3% in January 2023, easing sharply from 12.4% in the previous month. Zimbabwe dollar’s YOY loses widen by 18% The AXiS LXIII Friday 18 Feb 2023 28

ZSE WEEKLY COMMENTARY The ZSE succumbed to profit-taking induced sell-offs in the week under review following a bull-run in the first 2-weeks of the month which saw the ZSE garnering over 24% nominal gains. The mainstream ZSE All Share Index slumped by a whopping -7.15% in the week to close at a 1-week low of 27511.60 points. Losses were skewed towards market heavies which plunged by a staggering -10.2% in the week, outweighing the 5.84% and 1.36% gains in penny stocks and medium caps respectively. The negative performance was induced by increased supply as investors took out early gains, while demand remained constrained by liquidity challenges. Resultantly, overall month-to-date nominal gains were trimmed to 20.59% while YTD nominal growth closed at 41.13%. On the upside, the ZSE remains the best performing bourse in Africa on a YTD basis so far, boasting of a 13% return in US$ terms while closely followed by MSE (Malawi) which closed the week at 12% gains. Meanwhile, the US$ denominated bourse, VFEX, plunged by -8.37% in the week under review to close at 106.7763 points owing to heightened sell-offs. Losses were driven by the trio of Padenga, BNC and SeedCo Intl. on slumping -10.05%, -1.87% and -0.04% in that respective order, while on the upside, Sim- bisa Brands Ltd firmed by a mild 0.09%. An aggregate of US$95,137 exchanged hands on VFEX during the week under review, up from US$61,171 recorded in the prior week. On the other hand, Innscor held an EGM during the week in which shareholders passed the resolutions to delist the counter from ZSE for a subsequent listing on VFEX. Despite a continued slow-down in inflation over the recent months owing to tightened liquidity and other measures implemented by the Central Bank, the ZWL continues to lose its grip on both the formal and informal currency mar- kets against the US$. The ZWL shed off -2.98% of its value against the green- back in the week under review to close at ZWL860.7678 on the sole legal cur- rency market (interbank). On the Reuters Auction market, the local unit depreci- ated by -3% against the US$ to settle at ZWL801.6023 at the close of the most recent currency auction trading week. ZSE ASI 29,631.60 29,944.34 29,257.89 28,982.80 28,325.82 27,511.60 -7.15% ZSE TOP 10 18,844.57 19,085.82 18,446.25 18,199.89 17,567.80 16,922.02 -10.20% MEDIUM CAP INDEX 55,373.79 55,596.86 56,004.49 56,083.93 56,642.74 56,129.15 1.36% ZSE TOP 15 20,871.15 21,136.88 20,535.89 20,319.36 19,770.61 19,098.96 -8.49% ZWL INTERBANK 835.0978 838.8520 846.1039 850.0785 856.8403 860.7678 -2.98% SMALL CAP INDEX 511,401.70 518,724.23 518,723.45 518,737.11 518,742.25 541,277.99 5.84% The AXiS LXIII Friday 18 Feb 2023 30

market, with geopolitical tensions and economic uncertainty still present. Investors may continue to remain cautious and gold prices may experience further volatility in the coming weeks. This week, Platinum Commodity Mineral experienced a large- ly positive performance, with prices climbing steadily throughout the week. Copper (US$/t) This week, Copper Commodity Mineral experi- enced a mostly positive performance, with prices climbing steadily throughout the week. The metal started the week at a relatively low price, but rose steadily each day, closing at a higher price than it opened at. This performance reflects a more confident market sentiment, with investors feeling more optimistic about the future of the global economy. This optimism is likely to con- tinue in the near future, with the metal's prices expected to remain relatively stable or continue to increase. However, there is still some uncertainty in the market, with geopolitical tensions and economic uncertainty still present. Investors may continue to remain urther volatility in the coming weeks. This week, Copper Commodity Mineral experienced a mostly positive performance, with prices climbing steadily throughout the week. Aluminium (US$/t) This week, aluminium mineral performance was mixed, with prices rising slightly overall. Spot prices for primary aluminium rose by 0.6%, while alumina prices increased by 1.4%. However, the London Metal Exchange (LME) three-month aluminium price fell by 0.3%, and the Shanghai Futures Exchange (SHFE) price for aluminium dropped by 1.4%. Prices for bauxite and alumini- um scrap remained largely unchanged. The Reserve Bank of Zimbabwe (RBZ) has suggested that a blended inflation rate, denominated in a combination of US dollars and Zimbabwean dollars, could be a more accurate reflection of the country's current economic reality. This new mea- sure would take into account the prices of goods and services in both currencies, and could be used to better gauge the impact of inflation on Zimbabwe's economy. Nickel (US$/t) This week, Nickel Commodity Mineral experi- enced a mostly positive performance, with prices climbing steadily throughout the week. The metal opened the week at a relatively low price, but rose steadily throughout the week, closing at a higher price than it opened at. This performance is indicative of a more confident market senti- ment, with investors feeling more optimistic about the future of the global economy. This optimism is likely to continue in the near future, with the metal's prices expected to remain relatively stable or continue to increase. This week, Nickel Com- modity Mineral experienced a mostly positive performance, with prices climbing steadily throughout the week. The metal opened the week at a relatively low price, but rose steadily throughout the week, closing at a higher price than it opened at. Brent/Oil (US$/b) This week, Brent Oil Mineral experienced a mostly stable performance, with prices remaining largely consistent throughout the week. There were some minor fluctuations, but overall prices remained relatively steady. Weekly Commodity Pulse Gold (US$/oz) This week saw gold prices on a rollercoaster ride, with a strong start on Monday, rallying to a new high of $1,890.53 on Tuesday, before quickly dropping back down to its opening price on Wednesday. Thursday saw a modest recovery but it remained significantly lower than its Tuesday peak. Friday's trading saw gold prices continue to climb, closing above $1,850, resulting in a net gain for the week. However, the week was marked by significant volatility, with prices rising and falling multiple times throughout the week, making it a roller- coaster ride for investors. The gold market is often seen as an indicator of investor sentiment, with prices rising when investors are feeling more confident and falling when they become more cautious. This week, the gold market has been an accurate reflection of this, with prices rising and falling multiple times as investors reacted to the news of the day. Platinum (US$/oz) This week, Platinum Commodity Mineral experi- enced a largely positive performance, with prices climbing steadily throughout the week. The metal opened the week at a relatively low price, but steadily increased, closing at a higher price than it opened at. This performance reflects a more confident market sentiment, with investors feeling more optimistic about the future of the global economy. This optimism is likely to continue in the near future, with the metal's prices expected to remain relatively stable or continue to increase. However, there is still some uncertainty in the The AXiS LVIII Friday 13 Jan 2023 27 380.7 81.67 380.7 81.67 380.7 81.67 380.7 81.35 380.7 81.35 1,828.60 Daily % Change 10-Feb-23 1 ,875 13-Feb-23 1,852 14-Feb-23 1,854 15-Feb-23 1,834 16-Feb-23 1,842 17-Feb-23 1,832 WoW -2.25% YTD 0.21% 1,770 1,790 1,810 1,830 1,850 1,870 1,890 1,910 1,930 1,950 12-Jan-23 18-Jan-23 24-Jan-23 30-Jan-23 5-Feb-23 11-Feb-23 17-Feb-23 965.80 Daily % Change 10-Feb-23 961 13-Feb-23 959 14-Feb-23 939 15-Feb-23 918 16-Feb-23 931 17-Feb-23 916 WoW -4.63% YTD -5.13% 940 965 990 1,015 1,040 1,065 1,090 1,115 11-Jan-23 17-Jan-23 23-Jan-23 29-Jan-23 4-Feb-23 10-Feb-23 9,720.50 Daily % Change 10-Feb-23 8 ,935 13-Feb-23 8,938 14-Feb-23 8,947 15-Feb-23 8,858 16-Feb-23 9,023 17-Feb-23 8,897 WoW -0.43% YTD -8.47% 7,800 8,000 8,200 8,400 8,600 8,800 9,000 9,200 9,400 11-Jan-23 17-Jan-23 23-Jan-23 29-Jan-23 4-Feb-23 10-Feb-23 20,757 Daily % Change 10-Feb-23 28,322 13-Feb-23 26,627 14-Feb-23 26,459 15-Feb-23 26,459 16-Feb-23 26,489 17-Feb-23 26,014 WoW -8.15% YTD 25.33% 25,000 27,000 29,000 31,000 11-Jan-23 17-Jan-23 23-Jan-23 29-Jan-23 4-Feb-23 10-Feb-23 2,808 Daily % Change 10-Feb-23 2,470 13-Feb-23 2,413 14-Feb-23 2,408 15-Feb-23 2 ,385 16-Feb-23 2,394 17-Feb-23 2,386 WoW -3.42% YTD -15.03% 2,200 2,300 2,400 2,500 2,600 2,700 2,800 11-Jan-23 17-Jan-23 23-Jan-23 29-Jan-23 4-Feb-23 10-Feb-23 77.78 Daily % Change 10-Feb-23 80 13-Feb-23 81 14-Feb-23 84 15-Feb-23 8 5 16-Feb-23 8 5 17-Feb-23 87 WoW 8.28% YTD 11.29% 77.0 79.0 81.0 83.0 85.0 87.0 9-Feb-23 1-Feb-23 24-Jan-23

FINANCIAL MARKETS AT A GLANCE 2023 ZSE All Share Index ZSE Top 10 Index ZSE Small Cap Index Interbank Market Rate 7831.79 0.02% 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 27248 484.57 277400 56865 50047.57 7900 50000 81521.28 800 18000 5423.08 20000 178 5320 18606.37 28202.06 412.38 277300 49450 64915.84 8000 50210.9 81516.75 800 18090.31 5000.84 23082.22 192.08 5320 18628.66 Latest Price ZWL Cents Previous Week ZWL Cents African Sun AXIA EDGARS NTS RTG TRUWORTHS 4968.36 14114.8 1085 1020 1020 280 5888.45 13789.43 1300 1020 1008.33 280 Ecocash ECONET ZIMPAPERS 7276.67 19016.76 435 7819.78 21860.02 435 MASHHOLD FMP 820 1700 700.1 1700 ARTZDR LAFARGE PROPLASTICS TURNALL Willdale RioZim 2100 14375 6300 500 289.78 16000 2000 14375 6255 444.25 272.14 16000 First Capital Bank CBZ FBCH FIDELITY FML GBFS NMBZ ZBFH ZHL 1868.75 14000 7005 2400 1950 2250 4508.38 11300 861 1899.28 16500 7000 2400 1909.97 2300 4400 11300 909.65 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 EDGARS African Sun NAMPAK MASHHOLD CFI 1300 5888.45 2050 820 56865 300.12 1085.45 325 110.72 7415 DELTA SEEDCO RTG ECONET STAR AFRICA 50047.57 20000 1008.33 19016.76 178 -15081.53 -3917.66 -191.67 -2838.24 -11.59 30% 23% 19% 16% 15% -23% -16% -16% -13% -6% 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 860.7678 -2.98% 497,412.08 4.8% 14,407.72 5.37% 23,653.77 6.98% 79858.02 -0.2% COUNTER PRICE CENTS CHANGE % CHANGE % CHANGE 54496.31 0.25% 7201.12 0.48% 27511.6 16,922 ZSE Top 10 Index All Share index ZSE Top10 index WOW -10.2% MOM 24% YTD 27511.6 31119 ZSE Financials Sector All Share index ZSE Financials index WOW -0.8% MOM 7% YTD 8.5% 27511.6 34512 ZSE Industrials Index (New) All Share index WOW 7.5% MOM 5 8% YTD 62.1 YTD 62.1% 27511.6 20699 ZSE Real Estate Index All Share index ZSE Real Estate Index WOW 0.8% MOM 4% YTD 16.7% 7831.79 27511.6 BSE All Share Index BSE All Share index WOW 0.02% MOM 1.4% YTD 1.4% 27511… 541,277 ZSE Small Cap Index All Share index Small Cap index WOW 5.8% MOM 19% YTD 19.7% 27511.6 54834 ZSE Consumer Discre�onary Index All Share index WOW 6.6% MOM 5 1% YTD YTD 54.5% 27511.6 33470 ZSE ICT Index All Share index ZSE ICT Index WOW -7.4% MOM 46% YTD 91% -18.7% 29% Interbank Market Interbank All Share index 7201.12 27511.6 LUSE All Share Index LUSE All Share index WOW 0.5% MOM -2.1% YTD -1.9% 54496.31 27511.6 NGSE All Share Index NGSE All Share index WOW 0.3% MOM 6.4% YTD 6.3% 79858.02 27511.6 JSE All Share Index JSE All Share index WOW -0.2% MOM 3.9% YTD 9.3% 27511.6 18010 ZSE Materials Index All Share index ZSE Materials Index WOW 2.1% MOM 29% YTD 32.2% 27511.6 34766 ZSE Consumer Staples Index All Share index ZSE Consumers Staples index WOW -10.5 MOM 27% YTD 42.3% 27511.6 56,129 ZSE Medium Cap Index All Share index Medium Cap index WOW 1.4% MOM 44% YTD 53.2%

Regional Economic Watch the Republic of Congo $87 million in budget support after conducting a second review of the nation’s progress regarding its social, economic, and political reforms under the Extended Credit Facility (ECF).The funding is a component of a $455 million Extended Credit Facility (ECF) program approved on January 21, 2022, resulting in the disbursement of $87 million. The three-year funding initiative aims to assist the Republic of Congo in preserving macroeconomic stability and boosting its economy amid the Covid-19 pandemic by encouraging financial aid from official sources. Egypt Inflation in urban parts of Egypt accelerated to its fastest pace in more than five years as last month’s steep currency devaluation heaped more pressure on consumers in the Middle East’s most populous nation.The index climbed 25.8% year-on-year in January versus 21.3% the previous month, the state-run statistics agency CAPMAS said Thursday. The increase was driven by a 48% surge in food and beverage prices, the largest single component of the inflation basket.On a monthly basis, inflation was 4.7%, the quickest since 2016. Egypt’s government said tackling soaring prices for food and other commodities is its top priority for the country, where a large proportion lives around or below the poverty line. The central bank is targeting inflation at an average of 7%, plus or minus 2 percentage points, by the fourth quarter of 2024. Its next Monetary Policy Committee meeting is due on March 30.Prices are likely to accelerate further in the short term, spurred by an expected hike in fuel prices and increased demand during the holy month of Ramadan, which begins at the end of March and is marked by family gatherings and large meals Mozambique Standard Bank Mozambique predicts the country’s GDP growth to stand at 4.2% this year, with annual inflation at 9.9%, announced chief economist Fáusio Mussá in a commentary released by the bank .Considering risks still elevated, inflation will be seen easing towards 9.9% at the end of the year, from 10.9% y/y last December as food inflation softens and fuel price pressures moderate.This is consistent with the views that GDP growth will likely modestly rise to 4.2% y/y in 2023, from an expected 4.1%y/y in 2022. From a production perspective, growth will likely be driven by primary activities, but may however be softer in manufacturing and services on the back of a tight monetary policy and the planned front-loaded fiscal adjustment . Zambia Zambia’s Minister of Finance has rejected China’s request for the World Bank and other international lending institutions to participate in restructuring the nation’s debt. The Minister also stated that any delay in debt relief could impede the economic recovery of Africa’s second-largest copper producer. In an interview with Financial Times, Situmbeko Musokotwane stated that completing the restructuring of approximately $13 billion in external debt is crucial and should be accomplished this year, three years after Zambia defaulted on the debt. He expressed that China’s demand for the inclusion of multilateral lenders in the restructuring process hinders the efforts to resolve. According to Musokotwane, the country needs to focus on finding immediate solutions rather than getting bogged down in discussions that may prolong the process. China is the largest creditor of Zambia, with around $6 billion in infrastructure loans from various Chinese banks and $3 billion owed to all the country’s US dollar bondholders. China’s request to include multilateral lenders would go against the long-standing rule in sovereign lending that such lenders should be exempt from debt restructuring as they serve as lenders of last resort and charge low-interest rates. Kenya 1) In December, Kenya’s public debt surpassed KES 9 trillion ($72 billion) for the first time, bringing the country closer to reaching the KES 10 trillion ($80 billion) limit set by Parliament in June 2022.Data from the Central Bank of Kenya (CBK) shows public debt hit KES 9.145 trillion ($73 billion) in December, made up of KES 4.472 trillion ($36 billion) in domestic debt, KES 37.88 billion ($303 million) publicly-guaranteed debt and KES 4.673 trillion ($37 billion) in external debt.The debt is poised to get past the KES 9.44 trillion ($75 billion) mark by June, according to earlier estimates by the Parliamentary Budget Office (PBO), which will be just KES 560 billion ($4.5 billion) shy of hitting the ceiling. 2) The Kenyan finance ministry has revised its estimated spending and the budget deficit for the current fiscal year ending in June, revealing a slight increase in total expenditure and a smaller deficit.Supplementary budget documents submitted to parliament reveal that overall spending is projected to be KES 3.37 trillion ($26.98 billion), an increase from the KES 3.36 trillion initially presented in April last year.Meanwhile, the deficit for the 2022/23 fiscal year is now estimated at 5.7% of the gross domestic product (GDP), a decrease from the original projection of 6.2%. President William Ruto’s administration is working to reduce the deficit, which grew significantly under his predecessor, Uhuru Kenyatta, due to an infrastructure construction drive. 3) In January, Kenyans working and living abroad sent home KES 43.7 billion, a 3.2% rise in remittances compared to the KES 42.4 billion they sent during the same month in the previous year.According to the Central Bank of Kenya(CBK), the US remains the largest source of remittances into Kenya, accounting for 58.5 per cent of the inflows in January. The cumulative inflows for the 12 months to January 2023 totalled USD 4,039 million compared to USD 3,778 million in January 2022, an increase of 6.9 per cent.Diaspora remittances help shore up the country’s foreign currency, which has come under pressure in recent months due to the rising dollar rate against the Kenyan shilling.According to world remit, Education, healthcare, and household needs are the main uses of remittances in Kenya, which tend to have a multiplier effect on development. Digitization remains a key driver for the growth of remittance services, according to WorldRemit, which has partnered with local banks, allowing the direct sending of money to accounts and M-pesa. Botswana Botswana expects economic growth of 4% this year while targeting medium-term growth of 5.7%, and the government plans to ramp up infrastructure investment, its finance minister said on Monday.The diamond-rich southern African country now sees its 2023/24 budget deficit at 3.06% of gross domestic product (GDP), compared with 2.1% for 2022/23, Peggy Serame said during an annual budget speech to parliament.In September the government forecast a 2023/24 budget deficit of 0.1% of GDP and a 2022/23 deficit of 3.4%.Botswana wanted to raise its 2023/24 infrastructure spending to “unlock constraints to economic growth”.The government has also revised upwards its 2022 growth estimate to 6.7% from an earlier prediction of 4.2%, she added.Serame said the 2022 revision was linked to a strong recovery from the COVID-19 pandemic, after economic growth of 11.8% in 2021 following a lockdown-related contraction in 2020.“This is due to better than expected performance in both the mining and non-mining sectors, particularly the diamond trade, and the water and electricity sectors,” she said.Botswana generates about 30% of its revenue and 70% of its foreign exchange earnings from diamonds. Congo The International Monetary Fund’s (IMF) executive board has granted The AXiS LVIII Friday 13 Jan 2023 30