The AXiS XLII

The Cost of transacting in banking industry soars
Chinese droughts to stiffle global supply chains
SARB okays use of crypto
First Capital’s total income grows

Inflation hits rock bottom

#Issue: XLII

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CONTENTS The AXiS XLI 26 August 2022

The Cover Economic News & Analysis

As Zimbabwe policy makers try to implement 4 From here, where goes Inflation
different measures to curtail the effects of 5 Cost of transacting transcends as inflation weighs on banks’
inflation, can we say that the battle has been lost
due to policy inconsistencies as well as uncon- going concern
trollable spending by treasury. 7 Skyrocketing food prices, where it’s heading
8 SARB okays use of crypto whilst RBZ remains adamant
Chinese droughts to stiffle global 9 Further Global supply chain bottlenecks expected due to
supply chains
Chinese droughts
Heatwaves,flash floods and droughts have 10 OPEC Fund’s US$15 million loan to improve Zim’s food security
affected the second largest economy in the
world.This in effect is bound to cause supply and climate resilience
chain bottlenecks especially after the ravaging 10 Addled government turns to UAE as power crisis takes toll
effects of covid-19 and the Russian-Ukraine war. 11 Currency Conundrum: Zimbabwe dollar touches record 3-week low

SARB okays use of crypto Business News & Insights

As economic agents await the introduction of 12 First Capital Bank’s total income growth more than half in 1HY’2022
the RBZ digital currency, what can be learnt from 13 Workers strike, regional floods: Affects Sibanye Stillwater’s
the South African relaxed stance to allow the use
of crytocurrencies in the nation as a way of HY1’2022 production
collection additional tax revenue. 14 Amazon accelerating expansion drive into Africa at detriment of local

First Capital’s total income grows players

As most banks begin releasing half year financial Markets
statements at the backdrop of a tough economic
climate,FCB’s net interest income recorded a 18 Markets Watch
12% uptick while non interest interest income 19 ZSE Weekly Commentary
almost doubled in comparison to the previous 21 Financial Markets at a Glance
comparable session. 22 Weekly Commodity Pulse

World News

15 Politics around the world
17 Business around the world

ZSE ASI 14,438.57 ZSE TOP 10 8,736.23 MEDIUM CAP INDEX 30,031.81 ZSE TOP 15 9,711.91 SMALL CAP INDEX 490,639.15 ZWL INTERBANK 498.5334
14,423.98 8,740.50 29,774.97 9,695.40 509,464.69 500.6271
14,506.54 8,845.88 29,510.64 9,798.22 507,518.32 507.0926
14,541.79 8,874.36 29,532.34 9,822.90 505,898.06 513.9277
14,361.47 8,762.98 29,144.13 9,714.76 514,795.59 521.2673
14,365.64 8,720.74 29,500.23 9,695.40 520,512.00 528.0554
-0.51% -0.18% -1.77% -0.17% 6.09% 5.92%

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The AXiS XLII Friday 26 Aug 2022 4

& Analysis

From here, where goes

Inflation

The Zim dollar has now lost a cumulative Zimbabwe’s annual inflation is now regarded as The risks are there but minimal and these include
80% against the greenback since the the highest in the world and this is large as a RBZ failing to sustain payments in future if
beginning of the year. The year-to-date result of domestic developments chief being cur- demand slows down relative to supply, this being
loss posits the current year as the worst, in rency dynamics. The inflation dynamics have those that the selling and those willing to buy.
terms of currency performance since the reintro- adversely affected the fiscus which has since been The gap is essentially what the Bank has to cover
duction of the currency in 2019. In 2019 and supplemented by a factor of 100% from initial and this typically induces new money in the
2020 the Zimdollar lost about 75% in each levels. The civil service has largely been unstable system.
respective year before recording a narrower loss and service delivery dragged by this dynamic. One would equate this to a TBs scheme where
of 28% in 2021. With a quarter of a year still The government is presently grappling with fixing the government would seek liquidity from the
to go, it is apparent that the current year’s cur- procurement procedures across parastatals and market now and settle at maturity which is about
rency performance is by far the worst. With related entities. Authorities have admitted that 3 months or so. At the point of settlement pay-
currency, depreciation comes Zimdollar inflation budgets were exhausted because of forwarding ments may be overwhelming but in the case of
and with inflation comes a slow down in con- pricing, which grossly inflates costs. Forward gold coins, there rotational effect which posits it
sumption and consequently production, which pricing by its very nature is a creature of infla- more in line with pyramid schemes where sellers
entails a slower economic growth of recession tion, it emanates from inflation, not the other way are countered or matched by new buyers and not
in the worst. round. necessarily the RBZ.
The immediate fears are that of hyperinflation In this case, it means that, while it's important to This has the impact of moderating pressure post
similar to 2020 one or the much dreaded 2008 robustly manage costs, the root cause is not the vesting period when most holders are likely
one. Recent inflation statistics showed an out- forward pricing itself, it is some force touching to seek to jump out of the coins. The catch is in
turn of 220% in July. At peak levels post dol- on the fundamentals of the economy. the challeng- sustaining demand for the long as the Bank can
larization, inflation reached 820% in August of es with inflation are not only limited to the gov- and this is largely a function of confidence.
2020 and what is interesting to note is that a ernment, companies are witnessing mixed perfor- Already the smaller denomination coins are also
higher level of currency depreciation in the cur- mances on volumes because of the adverse infla- a way of sustaining demand such that more
rent year is accompanied by a relatively lower tion. buyers remain in the game.
inflation outturn, although the outturn itself is a The distortive effects of COVID-19 where eco- The challenges remain that there exists a wider
mess. It would be expected that a higher cur- nomic activity is picking up, deflate the extent of premium on the parallel market which RBZ is
rency depreciation this year would result in a volume loss emanating from inflation. As a conse- seen to be compensating for, positing the scheme
much higher inflation rate to mirror it. quence, companies continue to report growth in more as a pyramid one than pure financial engi-
2 realities inform the lagging inflation rate and volumes largely driven by the rebound in demand neering. If it qualifies as a pyramid scheme it
these are the base effect of inflation in 2020, post-COVID-19, another base effect. Pricing under becomes a game of when and not if, which
where the economy was coming from full dol- such conditions becomes very difficult, and so means in the time it will eventually collapse.
larization. Under dollarization inflation generally does procurement and dealing with suppliers. To It is not all hell as painted above, there are
trended lower and the economy even experi- preserve value, companies are forced to accrete chances of succeeding if the gap between the auc-
enced disinflation earlier into dollarization. The into value-preserving assets. tion and the parallel market is closed as has been
base effect of inflation in 2020 resulted in a The inflation outlook is moderate given recent happening over the last few weeks. If the gap
much higher inflation rate vis a vis the manoeuvres by the government and specifically closes it means the Bank is not paying a premium
exchange rate. otherwise, we are witnessing an the RBZ to tame back currency depreciation. Gold when buying back the coins and essentially this
almost similar inflation level after moderating coins which have been traded for a month now, can sustain the exercise.
for the base effect. Another factor is that in have played a larger role in efforts to mop up Much of the inflation outlook depends on the
2020, the economy was operating as fully dol- excess liquidity from the market. government’s ability to sustain the current run,
larized before the government adjusted policy They are being used as a quasi-open market oper- which is still as crude and not sustainable given
under the guise of COVID-19. ation tool and not as an alternative investment the underlying shaky drivers. More is still to be
Presently the economy is back to a dual curren- asset. An estimated ZW$3 billion could have been done, but much of the instability is a result of
cy system where the US dollar is becoming the realized from the sale of 3 batches so far. Essen- government-driven market distortions, which cause
most dominant currency in terms of utilisation. tially the government is using gold coins to defer arbitrage and wider premiums. Foreign receipts
The level of USD utilisation is in the range of pressure from the short run into the future. for the current year may reach US$12.5 billion
60% to 80% of transactions by value. These To lure holders of local currency, the sale is being and this is a record high for the country.
estimates are derived from retail sales from done at a discount given the premium existing The BOP position is expected to come in positive
select market-leading players as well as the between the auction rate and the parallel rate. for the second year running and these factors
general trends in the forex auction market. since local currency is not readily changeable into should inspire the government to loosen up on
A dollarised economy implies that prices do not forex via the auction which attracts lower rates, tight control of forex allocation.
inflate at the same rate as a fully de-dollarized the choices are to hold further a depreciating cur- The tight grip on forex allocation results in ineffi-
economy, which was the case in 2020. The rency and lose value, buy forex at higher parallel ciencies and these inefficiencies breed market
USD market plays the role of a cushion, mod- rates or buy gold coins hold them for 6 months distortions as subsidies, waivers on sectors and
erating the inflation rate and hence we are wit- and realise full USD value and discounted prices. preferences kick in, which eventually destabilise
nessing slower growth in the current year. The last is an appealing option to holders of local the economy.
Regardless of the comparison, the present currency.
year's inflation levels are still concerning in
absolute terms.

5 The AXiS XLII Friday 26 Aug 2022

Cost of transacting
transcends as inflation weighs on banks’ going concern

As weak macro-economic fundamentals
take a toll on the economy of Zimbabwe,
the ministry of Finance, together with the
Central Bank, have relentlessly raised swords at
one symptom, the currency crisis. The resulting
effect of this has been a worsening economy at
other fronts which are left unguarded. This has
seen companies, particularly the banking sector,
having to immediately remodel their operations
and incorporate a “GoZ-survival guide”.

The economy has, for a long time, suffered With every variable under siege in the economic Therefore, banks have been monitoring their loan
from weakening fundamentals in different cate- environment, confidence in the authorities and books and lending less than usual as they risk
gories including political factors, demographic policies has followed suit. This has led to the receiving depleted value in return. In a normal
factors, technological factors and economic dumping of anything local in preference of economy, bank lending is the main income gen-
factors among others. The political climate foreign, particularly currency. The local currency erating activity for any bank. In Zimbabwe,
affects every business. Governmental organiza- exchange rate has risen by over 300% since the banks have to do away with the norm and yet
tions, rules, legislation, and general public beginning of the year on the formal currency still survive. This has seen a remodeling of
policy all have an influence. The political land- markets. This has been driven by a lot of income generating activities for banks, mainly
scape must be taken-into-account in many com- factors, including low production and increasing including raising commission fees to all-time
mercial choices, and yet public policy changes money supply pumped by the Central Bank. In highs in a bid to survive. According to an RBZ
are the hardest to predict in our business envi- a bid to curtail the rampant exchange rate move- report, interest income contributed 18% to aggre-
ronment. People and their makeup are related to ment, the government pledged to attack all gate income for banks in the first half of 2022,
demographic dynamics. The average or typical forces not relating to the actions of government down from 40% in 2021 as loan books continue
features of a target market, or the individuals institutes. These measures included interfering in to dwindle. Fees and commissions contributed
who purchase goods or services, are known as the stock market and change trading regulations, 79% of the aggregate income in the first half of
demographics. Demography is also considered in a move that saw a bloodbath on the bourse. 2022 as banks passed the loss in value to cus-
driving an economy, with age as a major consid- Thegovernment also suspended payment of con- tomers who use their services.
eration as the youths are the major economic tractors, a move that has seen affected business- The increase in fees and commissions is
players, and yet the country has lately seen an es facing liquidity constraints and risk receiving applaudable to banks whose profits have gone
increase in the number of youths leaving the payment when the money has significantly lost up and strengthened their going concern. How-
country for greener pastures. These, among value, thus recording exchange losses in the ever, this comes at a cost of further losing confi-
other factors, remain unattended to and have financial year. dence and interest in formal banking channels as
been collectively eroding the economy. Proving more detrimental to the banking sector users now prefer informal channels. This has
The authorities’ main focus has been to address as the topic under scrutiny, the Central Bank seen a reduction in deposits in real terms. The
an element under economic factors at the increased borrowing costs to 200% while infla- continued stringent measures on borrowing have
expense of all the other factors. Economic tion was at 192%, a reckless projection as any also weighed on companies’ liquidity positions
forces influence the purchasing power and layman would project inflation to outgrow the as companies require a plausible level of liquidi-
spending habits of consumers, which also have interest rate in less than a month. Due to high ty to fund operations. While inflation grew to
an impact on the success or failure of compa- inflationary pressures and speculations, arbitrage 257% and ZWL-US$ exchange rate grew by
nies and products. Variables affected by eco- was the main business in town as capacitated over 300%, the total banking sector loans grew
nomic forces include the rate of inflation (mea- people would borrow large sums from the bank by a mere 162% in nominal terms.
sured by the CPI, or Consumer Price Index), the before burning the ZWL on the parallel In conclusion, government’s complacency in
level of interest rates, stock market movements, exchange market. The greenback would rapidly addressing problems rather than tackling symp-
employment rate, tax laws, and government appreciate against the ZWL as the exchange rate toms will continue to have an adverse impact on
fiscal policies. Annual inflation reached a peak has been growing by an average of 1.5% each the end-persona in the business chain, which is
of 256.9% in July, which was the highest in the respective day, allowing the speculative borrower usually the customer as business will pass
world as the country went back into hyperinfla- to pay back the borrowed funds at less value adverse effects on the customers. BAZ chief
tion. In the prior month of June, interest rates after benefiting from the premium of holding a executive officer Fanwell Mutogo, had to say,
were raised to 200% against an annual inflation hard currency in hand. Raising interest rates to “The companies may be forced to astronomically
which stood at 192% then. The local bourse, 200% while inflation was at 192% was a mea- increase prices to be able to pay and this could
Zimbabwe Stock Exchange, has turned from sure meant to curb speculative borrowing. How- cause inflation in the process,” while implying
being the best performing bourse in 2020 and ever, this measure only lasted for less than a that exorbitant borrowing costs have hit compa-
2021 respectively at global level, to being the month as inflation sky rocketed to 257% in the nies’ bottom line and driven down cash flows.
worst performing in the world after succumbing following month.
to a current year-to-date loss of -71% in United
States Dollar terms. Employment rate has
remained one of the worst in the region while
the economy is highly informalized. Companies
have also continued to raise concerns on the
very high tax rates which are inhibiting growth
as profits are depressed further.

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The AXiS XLII Friday 26 Aug 2022 6

7 The AXiS XLII Friday 26 Aug 2022

Skyrocketing food prices,

where it’s heading
F ood, whether it is in the supermarket or
in a restaurant, is significantly more The share of high-income countries with high son. The major factor that has contributed to the
expensive than it was a year ago. While inflation has also increased sharply, with about skyrocketing food inflation is the rampant cur-
general inflation, as well as the lasting impacts 83.3 percent experiencing high food price infla- rency depreciation that has taken the country by
of COVID-19 and the Russia-Ukraine war, have tion. The most affected countries are in Africa, storm since 2019. The war against inflation
driven this trend, some are placing blame on North America, Latin America, South Asia, seemed all lost for the government until they
supermarkets. Europe, and Central Asia. introduced the gold coins which are trying to
Food has been one of the worst-affected sectors In real terms, food price inflation exceeded mop up excess liquidity in the market and
by price hikes in recent months in the country. overall inflation (measured as year-on-year reduce money supply.
In the quarter ended June 30, 2022, Zimbabwe change in the overall CPI) in 81 percent of the This in turn has ushered a lifeline for businesses
contended with a fast-depreciating local currency 153 countries for which food CPI and overall and investors who can now opt for the gold coin
and relentless inflation which accelerated from CPI indexes are both available. to store value. The stability of prices over time
72,7 percent in March 2022 to 191,6 percent in The latest World Bank (WB) food security will stabilize the purchasing power of consumers
June 2022 as the economic environment became report has indicated Zimbabwe was among the since a fixed amount of money will afford con-
hyperinflationary. countries worst affected by domestic food price sumers the ability to budget but the reality still
This, according to the firms, exacerbated cus- inflation, a development that has exacerbated stands that prices will still need to go down.
tomers’ inability to acquire goods as the real household food insecurity. If the government plays its cards well, and goes
value of disposable incomes was inflation The report ranked Zimbabwe second bottom on on to dollarize the economy after extensively
eroded. An overall rise in prices over time the rankings of 10 countries hit hardest, with mopping up the excess liquidity then food prices
reduces the purchasing power of consumers Lebanon emerging as the worst affected. Zimba- will definitely continue to go down.The govern-
since a fixed amount of money will afford bwe’s food inflation is still alarming as com- ment has also lifted import duties on prioritized
fewer goods for consumption. pared to the other countries in the region as basic food and non-food commodities in
The development has also seen firms struggle to seen below. response to emerging shortages which has been
price their merchandise owing to growing The country is the worst hit in the region and cushioning some household groups, but access
foreign exchange price differences on the formal climate change has impacted agricultural seasons for poorer households remains constrained. Fur-
trading platforms and that obtained on the paral- coupled with rising prices for raw materials ther to that, the Consumer Council of Zimbabwe
lel market. This climaxed in Zimbabwe being have sent the agricultural sector on its knees. commended the impact of the reduction of fuel
listed among the top 10 countries that have been Challenges being faced in accessing fertilizer prices on basic commodities has resulted in the
hard hit by food inflation as indicated in the mainly as a result of sharp price increases is price decline of commodities such as maize
table below. Zimbabwe in recent months has likely to negatively impact the production of the meal, cooking oil, and flour. CCZ went on to
been the worst hit country in Africa. winter cropping season and the 2022/23 agricul- commend that consumers look forward to a
The World Bank’s latest Food Security Update tural season. The price of a 50kg bag of further decrease in prices for them to gain con-
sumer confidence.

\

states that domestic food price inflation remains AN fertilizer increased by 71% to an average In conclusion, the food poverty line and total
high around the world, with high inflation con- of USD94 by end of June 2022 compared to consumption poverty line which have been
tinuing in almost all low and middle-income USD 55 during the previous cropping sea increasing rapidly without a matching increase in
countries and the share of high-income countries incomes resulting in worsening vulnerabilities
with high inflation increasing sharply. and food insecurity will need to be curbed soon
Domestic food price inflation (measured as to allow consumers to trust the system again.
year-on-year change in the food component of a
country’s Consumer Price Index (CPI)) remains Food inflation for countries in SADC (Percent Change, Year on Year)
high around the world, it said.

Information from the latest month between April
and July 2022 for which food price inflation
data are available shows high inflation in almost
all low and middle-income countries; 92.9 per-
cent of low-income countries, 92.7 percent of
lower-middle-income countries, and 89 percent
of upper-middle-income countries have seenin-
flation levels above 5 percent, with many expe-
riencing double-digit inflation.

The AXiS XLI Friday 19 Aug 2022 8

SARB
okays use of crypto whilst RBZ remains adamant

The South African Reserve Bank announced sion to follow suit as it Bank has produced a public consultation paper on
that all financial institutions will now be becomes more open to the market for digital CBDC to be released soon," Mangudya stated that
permitted to deal with funds related to dig- assets. The SARB's Prudential Authority (PA), in addition to the consultation document, the
ital assets and shouldn't arbitrarily block all cryp- which regulates financial institutions, has urged Bank would also conduct consumer perception
tocurrency users in the week commencing August them to implement a risk assessment strategy for studies on CBDC. Mangudya claimed that the
21, 2022. A digital asset is just content that has providers of virtual assets (VASPs).Instead of Bank will be able to participate in pilot CB-
been digitally stored. Images, pictures, videos, using this strategy, the agency advises banks and DC-related programs as a result of the findings
text-filled files, spreadsheets, and slide shows all other financial institutions to classify digital assets of both the consumer survey and the consultation
fall under this category. This holds for financial and CASPs using risk assessment to identify the paper.
information as well, and it is now accepted prac- proper amount of risk management measures Zimbabwe plans to have a digital economy by
tice. This article examines the rationale behind required to maintain their relationship with them. 2025, hence the adoption of CBDC will have a
South Africa's decision to reverse course and For regulatory and taxes reasons, South Africa significant impact on the idea. Another significant
permit the usage of cryptocurrencies and other now categorizes digital assets as financial assets, step toward digitalization will be the use of digi-
digital assets to support their financial system. according to a Reuters article. Following the clas- tal currencies. According to the most recent report
According to the South Africa Reserve Bank, sification, several agencies are developing regula- by the World Bank's Digital Economy for Africa,
banks are now permitted to function as a conduit tions that will be made available to the business which was released in 2021, Zimbabwe has a
for money linked to crypto asset service providers by 2022. This indicates that, given the prospect relatively well-developed digital payment system,
and may assist clients looking to buy or receive of greater income collections, the RBZ must with the government using digital currency almost
payments in fiat currency into their bank accounts adopt the use of digital assets as quickly as feasi- exclusively and 96% of all formal sector transac-
for the selling of cryptocurrency (SARB). The ble in this era of digitization. tions taking place online as opposed to 4% in
country's central bank stated that financial institu- cash.
tions in South Africa are now permitted to deal There are numerous advantages to CBDC adop-
with funds related to digital assets and shouldn't tion for Zimbabwe, which cannot be disputed.
arbitrarily block all crypto clients. The CBDC may be able to help the nation, which
The advice was made public after some regional is struggling with inflation, unstable currencies,
banks took action to close down accounts con- and a cash shortage. Reduced reliance on cash
nected to cryptocurrency exchanges, citing risk lowers costs associated with printing and distrib-
exposures. The SARB acknowledged in the letter uting cash, among other benefits.
that some banks in the nation had barred custom- The digital currency will only be valuable,
ers with connections to cryptocurrencies. though, if there is free market price discovery,
A thorough risk assessment is important, it was economic policy stability, and effective growth
stated, but wholesale client relationship termina- management of the supply of electronic money.
tion poses a threat to the stability of the busi- Already, several experts are warning that the
ness's finances. In 2018, Zimbabwe outlawed chosen classification would cause issues for inves-
cryptocurrency trading by financial institutions, tors. According to a legal expert, investors would
following a small number of other countries that struggle to demonstrate how much of their owner-
had already passed similar regulations. The RBZ ship in digital assets qualify for taxation.
should be interested in studying the impact of this A lesson from Botswana
decision by the South African Reserve Bank.

All banks, foreign institution branches, controlling Contrary to South Africa and Zimbabwe, which
corporations, qualified institutions, and bank or outlawed the usage of cryptocurrencies right once,
controlling company auditors received the instruc- Botswana adopted a different policy that has
tions. Notably, it is a follow-up to the risk assess- helped the nation secure favourable investor rela-
ment of the local banking sector published by the tions and boost FDI. The RBZ should learn from
SARB in July, which listed digital assets among this and adopt a strategy that places more empha-
the top 10 threats. sis on restrictions than anything else, as opposed
According to the aforementioned graph, bitcoin to a total prohibition.
ownership is truly big enough that central banks
like the RBZ should adopt and legalize its use as Botswana passed a bill to control the trading of
soon as possible. digital assets at the beginning of 2022. According
While the central bank issued a warning that cur- to Bloomberg, to strengthen its anti-money laun-
rent regulations did not permit " cross-border or What is the Zimbabwean economy doing about dering procedures, cryptos and digital tokens will
foreign exchange transfers for the explicit purpose digital assets be controlled (AML). Any business that provides
of purchasing crypto assets," some South African cryptocurrency services or anything else involving
banks in June 2021 prohibited customers from Mangudya stated that the Bank has conducted digital tokens is required by the new regulations
using their credit and debit cards to purchase study trips to nations that are advanced in CBDC to obtain a license from the Non-Bank Financial
cryptocurrencies on foreign exchanges. endeavours since 2021 and have produced a road- Institutions Regulatory Authority.
However, South Africans are permitted to pur- map for the implementation of CBDC in Zimba-
chase cryptocurrency with their yearly "single bwe in the most recent monetary policy statement Regulators are looking for measures to safeguard
discretionary allowance" of up to 1 million South (MPS) delivered on August 11, 2022. The public people in Africa from this risk as bitcoin adop-
African rands (about $59,000) or 10 million rands will have 90 days from the date of release to tion continues to spread and risks grow as more
($580,000) of foreign capital allowance.The South make their thoughts on a public consultation people fall victim to cryptocurrency scams. As a
African Reserve Bank encourages financial insti- paper on CBDC, according to the Bank. The pre- result, the Financial Sector Conduct Authority
tutions to act in a way that is conducive to digital cise date hasn't been disclosed, though. (FSCA) in South Africa is developing a regulato-
assets. The South African Reserve Bank (SARB) ry framework to shield more people from the
is pushing financial institutions under its supervi "The involvement of stakeholders in the CBDC risks associated with cryptocurrency investments.
journey is crucial," Mangudya said in a statement The framework will largely control cryptocurrency
that was attached to the MPS. "In that regard, the trading.

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9 The AXiS XLI Friday 19 Aug 2022

Further Global supply chain

bottlenecks expected due to Chinese droughts

nation, placing addi- The US and China are particularly affected by
tional strain on water shortages, but drought is also having a
already-stressed significant impact on the stability of global supply
global supplies due to networks in addition to the horrifying cost to
the crisis in Ukraine. human (and animal) lives. Agriculture is the eco-
nomic sector most at risk from drought.
As cities struggle to The University of California's drought report esti-
keep up with a surge mates that the 2021 US drought cost the Califor-
in electricity con- nia agriculture industry roughly US$1.1 billion
sumption, tempera- and nearly 8,750 full- and part-time jobs. The
tures as high as 45 analysis came to the conclusion that the entire
degrees Celsius (113 impact, accounting for the effects on other eco-
degrees Fahrenheit) nomic sectors, is anticipated to be $1.7 billion,
have prompted some with a loss of 14,634 full- and part-time employ-
Chinese provinces to ment.
enforce industrial Any long-term issues with grain production in the
power cuts. The US will not help to improve the situation because
Yangtze River's the ongoing conflict in Ukraine has already nega-
record low water tively impacted the world's grain supplies. But
T his picture demonstrates how China is the levels have also put strain on the area's hydro- because so many international supply chains rely
world's leading producer of wheat. As one electric plants. In Sichuan, where temperatures on on Chinese labor, China is where the drought is
of the world's leading food producers and Wednesday reached 44 degrees Celsius (111 having the biggest economic impact.
an important exporter, China has played a key degrees Fahrenheit), recent heat waves surpassed This impact is seen not just within China's bor-
role in ensuring global food security. However, records. ders but also on a worldwide scale. Reuters
the country is currently experiencing a severe reports that on August 22, restrictions on electric-
drought, and this article will analyse how such a In southern China, the middle-year rice crop is ity consumption were expanded in south-west
situation may impact both global prices and Afri- now in a stage of ear-drawing and blossoming. China's burnt areas. According to Fortune, such
can markets that rely on China for food imports. Male-drawing and silk-spitting season has arrived power rationing is already starting to have an
According to experts, the current heatwave may in the summer corn. The current time period is impact on already stretched global supply
rank among the worst ever observed throughout crucial for determining autumn grain crop yields networks.
human history due to its severity, size, and endur- in the south, according to the China Meteorologi- Just last week, Sichuan province a major manu-
ance. The Tibetan Plateau was among the regions cal Administration. It is also the time of year facturing hub for both ordered firms to shut down
of southern China that were experiencing "severe" when moisture and temperature are most sensi- in order to conserve electricity, giving automakers
to "exceptional" drought conditions. According to tive. The production of fall grains will face and semiconductor manufacturers a taste of how
government data released ahead of even hotter significant obstacles due to drought and high tem- China's water shortages may disrupt their produc-
temperatures on Thursday, a debilitating drought peratures. tion lines. China's Ministry of Finance reports
that was made worse by a record heat wave has that in 2021, the government spent $8 billion on
stretched across half of China and reached the Villagers lament the drying up of all the nearby water conservation subsidies, an increase of 3%
typically chilly Tibetan Plateau. farms. Early, medium, and late varieties of rice from the year before.
Heatwaves, flash floods, and droughts have affect- are present in the field. Six weeks will pass
ed the second-largest economy in the world. before late rice may be harvested. Because they
According to scientists, these natural disasters are are powerless this year, farmers will produce less
growing more common and severe as a result of grain. Although there will be less grain produced
climate change. According to the agriculture min- this year, it is still difficult to predict how much.
istry, Southern China has had the longest stretch The average wholesale price of vegetables in July,
of consecutively high temperatures since records as tracked by the Chinese Ministry of Agriculture
have been kept more than 60 years ago. and Rural Affairs, was 3 cents/kg, up 21.3%
According to experts, the current heatwave may annually and 19.9% sequentially. The Chinese
rank among the worst ever observed throughout National Bureau of Statistics recently revealed
human history due to its severity, size, and endur- CPI statistics that showed a 12.9% year-over-year
ance.More than 370 million people live in the increase in the price of fresh vegetables.
Yangtze river basin, which stretches from Shang-
hai's shoreline to Sichuan province in southwest Due to China's hydropower limitation and the
China. UN's report that droughts are becoming more
This region is home to major manufacturing hubs, frequent and prolonged, multinational corporations
notably the megacity of Chongqing. On Thursday, need to reconsider their supply chains. It
the China Meteorological Administration forecast- appearsthat the list of issues interrupting interna-
ed that Chongqing and the provinces of Sichuan tional supply networks is growing, and the latest
and Zhejiang would continue to experience high one to be added is drought.
temperatures of up to 40 degrees Celsius (104
degrees Fahrenheit). But the heatwave was Globally, droughts are getting more common and
relieved in some areas. According to state broad- prolonged, and of all natural disasters, they claim
caster CCTV, parts of southwest Sichuan were the most lives. This is according to a recent UN
lashed by severe rains overnight, forcing the research called Drought in Numbers 2022.
evacuation of over 30,000 people. According to the report, weather, climate, and
A 10 billion yuan ($1.45 billion) subsidy was water risks caused 50% of all disasters worldwide
announced by China's State Council on Wednes- between 1970 and 2019 and accounted for 45%
day in order to help rice farmers who are suffer- of all disaster-related deaths (650,000), largely in
ing from drought circumstances that, according to poor nations. These figures are all the more
the government, pose a "serious threat" to this alarming when you consider that only 15% of
year's autumn harvest. China produces more than natural disasters throughout this time were caused
95% of the rice, wheat, and maize it eats; never- by droughts.
theless, a smaller harvest may result in a greater
need for imports in the world's most populous

The AXiS XLI Friday 19 Aug 2022 10

OPEC Fund’s US$15 million loan

to improve Zim’s food security and climate resilience

T he OPEC Fund for International Develop- The US$15 million loan comes at a time when farmers in Zimbabwe will help to create new
ment recently announced this week that Zimbabwe is making strides in trying to be food employment and improve livelihoods.” Zimbabwe
it is providing a US$15 million loan to secure by developing its agricultural sector. is currently targeting to grow the agricultural
the Republic of Zimbabwe to support the Small- sector US$8.2 billion by 2025 contributing at
holder Agriculture Cluster Project (SACP) to Most experts have stressed the need for more least 20% to the nation gross domestic product by
increase productivity and improve household attention to be anchored on boosting the country’s that year.
incomes. agricultural sector to win the fight against food
In a press release, OPEC Fund said the loan is insecurity and poverty within Zimbabwe. Upon introduction, SACP was to be implemented
provided under OPEC Fund’s Food Security in five provinces namely, Mashonaland Central,
Action Plan, a US$1 billion commitment to Zimbabwe is currently at the bleak of facing food Mashonaland East, Mashonaland West, Midlands
address global food insecurity. insecurity as food production has been decreasing and Matabeleland North, where it will target key
“SACP will target key urban and rural agricultur- owing to frequent droughts, low and erratic rain- urban-rural agricultural production and food trad-
al production and food trading corridors in five fall, intermittent floods, the COVID-19 pandemic ing corridors to increase the role of small-scale
provinces - Mashonaland Central, Mashonaland and lack of funding within the agricultural sector. farmers and private sector.
East, Mashonaland West, Midlands and Matabele- Food insecurity in Zimbabwe has also been made
land North and benefit 78,000 small scale farm- worse by depressed disposable incomes due to Last year, the IFAD financed the project with a
ers. Fifty per cent of the beneficiaries will be inflation and exchange rate disparities which has loan of US$35.69 million with US$8.8 million
women and at least 30 per cent will be youth,” made it difficult for most citizens to afford basic being provided through domestic co-financing,
read the release. food stuffs, and with agriculture not looking so which includes US$4.6 million from the Govern-
good, most families are likely to live in poverty ment of Zimbabwe and US$4.2 million from the
with time. beneficiaries themselves.

SACP is an initiative aimed at increasing produc- Recently, this month, Zimbabwe was ranked by Participants of the project will also benefit from
tivity and household incomes by sustainably trans- the World Bank latest report to be among the improved access to irrigation water, domestic
forming the small-scale farming sector and countries worst affected by domestic food price water supply and rehabilitated roads that will
increasing farmers’ participation in market-orient- inflation, a development that has exacerbated facilitate the commercialization of small-scale
ed and climate-smart value chains. household food insecurity. agriculture and attract the private sector.

SACP will provide technical assistance, matching With agriculture being one of the sectors that About the OPEC Fund
grants and infrastructure investments to agricultur- underpins the country’s economic growth, food The OPEC Fund for International Development
al production groups (APGs), rural micro-enter- security and poverty reduction strategies, funding (the OPEC Fund) is the only globally mandated
prises and value chain lead enterprises that can of the sector is very crucial and over the years, development institution that provides financing
take advantage of improved access to assets and small-scale farmers have proved to play a critical from member countries to non-member countries
opportunities for agricultural production and role in the sector, as they own majority of the exclusively. It was established by the member
income-generating projects. agricultural land. countries of OPEC in 1976 with a distinct pur-
The OPEC Fund’s loan will finance the construc- Commenting on the loan development, OPEC pose: to drive development, strengthen communi-
tion small-scale irrigation schemes to equip a total Fund Director-General Dr. Abdulhamid Alkhalifa ties and empower people. The organisation works
area of 1,780 ha with improved, climate proofed said, “Addressing global food insecurity and pro- in cooperation with developing country partners
irrigation systems, the rehabilitation of 89 km of tecting the most vulnerable and affected popula- and the international development community to
feeder roads, and equipment of 100 wards with tions is a priority for the OPEC Fund. Improving stimulate economic growth and social progress in
water supply and sanitation facilities. productivity and sustainability of small-holder low-and middle-income countries around the world.

Addled government
turns to UAE as power crisis takes toll
Z imbabwe’s target to achieve electricity
self-sufficiency by 2023, which is barely that Zimbabwe is in talks with the Dubai unit of climate change effects and recurrent technical
5 months from now remains hanging in SkyPower, a renewable energy projects developer, faults on the plant which the government isdis-
the air as the power utility, Zimbabwe Electricity to build 500MW of solar plants in the country. mally failing to address. On the other hand,
Supply Authority continues struggling to put its Data from SkyPower shows that it has built and Hwange Thermal Power Station is also struggling
house in order. acquired a pipeline of over 25GW worth of due to ageing power plants which the government
Despite having one of the largest man-made dams power projects in the Middle East, Africa, and also, is failing to replace. Zimbabwe heavily
in Africa, Kariba Dam, Zimbabwe continues to Asia. Minister Mutsvangwa said the proposed relies on its only hydro-power plant, the Kariba
battle massive electricity blackouts which a put- solar parks would be built in phases during a South Power Station, which is the biggest power
ting the country’s production targets at stake. The post-cabinet briefing without providing financial generation plant in the country with a total gener-
country expects a Gross Domestic Product (GDP) insights. Zimbabwe needs an average power ation capacity of 1050MW while Hwange Power
growth of 4.6% a downgrade from the initial demand of nearly 2000 MW, but the power utili- Station, the largest coal-fired power station has a
5.5%. ty’s total power supply currently ranges between capacity of 920MW. Other power comes from
Zimbabwe’s energy sector is being crippled by a 1000 MW to 1200 MW leaving out a deficit of Harare, Bulawayo and Munyati power stations
huge debt that ZESA is failing to pay to Mozam- more than 400MW. with installed capacities of 50MW, 90MB and
bique estimated at US$ 10 million by April this “The Framework Agreement will pave way for 50MW in their respective orders.
year and a monthly obligation to Zambia. In engagement between SkyPower Global and ZESA Of the state-owned five power utilities, Kariba is
2021, the country made a titanic effort to cut Holdings in order for the two entities to negotiate the only which produces renewable energy with
down its debt to Mozambique by paying US$35 a Power Purchase Agreement as well as other the other five producing non-renewable energy. To
million from US$45 million according to official ancillary agreements relevant to power genera- offset climate change effects, Zimbabwe is push-
statistics. South Africa’s Eskom has been one of tion,” Information Minister Monica Mutsvangwa ing for private investment into renewables to fill
the key electricity imports destination to Zimba- during a post-cabinet briefing. the power deficits. The government announced
bwe. However, due to Zimbabwe’s failure to As it is battling to deal with power blackouts, bids for 500MW of solar in 2020 but the coun-
service its debt on time, the country has cast a ZESA has turned on to load shedding of up to try’s political hatred towards democracy, corrup-
blind eye to ZESA’s struggles. Strains to import 12 hours per day affecting industry capacity utili- tion and currency crisis has kept many investors
power from South Africa have been exacerbated sation. The power crisis comes at a time the away. Zimbabwe has issued permits for a com-
by Eskom’s struggles to put its house in order, a nation is forfeiting almost US$1.2 billion to cor- bined capacity of close to 7000MW, but indepen-
situation that has seen South Africa embracing ruption and gold smuggling. dent power producers are supplying only about
dark prolonged periods. ZESA’s main power harbour, Kariba Power Sta- 135MW to the grid. In July last year, Zimbabwe
Recently, Minister Monica Mutsvangwa alluded tion has been battling to supply enough electricity announced talks with AF Power of Singapore
due to reduced water levels exacerbated by the under which the company would build 200MW
over three years, starting with the first phase of
50MW in Umguza by 2022. However, the project

*To Page 11

11 The AXiS XLI Friday 19 Aug 2022

*From Page 10 Chivhayo won are worth more than US$600m – is known as the ‘DRAX scandal.’
most of which have not started such as US$73m To end the power crisis, Zimbabwe needs to deal
is yet to take off. for the refurbishment of the Harare Power Sta- with corruption first and then look for good inves-
In 2021, the government rolled out the National tion, US$163m for the restoration of the Munyati tors for the Hwange Power Station and Kariba
Development Strategy (NDS) Phase 1 Power Station and US$248m for the Gairezi Power Station. Chinese people are not real inves-
(2021-2025) which targets to increase power Power project by ZPC. tors but are shenanigans that are milking Africa’s
supply from the current installed capacity of 2317 Law enforcement has been on a ‘catch and resources while putting them in a big debt trap.
MW to 3467 MW by 2025 and to construct an release’ circus with fingered corrupt officials- Due to the lack of separation of powers, fighting
additional 280 km of the electricity transmission with no genuine arrests and imprisonments occur- corruption in Zimbabwe is just like moving moun-
and distribution network by 2025. However, such ring. In 2019, Tourism Minister Prisca Mupfumi- tains as both the legislative and the judiciary sys-
projects require huge funds which can only be ra was fired after she was accused of criminal tems are captured. The executive arm of the gov-
attained through political and economic reforms. conduct during her time as Minister of Public ernment has immense influence within the courts
Corruption has been a haunting factor in the Service resulting in the loss of US$95 million at of law making it difficult for the rule of law to
ending of the electricity crisis in Zimbabwe. In the National Social Security Authority. Zimba- apply. That is also making it difficult for Zimba-
2014 ZESA contracted Intratrek Zimbabwe, bwe’s Health Minister, Obadiah Moyo, was bwe to get a credit bailout to service its debts and
owned by businessman Wicknell Chivayo, to discharged in June 2020 after allegations that he unlock new loans.
implement a 100MW solar project worth $200m illegitimately granted a US$60 million contract to
in Gwanda. However, nothing substantial was a sinister firm that sold the government
produced. The tenders for power projects that COVID19 PPE at inflated prices in what

Currency Conundrum:

Zimdollar loses at 3 year worst

Barely 2 weeks after gaining a 5% remorse, The crush of the Zimbabwe dollar (ZW$) on the forex allocation. “In this context, the foreign
the Zimbabwe dollar traded on the back Auction Market comes amidst the introduction of exchange auction system is no longer a price
foot on the latest RBZ-governed Auction the gold coins by the RBZ last month on the discovery mechanism but instead the most ideal
Market held on Tuesday after shedding by 5%, 25th as a hedge against inflation, a move which allocative platform of foreign currency in the
which is a record decline in three weeks. During is expected to bring the ailing currency to order. domestic economy given the geo-political con-
the second trade in August, the local currency However, the continued fall raises questions on straints facing the local banking industry to estab-
narrowed deficits by 5% while during the prior whom the market lacks confidence more in: the lish an efficient interbank foreign exchange
week, it lost by a marginal 3%. Zimbabwe dollar or the government. The local market,” RBZ governor John Mangudya said in his
However, due to liquidity crisis and confidence currency has been falling due to a lean back-up latest mid-term Monetary Policy Statement (MPS).
crisis, the under-fired local currency which cur- of US dollar reserves. However, despite the intro-
rently enjoys a gold backup resumed the tailspin duction of the gold coins, the dismal performance Since 2020 when the auction system was intro-
performance to ZW$521.3451 from ZW$494.9883 of the local currency on the auction market fails duced on 23 June, 108 Main and 102 SME auc-
last week against the United States dollar. The to end. tions were held as of 23 August 2022. In 2022,
Grade 7 logic tells that market prefers the US the Bank allotted about US$834.7 million, repre-
dollar due to its ability to reserve and preserve Also, the decline came at a time the Central Bank senting about 91% of the total bids submitted to
value against the Zimbabwe dollar which has a governor said the auction market will be only the auction as of 26 July 2022 according to the
bubble-gum effect as far as confidence, value responsible for allocating foreign currency to data released by the Central Bank with the SMEs
preservation and acceptance from the public are companies and will not be used as a demarcation sector receiving circa 17% in the first half of
concerned. for exchange rates, a move from an auction 2022, compared to a share of 11% in the same
The pie chart below shows the distribution of market to an allocation market. Dr Panonetsa period in 2021.
Foreign Currency Allotments at Main Auction in Mangudya (Central Bank governor) has shifted
millions as of 23 August 2022 from his rhetoric that the auction was meant to Due to the high demand for the greenback, US$18
“discover” the right exchange rate after announc- million was allotted up from US$16 million last
ing that the platform will be only responsible for week adding more strains to the RBZ coffers
which is yet to clear a backlog of US$169 million
at an unspecified time.

Meanwhile, the highest rates and lowest rates
received for the Zimbabwe dollar against the US
dollar were 580 and 485 respectively up from 550
and 460 during the prior week, an indication not
only of rejection of the local currency but also of
high RTGS liquidity in circulation which the busi-
ness needs to unburden itself with.

An independent economic analyst who spoke to
Equity Axis on condition of anonymity said the
problem with the Zimbabwean economy is not a
currency problem but a governance problem, a
topic I will cover broadly in The Axis to be
released next week. He said the problem in Zim-
babwe can be related to that of the United King-
dom during the reign of Boris Johnson. Under
Johnson, the United Kingdom had everything eco-
nomically, a valuable currency and an active indus-
try but lacked confidence within the governance of
Johnson. Johnson created fractious relations within
European Union due to his incompetence in lead-
ership. That resulted in a perilous period for the
U.K. economy with inflation hitting a new 40-year
high of 9.1% in May as soaring food and energy
costs deepened the country's cost-of-living crisis.

Despite being backed up by gold coins, the Zim-
babwe dollar has failed to find a tangible remorse
even for only two weeks. Therefore, can one say
gold is failing the local currency or it’s a confi-
dence crisis in leadership?

The AXiS XLI Friday 19 Aug 2022 12

& Insights

First Capital Bank’s

total income growth more than half in 1HY’2022

The graph below shows FCB’s total assets trajectory over 4 years in ZW$ millions huge setback due to a lack of adequate foreign-
currency reserves as a backup against inflation.

However, total comprehensive income for the
period, after incorporating revaluation credits on
assets and the investment portfolio amounted to
ZW$5.3bn for the 6 months to June 2022, 598%
higher than the ZW$754.4m reported for the cor-
responding period in 2021.

The Bank procured a EUR12.5m open line of
credit from the European Investment Bank (EIB)
during the period under review, a medium-term
facility running up to 7 years and is expected to
provide capital funding for mid-cap customers.
“This is a critical intervention coming at a time
when the economy is showing signs of a
rebound,” McSharry said.

About innovation through product development,
The Bank launched a series of innovative
enhancements on its Mobile App, creating a
360-degree banking experience with multiple
functionalities while a Gold Card with improved
security features for those who travel or make
payments online was successfully launched during
the period.

Z imbabwe Stock Exchange (ZSE)-listed to 200%. Such an aggressive policy was adopted “The Bank is committed to providing its custom-
financial services outfit, First Capital by the Central Bank to deal with speculative bor- ers with relevant products and services that sup-
Bank has registered a total income rowing and deter inflation acting as a barrier to port their individual needs.”
growth of 57% to ZWL 10.4 billion during the huge borrowings from productive sectors.
six months to 30 June 2022 from ZWL 6.6 The Group declared an interim dividend of “This is being achieved on the back of strong
billion in 2021 according to the Group’s latest ZWL44.23 cents per share with a separate divi- relationships with like-minded technical and busi-
half-year financial results. dend notice to be issued with respect to the divi- ness partners. Recent partnerships with Money
The growth was anchored by an improvement in dend declaration. Transfer Agencies, RIA and HelloPaisa were
the underlying business, with net interest income Resultantly, the Group posted a profit after tax of followed by the successful launch of Western
and net fees and commissions increasing by 12% ZWL471.9 million during the period. However, Union resulting in increased options for custom-
and 18% respectively. this was 2% down from ZWL 483.8 recorded ers,” McSharry added.
The significant growth coincided with the Central during the same period in 2021. The profit was During the reporting period, the Bank partnered
Bank’s record hiking of interest rates, a situation eaten up by monetary loss which sky rocked by with Junior Achievement Zimbabwe (JAZ) during
that affected production record with an ultimate 701% and a higher tax charge increase of 116% the Global Money Week and provided financial
impact on Banks’ net interest incomes. Besides computed for 2022 played a significant role in literacy training to 4664 students in and around
that, the period was clouded by a record Zimba- narrowing the profit. Harare.
bwe dollar fall of 33% on a single day and 70% During the period from January 2022 to June In the outlook, the Bank expects the volatility to
over six months causing greater risks on monetary 2022, the Zimbabwe dollar depreciated by 70% continue in the short to medium term. Therefore,
gain margins. on the overvalued Reserve Bank-governed auction the Bank said a fine balance will be maintained
market while by over 200% on the parallel between the quest for short-term profitability and
“A 290% increase in foreign exchange trading market. The local currency has succumbed to a the long-term sustainability of the business.
income also contributed significantly to income busload of factors, chiefly a lack of confidence “The Board remains optimistic about the growth
growth, underlining the effects of exchange rate both in policy promulgators and the currency prospects of the business notwithstanding the require-
movements and growth in foreign currency itself. The ailing Zimbabwe dollar also suffered a ment for caution in navigating expected short-term
denominated business during the period,” the disruptions that may still emerge at a macro-level as
Group’s managing director Ciaran McSharry said policies adopted by regulatory authorities to stabilise
in a statement accompanying the half-year finan- the markets take root,” McSharry said.
cials.

Net interest income recorded a 12% uptick to
ZWL 3.1 million during the period under review
while non-interest income almost doubled after a
significant 88% growth to ZWL 7.2 million from
ZWL 3.8 in 2021 during the same period.

The Group’s net interest income’s performance
coincided with the Central Bank’s global record
high of hiking interest rates by 120 basis points

13 The AXiS XLI Friday 19 Aug 2022

Workers strike, regional floods:

Affects Sibanye Stillwater’s HY1’2022 production

Precious metals mining company higher by-product credits, resulting in AISC being
Sibanye-Stillwater, which jointly owns maintained in line with inflation.
Mimosa in Zimbabwe with Implats record-
Precious metals mining company Sibanye-Stillwa- Meanwhile, Group adjusted earnings before inter-
ter, which jointly owns Mimosa in Zimbabwe est tax depreciation and amortisation (EBITDA)
with Implats recorded a 63% and 23% decline in for the half year decreased by 44% to R22.6
production from its SA gold operations and US billion from a comparative same period last year
PGM operations for the six months ended 30 of R40.5 billion.
June 2022 owing to industrial action at the SA
gold operations and ongoing operational con- Profit for the period of R12.3 billion was 51% a specific priority for 2022, is the elimination of
straints and the temporary suspension of opera- lower than the record profit for the first half of fatal incidents, underpinned by the implementation
tions at the Stillwater mine. 2021 of R25.3 billion but compares favourably of our Group-wide Fatal Elimination Strategy,” he
In a statement accompanying the Group’s finan- with profit achieved for the second half of 2021 said adding that, “This resulted in the Group
cial results, Chief executive Officer, Neal of R8.5 billion when average precious metals achieving a fatality free quarter for Q2 2022, a
Froneman said the industrial action at SA gold prices were at similar levels. notable milestone.”
operations extended for more than three months “This represents the third highest six-month Going forward, Sibanye’s focus remains on
while the ongoing operational constraints at Still- period profit achieved since the Group's initial growth in ecosystems, however, the significant
water mine are a result of severe regional flood- listing in 2013,” Froneman said. increase in battery metal prices since early
ing that occurred in Montana from mid-June Basic earnings per share and headline earnings 2021has required a more cautious approach to M
2022. per share of 426 SA cents (US$28 cents) and 423 and A growth.
“The Group performance for the six months SA cents (US$27 cents) were both approximately
ended 30 June 2022 reflects the deterioration in 49% lower year-on-year.
the global economic and political environment
during the first half of 2022, and a challenging Froneman highlighted that the Group made signif- “Management believes that a strategy focussed on
period for the Group due to significant disruptions icant steps in its safety journey, with the improv- specific acquisition opportunities makes sense
experienced at the SA gold and US PGM opera- ing trends in all safety indicators observed during both strategically and from a value perspective,
tion,” Froneman said. the second half of 2021, continuing into the first such as the increased stake in Keliber outlined
4E PGM production from the SA PGM opera- half of 2022. below and the expected acquisition of 50% in the
tions was 8% lower than for the comparative Rhyolite Ridge project once all conditions prece-
period in 2021 but remains well within guidance, “While institutionalising the "Rules of Life" and dent have been met, including, but not limited to,
with a continued cost management focus and other successful initiatives implemented in H2 permits and debt financing having been secured,”
2021 to maintain these positive trends is ongoing, Froneman said.

Term of The Week

'

Deferred tax

tDiveefin(liiatiboinlit:yD) eefnetrrryedotnaxarecfoemrsptaoney’isthbearlaanpcoesistihveee(tasrseegta)rodrinngegtaax- When the amount is less than the estimated tax, an entry is placed
owed or overpaid due to temporary differences on the balance sheet in the form of a liability.
Deferred tax typically refers to liabilities, wherein the amount
Ucantedgeorrsiteasn. Ddeinfegrdreedfetarrxeldiabtailxit:ieDse, faenrdreddetfaexrrceadntfaaxll into one of two entered on the balance sheet is payable at a future time. However,
assets. deferred tax can also apply in the opposite sense.
t•aDxepfeerrrioedd, ttahxisacsasnetb: eWmheanrkaedcoamspaandyeofevrerrepdaytsaxfoarsaseptarotnicutlhaer
Both will appear as entries on a balance sheet and represent the balance sheet. If taxes are overpaid or paid in advance, then the
negative and positive amounts of tax owed. Note that there can be amount of overpayment can be considered an asset and illustrates
one without the other - a company can have only deferred tax liabil- that the business should receive some tax break in the next filing.
ity or deferred tax assets. Paying in advance to create deferred tax assets can aid a business
looking to decrease their tax liability in a future period.
Depending on whether the tax is owed or paid will determine A deferred tax asset can also occur due to losses that are carried
whether it is considered an asset or liability. over to a new accounting period from a previous accounting period
and can then be claimed in the new period as an asset
Types of deferred tax:

n•eDsesfhearrseadctearxtaliinabaimlitoyu:nAt deferred tax liability occurs when a busi-
of income for an accounting period and
that amount is different from the taxable amount on their tax
return.

14 The AXiS XLI Friday 19 Aug 2022

Amazon accelerating
expansion drive into Africa at detriment of local players

P recious metals mining company Sibanye-Still- Prime Video, will also be accelerated. A mar- complex, which will be erected on more than 14
water, which jointly owns Mimosa in Zimba- keting campaign created by the Nigerian agency hectares of land, is thought to infringe on sacred
bwe with Implats recorded a 63% and 23% has already been launched by Prime in Lagos, lands, according to the association of diverse
Digital streaming, cloud computing, e-commerce, where it competes not just with local platforms indigenous peoples.
and artificial intelligence are the main areas of like Jason Njoku's IrokoTV but also with US Since purchasing the Emirati e-commerce site
interest for Amazon Inc., a multinational technolo- rivals Netflix and Disney+. Souq.com in 2017 for $580 million, Amazon has
gy business based in the United States. One of the only been active in Egypt. The company, which
most valuable brands in the world, including Diversification will be renamed Amazon.eg in 2021, has 28,000
Adidas, Nivia, and Jockey, the corporation has been square meters of office space on the 10th of
cited as one of the most significant economic and Because it is looking for new sources of Ramadan, a new city some distance from Cairo
cultural forces in the world. growth to counteract the slowdown it experi- by car. With local competitors in Nigeria floun-
Amazon is anticipated to launch its e-commerce enced in the post-Covid-19 period, Amazon has dering, the US behemoth would be a real rival to
platform in Nigeria and South Africa in 2023. This increased its focus on the African continent. Its Jumia once its marketplace places are accessible.
is due to the fact that it is every company's ambi- profits decreased from $14.3 billion during the Jumia is currently in competition with Konga,
tion to maximize commercial operations in terms of same period last year to $3.3 billion in the which dominates the market but is having trouble
higher profits/revenues and at the same time germi- second quarter of 2022, continuing the decelera- finding a balance, and Amazon in Egypt. Jumia,
nating expansion. Local players are having trouble tion trend that was already visible in the first which operates in 11 African nations, had eight
striking a balance locally. Due of the fierce compe- quarter. The Amazon Company purchased One million active users in 2021 and made $178 mil-
tition that will undoubtedly result from Amazon, Medical in July for approximately $3.9 billion lion in sales while incurring losses of $227 mil-
local players are finding it difficult to achieve a as part of its healthcare diversification efforts. lion. Compared to 2019, these outcomes remain
balance as the American giant looks for new The company is now looking for new custom- steady.
growth levers. The punch will undoubtedly come, ers in new markets. And to recover more The Prince Nnamdi-led Konga, which Zinox Tech-
which truly awful news for other African jugger- retains, this may be the key driver behind the nologies, a Nigerian computer maker, acquired in
nauts already is operating in the market. company's expansion into African nations. The 2018, doesn't release its financial information. The
The top five African e-commerce companies—Kon- following graphs show the entity's net revenue previous CEO of Konga stated in 2020 that he
ga, Jumia, Takealot, Kilimall, and Bidorbuy—will trends: aimed to surpass $3.5 billion in sales by 2024.
likely face fierce rivalry as a result of the afore- The US behemoth has until now prioritized its The company presently claims a valuation of $2
mentioned arrangement. The three e-commerce data hosting business in Africa. The industry billion, versus Jumia, which is listed on Wall
titans in South Africa and Nigeria are witnessing a leader in cloud computing declared in April Street, at less than $1 billion.
rise in Amazon's aspirations within their own bor- 2020 that it would be strengthening its current Takealot from South Africa is the go-to online
ders. The US giant intends to introduce its popular infrastructure by assembling several data centers merchant for consumers looking for an easy and
marketplace in the two biggest economies on the in Cape Town into a "region." the product that convenient online shopping and user experience.
continent. Most likely, the organization Jeff Bezos made AWS the first source of income for the The digital juggernaut Naspers' subsidiary Takeal-
built and is currently leading under Andrew Jassy group.The organization, which is now hiring ot is said to have results that are nearly
implemented the new strategy. A new strategy for over 300 individuals in the nation, has also break-even. The corporation reported $827 million
Amazon Web Services (AWS), the organization chosen to erect its continental headquarters in in revenue for the fiscal year that ended in March
responsible for providing data hosting services, is the nation's capital. Despite the roughly $300 2022, a 27% increase, and a $6.54 million loss.
also part of the updated plan. The latter desires to million investment, the development project has What the corporation retains after excessive com-
concentrate more on new businesses in Nigeria. been halted since March 20 as a result of the petition from Amazon will be the question.
The US juggernaut's video streaming service, indigenous peoples' lawsuit against the regional
developer. The prospective 60,000 square meter

20Check page

Politics Around The World The AXiS XLI Friday 19 Aug 2022 15

Taiwan announces plans for record defence Somalia's President Hassan Sheikh Mohamoud on Three months later al-Shabab staged one of its
budget after China drills Tuesday pledged "all-out war" to eliminate the radical most spectacular ever attacks, storming a hotel
Taiwan announced plans for a record increase to Islamist Shebab, in his first statement to the nation a short drive away from the presidential palace
its defence budget on Thursday after huge military since the bloody attack on a Mogadishu hotel that left in the capital, Mogadishu.
drills by China earlier this month sent tensions at least 21 people dead and 117 injured. They held it for 30 hours. Officials said more
between the two to their highest in decades. "I know that the Somali people are tired of condolenc- than 20 people died in the siege of the Hayat
Taipei has proposed a defence budget of es and endless mourning, I know that you lose and 117 were injured. – BBC News
Tw$415.1 billion ($13.7 billion) for next year, up respectable people in every attack carried out by the Anti-government protesters gather outside
13 percent year-on-year, pending parliamentary terrorists," President Mohamoud said. New Zealand's parliament
approval. "I therefore urge you to prepare for an all-out war About 2,000 anti-government demonstrators gath-
An additional special budget will also be created against these ruthless people who are hostile to our ered outside New Zealand’s parliament on Tuesday
specifically to acquire new fighter jets and other peace," he said in a statement issued by the presiden- to vent their frustration on a range of issues nearly
projects to boost naval and air capabilities, the top cy. six months after protesters were forcibly removed
budgeting agency said in a statement. Last weekend's attack was the deadliest in the capital from the grounds of the legislature.
"To protect national security, the overall defence since President Hassan Sheikh Mohamoud was elected The protesters, organised by the Freedom and
budget for next year will reach Tw$586.3 billion in mid-May and the government took office in early Rights Coalition, arrived from around New Zealand
to a record high," a cabinet spokesman quoted August. – Africanews and assembled on the lawns outside parliament in
Premier Su Tseng-chang as saying. – AFP Japan considers nuclear power despite the capital, Wellington, as politicians worked inside.
Angola votes as ruling party seeks to extend post-Fukushima vows People, some with placards calling for freedom,
47-year rule In a break with previous policy, Japanese Prime Minis- were protesting over a range of issues including
Angolans are voting in an election in which Presi- ter Fumio Kishida called for a plan to revive nuclear tighter environmental regulations for farmers, a gov-
dent Joao Lourenco is seeking a second term and energy. ernment bid to take over regionally owned water
longtime opposition party UNITA is trying to The country seeks to extend the operating life of assets and now largely removed COVID-19 restric-
unseat the ruling MPLA party which has held existing nuclear plants and build new ones. tions.
power for 47 years. Eleven years after an earthquake and the resulting "Our government, they're not really working for
Some voters lined up at dawn Wednesday, two tsunami shutdown the Fukushima nuclear power us," said protester Danny Hanif who had travelled
hours before polling stations opened at 7 a.m. station, Japanese Prime Minister Fumio Kishida said from his home near the town of Hamilton. – Reu-
local time. his country is contemplating extending the operating ters
Lourenco and opposition candidate Adalberto life of and building a new generation of nuclear power Russian attack kills 25 civilians on Ukraine's
Costa Junior of the Union for the Total Indepen- plants. Independence Day, Kyiv says
dence of Angola, UNITA, cast their ballots in "Japan needs to bear in mind potential crisis scenari- A Russian attack killed 25 civilians when missiles
Luanda, the capital city on the Atlantic Ocean. os," Kishida said. struck a railway station and a residential area in
About 14 million of the country's more than 33 Kishida's announcement at a "green transformation" eastern Ukraine, officials in the capital Kyiv said,
million people have registered to vote. In the pre- conference, while speaking remotely due to a positive as the nation marked its Independence Day under
vious election in 2017, the turnout was 57% of COVID-19 test, is a departure from previously heavy shelling.
those who registered. – Associated Press announced official policy in Japan. By the end of the The death toll rose from an initially reported 22
Fighting erupts along border of Ethiopia's north- year, the country will decide on its new policy, he after three more bodies were retrieved from the
ern Tigray region said. – Deutsche Welle rubble in the town of Chaplyne as rescue operations
Fighting between forces from Ethiopia's rebellious Kenya tribes take UK government to EU court there ended, Ukrainian presidential aide Kyrylo
northern region of Tigray and central government over colonial crimes Tymoshenko said on Thursday.
forces has erupted around the town of Kobo, resi- The UK government has been taken to the European The Vyshgorod region, directly north of Kyiv, also
dents and both sides said on Wednesday, ending a Court of Human Rights by Kenya over historical land came under rocket attack, but there were no casual-
months-long ceasefire. theft, rape, torture and displacement perpetrated by ties reported, regional official Olexiy Kuleba said
The fighting is a major blow to hopes for peace British colonial forces. on the Telegram channel.
talks between Prime Minister Abiy Ahmed's gov- The Talai and Kipsigis tribes are seeking £168 billion The missile strikes and artillery shelling of frontline
ernment and the Tigray People's Liberation Front in compensation and an apology for crimes committed towns, such as Kharkiv, Mykolaiv, Nikopol and
(TPLF), the party that controls Tigray. in Kericho in western Kenya - one of the world’s Dnipro, followed President Volodymyr Zelenskiy's
Each side blamed the other for the outbreak of leading tea-producing regions. warnings of the risk of "repugnant Russian provoca-
fighting. Over 100,000 people within these groups were ruth- tions" ahead of Wednesday's 31st anniversary of
"At 5am today (the TPLF) has attacked on the lessly evicted by the British army between 1895 and independence from Moscow-dominated Soviet rule.
Eastern Front; from Bisober, Zobel and Tekulshe 1963 to make way for profitable tea plantations owned – Reuters
direction ... it has effectively broken the ceasefire," by settlers that left many unable to return to their World struggles to get Iran and US to return to
the government's communications service said in homes and ancestral land. nuclear deal both say they want
a statement. – Reuters This “cruel and unjust” treatment violated the interna- Iran is accusing the United States of dithering.
Pakistan rejects India's closure of missile firing tional obligations of the UK, the groups argue. – The Washington accuses Tehran of having frittered any
incident into its territory Independent goodwill over months of intransigence. And both
Pakistan rejected India's closure of the incident of Ethiopia: Tigray rebels accuse government forces sides are struggling to present any return to the
the firing of a supersonic missile into Pakistani of new, large offensive nuclear deal as a victory.
territory on March 9, and reiterated demand for Rebels in Tigray said the government in Addis Meanwhile, an exasperated European Union has
joint probe, said a statement by Ministry of For- Ababa has launched a "large-scale offensive." The shorn its status as messenger and taken a more
eign Affairs issued Wednesday night. claims could not be independently verified as the active mediator role, urging both America and the
The Indian Air Force on Tuesday said at the end Tigray region is under communications blackout. Islamic Republic to embrace a deal they both say
of its inquiry that the government had sacked Rebels in the Tigray region of Ethiopia accused they want.
three officers for accidentally firing a missile into the central government in Addis Ababa and mili- “The world would be a much safer place if we
Pakistan in March, an incident that the two nucle- tias aligned with them of launching what it could just make this deal work again,” EU foreign
ar-armed rivals handled calmly as there were no termed a "large-scale offensive" Wednesday. affairs chief Josep Borell told reporters on Monday.
casualties. The government in Addis Ababa did not immedi- Experts and diplomats say the US and Iran are
The BrahMos missile a nuclear-capable, land-at- ately respond to the claims by the Tigray People's closer than ever to returning to the terms of the
tack cruise missile jointly developed by Russia Liberation Front (TPLF). It was not possible to 2015 Joint Comprehensive Plan of Action (JCPOA)
and India - was fired on March 9, prompting independently verify the claims made by the abandoned under the presidency of Donald Trump.
Pakistan to seek answers from New Delhi on the TPLF due to the information blackout in that part – The Independent
safety mechanisms in place to prevent accidental of the country. China warns of 'forceful measures' if Canada
launches. The "large-scale offensive" would put an end to interferes in Taiwan
"Pakistan categorically rejects India's purported a months-old cease-fire that had held a fragile China warned it will take "forceful measures" if
closure of the highly irresponsible incident and peace in the country. – Deutsche Welle Canada interferes in Taiwan, a week after it
reiterates its demand for a joint probe," a foreign Somalia's daring move aimed at defeating emerged that a delegation of Canadian parliamentar-
office statement said. – Reuters al-Shabab ians was planning to visit the island later this year
Somalia's president vows 'all-out war' against In an audacious appointment, Somalia's new gov- to explore trade opportunities.
Shebab Islamists ernment has included a former al-Shabab militant, China claims Taiwan as its territory under its
who once fought against the authorities, in the "one-China principle" and objects to foreign politi-
cabinet, but the weekend's deadly hotel siege is cians visiting the island. Democratically governed
a reminder of the tough task for those in power. Taiwan rejects China's claims.
When Somalia's new President Hassan Sheikh "We urge the Canadian side to abide by the
Mohamud took office in May he declared a top one-China principle and respect China's sovereignty
priority was bringing an end to the country's and territorial integrity," the Chinese embassy in
15-year Islamist insurgency. Canada said in a statement sent late Tuesday.
"China will take resolute and forceful measures
against any country that attempts to interfere with
or infringe upon China's sovereignty and territorial
integrity," the Chinese embassy said. – Reuters



17 The AXiS XLI Friday 19 Aug 2022 Business Around The World

Kenya is on track to approving GM cassava — lFooorksctloeaUnNetnaelrkgsy, financial growth, Africa waters to oil and gas exploration.
take a bow local scientists In Kenya's semi-arid Makueni County, Ten areas stretching from the Ashmore and
50-year-old Purity Kinyili used to spend most CMreixaaap’rsdltioeerlGraeitiniIposeplnas,Knladininsndgi,nwbsahatshaiidtne wIthhnoaeduvialedrnebs“OoepueclanrecyaenosapnteomniemiVndpiiscotfterootr-r-,
Cassava is a hardy crop widely grown in the of her time traveling for water and firewood ant role in securing future energy supplies”.
country, can contribute to food security and to sustain her family and farmland. “At the same time as we strive to reduce
has industrial application. tBoutintshtaelnl sthoelargoevneerrngmy einnt rsuertaluptowanns,inistoiatsivhee euwmeedaislstehixopnwlso,artaiettrisomniussftocrebneotirleamlapntohdasagilsaleesdviianthtianctgomcofmunttouinnre--
got hold of the easy-to-install panels, set them domestic gas shortfalls,” she said.
isTnehtaeerrcnhKateiOonnrygaaal nciAsoagutrinioctneurlptiuanrratslcoialslnadbaoprpLaltiyivoiennsgtowcmkitohdReiretns- up and sunk a solar-powered borehole. Now “Australia’s energy sector also continues to
biotechnology to develop a new genetically her once dry land has turned a lush green, and sllaaurrplgypeolyrtdubirnyintegrRnuatsthisoeian’aslglioenbnvaealrsgioytnursbeoucfulernUitcyke,rapicnaaerut.”isceu–d-
modified (GM) cassava variety (cassava 4046) eshleec'tsriceivtyeninghoet r ehnoomugeh. power left over for The Guardian
resistant to the viral disease, cassava brown Access to more and cleaner energy while con- Six months into war, Russian goods still flow-
isntrgeatkhedicsreoapse. (CBSD), that has been devastat- tinuing to grow economically will be a top ing to US
priority for African nations in the upcoming On a hot, humid East Coast day this summer,
Plant breeders have found it difficult to devel- bUcoenrni,ttientdoepnNt aostfaifoiidcn.isal–csliAmansasdtoecciacliotmendafetePrerneecxsespeirnts Noonvetmhe- a massive container ship pulled into the Port
op cassava varieties that are resistant to CSBD Kenya Airways reports Sh9.9 billion loss in of Baltimore loaded with sheets of plywood,
using conventional breeding methods. six months AosofluuRrmcueisndsiiuafm.romrodtsheanfdielrdasd,iofaocrteivstes manadterfiaalct–oriaelsl
The loss is as a result of high fuel cost that President Joe Biden promised to “inflict pain”
ieTnxotpelrofeditreeevdnecleoapannadtthuiernatlroccdaeuslsclaevdparoacte4isn0sy46cp,aiellcesecdieoRnftNitshAtes saw the airline spend Sh11 billion during the and deal “a crushing blow” on Vladimir Putin
two viruses that cause the CBSD disease into period under review, pushing total operational BtRvhouurdotsksuiahga,u’hsnddtiirarnaemvddaeossnirdooesnfstraooinctfhdtieUorgnkasrtsyaooiplnnienesecsooiimxfn mumthnooesdnainwttihceastskioealngiekoodef.
the cassava plant, which in turn activated the costs to a five year high of Sh57 billion com- goods worth billions of dollars, including
natural defence mechanism of cassava to fight pared to Sh56 billion in 2017. those found on the ship bound for Baltimore
hCuBmSaDn;s.m–ucBhusliikneeshsoDwaislyome vaccines work in KQ losses for the first six months of the year from St. Petersburg, Russia, continue to flow
drop 14 per cent to Sh9.9 billion from Sh11.5 into U.S. ports.
Asian, European markets rise with eyes on billion in the same period last year.
China, Fed speech Tpcsaoehwsreitosdtlhotoesusnaadiisrfelirivanesreeyvaseipearewrens,hduiplgtSuhshoh1ofi1fnhgSibghithl5oli7toafunlbeioldllpuicoerorinnasttgcioothtnmhaae-tl
pared to Sh56 billion in 2017.
Hong Kong led gains in Asian markets Thurs-
asbdpbaoeyooeuscttahffittuebstryuerCecthohernianotFameeydhu,inkcwveheshai.iillreedthinfarvteesmshtoaryms ehaaowsludarietceslduetoas

Central bankers are meeting in Jackson Hole KQ said during the first half of 2022, opera- The Associated Press found more than 3,600
in the US state of Wyoming, and all eyes are trdieeosmnuslatnindwgeairnnedatphsoetsriotrinevmgeloayvnadlimsoupfsattcartiaenvdeedl brryeecstorpviceetnriyot-nuisnp, shipments of wood, metals, rubber and other
iFonnrfildaatFiyoednse.preael chRefoserrvceluebsosasbouJteropmlaens Ptoowtealml'es trading performance compared to a similar goods have arrived at U.S. ports from Russia
period in the prior year. – The Star since it began launching missiles and airstrikes
Market sentiment was also boosted by the Bangladesh cuts school and work hours to cainbatnootutidtsr6o,n0pe0if0grhosbmhoiputmrheiennstaFsmeaberrruipvaeerrydi.o, dTbhuiantt’i2st 0sa2t1islligwanhdiefdins-
Chinese government's Wednesday announce- save power up to more than $1 billion worth of commerce
mrmecye.onvt eroyf onfewthe pwoolirclide'ss stoecohnedl-plargsuessttaienconthoe- a month. – Associated Press

Asian traders on Thursday followed a positive Bangladesh will close schools for one more Food price rises around the world are result
lead from Wall Street, where the Dow, Nasdaq day each week and reduce office hours to ease of ‘broken’ system, say experts
and S&P 500 all closed higher. – AFP saanyse.lectricity shortage, a government official Food price rises around the world are the
Last month, the South Asian nation started result of a “broken” food system that is failing
S.Africa's COSATU leads union protests over daily two-hour power cuts. tihnethpeoohranadnsd ocfonacefenwtr,atfinogodpeoxwpeerrtsanhdavperosfaitisd.
high cost of living

Hundreds of South Africans protested in Pre- pwPrreiocetekessstebryasftmehraovreethttehakanegno5v0teo%rn.tmheensttrereatisseidn rpeecternotl Rising food prices are causing widespread suf-
toria and Cape Town on Wednesday against fering in developing countries, and even in the
iaannflloaantcigtoi-ontinmtheleatdalhlbyaysotfsroatadhreeedruuntloiionnga gA1r3for-uiycpeaanrCONhiaSgtAhio,TnUianl, rich world the combination of high food and
Congress. fuel prices threatens hardship for millions.

Labour unrest often affects sectors such as The war in Ukraine has driven up the cost of yFeoaord anpdricaebsouhtav3e45sumrgileldionbypeaobpoleutar2e0%exptehriis-
lfmeoairndiCnaOg SndAautTriioUnng,alSwopaurgotehtensAte.fgroictaia'tsiobnisg,gbesutt uitniiosnr,atroe importing fuel and taken a toll on Bangla- encing acute food insecurity, compared with
desh's economy and foreign currency reserves. 135 million before the Covid-19 pandemic.
OKwnhhaicnhMdkowenredraAeyn, wprBaervaunilogulIassldlyaemshclosasCiedadbitnhoeantt FsScreihdcoaroeyltssary-- AocuflrerfxeaniMlturaceirstilsaiinsndwtohafesOg“xltohfabemallatftoeolsodtdtihnseysaGteulmoanr”dg, iawsnehritichehes
Union officials said more protesters were would now also be shut on Saturdays. – BBC
expected to join the marches as the day pro- News
giinfreasmsceoadrle,l –tfthohRoraeunaugth1ne0aritstiomwnaaajlosrshncuoitttdieoismwmnweotdouiladttaeklbyee pcsllaueccae-r
cessful. Peru to sue company for $4.5bn over oil spill has been made even more fragile recently
owing to extreme weather and the impacts of
Peru's consumer protection agency is suing the climate crisis, economic upheaval and the
China hits back at Africa debt-trap claims Spanish oil firm Repsol over a huge oil spill Covid-19 pandemic. – The Guardian
with loan write-off offer wLihmicah inblJaacnkueanrey.d beaches off the coast of
Air New Zealand losses soar due to sky-high
Coamfhiiindnateahreassgtr-ofarnweneionuglonacrneivsdaltproylan1ws7 ittAoh fcrtiahcneacneWlceaosutsnetrraiineedss The spill, which Peru called the worst ecologi- fuel, labour costs
accusations that it is creating "debt traps" on cal disaster around Lima in recent memory,
the continent. leaked more than 10,000 barrels into the mSCkooyvr-eihditghthraanvfuedleolrueabsntlrdeiclitatisobnolsuorsssaecwsostiAsnirctohNmeebwlainsZet defaiwnlaainnthd-
Pacific Ocean. cial year, the airline said Thursday.

DbwdyeeibpetlkCoCmhohinanitlneiycsaeroepbprFsoroeevrrsievedienegrtdnsedstoMaaidiAsnmtfihsraitecellarm.froWavcaetniogannnYoofui ntoclateasdlt eTnhveirocnivmilenltaawl sduaitmasgeeeksand$3b$n1.5(b£n2.5(4£b1n.2)7bfonr) The flag carrier saw losses increase to
for damages to locals. NNZZ$$259912 mmiilllliioonn in(UtSh$e3260621miflilnioannc),ialupyeafrr.om

Addressing a virtual meeting related to the Repsol has denied responsibility. Its loss before tax was NZ$810 million, up
Forum on China-Africa Cooperation (FOCAC),
Wcboeauncngatrnisecaesildldedu2.e3 ibnytertehset-fernede loofanlsastto y1e7arAwfroicualnd Nm$O4ene.wa5nbsTinnugesladtwahyes,uicatasbPeyerwuIivnlildaengcoojpuitdogaegcoaaiudnrmst.t it–tRedeBpsBtohCle, from NZ$415 million, while revenue rose
Australian government launches offshore from NZ$2.5 billion to NZ$2.7 billion.
Do you have questions about the biggest petroleum exploration permits for 47,000 sq pMTrheaevrciohreuoshpaespnaihnnegdlepmoedfic-NeraeeslwaetetdZheeatlrpaarnvedes'lssurrbee,osrtbdriuecrttsiothnines
topics and trends from around the world? Get km of ocean impacted its operating revenue.
tpFhAlaeQtfaosn,rmswaneoarsflyswceuistrhaateSnddCMcionPnfotKegnrnatopwhwliecitdshgebe,rxoopuulgarhintneertwso,
CyohuinabyMoorunringawPaorsdt-winning team. – South Air New Zealand CEO Greg Foran said the
The Albanese government has launched its finogcusa ncohwoicies oonf "farerestsorainngd –sleaAruvnFiccPhesin, gmianinntoavina--
first offshore petroleum exploration permits, tions" for their customers.
opening up nearly 47,000 sq km of Australian

The AXiS XLI Friday 19 Aug 2022 18

Markets
watch

Zimbabwe dollar
stumbles by 5%
T he Zimbabwe dollar shed by 5% Sibanye Stillwater reported a 50% slump in Yemi Osinbajo said during a virtual launch
against the United States dollar on the its half-year profit but raised its outlook for of the country’s energy transition road map.
latest RBZ-governed auction market the rest of 2022 after operations at its gold The West African country has already
held on Tuesday according to the data mines in the country resumed. secured a US$1.5 billion pledge from the
released by the Reserve Bank of Zimbabwe World Bank. It is in talks with the US Ex-
(RBZ). The under-fired currency traded Kenyan Shilling steadies at 119 port-Import Bank for an additional $1.5
ZW$521.3451 from 494.9883 registered last billion, according to a government statement.
week. The shilling traded at 119 against the single Nigeria’s energy transition plan is designed
The crush of the Zimbabwe dollar (ZW$) on US$ on Thursday as the energy crisis, to lift 100 million people out of poverty in
the Auction Market comes amidst the intro- hunger and disputed elections continue to a decade, drive economic growth, bring
duction of the gold coins by the RBZ last affect East Africa’s biggest economy. Mean- modern energy services to the people and
month on the 25th as a hedge against infla- while, the Stanbic Bank Kenya PMI edged manage the expected long-term job losses in
tion, a move which is expected to bring the lower to 46.3 in July of 2022 from 46.8 in the oil sector due to global decarbonisation,
ailing currency to order. However, the contin- June, pointing to the fourth consecutive according to the statement.
ued fall raises questions on whom the market month of falling private sector activity and
lacks confidence more in: the Zimbabwe the steepest since April of 2021, as uncer- Kwacha continue firming
dollar or the government. The local currency tainty around the upcoming election and the
has been falling due to a lean back-up of US impact of strong inflationary pressures The currency of Africa’s second-largest
dollar reserves. However, despite the introduc- dampened demand. copper producer continued firming after clos-
tion of the gold coins, the dismal performance Both output and new orders fell at acceler- ing the Thursday session at 16.1800 against
of the local currency on the auction market ated rates, while business confidence the single greenback, also above the perfor-
fails to end. remained muted. More positive was the first mance of the Rand. The kwacha will likely
Despite being backed up by gold coins, the rise in employment for three months. While gain next week due to sustained central bank
Zimbabwe dollar has failed to find a tangible rates of inflation generally eased in July, support and favourable sentiment after Zam-
remorse even for only two weeks. Therefore, they remained elevated as higher costs for bia’s official creditors assured that they
can one say gold is failing the local currency fuel in particular drove prices higher. would restructure its debt.
or it’s a confidence crisis in leadership? Elsewhere, the National Bank of Kenya The Central Bank of Zambia kept its key
(NBK) reported a profit after tax of Ksh interest rate at 9% at its August 2022 meet-
Regional Markets 661.8 million in the first six months of the ing, citing upside inflation risks, lingering
year, a decline compared to Ksh 717.6 mil- vulnerabilities in the financial sectors and
RtigahntdenrienbgouBnadnskopnolpicryospects of further lion reported over the same period last year. weak domestic growth. The annual inflation
Net interest income grew by 18% to Ksh peaked at 24.6% in July last year and
The rand appreciated to 16.8 against the US 4.8 billion from Ksh 4.0 billion, driven by declined steeply until June, when it reached
dollar, the highest since August 17th this gross interest income, which grew by 17per- 9.7%, before edging up to 9.9% in July.
month amid a softer dollar and after domestic cent to Ksh 6.8 billion, owing to increased Meanwhile, inflation forecasts were revised
inflation data raised prospects of further inter- volumes in loans and advances as well as lower to 11.4% in 2022 from 12.5% seen in
est rate hikes. The JSE FTSE All Share Index an improved level of debt recoveries. May, before falling back within the bank's
also closed 0.8% up at 70,341 on Thursday, 6%-8% target range during the first quarter
the highest since August 18th, extending gains Ndeasipraitedienpcrreecaisaeteins faxgasuinpsptlyUS dollar of 2024. The real GDP growth is now seen
for the third straight session, driven by tech at 3.1% in 2022, down from a 3.5% projec-
companies and healthcare stocks. The Nigerian currency, the Nigerian curren- tion in May.
Meanwhile, investors continued to assess the cy, Naira, depreciated against the US dollars
global economic outlook while awaiting direc- at the Investors and Exporters window. Data Pula closes at 12.6a
tion on interest rates by the U.S. Federal Re- from FMDQ securities where Naira is offi-
serve from Chair Jerome Powell's speech at cially traded showed the exchange rate on The Botswana Pula closed at 12.6263 on
Jackson Hole this week. On the domestic data Tuesday closed at N430.67 to a dollar. Nai- Thursday, August 18 from 12.6103 in the
front, South Africa's producer inflation accel- ra’s poor performance occurred despite an previous trading session. The Botswana Pula
erated further to a fresh high of 18% in July, increase in the amount of forex supply to is expected to trade at 12.61 by the end of
surpassing market estimates of 17.6%. On the the market. this quarter, according to Trading Economics
business front, mining group Gold Fields Meanwhile, Nigeria aims to raise an initial global macro models and analysts’ expecta-
posted a jump of 29% in half-year profit, $10 billion in funding to implement its tions.
driven by higher metal prices and increased energy transition plan ahead of COP27 Looking forward, it is estimated to trade at
production. climate talks later this year. Nigeria needs 13.09 in 12 months’ time. Historically, the
Conversely, platinum group metals miner at least an additional US$10 billion a year Botswana Pula reached an all-time low of
and a total of US$410 billion to deliver on 12.85 in July this year.
its net-zero targets by 2060, Vice President

ZSE WEEKLY COMMENTARY

The performance of the Zimbabwe Stock Exchange oscillated during the week
under review, maintaining a negative trajectory but marginalizing the magni-
tude of losses. The mainstream ZSE All Share Index dipped a mild -0.51%

to close at 14365.64 points. Market heavyweights and medium caps collec-
tively weighed on the bourse on plunging by -0.18% and -1.77%, respectively,
while penny stocks rose by 6.09%. Due to increased demand for market
heavyweights as investors purchase at low prices, the market saw advances

in 3 of the week's total 5 sessions. Nominal annual gains ended the week at
32.74%, representing a decline of -70% in US dollar terms. As the month
nears its end, the month's overall losses have stretched to -13.43%, marking
the fourth consecutive month of poor performance.

ZSE ASI 14,438.57 ZSE TOP 10 8,736.23 MEDIUM CAP INDEX 30,031.81
14,423.98 8,740.50 29,774.97
14,506.54 8,845.88 29,510.64
14,541.79 8,874.36 29,532.34
14,361.47 8,762.98 29,144.13
14,365.64 8,720.74 29,500.23
-0.51% -0.18% -1.77%

ZSE TOP 15 9,711.91 SMALL CAP INDEX 490,639.15 ZWL INTERBANK 498.5334
9,695.40 509,464.69 500.6271
9,798.22 507,518.32 507.0926

9,822.90 505,898.06 513.9277

9,714.76 514,795.59 521.2673

9,695.40 520,512.00 528.0554

-0.17% 6.09% 5.92%

Padenga added 1.2% to its preceding week's gains on the US dollar-denominat-
ed exchange VFEX, while BNC stock grew by 0.3%. The duo traded a total
of US$37,869 in shares during the week, up from US$24,573 the week before.
Despite a few listings, the VFEX has outperformed the ZSE on a year-to-date
basis. This comes as investors are shunning away from ZWL denominated asset

classes at a time when the US dollar, the VFEX trade currency, gives security
to investors through value preservation.

The local unit ZWL continues to lose value daily in relation to the US dollar
on official currency markets, while, due to the Central Bank's attempts to
absorb surplus liquidity, the value of the local currency has appreciated in rela-

tion to the US dollar on the black market. At the end of the most recent auc-
tion trading week, the exchange rate on the Reuters Auction Market increased
by 5.3% to ZWL521.345 while the interbank exchange rate increased by a fur-

ther 5.92% to ZWL528.0554 per US$. The ZWL has recently appreciated on
the parallel currency market, reducing the premium between the two currency
markets from above 100% to 40–50%.

Victoria Falls Travel Guide

HISTORY DID YOU KNOW?

• David Livingstone, while exploring the • Victoria Falls go by the name indegenous name- ‘Mosi-oa-Tunya’
Zambezi River, stumbed upon the which literally means “Smoke that Thunders.”
Victoria Falls in 1855
• The falls are one of the seven natural wonders of the world.
• The falls were declared a UNESCO • They form world’s largest curtain of falling water
World Heritage Site in 1989. • On full moon nights, tourists can witness a lunar

LOCATION BEST TIME TO VISIT

• April (in the peak of flood

visit the Falls.

• The Falls are located on the borders of Zambia and Zimbabwe.

•
nearest ones from the Falls.

•

• T1 road from Lusaka (Zambia) and A8 highway from Bulawayo
(Zimbabwe) are preferred gateways to the falls

a tincture from the falls...

infographic

7 things to do in Vicfalls

BUNGEE JUMP FLIGHT FO ANGELS ZIPLINE SUNSET CRUISE ON THE
Brace yourself for the 111m A helicopter ride over the Victoria If you are not scared of heights, ZAMBEZI NEED TO
descent from the Victoria Falls Falls. Experience the best view of take the zipline and slide between UNWIND AFTER ALL THOSE
Bridge - one of thehighest the Smoke that thunders and its 200m and 425m across the gorge, STRENUOS ACTIVITIES?
bungee jumps in the world. scenic surroundings from the air. at about 120m above its floor. By taking a boat cruise on
the Zambezi River you will
WHITE WATER RAFTING SWIM ON THE EDGE OF VICTORIA EAT IN STYLE feel much better. You can
When you visit the Victoria Falls, FALLS IN THE FAMOUS DEVIL’S Some of the best restaurants are also enjoy the sunset with a
feel your heart pound as you POOL. located in Vic Falls. from cold beer while keeping an
take the 8m plunge at the Marvel at the spendor that is Mosi traditional stlye meals served eye out for wildlife along
Stairway to Heaven or propel oa Tunya from the rock pool. Take with local entertainment to funky the river bank
yourboat against the long and note: you can only swim in this upscale restaurants. Its foodies
violent commercial Suicide pool during the dry season when delight.
rapids. its levels are safe enough for
swimming

Interacti ve Tinctu re 08677 197 791 equityaxis.net @ [email protected]

21 The AXiS XLI Friday 19 Aug 2022

Weekly
Commoddity Pulse

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

In the week under review, gold prices have Copper prices marginally surged 5.5% due to tight In the week, nickel prices strengthened by
pushed to session highs as the housing market, an supply, which makes metals scarce for buyers, and 2.2% to settle at $21,78 per ounce due to
important pillar of U.S. economic growth, contin- on hopes for improved demand from top consum- the news of Indonesia's policy, but due to
ued to weaken as consumers bought fewer new er China. limited fundamental support, futures prices
homes than expected last month. New home sales The metal used in power and construction has continued to rise, and domestic high-tem-
fell to a seasonally adjusted annualized rate of recovered from a 20-month low but remains down perature power cuts affected the output of
511,000 homes in July, down 12.6%, the U.S. 30% from a record high in July, as aggressive nickel sulphate plants. On the supply side,
Commerce Department said in the week. The gold interest rate rises in many countries cause an eco- the arrival of Russian nickel increased
market is seeing new safe-haven demand as reces- nomic slowdown. Meanwhile, benchmark copper significantly, while the terminal demand
sion fears remerge in the marketplace following CMCU3 on the London Metal Exchange (LME) was weak, the transaction of ferronickel
the disappointing sales data. December gold prices was up 0.8% at $7,598 a tonne. was deserted, and the price of nickel was
last traded at $1,765.70 an ounce, up roughly 1% The demand is also elevated from China’s under pressure. Equity Axis research
on the day. Economists have said that rising mort- resumption from COVID-19 lockdowns that expects that the nickel price will remain at
gage rates due to higher interest rates and rising restricted factory activity earlier in the year. a low level, with a wide range of fluctua-
home prices have priced many new home buyers tions.
out of the market.
Brent/Oil (US$/b)
Platinum (US$/oz)

Aluminium (US$/t)

Platinum prices went up by 1.7% in the week Aluminium prices rose 2.1% in the week as Oil prices further plummeted 4.5% to ease
under review amid an increase in demand for the smelter closures reduced supply, but analysts said by $101 per barrel in the week in volatile
metal. prices are unlikely to rise sharply because slowing trade as investors braced for the possible
However, analysts and traders have sharply low- economic growth would also curtail demand. A return to global markets of sanctioned
ered their price forecasts for platinum and palladi- smelter in Slovakia became the latest in Europe Iranian oil exports and on worries that
um as a global economic slowdown reduces to announce a closure due to sky-high energy rising U.S. interest rates would weaken
demand. In other news, Karo Resources Pvt Ltd costs last week. In the interim, the Chinese fuel demand. The prospect that the OPEC+
is set to build its platinum concentrator plant as rationing of power supply is the latest blow to the producer group could curb oil supplies
soon as it gets an Environmental Impact Assess- metal. limited the decline in oil prices. As an
ment (EIA) approval from the Environmental Poor demand for aluminium has begun to over- energy crisis engulfs Europe, global oil
Management Agency (EMA). This was revealed shadow concerns over its supplies, especially from markets have offered modest relief, with
by a contact within the Environmental Manage- Europe and China, and the metals used in aircraft, crude prices drifting lower while traders
ment Agency (EMA), who disclosed that his automobiles, cans and kitchens will likely rule grow anxious about the global economy.
organisation is working on an EIA to ensure lower this year. But the turn may be short-lived.
everything is above board before the construction In other news, momentum is building
of a platinum concentrator. among oil producers behind the idea of
cutting crude production to stabilize the
market, with OPEC’s president the latest
to back Saudi Arabia’s suggestion that the
alliance might pump fewer comments that
pushed the price of a barrel back over
$100 earlier this week. The growing con-
sensus among members of the Organiza-
tion of the Petroleum Exporting Countries
and its Russian-led allies, known as
OPEC+, threatens to keep energy prices
elevated despite the Biden administration’s
efforts to get the members to pump more.

FINANCIAL MARKETS AT A GLANCE 2022

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

14,438.57 8,736.23 490,639.15 528.0554
-5.64% -6.1% -4.57% -5.92%

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

All Share index ZSE Top10 index All Share index Small Cap index All Share index

Medium Cap index

148,,732650..6744 520,512.00 2194,,530605..6234
14,365.64

WOW -0.18% MOM -11% YTD 28% WOW 6.1% MOM -1% YTD 29.2% WOW -1.8% MOM -10% YTD 44.6%

ZSE Financials Sector ZSE Financials index ZSE Consumer Discretionary Index ZSE Consumer Staples Index

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

1243,833605..9644 19573.19 14,365.64
14,365.64 17473.92

WOW 5.4% MOM -6% YTD 70% WOW 1.3% MOM -6% YTD 59.8% WOW 0.1% MOM -12% YTD 27.8%

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

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

16125.5 19393.76 11134.91
14,365.64 14,365.64 14,365.64

WOW -4.8% MOM -10% YTD -14.8% WOW -6.5% MOM -10% YTD 18.1% WOW -0.7% MOM -9% YTD 27.4%
ZSE Real Estate Index
ZSE Real Estate Index Interbank Market 35.8% JSE All Share Index 69808.69
14,365.64
All Share index Interbank All Share index JSE All Share index

9906.07 -10%
14,365.64
WOW -0.2% MOM -5% WOW -1.7% MOM 5.5% YTD -5.3%
YTD 13%
BSE All Share Index
LUSE All Share Index NGSE All Share Index

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

7372.65 7012.48 48675.24
14,365.64 14,365.64 14,365.64

WOW 1% MOM 2% YTD 5.2% WOW 0.2% MOM 2.1% YTD 15.7% WOW -1.8% MOM -5.3% YTD 14%

Company Latest Price Previous Week Consumer Latest Price Previous Week Materials Latest Price Previous Week TOP 5 WEEKLY RISERS
Staples ZWL Cents ZWL Cents ZWL Cents ZWL Cents Sector ZWL Cents ZWL Cents
African Sun COUNTER PRICE CENTS CHANGE % CHANGE
AFDIS 32490 32490 AXIA 1550 1387.59 ARTZDR 1700 1700
ARISTON 210.13 240 EDGARS 6377.16 6312.48 LAFARGE 12000 12000 CBZ 14363.29 2830.5 25%
BAT 239000 244900 NTS 775 786.5 PROPLASTICS 2125 2250 ZHL 492 67 16%
CFI 37000 37000 RTG 1300 1175 TURNALL 455.68 457 TURNALL 455.68 55.26 14%
DELTA 24799.02 25019.8 SIMBISA 850 850 Willdale 187.06 204.99 ZIMPAPERS 400 38.75 11%
DAIRIBORD 2450 2468.13 TRUWORTHS 15960.25 15802.76 RioZim 9355 9355 EDGARS 775 75 11%
HIPPO 24300 24500 200 220
INNSCOR 27027.2 26223.69 ICT Financial Latest Price Previous Week TOP 5 WEEKLY FALLERS
MEDTECH 1200 1615 Sector Latest Price Previous Week Sector ZWL Cents ZWL Cents
MEIKLES 10000 9550.98 Ecocash ZWL Cents ZWL Cents COUNTER PRICE CENTS CHANGE % CHANGE
NATFOODS 134500 150000 ECONET 3717.42 First Capital Bank 743.56 756.33
OK 3150.76 3030.4 ZIMPAPERS 3910.85 12283.97 CBZ 14363.29 11532.79 Bridgefort Ltd 1200 -700 -37%
SEEDCO 7607.43 7476.31 11461.28 361.25 FBCH 5875 5875 ZBFH 8413.33 -2986.67 -26%
STAR AFRICA 163 145.72 Real Estate 400 FIDELITY 2200 2200 TSL 6125 -1079.97 -15%
TSL 6125 7204.97 Sector Previous Week FML 1900 1900 ARISTON 210.13 -35.95 -15%
Tanganda 12800 12968.75 MASHHOLD Latest Price ZWL Cents GBFS 1700 1700 MASIMBA 4350 -650 -13%
FMP ZWL Cents 500 NMBZ 1699.26 1799.97
613.85 ZBFH 8413.33 11400
500 ZHL 492 425
693

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

69808.69 7372.65 7012.48 48675.24
-1.69% 0.99% 0.24% -1.76%

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