The AXiS CIV(104)

Cover Page Page 5 Page 56 Page 66 In Focus 4 6 17 Markets Guest Column World News 26 27 28 29 Capital Markets 19 20 22 23 Markets Watch ZSE Weekly Weekly Commodi�es Pulse Financial Markets At a Glance 8 9 12 14 15 Economic News and Analysis Budget Facilita�ng Informal Dollaraza�on : Annual Infla�on to Stay Below 30% Unleashing the Tax Blitz : Exploring the 2024 Budget’s Impact On Businesses Electric Setbacks Dampen Zimbabwe's Steel Output An Elusive Journey : A�aining Universal Health Coverage in Zimbabwe Rwanda’s Renewable Energy Revolu�on : The Chase to Zero Proposed 2024 Na�onal Budget : A Pro-economy, Pro-people Budget? Business around the world Poli�cs around the world Regional Economic watch 24 25 30 The equityaxis.net @equity axis @equity axis zimbabwe @equity axis @equity axis @equity axis 08677 197 791 @ aaronc[at]equityaxis.net EQUITY AXIS Financial Insighs at your finger�ps CONTENTS The AXiS CIV 01 DEC 23 Taxes Tsunami : Mthuli’s Budget Deluge Drowns Struggling Economy Blue Carbon’s Controversial US$1.5Bn Virtue Signal : A Second Look Ahead of COP28 Meikles Limited’s Profitability Crunch : PAT Dips as Sales Slump Is it Losing it? : RioZim’s Produc�on Quandary CAFCA’s Ambi�ous Objec�ve : Expanding Export Footprint General Bel�ngs : Reports 57% Volumes Surge in Q3’23 Amidst Recovery Tiger Brands Thrives : Posi�ve Outlook for Zimbabwean Unit

*To Page 5 The AXiS CIV Friday 1 Dec 2023 4 n a intresting turn of events, Professor Mthuli Ncube, the Minister of Finance and Econom- ic Development, unveiled a budget proposal for 2024 that has sent shockwaves throughout the business community and the nation. The budget has raised eyebrows with its unexpected and exorbitant tax hikes, as well as the introduc- tion of new tax instruments. Rather than provid- ing much-needed relief, particularly for the mining sector, the budget imposes a staggering 100% increase in the existing tax burden, impact- ing a wide range of individuals and industries. From residents and civil servants to motorists, miners, and traders, no one seems to have been spared. The introduction of new taxes, such as the fizzy tax and house tax, along with signifi- cant increases in existing taxes like passport fees, fuel levies, tollgates, electricity, and new car reg- istration charges, has only added to the frustra- tion and concern surrounding the budget. This surge has raised significant concerns about the government’s ability to effectively address core economic issues such as currency stability, the growing debt crisis, exchange rate volatility, and employment dynamics which can’t be addressed by overtaxing the already strained pop- ulace. Rather than focusing on pressing concerns, the budget appears to prioritise exerting greater fiscal pressure on individuals and corporate enti- ties, following the austerity measures implement- ed in 2018. This approach has adverse repercus- sions on the overall trajectory of the economy in the short and long term. While taxes are crucial for fiscal sustainability and supporting economic activities, there are concerns about overtaxing and whether these tax measures are the best way to achieve economic goals. This article seeks to unpack these taxes according to the 2024 budget. Tax on Civil Servants Since the outbreak of the COVID-19 pandemic, civil servants have been granted a COVID-19 allowance to mitigate the economic impact. Initially set at US$75, the allowance was subse- quently increased to US$300 over time. However, as it was not classified as a formal allowance, it was not subject to taxation. Nevertheless, starting from January 2024, a tax rate of 2% will be imposed. Additionally, Ncube has revised the Tax-Free Threshold to ZWL750,000 per month and adjusted the tax brackets to ZWL270 million per annum. Any income exceeding this threshold will be subject to a tax rate of 40%, effective from 1 January 2024. Analysis The imposition of a 2% tax would result in a deduction of US$6 from the US$300 allowance, further exacerbating the financial challenges faced by civil servants. These individuals are already burdened with various taxes, including funeral policy taxes, insurance taxes, medical taxes, and IMTT (Intermediated Money Transfer Tax) taxes. The introduction of additional taxes only com- pounds their financial difficulties. To put the civil servants' situation into perspec- tive, their salary as of October 2023 stood at ZWL195,000. However, this amount is subject to electronic taxes, despite the rapid devaluation of the currency. When converted using the official exchange rate, the salary equates to approximate- ly US$33, while using the parallel market rate, it amounts to around US$19. However, due to the 2% tax and bank charges, the full ZWL195,000 cannot be withdrawn, resulting in a net amount of approximately US$25 (using the bank rate) or US$15 (using the parallel market rate). Taking into account the rising cost of living, civil servants will be earning less than US$310, while rental prices in high-density suburbs such as Dzi- varesekwa range from US$100 to $120 per room. This calculation does not include expenses for electricity, water bills, food, and transportation, which average around $50 per month. Regarding the proposed review of the tax-free threshold to ZWL750,000, equivalent to approxi- mately US$75, this amount is significantly low considering the pace of inflation. By November 2024, when the new budget is released, this threshold is likely to be less than US$1. Conse- quently, civil servants earning ZWL195,000 will quickly surpass the tax-free threshold and become liable for taxation. Blow to Retailers and Local Producers The challenging situation faced by large-scale retailers, including their difficulties in meeting payment obligations to manufacturers in US dol- lars, coupled with intense competition from infor- mal traders, has led manufacturers to prefer sell- ing their products to informal traders. To address this issue and restore a functional supply chain from manufacturers to wholesalers and retailers, Ncube has proposed a new regulation where trad- ers will only be allowed to purchase goods directly from manufacturers or wholesalers if they possess the necessary licenses and demonstrate tax compliance. This means that only traders who are registered for VAT and possess valid Tax Clearance Certificates will be permitted to engage in transactions with manufacturers. To further regulate this system, the threshold for VAT regis- tration will be reduced from US$40,000 to US$25,000 starting in January. This adjustment aims to ensure that a larger number of traders are registered for VAT and comply with tax obliga- tions, thereby reinstating a more transparent and accountable supply chain within the retail sector. Analysis Despite positive expectations, this measure will have a disruptive impact on manufacturers akin to the mandatory implementation of bank rate-based pricing, which has disrupted the opera- tions of retailers. It can be seen as robbing Peter to pay Paul, where the burden that was previous- ly placed on retailers has now been shifted onto manufacturers. The prevalence of informal trading and the porosity of our national borders make it unlikely that informal traders will be willing to acquire licenses valued at US$25,000, thus reduc- ing sales volumes from local producers. Instead of safeguarding the interests of both retailers and manufacturers, the government is subjecting them to a challenging situation. There is a high likeli- hood that informal traders will resort to importing products, as opposed to adhering to the VAT reg- istration threshold of US$25,000. As a result, we anticipate a surge in imports, which will further exacerbate the difficulties faced by both manufac- turers and retailers. Tax on Miners In light of the increased electricity tariffs imposed by ZESA on miners last month, coupled with the persistent decline in commodity prices for metals, there was an expectation that miners would receive some form of relief to ensure their survival without reaching a critical stage. Howev- er, contrary to these expectations, the latest budget did not include a 5% tax reduction, for example, on Lithium. Instead, an export tax will be imposed on lithium concentrates from March. Lithium is currently being exported as concen- trates. To circumvent this tax, the budget propos- es lithium miners to process lithium into carbon- ates, which represents a more advanced stage in the processing chain, involving two additional stages of processing. Miners involved in lithium extraction have until March to submit their pro- cessing plans, and new lithium licenses will not be issued without these plans in place. Addition- ally, Ncube is introducing a 1% levy on revenues derived from lithium mining activities, as well as on granite miners and producers of quarry stones. Analysis Miners are currently facing numerous challenges, including a decline in global metal prices, high corporate taxes, carbon taxes, and exorbitant elec- tricity charges. These inequities have led major mining companies such as Zimplats and Karo Mine to suspend projects. Among all minerals, lithium has been particularly hard hit. The price of lithium carbonate has plummeted to CNY 120,000 per tonne, reaching its lowest level since August 2021, as low demand exacerbates the cur- rent supply glut. Losses for lithium prices have accumulated to 9% week-to-date, 28% month-to-date, and 79% year-to-date. Lithium miners primarily generate income from selling lithium, and when prices are low, they must increase production to maintain profitability. However, the imposition of a 1% tax, a 5% levy introduced previously, and the upcoming tax on concentrates effective from March pose signifi- cant challenges. These challenges are compound- ed by the headwinds of high electricity bills, which now account for 22% of miners' expenses. Consequently, these measures are impractical and will likely result in reduced productivity and earnings. The lithium industry has already fallen short of the targeted revenue of US$500 million by year-end. It begs the question of the rationale behind increasing taxes when the demand for the product is already low. Taxes on Fuel The budget has increased fuel costs. The country already has the highest-priced fuel in Africa. As part of the budget measures, the Strategic Reserve Levy has been raised by US$0.03 per litre for diesel and US$0.05 per litre for petrol, starting from January. Analysis An essential analysis indicates that high fuel prices have significant implications. Fuel plays a crucial role in connecting wholesale and trade activities. When fuel prices rise, retailers and wholesalers often respond by increasing the prices of basic goods to offset any losses Taxes Tsunami Mthuli's Budget Deluge Drowns Struggling Economy I

The AXiS CIV Friday 1 Dec 2023 5 *From Page 4 incurred. This trend was observed during the fue- crisis in 2018, 2019, 2020, and 2021, where the cost of a 2-litre bottle of cooking oil reached a minimum of US$5. However, the irony is that large-scale retailers are the most severely impacted by these price adjust- ments, as any increase in prices creates incentives for informal traders to engage in smuggling activ- ities to take advantage of the situation. In response, the government often implements prag- matic policies such as opening borders for free imports. While this may help alleviate the situa- tion, it ultimately reduces earnings for the retail industry and local producers, resulting in a lower contribution to the country's GDP. Spiking of Tollgate Taxes Ncube has implemented a significant increase in tollgate taxes, raising them by 150% on premium roads. This increase applies to major routes such as the Harare-Beitbridge highway and the Plum- tree-Mutare Road. The toll fees for minibuses have risen to US$8 from US$3, for buses to US$10 from US$4, for heavy vehicles to US$15 from US$5, and for haulage trucks to US$25 from US$10. Analysis The increased tollgate taxes now require individu- als to budget US$50 or the equivalent in Zimba- bwean dollars for round trips between Harare and Bulawayo, and US$60 for round trips between Harare and Beitbridge. The government, facing challenges in securing external funding, is relying on the budget to finance the Beitbridge highway, as it has strug- gled to meet its payment obligations to contrac- tors. The Plumtree-Mutare Road, on the other hand, was constructed with a loan from the Development Bank of Southern Africa (DBSA). Originally, the loan was scheduled to be repaid by 2022, but the government defaulted on its payments. As part of a restructured deal, the out- standing amount of US$165 million will now be repaid over an additional 15 years, with a reduced interest rate of 5% compared to the pre- vious rate of 6.18%. These developments place an additional burden on the already struggling population, making it difficult for them to attain a sustainable livelihood. New Mansion Tax The budget has introduced a proposal for a 1% wealth tax on houses valued above US$100,000. The revenue generated from this tax is intended to be allocated towards urban infrastructure development, specifically focusing on roads, water supply, sewer systems, and community health centres. Individuals aged over 70 are exempted from paying this tax for their private homes. Taxpayers will have the option to choose whether to pay it on a monthly, quarterly, or annual basis. However, specific details about the valuation process for determining the property value and the assessment of the tax have not been provided in the budget announcement. Analysis If the funds are designated for road infrastructure, then what is the allocation of funds from ZINARA and ZIMRA? Specifically, what happens to the revenue collected from tollgates? The imposition of house tax, similar to historical hut taxes, has raised concerns and drawn parallels to the causes of the First Chimurenga, a historic resistance movement in Zimbabwe. Under the proposed tax, a person owning a house worth US$400,000 would be required to pay a tax of US$4,000 to the state. This could result in increased rental costs, as property owners pass on the tax burden to tenants. Essentially, this means individuals would be paying rent for their own homes after covering the costs of materials, land, construction, and council bills. The valuation pro- cess for houses based on supply, demand, and postcodes may be seen as problematic, making the entire taxation system appear arbitrary. This could discourage citizens from saving for or investing in medium or low-density housing, further exacerbating the rich-poor divide and lim- iting certain areas to only the wealthy and politically connected. There is concern over the poten- tial for corruption in determining the tax assess- ment. The recent story published by The Mirror, where ZANU PF elites were reportedly refusing to pay a tollgate fee of US$2, raises doubts about whether they would comply with the proposed minimum tax of US$40,000 per year. The effec- tiveness of enforcing the tax is questionable, given the state of the judiciary and the potential for preferential treatment of government officials. Taxing wealth or savings contradicts conventional tax practices, which typically focus on taxing earnings rather than accumulated wealth. Tax on Fizzy Drinks The government has introduced a new tax on the sugar content in fizzy drinks as a measure to discourage the consumption of beverages with high sugar content. Under this tax, each drink will be subject to a charge of US$0.02 per gram of sugar. The revenue generated from this tax will be allocated towards therapy programs and the procurement of cancer equipment for diagno- sis. Analysis The introduction of a new tax on sugar content in carbonated beverages has a notable effect on beverage companies, with Delta Corporation serv- ing as a prominent example due to its production of a substantial volume of soft drinks in Zimba- bwe. The tax is calculated based on the amount of sugar per gram in these beverages, and for brands such as Coca-Cola, and Pepsi which con- tain a significant quantity of sugar, the tax burden can be quite substantial. To illustrate further, let's consider the sugar con- tent in specific Coca-Cola and Pepsi products. A 100ml bottle of Coca-Cola contains 10.6g of sugar, while a larger 500ml bottle contains 53g of sugar, which constitutes approximately 59% of the total product volume. In comparison, a 500ml bottle of Pepsi contains 28g of sugar. These figures indicate that there are few alternatives available to consumers who wish to opt for bev- erages with lower sugar content, apart from choosing water as a substitute. In 2019, Delta Corporation produced approximately 36 million bottles of soft drinks per month. Considering the subsequent increase in production capacity, the current figures are likely higher. Based on a tax rate of US$0.02 per gram of sugar and using the production data from 2019, Delta would be obli- gated to pay approximately US$19 million per month solely in sugar taxes. When considering additional expenses such as corporate tax charges, electricity bills, currency devaluation, and lower consumer demand, the sugar tax can present significant challenges for Delta Corporation's business operations. The company may find itself with two primary options to address this situation. First, they could reduce the sugar content in their drinks which the Coca-Cola company might not agree to despite this potentially impact the taste and consumer preference. Delta already offers Coke Zero, a sugar-free alternative. Second, they could choose to increase prices, which could make their products less competitive in the market. Consequently, Delta may face the pros- pect of either raising prices or experiencing reduced production as a direct result of this tax policy. Passport Tax The government has also increased passport taxes, from US$120 to US$200 for an ordinary passport while emergency raised to US$300. Analysis The substantial increase in passport fees, which now positions them as the most expensive in the SADC region, has a detrimental impact on the population. In contrast, passport fees in countries such as Lesotho, South Africa, Malawi, Swazi- land, and Zambia are significantly lower, typical- ly amounting to less than US$25. This sharp rise in passport fees will create increasing challenges for individuals who wish to leave the country, especially as living standards continue to deterio- rate creating high crime, unemployment and illegal emigration. The increase in passport fees will exacerbate pov- erty in the country and reduce remittances, as the elevated cost of US$200 for a passport will be burdensome for many people who previously struggled to earn even US$150 for basic survival. The government's decision to implement such high fees seems counterproductive, as reducing passport fees could have potentially increased remittances and eased the strain on limited resources within the country. Imposing heavy taxes on a population with an unemployment rate of over 80% can be seen as a harsh and unfair practice, further exacerbating the challenges faced by the struggling population. Stashed money in a vault The budgetary allocation has provided the State with access to funds held in Safety Deposit Boxes within financial institutions. It has vested the commissioner with the authority to exercise discretion in accessing these boxes at any given time, thereby mitigating the risk of tax evasion. Analysis Previously, due to privacy laws, it was not feasi- ble to access safety deposit boxes without a court order. ZIMRA has been granted expanded author- ity to unilaterally open custody vaults to verify their contents. This applies to both financial insti- tutions and other entities providing custodial services for cash holdings. Many Zimbabwean citizens have refrained from using traditional banks to store their funds, espe- cially after experiencing significant losses during the financial crises of 2008 and 2019. Conse- quently, they have opted to keep their savings in safety deposit boxes. The recent measures intro- duced by the government may compel individuals to relocate their cash to banks located in neigh- bouring countries such as Zambia or Botswana. Alternatively, some may choose to purchase their safety deposit boxes and store money within their residences. This, however, fails to address the underlying reasons why people prefer to use safes rather than banks. The government needs to investigate and address the factors driving individuals to opt for personal safes over traditional banking services such as confidence deficit and policy slippages rather than curing symptoms. Conclusion The budgetary measures have failed to address crucial aspects such as exchange rates and cur- rency devaluation, instead placing a dispropor- tionate emphasis on tax-related issues. The tax burdens imposed on both companies and individ- uals are deemed excessive, particularly consider- ing the already onerous tax regime prevalent in Zimbabwe. There are other avenues to explore than straining the business community and indi- viduals. The country is experiencing an annual loss of 1.2 billion in revenue due to gold leakag- es, equating to 100 million per month. It is important to note that this figure does not account for other valuable resources such as diamonds, lithium, platinum, tobacco, and PGMs. Correcting these leakages should be a primary focus to address these fiscal gaps effectively. It is imperative to address the political and eco- nomic issues that are exacerbating the strain on companies including the tax regime. Continued financial burdens on businesses will result in reduced production, earnings, FDIs, and further economic decline. High taxes not only harm busi- nesses but also diminish confidence levels, con- tributing to a state of disarray in both political and economic spheres. It is worth noting that the government already imposes various taxes, including carbon taxes, surrender portions, corporate taxes, value-added tax, AIDS Levy, and pay-as-you-earn taxes. Given this existing tax burden, the question arises as to why additional strains are being imposed on com- panies and individuals. The focus should be shift- ed towards addressing revenue leakages from gold and other valuable resources, as well as rectifying the political and economic landscape.

The AXiS CIV Friday 1 Dec 2023 6 Blue Carbon's Controversial US$1.5Bn Virtue Signal *To Page 7 n early October against the backdrop of the climate crisis, Blue Carbon, a Dubai-based pioneering environmental entity, joined hands with Zimbabwe, resulting in a groundbreaking Memorandum of Understanding (MoU) valued at an astounding US$1.5 billion. Blue Carbon’s parent company, Global Carbon Investments agreed to transfer US$1.5 billion to Zimbabwe in pre-financing for carbon credits, an enticing offer for the haggard nation as that’s more than the country spends on education and childcare, which combined are the country’s biggest national expense. Zimbabwe, as the third-largest contribu- tor of carbon credits in Africa and twelfth global- ly, delivered a substantial 4 million carbon credits from diverse projects in 2022, as reported by Carbon Credits. Among these, is the Kariba Proj- ect, managed by South Pole, one of the world’s first major carbon credit trading companies and Stephen Wentzel, a Zimbabwean entrepreneur. At first glance, although seemingly controversial, Zimbabwean analysts saw the MOU as progres- sive considering that at the heart of the agree- ment lay a shared commitment to carbon offset- ting, a process pivotal in mitigating carbon footprints. Secondly, the deal is incredi- bly lucrative considering that Zimbabwe will be paid billions for bolstering con- servation efforts, which it has already been at the fore- front of for decades. Defor- estation or degradation of forests contributes to a mini- mum of 12% of worldwide greenhouse gas emissions responsible for global warm- ing. The pivotal factor underscoring the significance of forestry as a climate solu- tion lies in its capacity to absorb carbon dioxide from the atmosphere. Basically, for every ton of CO2 reduced, a valuable carbon credit is earned, and it is these credits that form the backbone of global carbon trading. So, with carbon credit schemes opening a new channel of revenue for forest-rich countries like Zimbabwe, it's almost an offer we couldn’t refuse. But at what cost? Following the revelation that Zimbabwe’s envi- ronment minister signed away control over a staggering 7.5 million hectares of Zimbabwean forests, almost 20% of the country to a foreign company, not even a year old, eyebrows were certainly raised and upon further investigation rightfully so. What does Blue Carbon stand to gain? Let's take a closer look at all the parties involved directly and indirectly. Blue Carbon’s Chairman, Sheikh Ahmed Dal- mook Al Maktoum, a member of the royal family and UAE’s prime minister, runs the year-old firm with no proof of record for its prior experience in handling carbon offset proj- ects. So why would Zimbabwe hand over 20% of its land to a company with no experience in these types of projects? Well, the government is focused on the earnings generated from the sale of carbon credits in the global market, as it will lead to significant income growth. According to President Mnangagwa, the deal would reduce the government’s financial deficit by US$200 million, besides producing carbon credits for usability in the international market. The MOU represents Blue Carbon's fourth strategic initiative in Africa this year, solidifying its stature as a major influ- encer in the domain of carbon credits. In 2022, the Private Office of Sheikh Ahmed Dalmook Al Maktoum made headlines by sealing a pact with Liberia, offsetting greenhouse gas emissions from a substantial 10% of Liberia’s land. Preceding this accomplishment were significant agreements with Tanzania and Zambia, where Blue Carbon committed to conserving extensive forest areas, covering 8 million hectares in each country, proj- ects spanning an impressive 24.5 million hectares across Africa in exchange for valuable carbon credits. Yet, beneath the surface of these climate initia- tives lies a nuanced narrative. The Liberian proj- ect, for example, faced intense scrutiny from local activists, who vehemently asserted that it encroached upon the land rights of indigenous communities. Similarly, the colossal Kariba proj- ect in Zimbabwe, one of the world's most significant forest protection endeavours, was marred by controversies. A report by Follow the Money in January revealed discrepancies in the funds allo- cated to Zimbabwe by the South Pole, the com- pany managing the project. However, South Pole has refuted media allegations, dismissing the reports as "exaggerated" and "misleading." In a news release issued in February, the company firmly rejected any misleading claims related to 'over-issuances' of verified carbon credits from its prominent climate action project, the Kariba REDD+ forest protection initiative. In response, Zimbabwe's government initially demanded half the revenue from carbon offset projects, causing a freeze on existing agreements. Subsequently, this demand was softened to a 30% share in August, allowing developers to retain 70% of the income. These adjustments sent ripples across the US$2 billion global carbon credit market, leaving investors and neighbouring nations like Malawi and Zambia contemplating similar actions. Zimbabwe has close ties to the UAE as one of the country’s main export destinations. The UAE has emerged as a leader in climate action, exem- plified by its Carbon Alliance's commitment to purchasing US$450 million worth of carbon credits from the African Carbon Markets Initiative (ACMI) by 2030. But so far, the media seems to be conveniently overlooking that the UAE is also one of the world’s biggest polluters per capita, so how does that work? In 2020, data from Climate Watch indicated that the UAE accounted for approximately 0.53% of global CO2 emissions. However, with a population of nearly 10 million people, it stands as the sixth-largest carbon emit- ter per capita. Notably, despite its relatively modest population size, the UAE ranked as the seventh-largest oil producer worldwide in 2022. As the host of the upcoming UN Climate Change Conference, the UAE aims to use its presidency to actively advocate for the incorporation of carbon removal strategies beyond forests. This includes addressing emissions from the combus- tion of oil and gas and subsequently storing them underground. The nation sees this comprehensive approach as a pivotal solution to the challenges posed by the climate crisis. The basic premise of COP is for world leaders to convene and discuss initiatives that do not only bolster the use of alternative energy sources like in the case of South Africa’s coal mine decommission program, but the reduction in the use of fossil fuels. Yet the UAE has chosen to cherry-pick the easy route of carbon offsetting without dabbling in any production reductions, which scientists and particularly climate activists have found to be more effective. Why? Well, the UAE has a lot to lose since oil and gas are the backbone of the economy. As of last year, the oil and gas sectors constitute approximately 30% of the country's GDP and account for 13% of its exports. Almost 100 countries endorse the gradual reduc- tion of fossil fuels, with renewable energy sources such as wind and solar becoming increasingly cost-competitive worldwide. And market dynamics sug- gest a natural shift away from oil and gas. How- ever, at COP28, there remains the possibility that fossil fuel companies and lobbyists may advocate against an over-reliance on wind and solar energy, seeking to maintain the status quo of oil and gas production. Almost certainly, the Abu Dhabi National Oil Company (ADNOC) will be one of the lead pro- ponents of an even bigger oil and gas market. As the UAE holds key roles in both climate leader- ship and fossil fuel matters, it adds a layer of complexity and somewhat a conflict of interest. Blue Carbon's deep connections with the nation's royals and rulers further complicate matters, making it challenging to distinguish its advocacy for carbon offsets from the UAE's interest in sus- taining fossil fuel production. However, Sultan Al Jaber, who runs the nation’s mammoth oil and gas company, sees no conflict of interest. Interest- ingly, the rules governing the purchase and sale of these carbon credits will be determined in Dubai during COP28. ADNOC is poised to increase its oil production by 41% and gas production by a third by 2030, compared to this year's projections. This surge A Second Look Ahead of COP28 I

corresponds to a 40% elevation in greenhouse gas emissions. By 2030, ADNOC aims to surpass the production levels of both Shell and BP, align- ing itself as a formidable international oil major. The company is diversifying its portfolio through acquisitions abroad, including gas fields in Azer- baijan and a collaboration with BP for a 50% stake in Israel's NewMed Energy, focusing on gas exploration in the eastern Mediterranean. ADNOC is also investing in renewable and chemical projects. To curtail its expanding carbon footprint, ADNOC announced plans in October to capture 10 million metric tons of CO2 annually by 2030. However, a recent analysis by Global Witness raised concerns about the accuracy of this figure, deeming it overly optimistic. So, what’s the problem for Zim? Final Thoughts Zimbabwe finds itself amidst significant polariza- tion, particularly concerning the contentious land issue, making the proposition of allocating 20% of its land for a few billion dollars a challenging one. The country, with a historical prominence in agriculture that once rendered it the Jewel and breadbasket of Africa, faces the dilemma of sac- rificing potentially more valuable land for carbon offsetting. Zimbabwe's contribution to global emissions is minimal, accounting for less than 0.01%, as the entire African continent contributes only 4%. Despite the nation's strong conservation history, utilizing land for carbon offsetting is questioned for its efficiency. Critics argue that this approach facilitates virtue signalling for oil-producing pol- luters, providing them with a means to escalate production under the guise of carbon offsetting. The concept of tradable carbon credits exchanged for forest preservation has faced widespread criti- cism, revealing accounting methods by major certifying companies that exaggerate their proj- ects' actual impact on climate change mitigation. Scepticism lingers among climate advocates and scientists, casting doubt on the efficacy of carbon removal as a strategy that potentially enables large-scale fossil fuel production, expansion, and substantial profits. The AXiS CIV Friday 1 Dec 2023 7 *From Page 6

he Treasury has implemented various mea- sures in an attempt to mitigate inflationary pressures, ostensibly bringing a semblance of stability to the market. However, it is important to critically analyze the efficacy of these measures, as they have proven to be woe- fully inadequate. In reality, it is the informal adoption of dollarization that has been the prima- ry driver behind the so-called stability in infla- tion. Equity Axis economic analyst Gerald Macheka predicts that as we embark on 2024, the annual blended inflation rates are poised to exhibit a fluctuation spanning from 10% to 25%. This projection is primarily driven by the perva- sive influence of dollarization, which eclipses the impact of the Zimbabwean dollar (ZWL) on inflation calculations. Macheka attributes this phe- nomenon to the extensive utilization of the USD, accounting for approximately 80% of currency usage within the economy. This projection takes into account the calculation methodology that heavily favours the US dollar, overshadowing the erosive impact of the Zimbabwean dollar (ZWL). The most recent annual blended inflation rate has surged by 3.8 percentage points, reaching the cur- rent level of 21.6%, compared to the preceding month's position of 17.8%. Likewise, the month-on-month inflation has escalated from 2.5% in the previous month to 4.5% in Novem- ber. Moreover, when examining the comparative movement, the official market has witnessed a substantial depreciation of the ZWL, with a year-to-date decline of 86%, while the parallel market has experienced an even steeper decline of 89%. Furthermore, in terms of month-on-month changes, the official market has observed a 1% decline, whereas the parallel market has encountered a significant depreciation of 15%. In June 2020, ZIMSTAT initiated the integration of a blended consumer price index, amalgamating the ZWL consumer price index and the USD consumer pricing index, in recognition of Zimba- bwe's dual currency price system. The objective behind this amalgamation was to offer a more comprehensive evaluation of inflationary patterns. Consequently, in February 2023, Zimbabwe formally adopted the blended inflation measure as the official metric, discontinuing the exclusive reliance on the Zimbabwean dollar (ZWL) for inflation calculations. In September 2023, ZIMSTAT introduced a significant alteration to the methodology employed for computing the weighted Consumer Price Index (CPI). The previous arithmetic aggre- gation method, which aggregated elementary indi- ces, was replaced with a more sophisticated geo- metric aggregation approach to price indices. This adjustment aimed to enhance the accuracy and reliability of inflation data by capturing the vary- ing significance of diverse goods and services in household expenditure. By transitioning to the geometric aggregation method, ZIMSTAT aimed to provide a more precise depiction of consumer spending patterns and their impact on the overall inflation rate. Despite attempts to address inflation through measures such as the introduction of gold coins and the ZIG currency, as well as adjustments to interest rates, it is evident that these avenues have proven ineffective. The primary challenge of instilling confidence among economic agents remains unaddressed, leaving monetary authorities with limited options. The extension of the use of United States Dollars until 2030, amidst a signifi- cant weekly depreciation of about 33% during May, indicates an explicit admission that dollar- ization is the sole solution to curbing inflation. This acceptance of failure was also apparent when forced de-dollarization was attempted in 2019 and subsequently abandoned. It can be safely concluded that inflation has been contained through the adoption of dollarization, as evidenced by the latest budget statement, which reveals a substantial increase in USD deposits from an average of US$300-400 million in 2018 to US$1.6 billion. Looking ahead, to enhance the efficacy of ZIM- STAT, it is imperative to address the limitations of the current price indices, which predominantly focus on the formal sector, particularly retail shops. Given that approximately 70% of Zimba- bwe's economy operates within the informal sector, it becomes crucial to devise a more com- prehensive approach to accurately assess inflation levels. This entails integrating price indices that explicitly incorporate the informal sector. The heavy reliance on dollarization within the infor- mal sector further underscores the necessity of incorporating it into inflation calculations. With nearly 99.9% of the informal sector embracing dollarization, understanding and managing infla- tion necessitates the inclusion of this aspect. By incorporating price indices that specifically account for informal sector transactions, ZIM- STAT would be able to capture the true extent of inflationary pressures within the economy, facilitating the development of more effective policy responses. Implementing this proposed approach in the future would require innovative data collection methods and advanced statistical techniques to grasp the intricacies of the informal sector. Engaging with informal businesses, market trad- ers, and other unregulated economic activities would be essential to gather pertinent pricing data. Additionally, collaboration with financial institutions and mobile payment platforms could offer valuable insights into the prevalence of dol- larization within the informal sector. By encom- passing these dimensions, ZIMSTAT would pave the way for a more comprehensive understanding of inflation dynamics, empowering policymakers with accurate information to devise targeted inter- ventions that cater to the needs of both the formal and informal sectors of the economy. The measures outlined in the budget fail to address the stabilization of the Zimbabwean dollar (ZWL) and instead reinforce the informal adoption of dollarization. The absence of ZWL-based taxation measures aimed at increasing the acceptance of the local currency further underscores the lack of confidence even within the monetary authorities regarding its stability. This trend indicates that the government is actively promoting informal dollarization until it becomes the official norm. Budget Facilitating Informal Dollarization & Analysis Annual Inflation to Stay Below 30% T The AXiS CIV Friday 1 Dec 2023 8 *To Page 9

As we enter 2024, it is expected that the central bank will persist in implementing stringent mone- tary policies, such as maintaining elevated interest rates, to uphold an environment characterized by stable inflation. The central bank's strategy involves delicately balancing higher interest rates within a broader monetary policy framework, while simultaneously creating the perception of relatively low interest rates. With the anticipated disbursement of salary bonuses for civil servants in 2023 by the Trea- sury, market liquidity is likely to experience a significant surge. However, the lack of substantial economic production in response to the injection of cash will perpetuate currency devaluation and contribute to the fluctuating inflationary trends observed in parallel markets. The outlook for inflation in December remains uncertain, primari- ly due to external factors beyond Zimbabwe's control. Despite the risk of appearing sympathetic towards the Central Bank of Zimbabwe, which frequently falls short of its targets, ongoing geo- political crises like the Russia/Ukraine conflict and the Palestine/Israel conflict pose significant challenges to supply chain management for busi- nesses. These firms may resort to implementing price increases to mitigate the impact of disrup- tions in the supply of goods and services. Addi- tionally, the effects of imported inflation are note- worthy considering Zimbabwe's status as a net importer, as evidenced by the consistent trade deficit. Consequently, the Zimbabwean govern- ment must exercise caution during December and may need to make policy adjustments with a focus on short-term outcomes. This strategic approach is necessitated by the interconnected nature of global uncertainties and the interdepen- dence characterizing current economic activities. Both the official and black market exchange rates between the Zimbabwean dollar (ZWL) and the US dollar (US$) continue to witness significant declines. The latest annual blended inflation has risen by 3.8 percentage points, reaching a current rate of 21.6% compared to the previous month's position of 17.8%. Additionally, month-on-month inflation increased from 2.5% to 4.5% in Novem- ber. Furthermore, when considering the comparative movement, the Zimbabwean dollar (ZWL) has experienced substantial depreciation, with an 86% decline in the official market and an 89% decline in the parallel market year-to-date. Moreover, in terms of month-on-month changes, the official market witnessed a 1% decline, while the parallel market experienced a significant depreciation of 15%. *To Page 10 n a bold fiscal move, Finance Minister Mthuli Ncube has unleashed a barrage of new taxes under the 2024 budget. From levies on fizzy drinks to increased toll gate fees and even imposing charges on the burgeon- ing lithium industry, Ncube is leaving no stone unturned in his quest to bolster the nation's cof- fers. With limited external support, Ncube has turned to the public, putting the squeeze on indi- viduals and businesses alike to generate revenue crucial for funding vital initiatives, ranging from road rehabilitation to life-saving cancer treatment. The burden of these new taxes will be keenly felt across the nation, impacting both your business and your finances. In this article, we break down the intricate details of Ncube's ambitious Z$58.2 trillion 2024 budget and reveal precisely how it will impact your bottom line. Firstly businesses will face significant changes in the trade environment as Finance Minis- ter Mthuli Ncube is determined to restore the supply chain from manufacturers to retailers, aiming to address the issue of delayed payments faced by manufacturers from big super- markets. To achieve this, new regulations reminiscent of the past are being reintroduced, requiring traders to be licensed and tax-compliant to purchase goods directly from manufac- turers or wholesalers. Under the new regulations, only trad- ers who are registered for Value Added Tax (VAT) and possess valid Tax Clearance Certificates will be allowed to buy goods from manufacturers. Starting from January, the VAT registration threshold will be reduced from US$40,000 to US$25,000 or the equivalent in the local currency. Non-compliance with VAT regis- tration will result in penalties being enforced. While this measure aims to promote tax compli- ance and streamline the supply chain, it may pose challenges for manufacturers. They now bear the administrative burden of verifying the tax status of each of their customers, making compliance a complex task. Notably, informal traders have become the manufacturers' largest customer base, and this regulation may potentially drive them towards imports instead. While this move is commendable for the fiscus, it is crucial to protect the local industry to ensure its success. Otherwise, informal traders may opt to import goods and operate entirely underground, leaving manufacturers with customers who insist on credit terms but have limited access to bank finance. In addition to these tax reforms, it is worth noting that Mthuli Ncube is also eliminat- ing the duty-free entry of basic groceries. This change will have implications for the cost of imported essential food items. On the other hand, there's a new tax in town called the Minimum Domestic Top-Up Tax (DMTT). Finance Minister Mthuli Ncube has responded to global regulations that demand large multinational enterprises pay a minimum Corpo- rate Income Tax rate of 15%. Ncube has observed that generous tax incentives have allowed these companies to pay less than this threshold. To address this issue, he is proposing the implementation of the DMTT, a tax mecha- nism that enables the host country of a multina- tional enterprise to collect a "top-up tax" instead of the tax being funnelled to the company's headquarters. In a significant adjustment, the cor- porate tax rate has been increased back to its original level of 25%. This comes after a tempo- rary reduction to 24% in 2020, which aimed to provide support to businesses during the challeng- ing times of the COVID-19 pandemic. The introduction of the DMTT represents a pro- active response by the government to ensure that large multinational companies contribute their fair share of taxes. By implementing this tax mecha- nism, Zimbabwe aims to align with global stan- dards and prevent multinational enterprises from benefiting excessively from generous tax incen- tives. This new tax in some way reinforces the commitment to tax fairness and compliance but also has implications for the revenue generation of multinational enterprises operating in the coun- try. Lithium mining has been topical throughout the year with Zimbabwe increasingly becoming a key player in the global market and with this back- ground, there's a major policy change on the horizon for the lithium industry. Presently, large lithium inves- tors in Zimbabwe are involved in processing and exporting concentrates. However, a significant shift is underway as they will now be required to take an additional step in the processing chain by converting lithium into carbonates. This move deems concentrates as no longer qualifying as "beneficia- tion," making them subject to an export tax. Lithium miners have until March to submit their processing plans, and the issuance of new lithium licens- es will be contingent upon the submission of these plans. Amid a sharp decline in global lithium prices, miners were already hopeful for a reduction in their 5% royalty fees to alle- viate financial pressures. How- ever, the introduction of a new tax may force them to scale back on new invest- ments. This policy change means that lithium miners must go beyond their existing concentrator plants used for ore processing. They will now need to install converters to engage in further processing of the concentrate, ultimately produc- ing lithium carbonate. In addition to these changes, Finance Minister Mthuli Ncube is imposing a 1% levy on revenues generated by lithium and granite miners, as well as producers of quarry stones. The rationale behind this levy is to enhance the living condi- tions within mining communities. While these policy changes aim to encourage value addition Exploring the 2024 Budget’s Impact on Businesses Unleashing the Tax Blitz I The AXiS CIV Friday 1 Dec 2023 9 *From Page 8

*From Page 4 EQUITY AXIS fifffflffiflffi  Financial insights at your fingertips. fifffflffiflffflffi fiffff fffl  fiff  fiff  ff fiffflfffl www.equityaxis.net Equity Axis Head Office 32 Lawson Avenue, Milton Park, Harare, Zimbabwe t: +263 (08677) 197791 c:+263 773 782 392 | 773 037 422 [email protected] Follow us The AXiS CIV Friday 1 Dec 2023 10 *From Page 9 and local processing of lithium resources, they may have implications for the operations and investment plans of lithium mining companies. Balancing the need for increased revenue and community development with the sustainability of the mining industry will be crucial for the suc- cessful implementation of these policies. Businesses will need to rethink their logistical operations since going forward fuel prices will be on the rise coupled with a hike in tollgate fees. Finance Minister Mthuli Ncube is increasing the Strategic Reserve Levy by US$0.03 and US$0.05 per litre of diesel and petrol, respectively, effec- tive from January. In light of this transportation costs will rise for businesses and individuals alike. Tollgate hikes come as a result of the recently refurbished and much-appreciated Beit- bridge-Harare highway. Ncube is proposing a sub- stantial increase in toll fees for what he refers to as "premium roads." This includes the high- ly-traveled Harare-Beitbridge highway and the Plumtree-Mutare road. The current toll fee of US$2 will be raised to US$5 or its equivalent in local currency. To put this into perspective, if you plan to drive from Harare to Bulawayo and back, you'll now need to budget a hefty US$50 for toll fees. And if your journey takes you from Harare to Beitbridge and back, be prepared to shell out US$60. How does this compare? Well, travelling the equivalent distance between Johan- nesburg and Durban, which is similar to the Harare-Beitbridge route, will cost you up to around US$33 for a return trip. The combination of fuel price hikes and the sharp increase in toll fees will undoubtedly impact your travel expenses, leaving a dent in your budget. It's important to consider these additional costs when planning your journeys and to adjust your financial projections accordingly. The government's ambitious infrastructure proj- ects, specifically the Beitbridge highway and Plumtree-Mutare road, have encountered signifi- cant funding challenges. In the absence of exter- nal financial support, the government heavily relied on the national budget to fund the con- struction of the Beitbridge highway. However, this reliance has posed difficulties in paying con- tractors, leading to delays and disruptions in the project's progress. On the other hand, the Plum- tree-Mutare road project was initiated using a loan from the Development Bank of Southern Africa (DBSA). Originally, this loan was expected to be repaid by 2022. However, the government has faced financial constraints and was unable to meet its repayment obligations, resulting in a default on the loan. To address this default, a restructuring deal has been negotiated. Under the new agreement, the outstanding amount of US$165 million will be repaid over an extended period of 15 years, with a reduced interest rate of 5% compared to the previous rate of 6.18%. This restructuring pro- vides some relief to the government by lowering the financial burden and allowing for a more manageable repayment plan. Finance Minister Mthuli Ncube also announced additional cost increases for passport fees. Firstly, passport fees are set to rise significantly from US$120 to US$200. This adjustment will impact individuals seeking to obtain or renew their pass- ports, as they will now have to allocate a larger portion of their budget to cover the increased fees. Furthermore, vehicle registry fees are also on the rise. Vehicle owners and operators will need to factor in these additional expenses when budgeting for their vehicles' registration and compliance requirements. In another move by Finance Minister Mthuli Ncube, a new tax is being imposed on the sugar content of fizzy drinks. The rationale behind this tax is to discourage the consumption of beverages that have high sugar content, aligning with efforts to promote healthier dietary choices. Under this new tax scheme, each fizzy drink will be subject to a tax of US$0.02 per gram of sugar. The reve- nue generated from this tax will be designated for specific purposes, as stated by Mthuli Ncube. It will be utilized for therapy and the procure- ment of cancer equipment for diagnosis. By allo- cating the funds towards these areas, the aim is to enhance cancer treatment services and support the acquisition of vital medical equipment. The introduction of this tax on sugar in fizzy drinks reflects a broader global trend aimed at address- ing concerns about the health consequences asso- ciated with high sugar consumption. Such mea- sures aim to discourage the excessive intake of sugary beverages, which have been linked to var- ious health issues, including obesity, diabetes, and dental problems. Consumers and businesses in the beverage industry need to be aware of this new tax and its implications. Adjusting financial pro- jections and pricing strategies accordingly will be necessary to account for the impact of the tax on the cost of fizzy drinks. In a significant development, Finance Minister Mthuli Ncube has announced the implementation of an annual wealth tax targeting homeowners whose properties are valued above US$100,000. Under this new policy, homeowners falling into this category will be subject to a 1% tax on the value of their houses. The revenue generated from this tax will be directed towards urban infrastructure development, with a specific focus on roads, water supply, sewer systems, and com- munity health centres. While the tax aims to gen- erate funds for much-needed infrastructure improvements, certain exemptions have been put in place. Individuals aged over 70 will be exempted from paying this wealth tax for their private homes, providing some relief for elderly homeowners. Regarding the payment of the tax, taxpayers will have the option to choose between monthly, quarterly, or annual payment schedules. However, the announcement lacks specific details on the methodology to be used for property valu- ation. It is important to note that assessing the value of properties across the entire country would be an extensive and potentially costly pro- cess. In this vein, the implementation of a wealth tax on properties valued over US$100,000 signi- fies a broader effort by the government to address infrastructure development and enhance public services. However, the practicalities of property valuation and the associated administra- tive costs raise important considerations. Finance Minister Mthuli Ncube is proposing new regulations that aim to enhance government over- sight over custodial vaults held at banks or secu- rity companies. The motivation behind these pro- posed measures is to address concerns regarding tax compliance and potential illegal activities associated with funds stored in such vaults. Cur- rently, under existing privacy laws, the govern- ment can only access the contents of custodial vaults with a court order. This requirement ensures the protection of individual privacy and prevents arbitrary intrusion into personal financial matters. Additionally, money kept in vaults is not subject to garnish orders, further safeguarding the privacy and security of these assets. However, Mthuli Ncube argues that these limitations hinder efforts to combat tax evasion and criminal activi- ties. As a result, he is proposing to grant the Zimbabwe Revenue Authority (ZIMRA) the authority to open custody vaults at any time to ascertain their contents. The proposal also sug- gests that financial institutions and other compa- nies providing custodial services be required to document and disclose the cash contents held in their custody. If implemented, these regulations would represent a significant shift in the level of government access to custodial vaults without the need for a court order. The intention is to improve transpar- ency and ensure compliance with tax and legal obligations. It is important to note that these pro- posed changes raise important considerations regarding individual privacy rights and the poten- tial impact on trust in financial institutions. Strik- ing a balance between government oversight and protecting individual rights and freedoms will be crucial in the implementation of such regulations. As the proposal is still in the discussion stage, it is important for stakeholders to closely monitor developments and engage in dialogue to ensure that any regulations implemented are fair, reason- able, and aligned with the overall objectives of transparency and compliance.

11 The AXiS CIV Friday 1 Dec 2023

The AXiS CIV Friday 1 Dec 2023 12 Electric Setbacks Dampen Zim's Steel Output inson Iron and Steel Company (Disco), a subsidiary of China's Tsingshan Holding Group, is shaking up the schedule for the grand debut of its Manhize integrated steel plant. Originally slated for this month, the much-anticipated launch of the plant, which is currently 80 percent complete, will now take center stage in the first quarter of the upcoming year. As spotlighted in the AXIS issue 99, a glimmer of hope awaits in January when the power supply predicament is expected to ease off, thanks to the completion of mandatory class c maintenance on Hwange Units 7 and 8. Here's where the plot thickens—the revised timeline for the steel plant's commissioning aligns perfectly with the anticipated full functionality of Hwange Units 7 and 8. Is it merely a fortuitous twist of fate, or is there a choreographed symphony unfolding before our eyes? You be the judge! Well, DISCO, the power-hungry titan, is in need of some serious wattage. Initially, they're craving 100MW from Zimbabwe's grid, but brace yourself, because their insatiable appe- tite will eventually surge to a jaw-dropping 500MW once they hit full operational capacity. Unfortunately, the current electricity generation situation is far from electri- fying. From a promising start of 1500MW in October, the power supply abruptly dwindled to a meager 1100MW by the month's end, unleashing a plague of intensified power cuts across the entire country. Even the mighty Hwange Thermal Power Station, which soared to an impressive 1000MW peak, has now tumbled to half its former glory, casting a somber shadow over busi- ness operations in the year's final quarter. However it is noteworthy that the construction of a mighty 100MW wind farm by Centragale (Pvt) Limited is set to be the lifeline for Dinson Iron and Steel Company Private Limited as this ambitious undertaking is slated to be inte- grated into the national grid at some point. This powerhouse is set to connect to the grid through a 30-kilometer 132kV Double Lynx line, the electricity generated by this wind farm will surge into the hearts of industries and communities alike. On the flip side, a momentous partnership has taken shape between ZESA Enterprises (ZENT) and DISCO. Their inked offtake agreement sets the stage for a substantial supply of over 1500 tonnes of steel per month. The collaboration extends beyond a mere agreement, as the two companies have also sealed a memorandum of understanding (MOU) encompassing various areas of cooperation. These include the manufacturing of steel towers and the much-needed rehabilita- tion of Zimbabwe's transmission and distribution network. But that's not all—ZENT has been busy forging alliances on multiple fronts. They've inked various MOUs with the Ministry of Lands, Agriculture, Fisheries, Water, and Rural Develop- ment, opening doors for supplying steel products to ZINWA for dam construction. Additionally, ARDA, in need of irrigation equipment like center pivot manufacturing, will also benefit from this strategic partnership. In this regard, DISCO has been leaving no stone unturned in its quest for regional and internation- al success. With active engagement with steel sales agents, both regionally and globally, they're gearing up for imminent production. The con- struction of the colossal $1 billion steel and iron plant in Manhize, nestled approximately 200 kilo- meters south of Harare, has positioned Zimbabwe as a potential titan in the African steel industry. This groundbreaking development propels the country into the elite league of global steel man- ufacturing hubs, with the tantalizing prospect of emerging as a future powerhouse in the steel and iron sector. Zimbabwe's ascendancy in this arena heralds a new era of industrial prowess and eco- nomic growth. So despite the high energy requirements of the plant, its establishment solidi- fies Zimbabwe's economic standing. This is par- ticularly significant considering that nearly 90% of the country's steel production was being exported. Moreover, Zimbabwe is currently wit- nessing a boom in the construction sector, further underscoring the importance of a robust steel industry. The projected production capacity of Disco's Manhize plant is truly awe-inspiring, with estima- tions suggesting the immense potential to produce a staggering five million tonnes per year. The commencement of operations will be executed in a phased approach, commencing with an initial annual production capacity of 600,000 tonnes. As the plant progresses, the capacity will be incre- mentally increased, reaching 1.2 million tonnes in the second phase, 2.4 million tonnes in the third phase, and ultimately achieving its full potential of five million tonnes in the final phase. While specific timelines for reaching the momen- tous five-million-tonne production milestone have not been disclosed, accomplishing such a feat would undoubtedly position Zimbabwe alongside prominent global steel and iron producers such as Russia, South Korea, the United States, and Japan. This remarkable achievement would also restore Zimbabwe to its former glory as Africa's largest producer of iron and steel—a title it held until the closure of the Zimbabwe Iron and Steel Company in 2008. The revitalization of such a significant industry would not only bolster the nation's economy but also solidify its place on the world stage as a formidable player in the steel and iron sector. China's domination of global steel production is undeniable, as they produced a staggering 91.1 million tonnes last year, according to data from the World Steel Association. Following closely, India claimed the position of the second-largest producer with 11.2 million tonnes. However, Zimbabwe is actively propelling itself forward to become a prominent player in the global steel and steel value chain, thanks to significant invest- ments such as Disco's Manhize plant. Beyond the Manhize plant, Zimbabwe has made noteworthy investments in the iron and steel sector, demonstrating their commitment to indus- try growth. One notable example is the revival of Zisco, which involves a substantial $1 billion investment. This initiative aims to revitalize the once-prominent Zimbabwe Iron and Steel Compa- ny, further strengthening the nation's position in the global steel market. Additionally, the $250 million Simbi project in Masvingo contributes to the country's pursuit of prominence in the indus- try. These strategic endeavors in the iron and steel sector showcase Zimbabwe's deter- mination to carve out a significant presence in the global steel industry. By leveraging these investments and focusing on bolstering their production capabilities, Zimbabwe is positioning itself as a formidable con- tender in the global steel and steel value chain. Zisco, once a prominent regional steel giant, held a crucial role in shaping Zim- babwe's industrial landscape. The company was a major producer of steel, catering to both domestic and interna- tional markets. Its Redcliff steelworks, located near Kwekwe, stood as a symbol of Zimbabwe's industrial might, manufacturing a diverse range of steel prod- ucts utilized in construction, manufacturing, and agricul- ture sectors. Through its operations, Zisco provid- ed employment opportunities to thousands of workers and made substantial contributions to the country's gross domestic product. Furthermore, it earned valuable foreign exchange through its exports. Unfortunately, a combination of factors, including mismanagement and the use of outdated plants and equipment, led to Zisco's decline and eventu- al closure in 2008. This was undoubtedly a significant setback for the nation's iron and steel industry. However, Zimbabwe is now determined to revive the sector and reclaim its status as a regional steel giant. Through initiatives like Disco's Manhize plant and ongoing efforts to revive Zisco, Zimbabwe aims to revitalize its iron and steel industry and reestablish its economic strength in the sector. The challenges faced in rescheduling the commis- sioning of Disco's Manhize plant serve as a reminder of the complexities involved in large-scale industrial projects. Nevertheless, with strategic planning, continued investments, and a steadfast commitment to modernization, Zimba- bwe's iron and steel industry has the potential to regain its former glory. Not only will this contrib- ute to the country's economic growth and devel- opment, but it will also reinstate Zimbabwe as a significant player in the regional steel market. D

The AXiS CIV Friday 1 Dec 2023 13

The AXiS CIV Friday 1 Dec 2023 14 he boss at one of the largest medical aid societies in Zimbabwe, Vulindlela Ndlovu CEO at Cimas, is of the view that Univer- sal Health Coverage (UHC) is long overdue in Zimbabwe. I agree with that sentiment but given the state of our economy in general, those remarks can probably be reduced to mere wishful thinking. The demands or conditions required to meet UHC are vast and given how polarised our nation is, it makes it look far-fetched to attain. However, for a nation with a vast mineral resource endowment like ours - coupled with the willingness of those in authority, UHC can be attained in Zimbabwe. Universal health coverage is one of the targets set in 2015 under the Sustainable Development Goals. As defined by the World Health Organisa- tion (WHO), UHC should ensure that all people no matter who they are or where they live can receive quality health services, when and where they are needed, without financial hardship. So many lines under this definition need to be underlined as we try to relate to the Zim situa- tion. Firstly it's "all people" - the health situation so far is so clear that should you find yourself with a life-threatening condition and yet you are poor, your chances of survival will be very mini- mal unless God intervenes. Survival is for the financially fit, ceteris paribus. The question of where one lives is another important factor in Zimbabwe. Those who stay in remote rural set-ups can be very far from facili- ties like clinics and hospitals. That, coupled with poor road networks makes access to health facili- ties even worse. Should one finally get to the facilities, the quality of health services also needs to be assessed. The country has been hit by a serious brain drain in the health sector as doctors and nurses migrated to better-paying economies, mostly in the UK and other European countries. Quality health services have also been hampered by a lack of even basic drugs as well as machines used in that field. Just less than a week ago the Harare City Council (HCC) reported that its infectious diseases hospitals have been operat- ing without tuberculosis (TB) drugs for the last 2 months. That alone is clear evidence that the quality of health services is still way below the minimum expected before we talk about UHC. According to WHO's definition of UHC, people should access quality health services without 'financial hardship'. Eliminate the financial hard- ship component, this might mean complete free health for all. In public clinics and hospitals, that privilege is only a preserve for senior citizens (65 years and above) otherwise the rest you pay. It is cheaper to get health care from public clinics and hospitals compared with private ones. Despite that public facilities are cheaper, not everyone can afford them due to economic hardships in a country with very high unemployment rates. Private health facilities in the country are regard- ed as more effective and efficient in responding to patient needs, unlike public ones. Such facili- ties are mostly accessed by those with medical aid cover, most of which are schemes from formal workplaces. The economy has been highly informalizing. Some health insurance companies have been pushing customised health cover options tailor-made to cater for the growing informal market. However, not all can afford to subscribe to the schemes. Reports are that less than 50% of people in Africa access the healthcare services they need. This is even lower for women and girls, as well as other vulnerable groups including the poor, disabled, and lesbian, gay, bisexual, transgender and queer (LGBTQ) community. Millions of Afri- cans face financial hardship due to out-of-pocket healthcare costs or suffer from a lack of quality healthcare services. To achieve joint ambitions to leave no one behind and guarantee gender equali- ty in health, this will not do. African countries have been working toward achieving UHC for the past 20 years. In 2001, African Union coun- tries met in Abuja and committed to allocating at least 15% of their annual budget to sustainable health financing. However, only 37% of countries in Africa have a formal commitment to UHC. Impoverished Zimbabweans have been on record crossing the border to South Africa (SA) to seek better healthcare services. Healthcare in SA is way better than ours but still, the 'good' neigh- bour is yet to attain UHC. In June this year, SA passed the National Health Insurance (NHI) bill the first hurdle towards becoming law, getting the country closer to its vision of achieving universal access to healthcare. The bill aims to provide for the establishment of a fund which will be used to pay for almost all medical treatments from accredited providers. For many years SA has had a two-tier system, in which around 9 million wealthy South Afri- cans pay high fees for world-class healthcare and exclusive access to around 200 hospitals across the country. The other estimated 50 million South Africans have to take their chances in underfund- ed and understaffed public hospitals, where the queues are long. The NHI bill plans to even things out and improve care for those who can’t afford it. For South Africans without medical aid or in lower income groups, the NHI will offer more equitable access to healthcare services. It will allow them to consult private practitioners and attend private facilities. The NHI also pur- ports to improve the resourcing of public hospi- tals and healthcare services as the burden of care will be more evenly distributed. On the other hand, for South Africans who do have medical aid, the NHI may be a shock to the system. Those who are accustomed to private care may have to settle for lower standards while still paying a similar or higher fee. The bill has been criticised for various reasons but one of the concerns is on how it will be financed. Recent estimates have put its cost at more than R500 billion a year (about US$26.5 billion). Extreme critics even doubt whether an NHI system will ever be workable in South Africa. They have described the bill as an empty promise. But as something still in the making, others believe that it can live up to its potential by being fully thought through, planned in detail and not rushed. In March 2023, Zimbabwe's Minister of Health and Child Care (MoHCC) launched the Health Resilience Fund (HRF)with support from WHO, UNFPA, and UNICEF. The event also marked the launching of the National Health Strategy (NHS) 2021-2025. The HRF has a budget of around US$90 million and is meant to help the country in achieving UHC. HRF focuses on three health pillars namely; ending preventable maternal, new- born, child, and adolescent deaths; global health security; and health systems strengthening. What is clear is that the fund alone will not be enough to cover all the health needs of the country although it is in the same direction. Countries with vast mineral endowments or those that could have accumulated huge quantities of US dollars can invest accumulated reserves in sovereign wealth funds (SWFs). SWFs are created to save and invest for the future to provide stability and economic security. SWFs play a vital role in managing a country's wealth and ensuring long-term financial well-being. In October 2023, Ireland announced plans to invest in a US$106 billion SWF to ease future healthcare, pension and climate costs linked to its growing and ageing population. Zimbabwe this year launched a SWF under the name Mutapa Investment Fund. Such a fund could be used to invest in the healthcare sector to achieve universal health coverage, assuming the fund is profitable. What makes the Fund's ability to finance the health sector in the short term is its structure and composition which includes under-performing state-owned enterpris- es. Should we assume that attaining UHC will be achieved from such a fund, that will mean we are far away from achieving it. Besides relying on an SWF, the authorities can allocate more resources towards health since the sector is directly linked to economic performance. Paul Kagame once said, “The link between health and economic growth is clear. When people aren’t sick in bed or in the hospital, they can go to work. However, the wider impact of these invest- ments is not always obvious. For example, over the past two decades, every dollar spent on essential medicines in Africa has generated $20 more in social and economic benefits. Every shot of a vaccine into a child’s arm, it turns out, acts like a shot of adrenaline into the heart of the An Elusive Journey Attaining Universal Health Coverage in Zimbabwe T

The AXiS CIV Friday 1 Dec 2023 15 n the heart of East Africa, a nation is trans- forming its energy landscape, harnessing the power of nature to pave the way for a sus- tainable future. Rwanda, one of the African countries with zero load-shedding, is set to mod- ernize on groundbreaking renewable energy that promises to increase industry support and expor- tation basis At present, Rwanda relies on a mix of energy sources to meet its power needs. Almost 40% of its electricity is derived from hydropower, har- nessing the country's abundant water resources. Solar energy contributes a modest portion, accounting for under 10% of the energy mix. Other sources include peat, thermal energy, and methane gas. Replicating Uruguay's energy transformation, Rwanda could build upon its success. Uruguay, once heavily dependent on fossil fuels, underwent a comprehensive energy sector overhaul that led to 98% of its electricity being produced from renewable sources. This shift was made possible through significant investments in wind, solar, and biomass energy, supported by strong govern- ment policies that promoted renewable energy adoption. According to the International Renew- able Energy Agency (IRENA), Uruguay's transi- tion resulted in yearly savings of approximately $500 million on oil imports, while bringing about substantial economic, social, and environmental benefits. Rwanda's pursuit of a higher renewable energy goal could bring about substantial economic advantages. By reducing dependence on imported fossil fuels, the country could lower national spending and insulate its economy from global price fluctuations in the energy market. The sav- ings generated from this transition could be rein- vested in expanding access to clean cooking methods, thereby enhancing living standards for many Rwandans and improving their overall qual- ity of life. However, Rwanda faces several challenges in scaling up its renewable energy sector to achieve its ambitious targets. One of the key challenges is expanding the grid infrastructure to handle increased renewable energy capacity. Upgrading and strengthening the electricity grid will be cru- cial to accommodate the intermittent nature of certain renewable energy sources, such as solar and wind power. Additionally, incorporating energy storage solutions will play a vital role in ensuring a stable and reliable power supply, even during periods of low renewable energy genera- tion. Another significant hurdle lies in securing the necessary funding and investment for renewable energy projects. Large-scale renewable infrastruc- ture projects often require substantial financial resources, and finding the right sources of fund- ing can be a complex task. Rwanda can explore innovative financing mechanisms, such as green bonds, which allow investors to support renew- able energy initiatives while generating financial returns. Moreover, forging global partnerships and collaborations can provide access to additional funding opportunities and technical expertise, further bolstering Rwanda's renewable energy endeavors. Investment in research and development (R&D) is also essential for Rwanda to advance its renewable energy sector. By allocating resources to R&D activities, the country can foster innova- tion and develop new technologies that improve the efficiency and effectiveness of renewable energy systems. This will not only enhance Rwanda's renewable energy capabilities but also position the country as a hub for renewable energy innovation in the region. In addition to technological advancements, estab- lishing effective policies and regulatory frame- works is crucial for attracting investments and sustaining renewable energy growth. Clear and consistent regulations can provide a favorable business environment, giving confidence to inves- tors and developers. Rwanda can draw upon best practices from other countries that have success- fully implemented renewable energy policies, adapting them to suit its unique circumstances and goals. Setting higher renewable energy goals can also have a transformative impact on job creation and economic diversification. The expansion of the renewable energy sector opens up opportunities for skilled employment in areas such as project development, construction, operation, and mainte- nance of renewable energy infrastructure. This, in turn, helps diversify Rwanda's economy, reducing its reliance on traditional sectors and creating a more resilient and sustainable economic founda- tion for the future. Moreover, increasing the use of renewable energy sources can significantly reduce environmental pollution, making a valuable contribution to the global fight against climate change. The transition to clean energy helps to mitigate greenhouse gas emissions, which are a major driver of global warming and climate-related challenges. By embracing renewable energy on a larger scale, Rwanda can contribute to the global efforts to combat climate change and create a cleaner and healthier environment for its citizens. Furthermore, improving access to efficient cooing solutions is a critical aspect of Rwanda's renew- able energy strategy. Traditional cooking practic- es, often reliant on biomass fuels such as wood and charcoal, contribute to indoor air pollution and have adverse health effects, particularly for women and children. By integrating clean cook- ing solutions into its energy plans, Rwanda can significantly improve health outcomes and reduce environmental harm caused by the widespread use of biomass for cooking purposes. In conclusion, Rwanda stands poised to make significant strides by raising its renewable energy targets and embracing a more sustainablefuture. Drawing inspiration from Uruguay's success, Rwanda has the potential to achieve and possibly surpass its 2030 renewable energy objectives. While the path ahead may present challenges, this endeavor offers Rwanda a unique opportunity to emerge as a renewable energy leader in Africa and make a tangible difference in the lives of its citizens through increased access to clean energy. By expanding renewable energy sources, Rwanda can reduce its dependence on fossil fuels, lower national spending, and create a more resilient and sustainable economy. The country can leverage innovative financing mechanisms, forge global partnerships, and invest in research and develop- ment to drive renewable energy growth. Further- more, the integration of efficient cooking solu- tions will enhance health outcomes and reduce environmental pollution, contributing to a cleaner and healthier environment for all. Rwanda's commitment to a renewable energy revolution not only aligns with global efforts to combat climate change but also positions the country as a trailblazer in sustainable develop- ment. By setting ambitious targets and imple- menting effective policies, Rwanda can inspire other nations to follow suit, accelerating the tran- sition towards a greener and more sustainable future for Ai. Rwanda's Renewable Energy Revolution The Chase to Zero I

The AXiS CIV Friday 1 Dec 2023 17 his week, the Minister of Finance, Econom- ic Development, and Investment Promotion presented the 2024 national budget speech which if passed becomes the 2024 national budget. While the budget speech does not auto- matically become a budget, it sets the footing for review, debate, and voting by parliamentarians, upon then will become an approved budget. Thus, this column seeks to unpack the socio-eco- nomic implications of the 2024 proposed budget and its policies. Budget Assumptions The assumptions underpinning the proposed 2024 national budget include normal-to-below-normal rainfall season due to the El-Nino effect, a slow- down in global economic growth amid geo-politi- cal tensions, declining international commodity prices, continued use of the multicurrency regime, tight fiscal and monetary policies, sustainable budget deficit, and stable ZWL & inflation. The bulk of these assumptions are adverse, and this helps explain the projected moderation of national output (GDP) growth to 3.5% in 2024 from 5.5% expected in 2023. Economic activity will be weighed down by the projected El Nino, which will subdue the agricul- ture sector by causing crop failure, below-average 2024 harvests, high food prices, low labour opportunities, and increased food insecurity. Also, export receipts will likely plummet significantly because of falling global mineral commodity prices as global supply chains improve coupled with projections of economic slowdown in advanced nations. Mineral exports account for at least 70% of Zimbabwe’s annual export receipts; falling mineral prices will greatly perpetuate foreign currency shortages in the formal markets which in turn limit the importation of essential goods and services and might also destabilize the local currency. The lack of political will to implement key reforms (economic, governance, and land tenure system) will sustain corruption, resource leakages, and market pricing distortions. Other outlook risks include the likely persistence of electricity shortages, elevated fuel prices, increased financial repression (excessive capital controls), public debt distress, poor public service delivery, and geoeco- nomic fragmentation fueled by rising global geo- political tensions. As such, the Treasury’s expec- tations of stable local currency and prices (3% month-on-month inflation) are likely to be a tall order given the expected elevated spending pres- sures as the government tries to cushion the economy and citizens, particularly vulnerable groups. Budget Ceiling The proposed 2024 budget has an expenditure ceiling of about ZWL58.2 trillion, which is 158% higher than ZWL22.6 trillion projected by the end of 2023. It is, however, not clear what explains the astronomical jump in the 2024 budget ceiling when the economic activity is expected to moderate significantly in 2024. Also, the assumptions underpinning the 2024 budget include stable ZWL and inflation, which only supports moderate growth in revenue collections. For me, it is very hard to believe that the addi- tional tax proposals in the proposed 2024 budget will generate 100% of revenues collected in 2023. Cognizant of the foregoing, I submit that the Treasury has silently admitted that the official exchange rate is likely to double in 2024. This will be driven by elevated fiscal spending (bor- rowing and money printing), a phenomenon gen- erally associated with drought years. When El Nino weather conditions hit Zimbabwe in the 2018/19 Agric season, reserve money supply (M0), a monetary aggregate under the direct con- trol of the central bank, spiked substantially by 170% to close December 2019 at ZWL8.8 billion. The 2024 budget presented by Prof. Mthuli Ncube brings back the dark history of the 2008 trillion era when the local unit and prices were too volatile; wiping out a significant chunk of income, savings, and wealth. After the conclusion of the budget speech, I believe economic agents immediately got the signal and have already start- ed forming their expectations. So, without a seis- mic policy shift to support the ZWL like, for instance, demanding 100% of government taxes to be settled in local currency, this could be the last nail in the coffin. Already the economy is witnessing rapid cash dollarization, with official statistics agency estimating that at least 80% of transactions are now conducted in USD. Budget Allocation Benchmarks The national budget is a crucial document that illuminates government decisions to invest and consume, borrow and lend, and tax and spend. Generally, the budget allocations should be guided by regional and international benchmarks Zimbabwe is a signatory to. These benchmarks function as indispensable tools for addressing the transparency and accountability deficit associated with long-term targets. It is highly commendable that some of the pro- posed 2024 budget allocations have shown improved willingness by the government to commit to international benchmarks. For instance, of the expected 20% spending on education, the 2024 budget is allocating 18% of budget resourc- es, up from 14% committed last year. Also, com- bined transport and infrastructure will gobble 14.6% of the budget, which exceeds the threshold of the 2009 AU Declaration. In addition, the 2024 budget has met the constitutional require- ment of setting aside 5% of the budget funds for devolution funds (fiscal transfers). However, despite dilapidating healthcare infra- structure, shortage of medical drugs and equip- ment, and increased brain drain, public spending on the healthcare sector remains low; failing to meet the Abuja Declaration threshold of 15%. Again, despite the ongoing widespread outbreak of cholera, the 2024 proposed budget set aside a paltry 1.17% of the total budget toward water and sanitation. Moreover, despite projections of El Nino weather conditions, the proposed budget earmarked only 7.39% of the budget toward the agricultural sector, down from 8.05% in 2023. Yet, more fiscal spending is expected in this sector as the government provides farm subsidies and food aid to vulnerable groups and communi- ties. Revenue Enhancement The significant jump in the 2024 budget ceiling means that the Treasury will have to find new revenue-enhancing measures. Unfortunately, while increasing existing tax heads, Prof. Ncube has further proposed additional taxes which will significantly deteriorate the welfare of economic agents, particularly the poor majority. For instance, the proposed increase in toll fees and fuel levy will have a negative bearing on the cost of doing business and public transportation costs. Also, with the ongoing increased exodus of Zim- babweans in search of greener pastures abroad, hiking passport fees will lead to illegal immigra- tion thus forcing expatriates to work in menial jobs. With increased allegations of corruption by officials at the Central Vehicle Registry, the mas- sive hike in vehicle registration fees proposed in the 2024 budget will further entrench corruption thus disadvantaging law-abiding citizens. While the designation of civil servants’ US$300 COVID-19 allowance as a pensionable emolu- ment has the effect of increasing the value of salaries, it will also now become liable for tax purposes. Thus reducing the disposable income for the already low-paid civil service. Be that as it may, there are some progressive tax proposals put forward such as the sugar tax whose proceeds will be ringfenced to fight non-communicable diseases like cancer. It is reported that most if not all of Zimbabwe’s public hospitals lack functional cancer machines. Also, the proposed budget seeks to introduce a wealth tax on residential properties worth at least US$100,000. If property valuation and tax collec- tion modalities are fine-tuned, this tax will go a long way in ensuring that the Treasury reaches the assets of wealthiest citizens thus increasing the government tax revenues and making the tax system fairer. In addition, compelling miners like lithium miners to beneficiate extracted minerals will help strengthen value chains and increase both export earnings and employment. Moreover, the newly introduced tax head, the Domestic Minimum Top-Up Tax (DMTT), is a game changer in the fight against the tax race to the bottom. To attract new investments, oftentimes Zimbabwe offers tax incentives to multinational companies (MNCs). However, low tax means Zimbabwe is losing revenue from tax profits enjoyed by MNCs hence ceding the taxing rights to the host country of MNCs' headquarters. T Proposed 2024 National Budget A Pro-economy, Pro-people Budget? Source: Compilations from National Budget

The AXiS CIV Friday 1 Dec 2023 18 *From Page 17 Tax Relief Measures To provide taxpayer relief, the 2024 pro- posed budget will review the tax-free threshold upward to ZWL750,000 per month or ZWL9,000,000 per annum, and adjust the tax bands to end at ZWL270 million per annum, above which tax will be levied at a rate of 40%. Also, the local currency tax-free bonus threshold will be increased from ZWL500,000 to ZWL7,500,000, with effect from 1 November 2023. More so, the Treasury reviewed the tax-exempt threshold on withholding tax on agricultural commodi- ties from US$1,000 per annum to US$5,000 or local currency equivalent. Increasing the salary and bonus tax-free thresholds will go a long way in cushion- ing lowly-paid workers against the effects of inflation. However, at the current offi- cial rate, the proposed tax-free salary threshold of ZWL750,000 is equivalent to a meagre US$130, an amount that is inad- equate to fund an individual’s monthly total consumption requirements. With per- sisting ZWL depreciation and inflation pressures, the threshold will soon fail to provide any cushion to the average earn- ing worker. Public Debt The proposed 2024 budget has shown that as of September 2023, Zimbabwe has domestic creditors of US$5 billion, down from US$5.2 billion in December 2022 and external creditors of US$12.7 billion, declining from US$12.8 billion as of December 2022. The retrenchment of debt is largely attributable to a decrease in liabilities on the RBZ balance sheet by US$684.8 million. However, the nation remains trapped in debt distress, that is, struggling to honour financial obligations to its creditors, and debt restructuring is required. This is shown by ballooning arrears and penalties; of the US$9.1 billion bilateral and multi- lateral debt, 76% (US$7 billion) are prin- cipal arrears, interest arrears, and penal- ties. Of all the government ministries, departments, and agencies (MDAs) bids totalling ZWL110 trillion, the Treasury only satisfied 53% (ZWL58.2 trillion) of the bids received. In addition, the pro- posed 2024 has a huge budget deficit of ZWL4.3 trillion (1.5% of GDP). All this shows that debt distress has severely collapsed the fiscal space. The 2024 proposed budget has laid bare the negative impacts of high indebtedness as the country now spends more resources on debt servicing than on social protec- tion. In 2023, the Treasury paid US$55.6 million and US$10.7 million on external debt servicing and token payments respec- tively. Again, in 2024, the budget resourc- es totalling ZWL948.3 billion are earmarked for interest payments, an amount far exceeding the budget votes allocated to some key ministries like housing (ZWL353 billion), energy (ZWL90 billion), youths (ZWL210.2 billion), and women (ZWL188.1 billion). As such, there is a need to continue dialoguing with creditors and swiftly implement identified reform matrices (eco- nomic, governance, and land tenure sys- tems) to receive debt relief. In addition, debt transparency must be increased and mortgaging of natural resources for more debt be discontinued. Zvikomborero Sibanda is an Economic Analyst for Zimbabwe Coalition on Debt and Development (ZIM- CODD). He writes in his own capacity; his views do not repre- sent those of the organization he works for. Email: [email protected]. Twitter: @bravon9

*To Page 20 The AXiS CIV Friday 1 Dec 2023 19 eikles Limited, a prominent diversified retailer in Zimbabwe with interests in both the retail and hospitality sectors, experi- enced a significant decline in profitability during the half-year period that ended 31 August 2023. The decline amounted to 30%, to ZWL 9.6 billion in profit after tax. This decline was large- ly attributed to exchange losses amounting to ZWL 10.4 billion, primarily arising from the revaluation of lease liabilities for seven leases denominated in US dollars. This alone presents how the currency conundrum is affecting compa- nies in Zimbabwe. The overall exchange losses during this period totalled ZWL 15.6 billion based on historical cost, or ZWL 17.0 billion based on the spot exchange rate on 31 August 2023. The decrease in profit however can be primarily traced back to the depressed sales volumes at its flagship store, Pick n Pay, attributed to prevailing depressed consumer demand. During the period in question, there was a notable 10% decline in units sold at TM Pick n Pay stores, accompanied by a significant 20% reduction in revenue from foreign currency sales. This decline in both sales volumes and foreign currency revenue serves as evidence of the challenges currently faced by veteran retailers in the country. The decline is due to intense competition from the informal sector and the government's control over the cur- rency market, which together create headwinds for the retail industry. Meikles is listed on the Zimbabwe Stock Exchange and London Stock Exchange. Its roots are traced back to 1892 when Thomas Meikle opened a trading port in Masvingo. In 1915, the hotel business was founded while TM Supermar- kets was established in 1978. The group encom- passes 4 sectors, Retail (TM Supermarkets trading as TM Pick n Pay), Hospitality (The Victoria Falls Hotel Operated in partnership with African Sun Limited), Real Estate and Property (Thomas Meikle Properties), and Security Services (Meikles Guard Services). Meikles owns 51% of TM Supermarkets (Private) Limited and the remaining 49% is owned by Pick n Pay South Africa. TM Supermarkets is a chain of fifty-nine (59) stores across Zimbabwe of which thirty-one (31) are branded and traded as “TM” while twen- ty-eight (28) stores are branded and traded as “Pick n Pay”. The Group leases and operates The Victoria Falls Hotel through a joint venture arrangement with African Sun Limited. The Vic- toria Falls Hotel was built in 1904 and is a 5-star hotel situated in a prime location overlooking the Victoria Falls in Zimbabwe, and has 149 guest rooms. The hotel completed the refurbishment of 47 rooms, bringing them to international stan- dards. Large-scale retailers are encountering significant difficulties as they contend with fierce competi- tion from the informal sector, a challenge they find difficult to overcome amid the prevailing currency crisis. The Zimbabwean dollar has been substituted by the US dollar as the preferred cur- rency due to its stability. However, due to the requirement for retailers to align their prices with the overvalued interbank rate, their prices become comparatively higher when expressed in US dollars. As a result, they face competition from informal sectors that offer products based on the parallel market rate, enabling them to provide goods at lower and more affordable prices in US dollar terms. The most recent Q2 GDP estimate demonstrates that the retail and wholesale sector has taken the lead, as illustrated in the graph below. This reflects the sector's importance to the country's economic strength. The services sector, led by retail and trade, con- tributes over 50% to Zimbabwe's gross domestic product (GDP), making it the largest sector surpassing agriculture, manufacturing, and mining. In the second quarter of 2023, retail and trade accounted for 18.6% of the GDP, which was the largest contribution followed by mining and quar- rying. In this scenario, the currency predicament is causing a decline in both sales volumes and reve- nue when measured in US dollars. Simultaneous- ly, revenue growth in Zimbabwean dollar terms is hampered by rapid devaluation, resulting in exchange losses. As a result, large-scale retailers find themselves in a precarious position, navigat- ing through challenging circumstances. One of the primary issues is the government's manipulation of the Zimbabwean dollar concern- ing the US dollar. The government's claims of a liberalized exchange market are not only unrealis- tic but also lacking a solid foundation. This becomes evident when comparing the govern- ment's exchange rate with the parallel market rate. If the formal market rate, particularly, is truly liberalized, it should align with the black market rate, which is determined by the economic dynamics of supply and demand. However, presently, there is a significant disparity of over 50% between the black market and formal market rates, indicating clear signs of market manipulation. Within the interbank rate of willing buyers and sellers, the Zimbabwean dollar is trading at ZWL5.7 thousand against the dollar, whereas the peer-to-peer rate has surged to ZWL9000. The situation worsens when consider- ing the black market rate, which reaches ZWL9500. Moreover, informal shops that accept the Zimbabwean dollar as a form of payment are charging a minimum of ZWL10000 per dollar. This substantial premium of 67% makes it extremely challenging for large-scale retailers to compete with the unregulated informal sector. The government's policies are placing a heavy burden on large-scale retailers, despite their significant contributions to the national treasury through tax payments, unlike informal players. Both the largest retailers, OK Zimbabwe and Meikles, are experiencing a negative impact. In addition to currency manipulation, one of the ways the government is affecting them is by pro- viding duty-free products on imports, even though border control is already compromised due to corruption. The graph below illustrates how the Zimbabwean dollar has impacted the operations of these two leading retailers compared to the dollarisation period. The pricing discrepancy between formal retailers and non-formal players creates a scenario where the products of formal retailers become compara- tively more expensive. Non-formal players, who often evade tax payments and regulatory require- ments, can operate with lower costs. This imbal- ance in cost structures places formal retailers at a disadvantage, leading to heightened competition and potentially even forcing them out of the market. Due to a controlled exchange rate combined with the rapid devaluation of the local currency, retail- ers in Zimbabwe have struggled to achieve con- vincing profitability when measured in Zimba- bwean dollar terms, especially when compared to US dollar terms. Meikles Limited’s Profitability Crunch markets PAT Dips as Sales Slumps M

*To Page 21 *From Page 19 The AXiS CIV Friday 1 Dec 2023 20 RioZim’s Production Quandary Is it Losing It? ioZim's gold production for the cumulative nine months leading up to the full year of 2023 has surged to 724 kilograms, surpass- ing the previous year's performance. This nine-month achievement follows a notable 13% increase in the third quarter, yielding 307 kilo- grams, after an additional 417 kilograms obtained during the first half of 2023. However, despite this upward trend, the recent performance contin- ues to trace a downward trajectory in annual per- formances, indicating another disappointing fiscal year in 2024, where RioZim is likely to fall short of producing 1000 kilograms within 12 months, despite operating three mines. It currently operates three mines: Dalny Mine, Renco Mine, and Cam and Motor Mine. Among these mines, Cam and Motor Mine serves as the flagship asset. However, it is worth noting that the operations of these mines have frequently encountered challenges such as maintenance issues, plant breakdowns, and difficulties adapting to heavy rainfall especially since 2020 with more focus tilted on maintenance than replacement and production. Dalny Mine is currently undergoing maintenance. This suggests that the mine is tem- porarily not in operation, due to the need for repairs, and upgrades. Renco Mine is facing its share of challenges as well. These like said primarily include plant breakdowns, which disrupt production and require consistent repairs or replacements. The recurring nature of these challenges, span- ning multiple years, indicates that RioZim has encountered ongoing difficulties in maintaining consistent operations across its mines. These factors have impacted the company's overall pro- ductivity and performance during this period. Up until 2020, RioZim held the position of the third-largest gold producer in Zimbabwe. The top two positions were occupied by Freda Rebecca and Caledonia, with Freda Rebecca being the leading producer and Caledonia in the second spot. Freda Rebecca has maintained its position as the foremost gold producer consistently aver- aging a gold output of 3,000 kilograms. Caledo- nia, on the other hand, holds the second position, consistently averaging an output of 2,000 kilo- In July this year, the government implemented a policy allowing duty-free imports of 13 essen- tial products, such as sugar, rice, cooking oil, washing powder, and flour. This exemption from import duties has resulted in increased competi- tion for supermarkets. With the availability of duty-free imports, the informal sector, despite evading taxes such as corporate taxes, rentals, and high employee expenses, no longer needs to resort to smuggling or bribery. This grants them a significant competitive advantage. As a result, large-scale retailers find themselves in a precari- ous state, facing heightened challenges in the market. To compound the challenges faced by large-scale retailers, the government has also permitted the duty-free shipment of maize and wheat. This development adds to the headaches of these oper- ators, as mealie-meal (maize meal) serves as a staple food in Zimbabwe, along with rice and bread, constituting significant portions of retail sales. The insatiable competition has already led to the closure of Metro Peech and Brown, the largest wholesalers, while OK Zimbabwe's sales have plummeted below the break-even point. The government must implement pragmatic poli- cies that strike a balance between supporting tax-paying companies and ensuring the welfare of citizens. Companies like OK Zimbabwe and Meikles despite contributing to the national fiscus employ a significant number of people. When faced with challenging economic conditions, they may be forced to close shops, downsize their workforce, and limit hiring, exacerbating Zimba- bwe's already high unemployment rate. According to ZIMSTAT, the official unemploy- ment rate stands at 54%, while non-governmental sources suggest it may exceed 90%. The graph below illustrates the substantial contribution of large-scale retailers to the national treasury through tax expenses during the dollarisation period. However, Meikles has an advantage due to its diversified presence in the hospitality and proper- ty market segments. However, the retail sector still accounts for 80% of its total revenue, indi- cating its heavy reliance on retail operations. On the other hand, OK Zimbabwe is attempting to tackle competition through acquisitions, such as the recent acquisition of Food Lovers. Despite these strategic moves, it seems that more action is needed to effectively address the intense com- petition in the market. Simply acquiring other businesses, especially formal retailers facing the same challenges as itself may not be sufficient to overcome the challenges at hand. The graph below shows large-scale retailers’ con- tribution to the national fiscus through taxes in ZWL Given the current circumstances and challenges faced by large-scale retailers, it could be benefi- cial for them to explore diversification into sec- tors such as mining and property. Diversifying their revenue streams can help mitigate risks associated with the retail sector and potentially increase their overall revenue. The mining sector, in particular, can offer opportunities for growth and profitability, considering Zimbabwe's miner- al-rich resources. Similarly, investing in the prop- erty sector could provide additional sources of income and potentially long-term stability. R

*From Page 20 The AXiS CIV Friday 1 Dec 2023 21 kilograms of gold. However, for RioZim, significant changes occurred in the gold mining landscape with the establishment of Padenga Holdings' gold opera- tions arm in 2019. Within a remarkably short period of just two years, this new entrant posed a threat to RioZim in 2021. Furthermore, in 2023, Padenga Holdings managed to surpass Caledonia in terms of both half-year and nine-month performances. Before the reintroduction of the Zimbabwean dollar, RioZim achieved a record annual gold output of 2,071 kilograms. This remarkable figure experienced a substantial decline in 2022, with production plummeting to 929 kilograms, falling below the 1,000-kilogram mark for the first time since 2014. However, RioZim's decline in output began in 2018, and over the years, production has continued to decrease, albeit at a slower rate. In 2018, production dropped to 1491 kgs, and although it tempo- rarily increased to 1660 kgs in 2020, it has been declining since then. This downward trend is expected to impact the full-year output for 2023 as well. This pro- jection is based on the observation that the country experienced extensive if not record-breaking, black- outs from September to November. These black- outs are likely to persist through December due to low water levels at the Kariba Dam and machine breakdowns at Hwange's ageing power plants. To understand the reasons behind the decline in production, it is necessary to examine the factors that contributed to the record high in 2017. The remarkable increase in gold output during that year is attributed to several factors. Firstly, the Cam and Motor Mine project, which commenced in 2015 and was fully commissioned in 2016, played a significant role while the acquisition of Dalny Mine from Falcon Gold in 2016 (after the deal was completed in 2015) contributed to the boost in production. In 2017, the Group complet- ed the full commissioning of the Cam and Motor gold processing plant, as well as the installation of the flotation circuit. These operational enhancements, combined with management changes, led to a notable increase in gold output. It is worth noting that this growth occurred despite challenges such as power outages and a foreign currency deficit, which continued to impact the company throughout the year. With COVID-19 in 2019, which was particularly felt in 2020, the company’s production declined and also saw the resignation of Nkomo. Instead of a post-COVID-19 recovery, production further deteriorated due to electricity shortages, a short- age of foreign currency, and plant failures. It is however key to note that Swami and Nkomo's leadership effectively managed the situation. Al- though some may argue that the conditions were better during their respective tenures, especially Swami's period of operating under a dollarized economy, it's important to note that the issues at hand are not directly related to dollarisation but competitive management. The former management team demonstrated ver- satility in terms of generating new ideas. They invested in new plants, and machinery, and initi- ated new projects. These efforts were beneficial in compensating for the electricity deficit that the country was experiencing. By implementing these measures, they were able to mitigate the impact of power shortages on production and maintain a certain level of productivity. These might be ideas that need to be implemented on Danly and the whole company in a while. With a change in management from Nkomo’s leadership, production at the flagship Cam and Motor Mine has declined significantly. In 2017, the mine produced a peak of 405 kilograms, but by the first half of 2023, production had dropped to 223 kilograms. There is a need to closely monitor whether this is due to depletion of resources (the mineral) or of thoughts. The down- ward trend is also reflected in the annual perfor- mance, with production declining from over 2000 kilograms in 2017 to below 1000 kilograms in 2022. The once prestigious Dalny Mine is been for a while operating under maintenance, resulting in minimal or no gold production. This trend was witnessed in the third quarter of 2023, mirroring the situation in the first quarter and the first half of the year. Throughout the cumulative nine months, the mine failed to produce any gold. It's important to note that this issue did not arise this year but rather carries over from the previous year. The management is currently facing signifi- cant challenges in restoring the mine to full pro- ductivity and appears to be overwhelmed by the task at hand. The management attributes this decline to electricity-related issues, further exacer- bating the adversity they are confronting. Due to this poor performance, the company has encountered difficulties in securing investors for its ambitious 178 MW solar project, and the progress of the even more ambitious 2800 Sengwa power project has been slow. In compari- son to the previous leadership under Swami and Nkomo, the current management appears to be lagging in terms of their ability to generate ideas and effectively implement them notwithstanding the currency crisis at hand. The current manage- ment may be facing overwhelming challenges and struggling to meet the expectations set by their predecessors. In terms of performance over the past nine months, the company's gold production is at its lowest, particularly when compared to other com- panies such as Padenga and Caledonia. Padenga achieved production of 1664 kilograms during the same nine-month period, while Caledonia reached 1564.8 kilograms. Despite Padenga starting its gold operations in 2019, it has managed to surpass RioZim and claim the third position in terms of gold production. This all goes back to the ideas of diversifying from Crocs to rocks by Padenga’s management. In 2017, the company's average gold production was 2071 kilograms, and in 2019, it reached the second-highest output of 1660 kilograms. Howev- er, in 2021, RioZim's production dropped to 1122 kilograms, marking the beginning of its decline as a renowned third-place gold producer in the country. The decline became more evident in the first half of 2022 when RioZim produced merely 393 kilo- grams of gold, while Padenga achieved 933 kilo- grams, nearly tripling RioZim's performance. As a result, Padenga emerged as the new competitor surpassing RioZim in terms of gold production. RioZim experienced steady growth in gold pro- duction, starting from 613 kilograms in 2013 and reaching a peak of 2071 kilograms in 2017. This represented a significant increase of 238% over five years. However, since 2018, the company's production has been on a downward trend, declining from 2071 kilograms in 2017 to a low of 929 kilo- grams in 2022. This decline amounts to a staggering 61% decrease over five years. The current situation calls for immediate attention from the management, as it is likely that the com- pany will produce below 1000 kilograms of gold again this year, consider- ing that the cumulative production for the first nine months was 724 kilograms. With the increased power outages witnessed in Zimbabwe since September, there is a high possibility that the company's production in the last quarter will fall below 400 kilograms. About gold in Zimbabwe Gold's significance in Zim- babwe's economy cannot be overstated, as it serves as the country's largest source of foreign exchange. With projected receipts of around US$4 billion for this year alone, gold accounts for approxi- mately 30% of Zimbabwe's total exports and 60% of its foreign currency receipts. After expe- riencing a record low of 3.579 tonnes in 2008, gold production gradually recovered over the years, reaching an all-time high of 35.6 tonnes in 2022. However, the gold production sector faces several challenges. Currency distortions, expensive elec- tricity taxes, power outages, and a burdensome taxation system all hinder production. Power blackouts alone account for an estimated 20% loss of production time, with companies like Freda Rebecca reporting annual losses of over 100 kilograms of gold due to power shortages. The rising costs of electricity, which now make up 21% of miners' operating expenses following the third price hike in 2023, further exacerbate the situation. Gold leakages resulting from side marketing and smuggling activities pose a significant challenge to the sector. It is estimated that Zimbabwe loses approximately US$1.5 billion annually due to gold smuggling, representing one-third of the country's total gold output. Delayed payments and poor prices from Fidelity, the state-owned gold-buying entity, contribute to these leakages. Miners, incentivised by delayed payments, resort to selling their gold through informal channels that offer higher prices, discouraging proper sales channels and creating opportunities for smug- gling. The impact of payment delays on mining operations was evident when RioZim, the third-largest gold producer at the time, temporari- ly suspended its operations in 2019 due to late payments from Fidelity. These challenges, including power outages, cur- rency issues, and gold leakages, pose significant obstacles to sustaining and maximizing gold pro- duction in Zimbabwe, impacting the country's foreign exchange earnings and overall economic growth.

The AXiS CIV Friday 1 Dec 2023 22 AFCA released its full-year financials for the year ending September 30, 2023, incor- porating inflation adjustments. Looking ahead, the company has set its sights on expand- ing its export footprint by establishing at least two additional consignment stock arrangements. On the local front, CAFCA aims to enhance its utility business and implement initiatives to win over customers in the mining sector. Furthermore, the company plans to launch an expanded solar cable offering in December. CAFCA, the sole cable manufacturer in Zimba- bwe, has emerged as a prominent player in the Southern and Central African market, while also making successful exports to countries as distant as Uganda and Russia. Established in 1947, CAFCA is listed on the Zimbabwe Stock Exchange, as well as the Johannesburg and London Stock Exchanges. As part of CBi Electric African Cables, a subsidiary of Reunert Limited, CAFCA operates within a larger network of cable manufacturers. Source:Equity Axis Impressively, CAFCA declared a dividend of US$7.90 cents per share. The after-tax profit of ZWL51.0 billion contributed to a dividend payout of ZWL14.6 billion. To finance debtors, the remaining balance was utilized, replacing stock sold worth US$35.0 billion. CAFCA's cash flow plan involves generating sufficient cash by the end of January 2024 to repay borrowings amounting to ZWL3.9 billion and fulfill the divi- dend commitment. CAFCA's ability to meet customer orders can be attributed to its short production lead time, which provides a competitive advantage in the market. During the reporting period, turnover surged to ZWL164 billion, a significant increase from the previous comparable period's ZWL75 billion. This growth can be attributed to dynamic factors such as fluctuations in copper prices, changes in sales mix, and volatility in exchange rates. Notably, copper cable sales experi- enced a year-on-year increase of 9%. Analyzing CAFCA's cash flow statement reveals notable trends. Net cash generated from operating activities rose from ZWL515 million to ZWL1.2 billion, indicating improved operational effi- ciency. However, cash flow from investing activities resulted in a net cash out- flow of -ZWL91,293,499, demonstrating capital utili- zation for investments. On the financing front, net cash from financing activ- ities witnessed an increase from ZWL2.497 billion in September 2022 to -ZWL3.490 billion. To achieve its goal of increasing the export foot- print, CAFCA should consider implementing the following recommendations. Strengthen Market Research Conduct comprehensive market research to identi- fy potential export markets and tailor products to meet their specific requirements. This involves analyzing market trends, understanding customer preferences, and identifying untapped opportuni- ties. By gaining deep insights into target markets, CAFCA can develop effective strategies to pene- trate new territories successfully. Enhance Marketing Efforts Allocate resources to marketing initiatives aimed at promoting CAFCA's products in the interna- tional market. This can include participating in industry trade shows and exhibitions, leveraging digital marketing channels, and establishing stra- tegic partnerships with distributors and agents in target countries. Effective marketing campaigns will help raise brand awareness, generate leads, and facilitate market entry. Streamline Production Processes Optimize production workflows to reduce lead times and efficiently meet increased export demand. This can involve investing in advanced manufacturing technologies, improving supply chain management, and implementing lean manu- facturing principles. By streamlining operations, CAFCA can enhance productivity, minimize costs, and ensure timely delivery of orders to international customers. Invest in Research and Development Allocate funds to research and development efforts to foster innovation and develop new cable products that cater to emerging market needs. This involves staying abreast of technolog- ical advancements, identifying customer pain points, and investing in product development initiatives. By offering innovative and differenti- ated products, CAFCA can gain a competitive edge in the global market. Enhance Customer Relationships Focus on building long-term relationships with mining sector customers by providing exceptional service, reliable products, and customized solu- tions. This can involve offering after-sales sup- port, maintaining open lines of communication, and proactively addressing customer concerns. By nurturing strong customer relationships, CAFCA can foster loyalty, secure repeat business, and gain referrals in the international market. CAFCA's financial statements and performance indicators provide optimism for the company's ambition to expand its export footprint. Leverag- ing its strong financial position, optimizing opera- tional efficiency, and targeting new markets stra- tegically, CAFCA has the potential to achieve sustainable growth and success both domestically and internationally. By implementing the afore- mentioned recommendations, CAFCA can enhance its competitive edge and seize the oppor- tunities presented by a broader export market. ' ' Term of The Week Market Volatility Understanding the term Vola�lity is influenced by various factors, including economic condi�ons, geopoli�cal events, investor sen�ment, market liquidity, and changes in supply and demand dynamics. High market vola�lity usually indicates increased uncertainty and risk, while low vola�lity suggests a more stable and predictable market environment. Economic indicators, such as GDP growth, infla�on, interest rates, and employment data, can significantly impact market vola�lity. Unexpected changes in these factors can lead to price fluctua�ons as investors reassess their expecta�ons and adjust their investment strategies accordingly. Poli�cal instability, conflicts, trade disputes, or policy changes can create uncertainty in the market, leading to increased vola�lity. Major geopoli�cal events, such as elec�ons, refer- endums, or interna�onal conflicts, can have a profound impact on investor sen�ment and market condi�ons. The structure of financial markets and the behaviour of market par�cipants can contribute to vola�lity. Factors such as algorithmic trading, high-frequency trading, or the use of leverage can exacerbate price swings and increase market fragility. Market vola�lity can present both opportuni�es and risks for investors. Higher vola�lity can offer the poten�al for greater returns but also involves higher risks. Traders and inves- tors employ various strategies to manage and capitalize on market vola�lity, including diversifica�on, hedging, and ac�ve trading techniques. Market vola�lity refers to the rapid and significant price changes of financial instruments, such as stocks, bonds, commodi�es, or currencies, within a specific market or across mul�ple markets. It is o�en measured by indicators such as the VIX (Vola�lity Index) or standard devia�on of price movements. Cafca's Ambitious Objective Expanding Export Footprint C

The AXiS CIV Friday 1 Dec 2023 23 SE-listed leading rubber and chemical prod- ucts manufacturer, General Beltings faced significant challenges due to deflated demand and liquidity shortages in the market, during the third quarter of 2023. These ongoing issues posed obstacles to the company's growth. However, GB says policy interventions aimed at easing the supply of foreign currency through authorized agents provided some relief. Despite this, the exchange rates rendered local manufac- turing costs high, leading to intensified price competition from imports due to regional cost disparities. To mitigate these challenges, General Beltings capitalised on the refurbishment of its boiler and ancillary equipment. This investment enhanced internal process efficiencies, allowing the compa- ny to retain its competitiveness in key markets. Additionally, the company successfully cleared backorders during the quarter following the com- missioning of a refurbished additional press. Fur- thermore, Cernol Chemicals, General Beltings' subsidiary, continued its recovery of traditional markets post the Covid-19 shutdown. Performance: Volumes, Turnover, and Profitability General Beltings showed promising performance during the third quarter of 2023. The total vol- umes recorded for this period reached 308 metric tonnes, mark- ing a significant increase of 57% compared to the same period in the previous year. The rubber division's volumes also experi- enced growth, reaching 92 metric tonnes, a 19% increase from the previous year. Similarly, the Chemicals Division witnessed a substantial increase in volumes, with 216 metric tonnes recorded, an impressive 82% growth com- pared to the same period the prior year. Despite the intensifying competi- tion from imports in the region and abroad, General Beltings managed to maintain its turnover at US$1.2 million, in line with the same period of the previous year, which recorded US$1.1 mil- lion. This demonstrates the compa- ny's resilience and ability to navigate challenging market conditions. Importantly, General Beltings operated profitably in the quarter, despite the mixed fortunes experienced by its divisions. Business Outlook: Recovery and Growth Pros- pects Looking ahead, General Beltings' business out- look depends on various factors. The rubber divi- sion's fortunes hinge on the recovery of currently depressed global metal prices. As metal prices rebound, the division is expected to experience increased demand and growth. On the other hand, the continued recovery of the hospitality sector will play a crucial role in assisting Cernol, Gen- eral Beltings' subsidiary, in its growth trajectory. The rubber division's enhanced production capac- ity positions General Beltings to cope with a rebound in the market. With shorter order con- version periods and increased competitiveness, the company is well-positioned to seize opportunities as market conditions improve. Despite the challenging operating environment characterized by deflated demand and liquidity shortages, the company leveraged policy interven- tions and internal process efficiencies to navigate the market. With a solid performance in terms of volumes, turnover, and profitability, General Belt- ings is poised for future growth. The recovery of global metal prices and the revival of the hospi- tality sectors are key factors that will shape the company's fortunes moving forward. As General Beltings continues to enhance its production capacity and competitiveness, it remains a signifi- cant player in the rubber and chemical products manufacturing industry. z iger Brands, a leading South African food company, has recently released its annual financial statements for 2023. The compa- ny's performance has been impressive, and its subsidiary, National Foods in Zimbabwe, has played a crucial role in contributing to the overall success. Tiger Brands' annual financial statements for 2023 reveal a strong performance, showcasing the company's resilience and ability to navigate chal- lenging market conditions. The consolidated financial results demonstrate robust revenue growth and improved profitability. The company's strategic initiatives, operational efficiency, and effective cost management have contributed to these positive outcomes. National Foods, Tiger Brands' subsidiary in Zim- babwe, has been a significant contributor to the company's success. Despite the challenging eco- nomic environment in Zimbabwe, National Foods has shown resilience and maintained a solid per- formance. The subsidiary's strong brand presence, diverse product portfolio, and effective market strategies have helped it overcome market chal- lenges and deliver positive results. Tiger Brands' investment in National Foods has allowed the company to expand its footprint in the Zimbabwean market. The subsidiary has suc- cessfully penetrated various product categories, including flour, maize meal, rice, snacks, and edible oils, catering to the diverse needs of Zim- babwean consumers. National Foods' commitment to quality, innovation, and customer satisfaction has enabled it to gain a competitive edge and strengthen its market position. National Foods' emphasis on supporting local agriculture has been a significant driving force behind its success. The subsidiary actively engag- es with local farmers, providing them with tech- nical support, training, and access to markets. This collaboration ensures a sustainable supply chain while contributing to Zimbabwe's agricul- tural development and food security. Looking ahead, Tiger Brands remains optimistic about its prospects. The company plans to contin- ue investing in product innovation, expanding its distribution networks, and strengthening its brand presence. Additionally, Tiger Brands aims to leverage digital technologies to enhance opera- tional efficiency and engage with consumers more effectively. These strategies, coupled with its commitment to sustainable practices and responsible business operations, position the com- pany for continued growth and success. Tiger Brands' strong performance and commit- ment to the Zimbabwean market have positive implications for the country's economy. The com- pany's investments and operations in Zimbabwe have created employment opportunities, supported local agriculture, and contributed to the overall economic growth of the nation. Tiger Brands' success serves as an example of how foreign investments can drive economic development and improve livelihoods in Zimbabwe. Tiger Brands has demonstrated a commitment to sustainability and social responsibility. The com- pany has implemented sustainable practices across its operations, focusing on responsible sourcing, waste reduction, and environmental preservation. National Foods, in Zimbabwe, has actively engaged with local farmers, providing them with support, training, and access to markets. These initiatives contribute to the overall well-being of communities and the sustainable growth of the agricultural sector. Tiger Brands' annual financial statements for 2023 demonstrate a robust performance, with its subsidiary, National Foods, playing a crucial role in the company's success. Despite the challenging economic environment in Zimbabwe, National Foods has maintained a solid performance and contributed significantly to Tiger Brands' positive financial results. With a focus on expansion, market penetration, and supporting local agricul- ture, Tiger Brands has positioned itself for con- tinued growth and success in both South Africa and Zimbabwe. The company's commitment to responsible business practices and sustainable growth further strengthens its outlook for the future. T General Beltings Tiger Brands Thrives Reports 57% Volumes Surge in Q3 '23 Amidst Recovery Positive Outlook for Zimbabwean Unit

The AXiS CIV Friday 1 Dec 2023 24 Chile's SQM misses forecasts as profit slumps on lithium prices Chile's SQM, the world's second-largest lithium producer, said on Wednesday its third-quarter net earnings fell 56.4%, dragged down by falling lithium prices. The miner, which also produces fertilizers and industrial chemicals, posted a net profit of $479.4-million for the quarter, below the $511.2-million expected by analysts polled by LSEG. Revenue for the miner reached $1.84-billion during the July to September period, down 37.8% from last year and slightly below the LSEG esti- mate of $1.9-billion. The Santiago-based compa- ny's reported earnings per share at $1.68 also lagged the $2.11 forecast by analysts polled by LSEG. "The third quarter 2023 results were impacted by significantly lower average sales prices in lithium and fertilizer business lines," SQM's CEO Ricar- do Ramos said in a statement. -MiningWeekly Oil prices jump after EU leaders agree to ban most Russian crude imports Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year. During Asia hours on Tuesday, U.S. crude futures for July were up 3.53% to $119.12, while Brent crude futures rose 1.87% to $123.95. At one point, U.S. crude rose to $119.42 per barrel — a 12-week high, accord- ing to Refinitiv data. Contracts for August also traded higher: WTI crude jumped 3.66% to $116.34, and Brent was up nearly 2% to $119.96 per barrel. The agree- ment resolves a deadlock after Hungary initially held up talks. Hungary is a major user of Rus- sian oil and its leader, Viktor Orban, has been on friendly terms with Russia’s Vladimir Putin. Charles Michel, president of the European Coun- cil, said the move would immediately hit 75% of Russian oil imports. The embargo is part of the European Union’s sixth sanctions package on Russia since it invaded Ukraine. Talks to impose an oil embargo have been underway since the start of the month. -CNBCA China is willing to be a ‘partner and friend’ of the US, Xi tells American CEOs China is willing to be “a partner and a friend” of the United States, Chinese leader Xi Jinping told American business leaders in San Francisco on Wednesday, as he sought to court US busi- nesses amid a decline in foreign investment in China. In a speech evoking decades of shared history and laden with symbols of warm US-China ties, Xi told a dinner event on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum that the most fundamental question shaping bilateral relations is whether they the countries are rivals or partners. “If we regard each other as the biggest rival, the most significant geopolitical challenge and an ever-pressing threat, it will inevitably lead to wrong policies, wrong actions and wrong results,” Xi told an audience that included Apple CEO Tim Cook and Tesla CEO Elon Musk. “China is willing to be a partner and friend of the United States,” he added. - CNN PepsiCo sued by New York state for plastic pollution PepsiCo has been sued by New York state for plastic pollution along Buffalo River that is allegedly contaminating the water and harming wildlife. According to the lawsuit, PepsiCo is the single largest identifiable contributor to the prob- lem. PepsiCo's spokesperson has told the BBC that it has been "transparent in its journey to reduce use of plastic". Last week Coca-Cola, Danone and Nestle were accused of making misleading claims about their plastic bottles.PepsiCo is the world's second big- gest food company and many other big corpora- tions have been facing lawsuits by local authori- ties about their impact on the environment. Companies are accused of greenwashing when they brand something as more eco-friendly, green or sustainable than it really is. It can mislead consumers who hope to help the planet by choos- ing those products.- BBC Kenya races to meet World Bank's tax reforms target Kenya’s tax revenue as a percentage of economic output or GDP is set to cross the 15 percent threshold in the current 2023/24 fiscal year, meet- ing the World Bank’s minimum recommendation. The ratio of tax revenues to GDP is set to reach 15.8 percent in 12 months to June 2024 beating Kenya’s regional peers; Uganda at 13.2 percent and Tanzania at 12 percent. The country’s tax revenue ratio is set to climb from 14.3 percent of GDP in the year ended June 2023 in the backdrop of elaborate reforms to tax collection and administration. -BusinessDaily UK to offer higher subsidies for offshore windfarms after crisis talks The government will offer significantly higher subsidies for new offshore windfarms after crisis talks with developers that are battling cost infla- tion across global energy supply chains. Ministers have agreed to raise the starting price of the government’s next auction for offshore wind subsidies by around two-thirds to £73 per megawatt hour to help more offshore windfarm projects to move ahead despite higher costs. The government has also raised the starting price for floating offshore wind projects by more than 50% from £116 a MWh to £176 a MWh before the next subsidy auction in 2024. The numbers reflect a maximum price, with bidders competing in a reverse auction to offer electricity at the lowest cost. -The Guardian German Ruling Puts €770 Billion of Govern- ment Funds at Risk A decision by Germany’s top court to strike down off-budget funding for climate action has called into question about €770 billion ($840 billion) of state funding, according to people familiar with the matter. The Constitutional Court declared Wednesday that repurposing €60 billion of pandemic aid from 2021 to finance climate protection contravened Germany’s Basic Law. As officials from Chancel- lor Olaf Scholz’s administration began to digest more than 60 pages of legal arguments, they feared that similar vehicles providing as much as €770 billion in funding may have to be dissolved or at least changed by the end of the year, according to people familiar with the govern- ment’s initial analysis. -Bloomberg Bangladesh PM stands firm on pay rise amid deadly garment worker protests Bangladesh’s prime minister has offered a stern response to striking garment workers amid deadly clashes over pay. After unions rejected a govern- ment offer, Prime Minister Sheikh Hasina on Friday rejected the demands of the protesting workers for a higher pay rise. The premier insisted that they accept the offer on the table or “go back to their village”. Union leaders expressed concern that her words could provoke more violence from police and security forces. Large protests have resulted in at least three deaths over the past two weeks. In response, a government-appointed panel agreed on Tuesday to raise the minimum wage by 56.25 percent to 12,500 taka ($113). However, unions swiftly rejected the offer, demanding instead 23,000 taka ($208), and the unrest has continued.- Aljazeera Huawei has a big problem with the popular Mate 60 5G smartphones: there’s not enough supply to meet growing demand Huawei Technologies is scrambling to crank up production of its new 5G smartphones to meet demand, according to analysts, as the wait time for its popular Mate 60 Pro model – the handset equipped with an advanced made-in-China chip that defies US sanctions – has been extended up to three months. “Production capacity can’t meet demand, which is the reason Huawei is doing pre-orders,” said Counterpoint Research senior analyst Wang Yang, adding that presales help buy some time for Huawei to secure orders from its suppliers. Wang also indicated that the secrecy surrounding the advanced Kirin 9000s processor used in the Mate 60 Pro has complicated how Huawei’s supply chain partners have conducted parts provi- sion, a lengthy process that typically takes between 12 to 18 months before a device is launched.- SouthChina MorningPost SA FINES STANDARD CHARTERED FOR CURRENCY MANIPULATION South Africa's competition watchdog said it has reached a settlement agreement with British bank Standard Chartered over accusations it colluded with other lenders to manipulate the rand. The Competition Commission said Standard Chartered (SCB) admitted liability in the case and agreed to pay a fine of almost R43-million. "The Commission welcomes SCB's decision to reach a settlement on this matter and encourages other respondent banks to consider settling the complaint against them," said Commissioner Doris Tshepe. SCB is one of 28 banks that the watchdog has accused of involvement in a scheme to manipulate the rand-US dollar exchange rate between 2007 and 2013. Traders at the banks communicated on instant messaging platforms to fix bids and offers and engage in other activities that fell foul of compe- tition rules, the commission said.- eNCA Ethiopian Airlines expands Boeing 737 MAX fleet 5 years after fatal crash Ethiopian Airlines announced, on Tuesday, a deal with Boeing that will see the company buy 20 737 MAX aircraft, as well as 11 additional 787 Dreamliners during the Dubai Air Show. The east African airline CEO Mesfin Tasew, says it's only the beginning. "This is just the first phase. We expect to do another round of fleet renewal process in the coming a few years, which we expect to order additional aeroplanes." According to Tasew, Ethiopian Airlines expects to exercise options to purchase another 21 of the narrow-body planes. It also has purchasing options for a further 15 787-9 Dreamliner jets.- Africanews Mozambique: AfDB to provide 162 million dollars for Mpanda Nkuwa The African Development Bank (AfDB) intends to disburse 162 million dollars for the implemen- tation of the Mpanda Nkuwa hydroelectric project on the Zambezi River, about 60 kilometres down- stream from the existing Cahora Bassa dam, in the central Mozambican province of Tete. The amount, according to Wednesday’s issue of the Maputo daily “Notícias”, will be granted as a soft loan to the publicly-owned electricity company, EDM. The Bank has also committed itself to disburse a further 300 million dollars in guarantees for investments in this hydroelectric project. Mozam- bique’s power sector currently has a capacity to generate 2,750 megawatts, and when the Mphan- da Nkuwa dam is in operation, it is expected that the country will generate 4,300 megawatts. The project includes a power station with an installed capacity to generate 1,500 megawatts, and a high voltage electricity transmission line running for 1,300 kilometres, from the Zambezi Valley to Maputo. According to Carlos Yum, Director of the Mpanda Nkuwa Implementation Office (GMNK), who was speaking at the African Development Forum, held recently in Morocco, Mpanda Nkuwa Hydroelectric project was one of those projects selected by the Forum, held under the AfDB’s auspices.- COM Business Around The World

The AXiS CIV Friday 1 Dec 2023 25 Israeli military drops leaflets in Gaza calling for further evacuations The Israeli military dropped leaflets into Gaza that called for Palestinians to evacuate deeper into the territory, indicating a possible growing Israeli military operation in the besieged region. The flyers ordered civilians in areas east of Khan Younis, which is in southern Gaza, to evacuate to "known shelters." This includes people in the towns of Al Qarara, Khuza'a, Bani Suheila and Abasan, according to United Nations Office for the Coordination of Humanitarian Affairs. Hundreds of thousands of people from the north of Gaza have already evacuated to areas in the south, some injured or sick, walking for hours with the few possessions they could carry and sometimes amid active gunfire and bombings. -NPR Spain’s Pedro Sánchez reelected prime minis- ter despite controversy over amnesty for sep- aratists Spain’s acting Socialist prime minister, Pedro Sánchez, was reelected by a majority of legisla- tors in a parliamentary vote Thursday, allowing him to form a new minority leftist coalition gov- ernment. Sánchez was backed by 179 lawmakers in the 350-seat lower house of parliament. Only right-wing opposition deputies voted against him. The vote came after nearly two days of debate among party leaders that centered almost entirely on a highly controversial amnesty deal for Catal- onia’s separatists that Sánchez agreed to in return for vital support to get elected prime minister again. Sánchez won the vote after clinching the support of six smaller parties — including two Catalan separatist parties — in recent weeks, allowing him to achieve the majority of lawmakers needed to be reelected and form another minority coali- tion government with the left-wing Sumar (Join- ing Forces) party. -AP U.S.-China relations are now more about crisis prevention After another rocky year of U.S.-China tensions, the two countries’ presidents are set to meet this week in person for the second time since Joe Biden took office. It will be a rare summit before the U.S. presidential election cycle kicks off in earnest. Taking a tough stance on China, the sec- ond-largest economy in the world, has become one of the few areas of bipartisan agreement. Biden plans to run for reelection. “The focus will be on expanding dialogue in order to low[er] tail risks in the relationship and prevent a crisis that neither leader is looking for,” said Michael Hirson, head of China Research at 22V Research. “Flashpoints such as Taiwan and the South China Sea need to be managed careful- ly,” he said. “For that reason the meeting is still important, especially ahead of a politically charged 2024 that will begin with an important presidential election in Taiwan in January and end with the U.S. presidential election.” -CNBC UN calls for investigation into Burkina Faso ‘mass killings’ The United Nations called Wednesday for an independent investigation into “mass killings” in Burkina Faso this month that left dozens of people dead, including children. Burkina Faso’s state prosecutor said Monday that more than 70 people had been killed in an attack on November 5 in the town of Zaongo in the central-north of country, and that most of them were children and elderly people. The UN rights office said it was “following the alarming reports of mass killings” in the West African country. “We call on the transitional authorities to carry out promptly a thorough, independent, and transparent investigation into these serious reports,” spokeswoman Liz Throssell said in a statement. She pointed out that while the authorities had confirmed at least 70 deaths, “some reports suggest that some 100 people may have been killed, and a large number injured”.- The Guardian Nigeria Mozambique Elections: Renamo pledges to continue demonstrations, boycott to parlia- ment sessions Mozambique’s main opposition party, Renamo, has pledged to continue holding street demonstra- tions against the results of the 11 October munic- ipal elections, which it regards as fraudulent. The Renamo National Political Commission met in Maputo on Tuesday and decided to continue the demonstrations throughout the country. The meet- ing also decided to continue boycotting sessions of the country’s parliament, the Assembly of the Republic, and of the various municipal assemblies where it holds seats. The statement from the meeting, cited by the independent daily “O Pais”, declared that the demonstrations held to protest against the election results had been “positive”, and so should contin- ue, as should the boycott of parliament, which it described as “a form of political struggle”. The Political Commission condemned “the intimida- tion and death threats against fellow citizens who are exercising their democratic right of expression and defence of the truth” Incitement to violence, it claimed, “is in the DNA of the regime, and is made operational by the police”.-COM Polls open in Madagascar amid violent pro- tests and opposition boycott Despite a night-time curfew imposed on Wednes- day, the security presence was scarce across the capital as polling stations opened. President Andry Rajoelina, who is seeking a third term, faces growing isolation after leading opposition figures, including two former presidents, declared him unfit to run and called on their supporters to abstain from voting. Urging the electorate to vote, he said on Thurs- day that: "The only democratic path ... are elec- tions," and denounced people "who try to cause trouble and stop elections". Rija Ralijaona, a 26-year-old day labourer, said she expected who- ever wins the election to reduce unemployment. “I expect the next president to create jobs for young people,” she said, as she prepared to cast her vote at dawn. Calls by the opposition to post- pone the elections were echoed by the organisa- tion grouping Madagascar’s four biggest Christian churches, which declared on Wednesday that it would not observe the vote, citing an unsuitable political environment and lack of standards. --France24 South Sudan deploys first unified forces after peace deal Hundreds of former rebels and government troops in South Sudan's unified forces were deployed at a long-overdue ceremony on Wednesday, marking progress for the country's lumbering peace pro- cess. The world's newest nation has struggled to find its footing since gaining independence from Sudan in 2011, battling violence, endemic pover- ty and natural disasters. The unification of forces loyal to President Salva Kiir and his rival, Vice President Riek Machar, was a key condition of the 2018 peace deal that ended a five-year conflict in which nearly 400,000 people died. Tens of thousands of former fighters were integrated into the country's army in August last year but none have been deployed until now, with the delays fuelling frustration in the international community. The first battalion comprising nearly 1,000 soldiers will be deployed to Malakal in northern Upper Nile State, which has received huge num- bers of South Sudanese refugees fleeing the con- flict in neighbouring Sudan. At the ceremony on the outskirts of the capital Juba, Santino Wol, the country's chief of defence forces, urged the battalion to remain united, saying: "Be a soldier and don't get involved in politics."- Africanews Taiwanese election could tilt in Beijing’s favor Taiwan’s leading opposition parties have agreed to combine forces with a joint ticket in January’s presidential election, consolidating their political support and boosting their chances of forming a more China-friendly government in Taipei. The Kuomintang (KMT) and Taiwan People’s Party (TPP) formed their new alliance on Wednesday, agreeing to settle on a single presi- dential candidate rather than splitting the vote. They also agreed to form a joint government if they win the election. “This is a historic moment for Taiwan, where two parties talk to form a coalition government,” TPP candidate Ko Wen-je said. “We need every- one to work together to work toward a final result.” The parties will put forward either Ko or the KMT’s Hou Yu-ih as the presidential candi- date on their combined ticket after analyzing polling data together. The runner-up would become the vice presidential running mate. -RT Lithuania’s opposition party picks former NATO official as presidential candidate The Democratic Union “For Lithuania”, an oppo- sition party led by former prime minister Saulius Skvernelis, has picked Giedrimas Jeglinskas as its nominee for next year’s presidential election. Jeg- linskas served as deputy defence minister between 2017–2019 and was subsequently NATO assistant secretary general for executive management until 2022. “I bring Western culture, Western diplomatic experience, real working experience from global economic institutions. It is up to the voters to decide who to vote for, but I bring a very strong profile,” Jeglinskas said after he was announced as the party’s nominee last Saturday. The Demo- cratic Union “For Lithuania” was founded in Jan- uary 2022 by politicians who split from the Lith- uanian Farmers and Greens Union.-LRT Israel’s opposition leader calls on Netanyahu to resign over Hamas attack Israeli opposition leader Yair Lapid has called on Prime Minister Benjamin Netanyahu to step down “immediately”, amid Israel’s indiscriminate bom- bardment of Gaza in response to Hamas’s Octo- ber 7 attack. Lapid called for a no-confidence vote in parliament that would allow for the formation of a new government led by another prime minister. “Netanyahu should leave immediately … We need change, Netanyahu cannot remain prime minister,” Lapid said on Wednesday in an inter- view with an Israeli news channel. Lapid accuses Netanyahu and the security apparatus under his leadership of an “unpardonable failure” for not preventing the October 7 attack. -AP Mali’s Army Says Kidal Recaptured from Rebels Mali’s army said Tuesday it has retaken the northern city of Kidal from rebels, after a raid that left many insurgents dead. The reported capture, not confirmed by indepen- dent observers, would mark a symbolic victory for Mali’s army as they have been virtually absent from the city, with ethnic Tuareg rebels controlling much of the northern part of the country. "Today, our armed and security forces have taken over Kidal. Our mission is not complete," Mali's junta leader, President Assimi Goita, said on X. “I recall it consists of recovering and securing the integrity of the territory, without any exclu- sion, in accordance with the resolution of the [U.N.] security council." Mali’s army said it called for peace in the town of about 25,000 and told its residents to obey soldiers.Rebel leaders expecting a military offen- sive cut phone lines in Kidal, and there has been difficulty in contacting the remote town. Insur- gents have not commented on the reported take- over.- The Kidal region has long frustrated the Mali government, after the army suffered several defeats there from 2012 to 2014, and has been unable to regain much of a foothold in the region since. -VOA Politics Around The World

Markets watch ZimDollar’s Parallel Market Premium Soars The AXiS CIV Friday 1 Dec 2023 26 he Zimbabwe dollar has experienced further depreciation, with its value dropping from ZWL5774.2758 to ZWL5790.0545, resulting in a 0.3% decline. This depreciation is not driven by market forces but is rather a result of manufac- tured depreciation. The government has reverted to its customary prac- tice of controlling the currency market by fixing auction market rates. This intervention is evident in the growing disparity between the official market rate and the parallel market rate. The parallel market rate is determined by the forces of supply and demand. When there is an abundance of a particular currency, resulting in a higher supply, the demand tends to decrease. This surplus of supply relative to demand leads to significant depreciations in the currency's value. On the other hand, when the supply of a currency is limited, indicating scarcity in the market, the demand for that currency tends to increase. This increased demand relative to supply leads to the appreciation of the currency's value in the market. When the supply and demand for a currency reach a state of equilibrium, where they are balanced, the currency's value tends to experience marginal depreciation or appreciation. In such cases, there are no significant disparities or wider margins in terms of the currency's value. In that regard, the parallel market serves as a refer- ence point to assess whether a currency is being manipulated. It operates based on the available con- ditions and reflects the dynamics of supply and demand. In the case of the Zimbabwe dollar, despite mar- ginal depreciation that could suggest a balance between supply and demand, the parallel market tells a different story. In the parallel market, the exchange rate for the Zimbabwe dollar has reached a lower of ZWL9500 and a higher of ZWL10000, which is nearly double the official rate of 5.7k. This significant difference indicates currency manipulation and extreme regulation. The premium in the parallel market, which represents the addi- tional cost compared to the official rate, is above 50% at 67%, and even higher in some instances, with a maximum of 75%. Regional Markets Rand eases 3% The South African rand has experienced a 3% weakening against the US dollar, trading at 18.7 per dollar compared to 18.2 the previous week. This depreciation occurred despite the US dollar being relatively subdued and the anticipation of a potential halt to US interest rate hikes. In line with this, the South African Reserve Bank (SARB) chose to maintain its interest rates at 8.25% during its most recent meeting on November 23rd. This decision marks the third consecutive time that the central bank has kept rates unchanged. Despite keeping rates steady, the SARB maintained a cautious stance due to ongoing economic uncer- tainty in South Africa. Additionally, the bank expressed concerns about inflation risks that are skewed towards the upside. These factors likely influenced the bank's hawkish tone during the meeting. Naira Appreciates by 2% The Nigerian Naira experienced a 2% appreciation against the US dollar, strengthening from 804 to 790. This positive movement is attributed to the optimistic economic sentiment surrounding the upcoming commencement of operations at the Dan- gote Petroleum Refinery. According to Aliko Dangote, the Chairman of Dan- gote Group, the long-awaited Dangote Refinery is scheduled to start operations in December. The refinery aims to initially produce 350,000 barrels per day. Additionally, a deal has already been final- ized for the first cargo of approximately 6 million barrels of crude oil, with delivery expected in December 2023. This news has contributed to the positive economic sentiment, leading to the appreciation of the Nigeri- an Naira. Kwacha devaluates 0.4% The Zambian Kwacha experienced a 0.4% weaken- ing against the US dollar, reaching a new historic low of 23.7 on November 30th, 2023, compared to 23.6 the previous week. This depreciation has prompted the Zambian government to take action by increasing interest rates. The Central Bank of Zambia raised its key interest rate by 100 basis points to 11% during its regular meeting on November 22nd, 2023. This decision follows a previous 50 basis points increase in August. It marks the fourth consecutive interest rate hike in the current year and the largest hike since November 2009. The primary objective of these rate hikes is to sup- port the Zambian Kwacha and stabilize inflation within the target range of 6-8%. By increasing interest rates, the government aims to address currency depreciation and ensure broader macroeco- nomic stability in the country. Shilling records first appreciation The Kenyan shilling experienced a slight apprecia- tion, rising from 152.8 to 151.5 against the US dollar. This marks the first time in over six months that the shilling has shown signs of strengthening. However, the Stanbic Bank Kenya Purchasing Managers' Index (PMI) for October 2023 declined to 46.2 from 47.8 in the previous month. This indi- cates the second-fastest contraction since August 2022. The contraction was driven by intense cost pressures. Across all sectors surveyed, output and new orders experienced contractions. Among the sectors, the construction, wholesale, and retail sectors witnessed the sharpest decline in new orders. Additionally, employment declined at the fastest pace since June 2020. Purchasing activity also fell modestly, while input inflation accelerated to a record pace. This increase in input inflation was primarily driven by higher fuel prices, which were influenced by ongoing currency weakness. Pula eases to 13.4 The Botswana pula experienced a reversal of its previous week's gains, easing to 13.4 from 13.5 against the US dollar. This indicates a slight depre- ciation of the currency. In terms of inflation, the annual inflation rate in Botswana decreased to 3.1% in October 2023, compared to 3.2% in the previous month. This decline can be attributed to a softer increase in prices of food and non-alholic beverages, which grew by 6.5% compared to 7.7% in September. Further downward pressure on inflation came from the health sector, where prices rose by 2.2% (com- pared to 2.3% in the previous month), and the recreation and culture sector, with prices increasing by 2% (compared to 2.1% in the previous month). Additionally, transport costs continued to decline, with a decrease of 0.6% (compared to a 0.5% decrease in the previous month). On a monthly basis, consumer prices in Botswana rose by 0.1% in October, which is a decrease from the 14-month high of 1.7% recorded in September. T

s investors seek safe haven for ZWL ahead of a new-year, demand for ZWL stocks notched up in the week under review, scaling up returns as the year nears its end. The ZSE All Share Index rose by a widened margin of 8.77% in the week under review to close at a record high of 191,271.68 points. The positive momentum was driven by market heavies and medium caps, evenly, outweighing a mild -0.5% dip in penny stocks. ZSE closed the month of November with a nominal growth of 21.8% and a US$ growth of 19.8% in US$ terms, surpassing October performance. On a year-to-date basis, the bourse is up 15.9% in US$ terms owing to currency stability during the month, which is the 3rd best stock market performance in Africa. In nominal terms, the ZSE has garnered a growth of 881.2% since the beginning of the year. The US$ denominated bourse, VFEX, succumbed to heightened sell-offs in the week under review as investors liquidate portfolios ahead of the festive. The mainstream VFEX All Share Index dwindled -83% to close at 68.9 points, with losses driven by 6 laggards which outweighed 3 risers. The bourse halted a positive streak that had stretched to 3 straight weeks, to close the month of November with a mild growth of 1.85%. Year-to-date losses scaled to -27.3% as the year-end draws close. An aggregate of US$400,347 exchanged hands on VFEX in the week under review, down from US$868,437 traded in the prior week. On the currency markets, increased efforts by the Central Bank to curb exchange rate depreciation through the control of money supply, borrowing costs and speculative currency trading has aided in stabilizing the exchange rate on the formal currency market. At the close of the most recent auction trading week, the ZWL shed off -0.27% against the US$ on the Auction market to close at ZWL5,790.05 per US$. On the interbank market, the ZWL depreciated by -0.26% against the US$ to close at ZWL5,791.08. The AXiS CIV Friday 1 Dec 2023 27 ZSE & VFEX WEEKLY COMMENTARY A ZSE ASI 175,845 VFEZ ASI 69.5 ZWL INTERBANK 5,775.99 181,273 68.6 5,776.23 182,945 68.3 5,777.05 186,320 67.3 5,778.44 188,519 67.9 5,790.05 191,272 68.9 5,791.08 8.77% -0.83% -0.26% ZSE TOP 10 74,671 MEDIUM CAP INDEX 776,590 SMALL CAP INDEX 5,343,534 76,304 814,590 5,313,313 77,352 815,062 5,315,678 78,971 826,231 5,316,568 80,102 831,949 5,316,568 82,144 826,195 5,316,568 10.01% 6.39% -0.50%

The AXiS CIV Friday 1 Dec 2023 28 Weekly Commodity Pulse Gold (US$/oz) Gold prices were poised for a third consecutive weekly gain, driven by data indicating a modera- tion in inflation and heightening expectations of an impending interest rate cut by the U.S. Federal Reserve. The recent report on U.S. consumer spending in October revealed a moderate increase, accompanied by the smallest annual rise in infla- tion in over 2-1/2 years. Additionally, a separate report indicating a slight rise in U.S. jobless claims suggested a softening labour market, amplifying the focus on Chair Jerome Powell's Friday speech. Traders, who have increased their probability for a Fed rate cut from 80% in May to a one-in-two chance in March, awaited Pow- ell's insights. Platinum (US$/oz) The platinum price opened the week at $923 per ounce and dropped to $918 before bouncing back to $945 on Tuesday. However, profit-taking on Wednesday pushed prices down to $941, and a slight recovery on Thursday resulted in a closing price of $936. Ending the week at $931, platinum prices recorded a modest weekly gain of 0.88%. The upward trajectory was against the backdrop of easing concerns over inflation and expectations of interest rate cuts by the U.S. Federal Reserve, as indicated by Chair Jerome Powell's speech. Copper (US$/t) Copper prices experienced a mixed week, with some notable fluctuations in the market. The week started on a positive note as copper prices rose by 1.58% on Wednesday, reaching 8,539 USD per ton. Firstly, there were indications of a potential increase in demand for copper due to the ongoing global economic recovery. Addition- ally, supply concerns emerged as labour strikes threatened production in major copper-producing countries such as Chile and Peru. However, the gains were short-lived as prices dipped slightly on Thursday, primarily due to profit-taking by investors. On Friday, prices rebounded slightly, driven by renewed optimism in the market. Aluminium (US$/t) Starting the week at 16,619 USD per metric ton (MT), nickel prices dipped to 16,079 USD/MT on 27-Nov-23, reflecting a 3.25% decrease. This decline was attributed to concerns over slowing demand from key consumers, such as the stain- less steel sector. However, the market rebounded swiftly, with prices surging to 16,766 USD/MT on Tuesday, driven by a surge in Chinese stain- less-steel output and positive sentiment stemming from infrastructure development initiatives. This 4.30% increase indicated a short-term recovery. Nickel (US$/t) Starting the week at 16,619 USD per metric ton (MT), nickel prices dipped to 16,079 USD/MT on 27-Nov-23, reflecting a 3.25% decrease. This decline was attributed to concerns over slowing demand from key consumers, such as the stain- less steel sector. However, the market rebounded swiftly, with prices surging to 16,766 USD/MT on Tuesday, driven by a surge in Chinese stain- less-steel output and positive sentiment stemming from infrastructure development initiatives. Brent/Oil (US$/b) This week, there was a slight decline in the price of Brent oil, after OPEC+ producers agreed to voluntarily cut oil output for the first quarter of next year which fell short of market expectations. causing a -1.56% wow change. The YTD change also shows a decline of 6.61% in the Brent oil price. Last week, expectations that OPEC+ could reduce supply to balance the market into 2024 contributed to the positive sentiment. Saudi Arabia, Russia, and other members of OPEC+, who pump more than 40% of the world's oil, agreed to voluntary output cuts approaching 2 million barrels per day (bpd) for the first quarter of 2024. 380.7 81.67 380.7 81.67 380.7 81.67 380.7 81.35 380.7 81.35 1,826.00 Daily % Change 24-Nov-23 1,993 27-Nov-23 2,012 28-Nov-23 2,040 29-Nov-23 2,047 30-Nov-23 2,038 1-Dec-23 2,040 WoW 2.36% YTD 11.74% 1,900 1,925 1,950 1,975 2,000 2,025 2,050 2,075 2,100 1-Nov-23 7-Nov-23 13-Nov-23 19-Nov-23 25-Nov-23 1-Dec-23 1,082.90 Daily % Change 24-Nov-23 923 27-Nov-23 918 28-Nov-23 945 29-Nov-23 941 30-Nov-23 936 1-Dec-23 931 WoW 0.88% YTD -13.99% 800 825 850 875 900 925 950 1-Nov-23 7-Nov-23 13-Nov-23 19-Nov-23 25-Nov-23 1-Dec-23 8,372.00 Daily % Change 24-Nov-23 8,406 27-Nov-23 8,364 28-Nov-23 8,473 29-Nov-23 8,416 30-Nov-23 8,465 1-Dec-23 8,539 WoW 1.58% YTD 1.99% 7,700 7,900 8,100 8,300 8,500 1-Nov-23 7-Nov-23 13-Nov-23 19-Nov-23 25-Nov-23 1-Dec-23 30,048 Daily % Change 24-Nov-23 16,619 27-Nov-23 16,079 28-Nov-23 16,766 29-Nov-23 17,122 30-Nov-23 16,645 1-Dec-23 16,929 WoW 1.87% YTD -43.66% 15,000 16,000 17,000 18,000 19,000 20,000 1-Nov-23 7-Nov-23 13-Nov-23 19-Nov-23 25-Nov-23 1-Dec-23 85.91 Daily % Change 24-Nov-23 82 27-Nov-23 80 28-Nov-23 81 29-Nov-23 83 30-Nov-23 81 1-Dec-23 80 WoW -1.56% YTD -6.61% 70 75 80 85 90 95 100 1-N ov-23 7-N ov-23 13-N ov-23 19-N ov-23 25-N ov-23 1-Dec-23 2,378 Daily % Change 24-Nov-23 2,227 27-Nov-23 2,211 28-Nov-23 2,217 29-Nov-23 2,214 30-Nov-23 2,193 1-Dec-23 2,193 WoW -1.50% YTD -7.78% 2,100 2,200 2,300 2,400 1-Nov-23 7-Nov-23 13-Nov-23 19-Nov-23 25-Nov-23 1-Dec-23

TOP 5 WEEKLY RISERS TOP 5 WEEKLY FALLERS FINANCIAL MARKETS AT A GLANCE 2023 AFDIS ARISTON BAT CFI DELTA DAIRIBORD HIPPO Bridgefort MEIKLES OK SEEDCO STAR AFRICA TSL Tanganda 230004.76 3866.67 1300000 190000 350829.57 62420 185515 1700 134600 19040 96982.39 484.37 110000 95800 210000 3600 1299995.67 190000 312049.43 54604.17 185473.11 1659.09 116666.67 18999.57 84200 488.25 119700 95800 Latest Price ZWL Cents Previous Week ZWL Cents Consumer Staples EDGARS NTS RTG TRUWORTHS 8500 2470 13868.06 3778.3 10000 2470 15600 3780 Latest Price ZWL Cents Consumer Previous Week ZWL Cents CAFCA G/BELTINGS MASIMBA NAMPAK UNIFREIGHT ZECO 220000 2200 81000 29935.3 28700 4 243750 2232.73 81010 29950 25000 4 Latest Price ZWL Cents Industrials Sector Previous Week ZWL Cents ARTZDR LAFARGE PROPLASTICS TURNALL Willdale RioZim 6400 14375 60600 2500 2800 81836.67 6400 14375 60889.27 2500 2903.36 81836.67 Latest Price ZWL Cents Materials Sector Previous Week ZWL Cents CBZ FBCH FIDELITY FML NMBZ ZBFH ZHL 216733.67 101000 20700 100000 49548.13 85000 16000 210000 90972.46 20700 104566.67 47003 85000 15500 Latest Price ZWL Cents Financial Sector Previous Week ZWL Cents Ecocash ECONET ZIMPAPERS 11999.96 73001.17 2500 12995.64 70055.55 2500 Latest Price ZWL Cents ICT Sector Previous Week ZWL Cents MASHHOLD FMP 14000 21000 14000 20800 Latest Price ZWL Cents Real Estate Sector Previous Week ZWL Cents SEEDCO MEIKLES EDGARS UNIFREIGHT DAIRIBORD 96982.39 134600 10000 28700 62420 23756.79 24750 1500 3700 7815.21 32% 23% 18% 15% 14% COUNTER PRICE CENTS CHANGE % CHANGE TSL FML G/BELTINGS ZBFH ECOCASH 110000 100000 2200 85000 11999.96 -9700 -4566.67 -80 -3000 -322.58 -8% -4% -4% -3.4% -2.62% COUNTER PRICE CENTS CHANGE % CHANGE Interbank Market Rate 5,793.12 -0.29% ZSE Top 10 Index 82,144.36 10% ZSE All Share Index 191,271.68 8.8% NGSE All Share Index 71,365.25 0.4% 8,879.08 0.01% BSE All Share Index LuSE All Share Index 10,900.12 1.8% VFEX All Share Index 68.9017 -0.8% JSE All Share Index 75,534.36 0.1% 191271.68 82144.36 ZSE Top 10 Index All Share index ZSE Top10 index WOW 10% MOM 28% YTD 567% 191271.68 5316567.9 ZSE Small Cap Index All Share index Small Cap index WOW -0.5% MOM 8% YTD 1076% 191271.68 826194.75 ZSE MediumCap Index All Share index Medium Cap index WOW 6.4% MOM 40% YTD 2155% 191271.68 408937.14 ZSE Financials Sector All Share index ZSE Financials index WOW 5.9% MOM 34% YTD 1326% 191271.68 585567.92 ZSE Consumer Discre�onary Index All Share index ZSE Consumer Discre�onary index WOW 12% MOM 12% YTD 1550% 191271.68 216737.87 ZSE Consumer StaplesIndex All Share index ZSE Consumers Staplesindex WOW 35% MOM 35% YTD 787% 191271.68 298226.43 ZSE IndustrialsIndex (New) All Share index ZSE IndustrialsIndex (new) WOW 0.8% MOM -4% YTD 1301% 191271.68 98171.81 ZSE ICT Index All Share index ZSE ICT Index WOW 3.2% MOM 26% YTD 460% 191271.68 100111.16 ZSE MaterialsIndex All Share index ZSE MaterialsIndex WOW -0.2% MOM 15% YTD 635% 191271.68 201486.85 ZSE Real Estate Index All Share index ZSE Real Estate Index WOW 3.6% MOM 25% YTD 1036% -2.1% 32% Interbank Market Interbank All Share index 75534.36 191271.68 JSE All Share Index JSE All Share index WOW 0.1% MOM 7.6% YTD 3.4% 8879.08 191271.68 BSE All Share Index BSE All Share index WOW 0.01% MOM 1.4% YTD 14.9% 10900.12 191271.68 LUSE All Share Index LUSE All Share index WOW 1.8% MOM 11.6% YTD 48.5% 71365.25 191271.68 NGSEAll Share Index NGSE All Share index WOW 0.4% MOM 6.6% YTD 39.2%

30 Regional EcoMozambique Mozambique plans to increase the supply of the population with drinking water to 63% next year, allocating 2.7% of total public expenditure to water and sanitation, according to official data accessed by Lusa on Wednesday.In documents supporting the proposed Economic and Social Plan and State Budget (PESOE) for 2024, currently under discussion in parliament, the government plans to guarantee this coverage rate with the construction of 151 water supply systems and “the rehabilitation and establishment of 22,660 household connections in cities and towns” plus the “opening of 1,715 water fountains” across the country. This government’s coverage forecast involves connecting 58% of the population living in rural areas and 84% in urban areas “with a safe water source”.Regarding sanitation coverage, the objective is to reach 36% of the population living in rural areas and 61% in urban areas with access to an “adequate” service. In the allocation of public expenditure planned for 2024 for each of the 17 Sustainable Development Goals, the Mozambican government reserved almost 12,289 million meticais (€175.8 million), equivalent to 2.7% of the total, for Drinking Water and Sanitation (SDG 6), against 6,111 million meticais (€87.5 million), equivalent to 1.5% of total expenditure, in 2023.Defined by the United Nations, the 2030 Agenda and the 17 Sustainable Development Goals are the common vision for humanity, a contract between world leaders and people and “a list of things to do on behalf of people and the planet”, in the institution’s words. For SDG 1, relating to the Eradication of Poverty, Mozambique has set aside 22.7% of total public expenditure for next year, equivalent to 104,367 million meticais (€1,493 million), against 27.4% this year, worth 110,013 million meticais (€1,574 million). Nigeria Nigeria plans to narrow its budget deficit to roughly 3.9% of gross domestic product (GDP) next year from about 6.1% this year, President Bola Tinubu said on Wednesday, as he projected lower borrowing costs The AXiS CIV Friday 1 Dec 2023

nomic Watch and higher revenues.Tinubu has embarked on Nigeria’s boldest reforms in decades, removing a popular fuel subsidy in May and scrapping foreign exchange controls, which have pushed up inflation to its highest levels in nearly two decades.His government is seeking to balance between cushioning the impact of the double-digit inflation and the removal of the fuel subsidy with keeping spending in check. In his first budget speech to lawmakers, Tinubu projected higher oil production and tax collection would boost government revenues and his administration would borrow slightly less next year.“Nigeria remains committed to meeting its debt obligations. Projected debt service is 45% of the expected total revenue,” Tinubu said while presenting his 27.5 trillion naira ($34.85 billion) expenditure plan for next year.Spending priorities include security, infrastructure and measures to ease a cost-of-living crisis.The president said the economy was expected to grow by at least 3.76% next year while inflation would moderate to 21.4%. Kenya Kenya is seeking to cut food imports by US$200 million per year through a partnership with UK-based company, United Green Group (UG). The resultant partnership will deliver agri-fin-tech services for rural communities, high productivity climate-smart farming and state-of-the-art agro-processing facilities, creating new markets for at least 100,000 rural households over the next five years. The investment in partnership with Kenya Development Corporation (KDC), will adopt a rigorous development approach in the agri-food sector, which seeks to improve food security for Kenya and the region. The venture will reduce Kenya’s dependence on importing food commodities by approximately US$200 million annually, thus reducing Kenya’s trade deficit. The Agri-Food Investment will focus on climate-smart and sustainable farming, improved nutrition, job Creation focusing on women and youth, inclusive and demand driven consumer markets.