Zimbawe

Robert Mandeya:People management issueS

AS businesses continue to compete for skilled employees in an increasingly competitive and growing global marketplace, the ability to retain and develop talent from within is quickly becoming essential. One method of developing internal employee talent is through the use of mentoring programmes. Research has it on good ground that mentoring programmes are effective in increasing employee retention.

Formal and informal mentoring
Mentoring programmes can be formal or informal and allow individuals to learn and grow professionally into their current or desired careers. Organisations, large or small, that foster a mentoring culture can realise many benefits including reduced costs, increased productivity and efficiencies through increased employee satisfaction, retention and engagement.

Mentoring partnerships and cultures provide employers with the opportunity to increase engagement in their workplace, increase productivity and to establish and achieve organisational goals. Studies have shown that there is a higher employee turnover rate if there is a lack of career development opportunities ranging from training programmes to promotion within an organisation.

Role of mentor
A mentor is someone, who is established in their career or business and is knowledgeable and experienced within an organisation, industry or career field. Mentors develop a professional relationship with mentees who are usually individuals seeking to start or develop within their career or business. The role of the mentor is to share knowledge, skills and experiences to help mentees develop their career or business through attaining new knowledge, building new skills, and in planning and achieving goals. A mentor plays two major roles, career support and psychosocial support. A mentor and mentee relationship is built on shared values, trust, confidentiality, and professionalism. The mentorship typically focuses on sharing and building knowledge and skills that the mentee would like to develop over a period of time.

The duration of mentoring partnerships can be either long or short term, depending on the goals of the mentorship and the compatibility of the mentor and mentee. Mentorships can range from a few months to a few years in length and may see the mentee transition between careers or business ownerships through the course of the mentorship.

Benefits of mentoring
There are many benefits to mentoring partnerships for career development and overall business success. Mentees and mentors develop a wide range of skills including leadership and communication, this leads to an increase in morale and job satisfaction.

Benefits to the organisation include: succession planning through the development of internal talent and retention of corporate knowledge, increased productivity and efficiencies, decreased costs, decreased employee turnover and a positive impact to the financial bottom line. Research states that when mentoring leverages the skills, productivity and employee morale within organisations can increase by 25 per cent benefiting both the employer and employees.

Although the benefits are many, it is important to recognize that developing an effective mentoring programme takes time, planning and a true commitment from all levels within the organisation (particularly the top). If you are interested in developing a mentoring program within your small business and are not sure where to start, here are five tips for your consideration:

Identify Interest
The first step to developing and implementing a mentoring program is to gauge the level of interest within the organisation as well as identify individuals who are potential mentors and mentees.

Design the programme
It is important to plan a mentoring programme that aligns with the culture of your organisation as well as development needs are of the individuals who will participate.

Mentoring programmes can be either formal or informal. Formal programmes are often structured in mentee/mentor pairings, meeting expectations, goals/outcomes, time frames, reporting, etc. Informal programmes are much more relaxed, often mentees choose their own mentors and meeting times/frequency, duration, topics, etc. are determined solely by the mentee/mentor with little or no input or guidance from the organisation. Programme formats can also vary and include peer-to-peer, one-to-one, forums, etc.

Select mentors and mentees
When selecting mentors, choose individuals who are not only interested in mentoring but also possess the required knowledge, skills and experience that will benefit the mentees and are positive role models with a genuine interest in developing others. These are employees with strong interpersonal skills, who are committed and willing to set aside the time to work with a mentee.

When selecting mentees, focus on individuals who are not only seeking development but who have been identified as key performers in their current position and who have the potential to advance.

Mentoring, like any other employee training and development programme, is an investment in an individual.If there are no qualified mentors available within your organisation, which is often the case for small businesses, consider finding a mentor from another organisation, association or industry. Mentors and mentees do not have to be involved in the same type of career or business, just someone you trust whom you can learn from.

Mentor/mentee matching
In a formal programme, mentees and mentors are paired through aligning the interests and goals of the mentee with a mentor who has the relevant knowledge, skills and experience.

Matching pairs is very important for mentoring because effective mentoring partnerships are more likely to occur if the pairs are compatible. It is important to look at the career or business goals and professional interests of the individuals. This can be accomplished through questionnaires, surveys or interviews.

Potential mentors and mentees should be consistent and share values in the areas of confidentiality, work ethic, patience and responsibility.

Mandeya is a certified executive leadership coach, corporate education trainer and management consultant and founder of Leadership Institute of Research and Development (LiRD). — [email protected]/ or [email protected], Facebook: @lirdzim and Mobile/WhatsApp: +263 719 466 925.

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Memory Nguwi

THE first thing any company does soon after being incorporated is to develop company values. These are meant to be aligned to the vision and mission statement. Company values are supposed to guide the organisation as they do their businesses. It is expected that every member of the organisation adheres to these values.

My own experience as a Consultant helping companies develop company values or developing productive work culture shows that there is a world of a difference between the values that companies say they believe in and what is practised on the ground.

There is a massive mismatch between what is posted on company walls as values and what is practised by members of the organisation. My assessment shows that the reason for the massive practice gap is that, most leadership erroneously believe that having company values drive organisational culture. The ignorance is across the board, as most people do not know that the foundation of an organisational culture goes much deeper than values posted on the walls or the websites. Employees have treated the massive gaps between company values and what is practised especially by the leadership to mean that they are not important. Employees normally follow the behaviour and practices of their leadership.

In a paper titled “When It Comes to Culture, Does Your Company Walk the Talk?” Donald Sull, Stefano Turconi, and Charles Sull(2020) laid bare the challenges with company values. This is why I think they are useless. Let us start with how many companies have values. In a study of 700 companies, they found that 80% of the companies had an official list of company values. That figure is staggering.

In practice, though I know, many companies copy values from other companies. In some instances, they just google the values and put as their own. What a tragedy? In the same study, they point out that one-third of Chief Executives Officers across the globe talk about their company values more frequently even when they are not asked about them.

“Of the companies in our sample, 72% referred to their company’s culture as values or core values, and even employees at companies that use other labels — principles, philosophy, or ideals, for example — cited values as the foundation of their culture.” Sull, Stefano Turconi, and Charles Sull(2020).

There is no or weak correlation between company values espoused by the company and actual practices within the same organisations. This finding by Sull, Stefano Turconi, and Charles Sull (2020) as shown below. For company values to stick and get practised they must be linked to important business outcomes. They must be linked to what is valued in the company.

Sources: When It Comes to Culture, Does Your Company Walk the Talk?” by Donald Sull, Stefano Turconi, and Charles Sull. (Sloanreview)
Most leaders cannot remember company values — My informal research which I have carried out as I train senior managers on various topics shows that 99% of the participants cannot remember the company vision. The same 99% cannot list all the company values without checking on the website or diary. It made me wonder what could be the problem. Are these values imposed or what? How could a whole team of managers not able to remember the values which should the geological compass for their behaviour. This could point to a fault process for creating these values. For values to be meaningful to individuals they must resonate with their values. To talk about values of integrity to an individual who does not value integrity is a waste of time as they will never internalise them.

The fact that over 80% of the values in companies are the same raises a lot of questions. It points to a situation where most of these values are copied from somewhere, as a result, they do not take route in the new organisation. People know the values where copied from the internet and other companies, therefore they will never take them seriously.

Company value statements and value list are vague and are rarely understood by the ordinary employee in the organisation. Creating value statements that are elitist and means very little to employees will lead employees to ignore them. A look at the google value statement shows a clearly articulated values or philosophy statements that leave everyone clear on their obligations

Companies do not take enough effort to inculcate the company values. They think sharing the values in company diaries and website is good enough. Research is showing that is not good enough. Values need to be lived every day to make them valuable. The leadership of the company must lead in this regard. The leadership is the weakest link in the process of making sure that values are practised in day to day activities within the company.

Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and HR consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone +263 24 248 1 946-48/ 2290 0276, cell number +263 772 356 361 or e-mail: [email protected] or visit ipcconsultants.com.

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Victor Bhoroma :analyst

THE Zimbabwean government recently gazetted the Finance Bill (HB 4 of 2020) which validates the fiscal changes that were tabled in the Mid-Term Budget Review in July.

The Bill amends the Gains Tax Act (Chapter 23:01), the Finance Act (Chapter 23:04) and the Income Tax Act (Chapter 23:06). The Bill also carries changes to various tax heads such as mining royalties, income tax, value-added tax, customs and excise duties. Of significance is the fact that the government is reverting back to the taxation model of the Finance Act of 2009, which allows it to collect taxes in foreign currency from corporates and individuals that earn their income in foreign currency.

The individual income tax-free threshold has been raised from ZW$5 000 to ZW$25 000 (US$302) and aligns to the foreign currency tax free threshold of US$350. The individual income tax bands will be as follows: From US$351 to US$1 500 (20%), US$1 501 to US$5 000 (25%), US$5 001 to US$10 000 (30%), US$10 001 to US$15 000 (35%) and above US$15 000 (40%). The changes are with effect from August 1, 2020.

Zimbabwe officially dollarised on April 9, 2009, and adopted a basket of multiple currencies led by the United States dollar and South African rand. The market had rejected the Zimbabwean dollar and started using foreign currencies after record hyperinflation eclipsed 250 million percent (officially) in July 2008.

However, the Zimdollar was hurriedly re-introduced in February last year to thwart pressure from civil servants, who were demanding to be paid in US dollars. Statutory Instrument (SI) 142 of 2019 was then gazetted in June 2019 to ban the use of multiple currencies and enforce the use of a mono-currency regime in the economy.

However, the local currency experienced a record free-fall, losing 90% of its value in 2019. Annual inflation increased from 59% in February 2019 to 838% in July 2020.

In July 2020, a dual pricing regulation (SI 185 of 2020) directed all sellers of various goods and services to display and quote prices in both the Zimdollar and US dollar using the auction rate. This paved the way for the government to follow businesses and labour with new US dollar tax proposals.

The economy is now heavily skewed towards official dollarisation again, with the government now amending its taxation arsenal and partially remunerating in US dollar. Most businesses have also moved to charge in foreign currency and will be more than happy to trade in a stable currency for planning purposes.

Impact on tax revenues
The revenue performance for 2019 looked rosy on face value despite regressing in real terms. The country’s tax and non-tax revenue jumped to ZW$22,971 billion (US$2,691 billion using monthly interbank rates).

In spite of surpassing gross and net revenue targets every month, tax revenues fell below the 2013 total net-of-refunds collections of US$3,430 billion. This means that the Zimdollar depreciation and the subsequent general economic contraction have seriously hit government pockets, thereby adversely impacting public service delivery and infrastructure spending.

Service delivery in hospitals, education, housing, social welfare and policing have been seriously affected due to compensation related industrial action and limited budget allocations.

Inflation still poses the greatest risk to revenue collection, utilisation of allocated budgets and service delivery in various government departments.

ZSE, pension funds losses
In December 2013, the Zimbabwe Stock Exchange (ZSE) market capitalisation reached US$4,2 billion. As of September 14, 2020 the combined market capitalisation was ZW$217,44 billion (less than US$2,630 billion). After pouring millions of capital into new production lines and ramping up production, all counters on the ZSE have seen their values eroded by more than 50% as a result of exchange rate losses.

The same can be said of the pensions and insurance sector where pension and investment values were severely battered. The value of pension and insurance assets has plummeted from a value of US$4,358 billion in December 2013 to about US$2,013 billion in December 2019. There has been an increase in product termination of policies as premiums, contributions and benefits can no longer keep pace with the rate of inflation. For the second time in a decade, pensioners have lost their life savings due currency changes and most are struggling to make ends meet.

Increase in poverty levels
Poverty levels in Zimbabwe spiked in 2019 as access to food, basic education, health care, decent housing, electricity, power, transport, safe drinking water and other insurance became elusive to many Zimbabweans as a result of loss of income.

Salaries and wages in both the private and public sector are not being adjusted in line with changes in inflation rate or consumer price indices. Civil servants are currently getting a Covid-19 allowance of US$75 plus a basic salary of ZW$3 000 for the least-paid worker (below the Zimstat Poverty Datum Line of ZW$11 334 for June 2020).

The same can be said for the private sector where salaries average just below that amount for the least-paid worker. This means that the Zimdollar has decimated incomes for labour and most are now living in extreme poverty if compared to 2010 to 2018 income levels or World Bank standards on poverty.

The impact is being felt on decline in consumer confidence and spending in the economy. According to the World Bank, extreme poverty reached 40% of the population in 2019, up from 33,4% in 2017, with urban poverty rising faster (from 4% to 10%) than rural poverty.

Corporate sector losses
Zimbabwe’s corporate sector has been hard hit by the rushed introduction of the local currency. Businesses have lost billions through erosion of asset value, exchange rate losses, foreign debt overhang and decline in revenue as a result diminished consumer spending.

British American Tobacco (BAT) Zimbabwe posted a loss of ZW$27,69 million in 2019. Financial behemoth, Old Mutual Zimbabwe suffered a massive loss of ZW$2,61 billion, while telecoms giant Econet Wireless Zimbabwe posted a heavy loss of ZW$1,28 billion in 2019.

Listed entities such as Simbisa Brands, Nampak, Pretoria Portland Cement, National Foods, Delta Beverages and RioZim experienced their worst trading period in 2019 characterised by production stoppages and failure to meet foreign obligations.

The business sector has blamed their losses on currency depreciation, foreign exchange losses and decline in consumer disposable incomes. After introducing the Zimdollar, the government took over foreign debts amounting to about US$2 billion. Most of the debt has not yet been paid and this has had a negative impact on local businesses in terms of importing raw materials, getting new credit lines, outsourcing critical foreign services, debt-to-equity ratio, cash flow management and business stability.

The country’s de-dollarisation plan was doomed from the onset as the country did not meet the basic fundamentals required to bring stability to a mono-currency. The country was not actively implementing any macro-economic stabilisation plan that would lead to low inflation or have an efficient foreign exchange market to talk of.

Further, the country has no foreign currency reserves or external facilities to back the stability of the domestic currency, an acceptable sovereign debt repayment plan or the governance discipline required to curb rampant money supply growth. The rushed introduction of the Zimdollar has not only left labour, business and the economy nursing wounds of inflation, but it has also battered the government in terms of tax revenue collections and service delivery.

The government is now covertly undoing the mono-currency legislation and exchange controls, but economic output lost due to the ill-timed currency changes can never be recovered.

Undeniably, every country needs a domestic currency to push its export and economic growth agenda. However, that currency borrows its stability for a stable economic and political climate. The currency changes were reactionary, mistimed and lacked alignment to other economic policies and reforms.

Victor Bhoroma is an economic analyst. He holds an MBA from the University of Zimbabwe. — [email protected] or Twitter: @VictorBhoroma1.

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Melody Chikono

THE postal and courier services have been the hardest hit by Covid-19 in the telecommunications sector, with volumes and revenues declining as the global pandemic exacerbated the substitution of paper communication by electronic methods.

A 2020 second quarter (Q2) Postal and Telecommunication Regulatory Authority of Zimbabwe (Potraz) report shows that total postal and courier volumes declined by 79,7% to record 272 881 items from 1 342 957 recorded in the previous quarter.

According to the report, this has been the lowest postal and courier volume the sector has experienced in a long time, after averaging above a million in the previous quarters.

Revenues declined by 2,1% to record ZW$69,4 million (US$849 449) from ZW$70,9 million (US$867 809), while other units revenues surged, while total operating costs by postal and courier operators grew by 13% to record ZW$58,7 million (US$718 482) from ZW$51,9 million (US$635 250) recorded in the first quarter of 2020.

“Postal and courier volumes declined significantly as people and businesses resorted to sending documents electronically. There were also challenges in channelling items to and from several destinations because of lockdown policies in different countries,” Potraz said.

“However, postal and courier volumes are expected to improve in the coming quarters as restrictions are eased globally and industry fully reopens. However, postal and courier volumes are expected to improve in the coming quarters as restrictions are eased globally and industry fully reopens.”

International courier volumes, which are a major source of income for postal and courier operators, declined significantly as people and businesses resorted to sending documents electronically.

There was also a drop in total fixed voice traffic, which declined by 27,8% to record 80,9 million minutes in the second quarter of 2020 from 112,1 million minutes recorded in the first quarter of 2020.

Total mobile voice traffic declined by 1,2% to record 1,31 billion minutes from 1,33 billion minutes recorded in the previous quarter. Given the economic environment, consumers have been inevitably substituting voice service with cheaper over-the-top services such as WhatsApp.

Overall, Potraz said foreign currency challenges continued to affect network deployment and maintenance as spare parts, equipment and vendor support fees require foreign currency.

Furthermore, the credit crunch also negatively affected network expansion. The high cost of international internet connectivity also remained a challenge as Zimbabwe is a landlocked country, accessing bandwidth from undersea cables via Mozambique and South Africa.

However, in the wake of the downturns, the regulator said mobile internet and data traffic increased by 56,2% to record 10,407TB from 6,661TB recorded in the previous quarter.

Used international internet bandwidth capacity also increased by 2,8% to record 128,173Mbps from 124,627 Mbps recorded in the previous quarter. Internet/data traffic will continue to grow due to the increased adoption of e-learning, telecommuting, and e-conferencing.

While the economic environment affects the sector through service demand and consumption levels, operating costs and investment and given the apparent stabilisation of the exchange rate that is emerging,

Potraz said there was optimism that the sector is poised for growth going into the future. Operating cost containment remained crucial for operators to remain profitable.

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FIDELITY MHLANGA

LISTED diversified concern, Tobacco Sales Limited (TSL) suffered a sharp volumes decline across its subsidiaries during the third quarter ended July 2020, mainly due to a shorter tobacco season.

The expectations in the tobacco industry were that national tobacco volumes would be lower by between 10% and 15% than the 258 million kilogrammes achieved in prior year. Currently at 182 million kg, indications are that the national crop will fall short of the original target.

A low national output affected independent auction volumes at Tobacco Sales Floor at 5,7 million kg. This was 73% below prior year attributed to the lower tobacco output, the late start to the tobacco season and the auction floors not receiving the requisite approvals to decentralise operations.

TSL bemoaned the late announcement of decentralisation of contract floors, which was done at the onset of the tobacco marketing season.

However, TSL still holds the largest market share in this segment and has the highest seasonal average price.

“Contracted volumes handled for tobacco merchants at 7,9 million kg are 45% below the same period last year. Work is being undertaken with industry players to ensure a smoother tobacco marketing season in 2021,” TSL company secretary James Machando said in a trading update.

The late start of the tobacco selling season and the decline in national tobacco crop caused a decline in Propak Hessian volumes by 21% .

The group’s Agricura segment registered a growth in market share and volumes across most product lines, largely attributable to product availability and more attractive pricing on locally manufactured products.

“In the farming operations, tobacco yields were satisfactory. Approximately two thirds of the crop had been sold and pricing was marginally lower than in prior year. Due to low dam water levels, the winter wheat programme was scaled back and water rationing was undertaken on the banana plantation. The business has opted not to sell the harvested maize and soya bean in the current period,” Machando said.

Tobacco handling volumes were 4% behind prior year due to the late start of the tobacco selling season and delays in tobacco processing.

Volumes in the ports business decreased by 37%, due to generally slower movement of both imports and exports owing to the Covid-19 pandemic.

Volumes in the freight forwarding and customs clearing business were depressed as imports by the customer base remains subdued.

Handling volumes at Premier Forklifts were 18% below prior year due to the delayed start of tobacco processing.

Avis’ rental days were 39% below prior year as the business was significantly affected by the ban on both local and international travel.

Meanwhile, forklift sales were also depressed as most customers held back on capital projects under lockdown.

The distribution division recorded significant growth in volumes as new customers were secured. Occupancies remain satisfactory with voids in the quarter at under 5%.

The group said it remained profitable during the quarter despite generally depressed volumes adding that cash generation remains satisfactory with most of the group working capital requirements being funded from internally generated resources.

“Construction of a 10 000 square metre world class warehouse is progressing well, although delays have been encountered in the steel supply chain. The warehouse is scheduled for completion and occupation in February 2021,” Machando said.

“The operating environment is expected to remain difficult for the remainder of the year. With the introduction of the foreign currency auction system, the availability of foreign currency for restocking and capital investments is expected to continue to improve. A more stable exchange rate will minimise business disruptions,” the company said about the outlook.

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Paison Tazvivinga : economist

FINANCE minister Mthuli Ncube announced a budget surplus of ZW$800 million, about US$9,6 million, (after factoring in outstanding payments) for the half-year to June 2020.

This is not the first of its kind during his regime as the country witnessed periods of surplus in 2019. He attributed the surplus to fiscal consolidation brought about by the Transitional Stabilisation Programme (TSP).

Revenue collection is estimated to have surpassed target during the surplus period by 6,7% from January to June 2020 (ZW$34 billion or US$411 million, according to Zimra Quarterly reports). Generally primary government revenue is an aggregation of tax collections and payments for government services.

A negative mismatch between revenue and expenditure is primarily financed through borrowing, which is merely financing through future tax revenue. Therefore, the ideal situation is to strike a balance between government revenue and expenditure. In contrast, expenditure for the same period is estimated at ZW$30 billion (US$362,8 million) and was disbursed as shown below.

However, a question arises; do the figures point to fiscal sustainability or it is merely a cyclical budget surplus? There are different ways to answer this but a more practical one is to assess past performance in terms of government expenditure and tax revenue collection. This gives room for significant inference into the future. In this regard it may be too early to reach a concrete decision for the current administration. However, they seem to be heading in the right direction in so far as fiscal sustainability is concerned, for the year 2019 to midyear 2020.

How so?
To answer that we need to look more on the determinants of fiscal sustainability. The main determinant is the debt to GDP ratio.

A higher increase in debt-to-GDP ratio in contrast to GDP growth rate implies that debt is increasing faster than economic growth. This poses a threat of debt spiral and then default which is penalised by further interest on arrears.

Over the years, debt and interest expenses have been increasing and currently, public and publicly guaranteed external debt stands at about US$8 billion (about 35% of GDP).

The situation is exacerbated by the fact that, of the total country’s public debt, 73% is arrears expenses which increases the opportunity cost of interest expense, a dollar spent on interest arrears is a dollar not spent on road infrastructure. Surely this is unsustainable and need sacrifices to curtail it if the country is to get back to sound fiscal standing.

What it means then is that there is need for a primary budget surplus (government revenue more than non-interest expenditure). This means that the government will be spending within its means — balancing unlimited human needs against limited resources and having extra revenue, which can be directed towards interest payments in order to reduce the interest burden. With this in mind it makes sense to commend the fiscal authorities on taking steps to address the debt and interest burden through fiscal consolidation in a sustainable manner.

However, most people have raised concerns that a sustainable primary surplus must be premised on two aspects; revenue collection and expenditure management.

The fiscal authorities seem to have performed better in the former through modernisation of revenue collection systems and curbing of leakages, but the latter still needs to be improved on. It is understandable though because some expenses were unavoidable such as Cyclone Idai response packages, drought and recently Covid-19 relief expenses.

It must also be borne in mind that in practise fiscal management is fraught with practical difficulties.

Expenditure obligations are difficult to change in the short to medium term because most government expenditure is bound by contractual agreements which make it difficult to effect abrupt changes without legal consequences. This differs from taxation, which is easier to manipulate to achieve revenue targets. Thus, it provides a glimmer of hope to note that, for the period to May 2020, expenditure has been contained within budgeted parameters as shown below:

Fiscal consolidation necessary?

Yes, the high debt-to-GDP ratio, above the statutory provision of 70%, according to 2019 budget, and associated debt interest calls for a primary budget surplus. It is a prerequisite in addressing the dual challenge of debt and interest expenses. The surplus will stabilise debt since borrowing will be curtailed. The extra revenue will then need to be directed towards interest payments.

Also, considering that the country is under fiscal restraint from multilateral financial institutions it makes economic sense to undo previous fiscal challenges. It serves to lubricate international relations which are necessary in supporting the country’s ability to fulfil mutual obligations to citizens even in times of economic shocks. Huge budget deficits without associated level of economic growth usually trigger currency depreciation.

In contrast, some have advocated for fiscal stimulus. The reasoning being that, spending more stimulates economic growth. Consequently GDP will grow faster and will translate to increased government revenue through increased tax collections. Eventually, the increased revenue will add up to primary budget surplus and overall budget surplus. But, the Zimbabwe economic environment is not conducive for such extreme stimulus at the moment. We still need to do more on policy side to attract long term investment which can sustain significant GDP growth.

There are underlying economic fundamentals, such as inflation, investor and consumer confidence, which must be addressed before the country can spend its way out of economic challenges. After all, not all deficits (driven by huge expenditure) can stimulate significant economic growth.

Recommendations
For now it makes economic sense to push for fiscal consolidation and grow primary budget surplus. The main focus should be efficient revenue collection and expenditure control. However, expenditure cuts must not be at the detriment of people’s living income.

Focus must be on rationalising contracts of senior civil servants and rationalising public service staff through natural attrition — Covid-19 has taught us that we can do as much the same work with less people. Subsidies on maize and transport cannot be into perpetuity, once people earn enough they must fall off.

The Treasury must continue to build a track record of fiscal discipline, as it counts in assessing fiscal sustainability, which is crucial in attracting investors and financial aid in times of economic shocks like the recently experienced disasters, Cyclone Idai and Covid-19.

Covid-19 induced economic downturn may dampen tax collections which will result in less than projected government revenue, this calls for a corresponding cut in expenditure if the budget balance is to be maintained.

There is need to embrace a more inclusive growth plan that incorporates the private sector, particularly in infrastructure investment, for example, public private partnerships, Build Operate and Transfer, Build Own Operate and Transfer etc. This entails tackling mismanagement of state enterprises, corruption and low business and consumer confidence, among others.

Tazvivinga is a Development Economist based in Pretoria, South Africa. These weekly New Perspectives articles are co-ordinated by Lovemore Kadenge, immediate past president of the Zimbabwe Economics Society. — [email protected] or mobile +263 772 382 852.

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TATIRA ZWINOIRA

EXPERTS say the success of the impending Victoria Falls Stock Exchange (VFSE) will depend on whether foreign investors will be allowed to easily repatriate their investments.

In July, Finance minister Mthuli Ncube announced government would set up the VFSE dedicated to trading stocks in foreign currency to shore up the country’s supply.

But, with the government’s poor track record concerning property rights, investors in recent years have been fleeing the Zimbabwean market.

“In brief, there is potential in the concept (VFSE). I think though what I would try to address are the concerns that investors probably have,” Renaissance Capital (RC) head of research for Sub-Saharan Africa, Yvonne Mhango, said at a Zoom meeting held on Wednesday on the VFSE.

“We are an investment bank targeting frontier and emerging markets and our current clients include institutional investors who have invested in these frontier markets, Zimbabwe being one of them. So, we have clients that have invested in Zimbabwe and the main concern has been the lack of ease in terms of repatriating capital and dividends as well as, of course, significant changes in foreign currency policy that has discouraged foreign investors.”

Looking at trades on the Zimbabwe Stock Exchange (ZSE) ever since the return of the Zimbabwean dollar in June last year, the trend has been that of foreign investors fleeing the main bourse.

This is because the local unit has lost significant value against the greenback from US$1:ZW$6,32 upon the local currency’s re-introduction to the current US$1:ZW$81,70.

Worsening matters was the suspension of ZSE fungible stocks in July 2020, a move that effectively ended foreign currency repatriation as these stocks were a vehicle for foreign investors to take out their investments.

“What we have come across from our investors is the lack of depth in the foreign currency market, stability and liquidity has been an issue, transparency and the lack of clarity in how it functions, how foreign currency allocations are being made, and then transparency and how the allocations are being made to investors,” Mhango said.

“We do understand that the intention here is that the Victoria Falls Stock Exchange will be US dollar-denominated. And, the main question from investors’ minds is that, can the authorities offer guarantees that once they invest their US dollars or foreign currency into this exchange, they will be able to repatriate? This has been the main concern for a couple of years now.”

Based on ZSE trades, before the re-introduction of the local currency, when it was first the RTGS (Real-Time Gross Settlement) dollar in February 2019, foreign buyers on the main bourse were averaging between US$3 million and US$4 million daily.

“If you look at the liquidity on the ZSE from the period of 2009 to about 2013, the ZSE was trading almost US$1 million on a daily basis,” Association of Investment Managers chairperson Jubelah Magutakuona said. “So, if you are going to reach those sorts of levels we have to look and deepen that market and allow the full participation of various investors to come in.

“All across the media, the interventions that South Africa is trying to make — whether it’s a crisis or no crisis in Zimbabwe that everybody is talking about — draw a certain picture about doing business in Zimbabwe. The other thing is that the cost of doing business in Zimbabwe are issues that people have not really discussed in terms of what the Victoria Falls Stock Exchange does differently from what the ZSE already does,” North-West University (South Africa) economic historian Tinashe Nyamunda said.

“The Hon Minister (Ncube) has travelled to Davos (in Switzerland) and to other international destinations to try and attract investment, but with the current currency situation in Zimbabwe — where policy appears to be inconsistent, you know at one point you have US dollars being used at another point we shift to using bond currency and at another point we are not really sure what is going on there — that kind environment is something that investors also look at.”

Ncube revealed during the Zoom meeting that they were working with foreign partners to help provide capital support to the VFSE to help shore up confidence from foreign investors to participate in the VFSE.

To deal with concerns around the repatriation of investments, it was announced the Reserve Bank of Zimbabwe (RBZ) is working with the ZSE on providing guarantees to investors that they would be able to easily take out their investments from the VFSE.

“Shortly, the central bank will be issuing a directive that will address a lot of these concerns on how investment can be done on the exchange, especially from local investors,” ZSE chief executive officer Justin Bgoni said.

“And, a lot of that will be very clear that it will be easy for foreign investors to come in and it will be easy for foreign investors to come out.”

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Emmanuel Koro:Journalist

SOUTH Africa’s Makuya hunting communities that occupy the most resource-rich 13 808-hectare area in the Northwest corner of Kruger National Park, has saved its hunting culture after winning a long, inspirational and hard-fought court battle against a Limpopo provincial government department.

The court case victory has brought hope for the Makuya community to continue with its centuries-old hunting culture without unwarranted interference in the future.

Makuya’s hunting culture was shockingly threatened in October 2019, when the Limpopo Province’s Department of Economic Development Environment and Tourism (LDEDET) cancelled its hunting licence, without giving reasons.

In sharp and very unfair contrast, hunting was allowed to continue in some white private hunting areas around Kruger National Park until March 31, 2020.

“This is racial discrimination at its best during the so-called sixth democratic South African administration,” Esther Netshivhongweni, advisor for the Makuya Traditional Council, said. “It is a very difficult job to be in sustainable use sector in South Africa, especially when you are a woman in a white-dominated sector, and at times you are dumped by your own government that is supposed to be your main supporter.”

When the LDEDET cancelled Makuya’s hunting licence in October 2019, it stunned the hunting communities. Why would a democratically elected government dump its own people? Literally, squeeze out of Makuya community the hope of breaking into the mainstream hunting industry and grow its wildlife economy.

The LDEDET licence cancellation also caused unwarranted job losses that the government ironically seeks to end. By implication, this unfortunate development frustrated the community’s efforts to escape from poverty that again the government seeks to alleviate. As if this was not enough, it further destroyed and went against the conservation and development efforts that even the South African government’s Department of Environment, Forestry and Fisheries had started promoting in Makuya hunting communities, through a R15 million rand (US$902 738) conservation grant.

Elsewhere, the local and international hunting organisations and hunters were shocked by the unexplained and premature cancellation of the Makuya hunting licence and concluded that it potentially demarketed and damaged South Africa’s hunting industry.

“Stopping Makuya community hunting business abruptly with no reason by the LDEDET frustrated 21 American trophy hunters who had booked hunts with Makuya, Mutele and Mphaphuli Communities,” Netshivhongweni said. “During the process, the community lost hunting income. International clients were devastated after booking their flights and accommodation to come to Makuya to hunt. A Makuya professional hunter, together with Makuya community lost incomes.

A hunting tracker and resident of Makuya, Ronald Mudau said that it was frustrating to see our professional hunter getting arrested when he was found still operating after the Makuya hunting licence had been illegally cancelled.

“It became more devastating when Ms Netshivhongweni informed us as hunting employees that we were going to stop our hunting operations and that meant loss of jobs and income for us and our families. Hunting is the only industry that helps many people in our community to put bread on the table,” Mudau said.

The Makuya community is the only South African community that has a rich hunting culture that spreads from pre-colonial times to the present day when it is now involved with commercial and viable international hunting business and has for years continued to protect this business against state capture at the provincial level. They market their own hunts worldwide and most of their clients are from the United States.

Ironically, the Limpopo provincial government’s LDEDET department almost destroyed Makuya’s profitable hunting culture when it unjustifiably cancelled the community’s hunting licence.

Such a shocking, inexplicable and heavy-handed government treatment would have scared and silenced many African rural communities. Not so for the Southern African region’s most promising hunting community that has already broken into the mainstream international hunting industry.

Leading the fight to save the Makuya hunting culture is someone whom all rural communities in Africa should like to know and draw community conservation and development inspiration from. Known as the only black woman who is meaningfully involved in the hunting industry in South Africa if not the whole of Southern Africa, Netshivhongweni, challenged the sudden cancellation of Makuya hunting licence in court in 2019.

About a year later the court has handed them a sweet victory that not only saved their hunting culture, but jobs as well. Makuya community are now in the process of following legal process for LDEDET to compensate the Makuya community for an undisclosed amount of money for loss of hunting business to the community caused by the illegal cancellation of its hunting licence.

“For me it is an absolute disgrace that communities need to take to court, the government departments that are employed to help them concerning permits,” South Africa-based wildlife producer, hunter and strong supporter of community empowerment, Barry York, said.

“It has become absolutely clear that the so-called conservation departments in South Africa pay little more than lip service with regards to true empowerment and transformation of the wildlife economy.”

Meanwhile, the Makuya court case victory that saved its viable hunting culture might go down in history as an experience on which greater community resilience will be built against all forms of injustice.

The victory, happy mood and a sense of self-determination that has gripped the Makuya community is unstoppable. Perhaps it is one of the best from-doom-to-glee developments that Makuya residents have collectively experienced this century.

“I am excited about the breakthrough that saved the Makuya hunting culture and business to continue,” Netshivhongweni said, who fearlessly and fiercely took on the LDEDET in a court battle that even threatened Makuya Community with bankruptcy, if they lost the case.

“We now want to let the hunting industry worldwide know that Makuya is back in hunting business with a big bang. We will start focusing on community jobs, marketing, developing and conserving Makuya Nature Reserve.”

Meanwhile, Chief (Thovhele) Vho-Makuya said he was very happy that Makuya had bravely opened a historic and successful court case against those who wanted to “steal its hunting culture that dates back centuries and is set to survive centuries to come”.

“Beyond winning the hunting licence battle, we are also closer to winning another fight to have full title over Makuya Park which would allow us to grow the Makuya wildlife economy and throw poverty and joblessness in the dustbin of history in this wildlife-rich area,” Chief Vho-Makuya said.

“Under the business leadership and advice of the highly experienced Esther Netshivhongweni, we have an ‘iron woman’ who is about to make us reap the fruits of being owners of Makuya Park and all its resources, including wildlife.”

Some of the socio-economic benefits that hunting had brought to Makuya community before the cancellation of its hunting licence, include employment creation and building village halls where important community meetings are held. Hunting revenue also funded a chicken layers project that cost half-a-million rands.

The community also benefited from the construction and operation of a community abattoir where hunted game is skinned and meat gets distributed to the community and purchase of a Toyota Legend double cab for attending meetings (administrative work).

Therefore, the cancellation of the hunting licence had suddenly stopped the running and growth of a whole new, promising and inspirational hunting industry that had exploded in rural Limpopo province. Fortunately, the Makuya court victory against their hunting licence cancellation means that hunting is back and will soon support their future conservation and development projects.

There is no doubt that the Makuya community still needs Netshivhongweni’s visionary leadership in order to achieve greater hunting business success in the future.

Netshivhongweni turned around a community-owned park called Makuya Park to a commercially viable hunting business. She initiated a fully community managed park with eight hunting committees from three community traditional councils, namely Mutele, Mphaphuli and Makuya Traditional Councils.

Some of her community responsibilities include advising communities in managing profitable communal nature reserves in Kwa-Zulu Natal, Free State Eastern Cape and Limpopo.

Her goals are to market the Makuya Nature Reserve Park and make it a national and internationally recognised community conservation area, which will become a conservation role model for African communities.

Netshivhongweni started her career in 1990 as a teacher and later occupied senior positions, including that of CEO in the corporate world.

Koro is a Johannesburg-based international award-winning journalist who has written extensively on environment and development issues in Africa for the past 27 years.

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World View :GWYNnE DYER

“I have got a plan so cunning you could put a tail on it and call it a weasel,” Blackadder’s sidekick Baldrick in the BBC’s brilliant historical comedy series Blackadder. In fact, he said, “I have a cunning plan” in almost every episode, but the plans hardly ever worked and it became a popular catch-phrase.

So the question in the United Kingdom today is this: if Prime Minister Boris Johnson is Blackadder, who is his Baldrick? Who actually put Johnson up to passing a new law that says Britain can unilaterally change the Brexit Withdrawal Agreement he signed with the European Union (EU) less than eight months ago?

Did he not understand what the treaty said? Unlikely. He negotiated it with the EU himself.

Does he realise that a treaty is a legally enforceable international agreement? Presumably, because even his own cabinet minister for Northern Ireland, Brandon Lewis, admits that plan “does break international law in a specific and limited way”.

Did he plan from the start to break the treaty? Probably not! This is Johnson — well, Al Johnson, really; “Boris” is just his stage name — and he regards worrying about next week as long-term planning.

Johnson was well aware that the problem that brought down Theresa May’s government last year and made him prime minister was the Irish border. Peace in Northern Ireland depends on there being an open border with the Irish Republic.

EU trade with the UK, post-Brexit, depends on controlling that border so that there is not a massive smuggling problem. Square that circle, if you can.

May tried to square it by agreeing that the customs border would effectively run down the middle of the Irish Sea, between Northern Ireland and the rest of the UK. That way, no customs controls would be needed on the border between the two parts of Ireland.

She never got that through parliament, because so many MPs from her own Conservative Party saw it as an unacceptable breach of British sovereignty. Eventually, her government fell and Johnson won the Conservative leadership and a large majority in an election last December by promising to fix that problem and “get Brexit done”.

But he could not fix it, of course. Instead, he just accepted the same withdrawal terms as May had when the negotiating time ran out, with a few extra concessions to the EU and the border still firmly in the middle of the Irish Sea. But he went around telling everyone in the UK who hadn’t read the text that it was not true.

On the strength of that “victory” he won a big majority in last December’s election. How could he imagine that this would not come back to bite him?

By following standard Boris operating procedure: bluster and lie to win time and hope something magical turns up in the end to save the day. If that doesn’t happen, then stage a disguised last-minute surrender, because without a trade deal with the EU, its biggest trading partner, the UK is heading for a massive economic crash.

Johnson has been on course for that surrender for some time now, but a new trade deal does not cancel the existing Withdrawal Agreement, so the border controls will still appear in the Irish Sea next January.

His instinct would be to blame it all on Johnny Foreigner and his tricky ways and maybe he could ride out the storm.

Instead, he has announced that he is going to tear up an international treaty with the EU. This is most un-Boris-like behaviour.

We are asked to believe that Johnson — Boris Johnson — has belatedly realised there will be a crisis in the Irish Sea next January and decided to push through a highly controversial law right now to give himself cover for an illegal act next year. It is so out of character that it begs the question: who put him up to it?

Not exactly Baldrick, but Johnson’s senior political adviser is Dominic Cummings, whose passionate and scarcely concealed desire is to crash the UK out of the EU with no deal at all.

The other man who truly wants that outcome is Michael Gove, the most powerful person in Johnson’s cabinet, who used to be Cummings’ main patron in government. Together, they have somehow talked Johnson into doing something so stupid that it may make a trade deal impossible and end his prime ministership.

They probably just told him that such a grave threat would bring the spineless foreigners to heel. The EU would let Johnson have his way, forget about putting an Irish-UK border anywhere (even though the Irish Republic is an EU member) and all would be well.

And the poor mug believed them.

Dyer is a London-based independent journalist. His new book is titled Growing Pains: The Future of Democracy (and Work).

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Clemence Machadu : Economist

THE outbreak of the Covid-19 pandemic has shifted our way of life in so many facets — and as each day continues to bring new infections, deaths and recoveries, with no vaccine in sight yet — the desire to find a new equilibrium continues to compel us to vary variables and interrogate new possibilities and fresh perspectives. If this is the new normal, then we should start mastering how to optimise our survival and that of our enterprises, until thy kingdom come.

About a century ago, humanity was faced with the same tragedy when there was an outbreak of the Spanish influenza, which swept across the globe and infected 500 million people — about a third of the world population that time — and killed 50 million people. There was no vaccine and, worse still, scientists had not yet discovered flu viruses. Some businesses went bust, but others survived. Those that survived chose to swallow the bitter pill of doing things differently.

In the present scenario, although we now have laboratory tests to detect and characterise these viruses, it is still unclear how this contagious virus will play out and when it is likely to be contained. This leaves our local industries at crossroads and it is not business as usual as they endeavour to figure out which direction to take.

When Covid-19 arrived earlier this year, it struck an already-agonising local industry. Capacity utilisation, which had declined from 48% in 2018 to 36% last year, further dropped down to 33% this year. And while the 2020 national budget initially projected real growth of the manufacturing sector at 1,9%, this has since been revised down to a decline of -10,8% in the budget review.

All manufacturing subsectors (with the exception of chemical and petroleum products as well as textiles and ginning) are projected to decline this year, with the foodstuffs, beverages, paper, printing and publishing, non-metallic mineral products sectors bearing the brunt. Production of alcoholic beverages, for instance, declined by 27% during the first quarter of the year, with non-alcoholic beverages also declining 24%. This is just a tip of the iceberg.

One of the biggest challenges of this pandemic to the manufacturing sector is how it has significantly crippled domestic demand. Zimbabwe has the second largest informal economy in the whole world, according to the International Monetary Fund. The indefinite lockdown, which has been in place since March 2020, disrupted the economic activities of many informal players who employ 94,5% of Zimbabwe’s labour force.

That significantly eroded disposable incomes of the majority of the populace, resulting in domestic demand going down. Demand plays a signaling function for production and low demand means low production.

And looking at how Zimbabwe is significantly integrated to the global economy, the disruption of global supply chains caused by this pandemic also posed another huge threat, and potential opportunity too, to the local industry. Most of the local manufacturing enterprises import their raw materials and the disruption of the transport sector also disrupted their production capabilities. Take sanitary wear manufacturers, for example, who import more than 70% of their raw materials from countries such as China.

This has not only affected source markets, but export markets as well. Take nickel production, for instance, which was also affected by the Covid-19 pandemic induced shutdown of the manufacturing sector establishments in parts of China that reduced consumption of base metals, resulting in declining nickel prices as well.

What makes the industry more vulnerable in this pandemic is the fact that the majority of its workforce is employed in on-site jobs that cannot be done remotely. And with the curfew measures being employed as part of the lockdown regulations, it becomes difficult for workers to be always on site. Most manufacturing establishments need to operate for 18 uninterrupted hours every single day, yet the curfew only allows them to operate for at most eight hours only per day. This automatically limits their operating capacity and productivity; not mentioning the plight of those subsectors that are classified as non-essential goods providers.

Further, issues of employee safety are also of particular concern, given the nature of the factories, whereby it is sometimes difficult to create social distancing in workplaces that are typically worker-dense. Employee morale is also very low, amid low to no incentives, as workers live with the fear of contracting the virus, which also lead to absenteeism and staff turnover. The pandemic has also affected their mental health and productivity. Stigma and discrimination is also still a reality for employees that have recovered from the virus and return to work; which calls for more education about this virus.

Salvos are firing at the local industry, left, right and centre and what we can realise from this moment of socio-economic distress is how it has resulted in capacity utilisation declining, production and productivity also falling down, rising cost of doing business, firms’ revenues going down, with employment levels also falling, resulting in poor overall performance of the manufacturing sector and its contribution to the national economy. Other sectors, which have strong linkages with the manufacturing sector, such as agriculture, mining and transport, have also been affected and the ripple effects of such also cascade to the wider economy.

While the situation might seem to be hectic for the local industry, this is actually the time for Zimbabwe to be looking at how best to minimise the risks and maximise the opportunities presented by the Covid-19 pandemic. Firms that learn to quickly adapt and dynamically redefine their business models stand a chance at turning the corner. The first opportunity lies in government fully implementing all the policies that have a bearing on the manufacturing sector. Four policies quickly come to mind, two administered by the Ministry of Industry, Commerce and Enterprise Development and the other two administered by the Ministry of Foreign Affairs and International Trade.

Last year, the Industry ministry launched two long-term policies, which have the potential to jumpstart the local industry during these difficult times, if measures and instruments therein are fully implemented. The Zimbabwe National Industrialisation Development Policy is one of the crucial policies seeking to grow the manufacturing sector’s growth rate by at least 2% per annum.

The policy also targets to increase the sector’s capacity utilisation to above 70% by 2023, anchored on value-addition and beneficiation, upgrading and modernisation of industrial equipment and machinery, rural industrialisation, effective co-operation between government and the private sector, amongst other strategies.

Also, given how global supply chains for both raw materials and finished goods have been affected, it is also time to gear up implementation of the Local Content Strategy, which was devised to encourage local value-addition through utilisation of domestic resources and localisation of supply chains. This is the time to aggressively pursue import substitution for both raw materials and finished goods, to ensure that we reduce our import bill, improve our balance of payment position, create employment and domestic demand, amongst other fundamental socio-economic desirables. We can make a big difference if the hundreds of millions we use to import goods and services start circulating within the local arteries of our economy.

It is also time to strategise on increasing exports and the Foreign Affairs ministry should start to upscale implementation of measures contained in the Zimbabwe National Trade Policy as well as the National Export Strategy, targeting US$7 billion in export value by 2023 and US$14 billion by 2030. In retrospect, these policies are usually not implemented and just exist as a reminder of what we want to achieve, but this is not the time to be docile.

This is also the time for firms to think about the future of their businesses and, where possible, divest non-core or underperforming assets to structure their portfolios in a manner that reflects efficiency and value creation. This is a defining moment, which calls for firms to innovate and break new ground. The safety of employees should also be put on high priority to help them cope with the already difficult times. Activities that can be carried out remotely should be identified, with workers supported to do them while at home. It is also important to provide incentives for employees to pull through these difficult times and to boost their morale.

While some firms are still holding onto old ways and still struck by inertia to move out of their comfort zones and think outside the box, taking the business as usual approach and failing to quickly adapt might result in their demise, like what happened to those that failed to adapt during the Spanish influenza era.

It is time to tame this new normal and find a new equilibrium where business is optimised. Covid-19 is upon us; and in the midst of triumph over recoveries, grief over deaths being experienced and hope for the situation to be contained sooner rather than later, captains of industries should carefully navigate their ships to avoid wreckage.

Machadu is an economist, researcher and consultant. The article appears in the Zimbabwe Independent 2020 Quoted Companies Survey released today, whose theme is “Soaring Above Turmoil: Business Post-Covid-19”. This is the first of a series of articles published in the prestigious magazine that will appear in the Independent in the coming weeks.

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Ceteris Paribus:Respect Gwenzi

IT is time of the year when listed companies are recognised for their financial performances. The Zimbabwe Independent holds its 23rd annual Quoted Companies Survey 2020 under the theme “Soaring Under Turmoil, Business Beyond Covid-19”. This year it has partnered Equity Axis as Research Consultants for the initiative. The Independent recognises that the research and analysis of financial performance as well as objective analysis is best conducted by independent researchers.

This increases reliability and objectivity of the analysis and adjudication processes.

At Equity Axis, we are very pleased for the recognition and having such a huge responsibility bestowed upon us. It is, however, very befitting given our stellar run, coming from nothing barely five years ago, to become the leading economic and financial research house in Zimbabwe.

Our research work covering the areas of economics and finance has placed us at the pinnacle of business research in Zimbabwe. Daily, we check the pulse of the economy and of business through analysis of economic and financial data. This data on the economic front includes inflation, trade, government revenue and expenditure performance, exchange rate, GDP and specific sectorial performances.

On the financial front we have, over the last four and half years, analysed annual and half year financials for listed and non-listed entities such as banks and insurance companies. By analysing these financials and publishing our findings, forecasts and recommendations to management and investors, our service has become highly sought after by business executives and investors.

As the most prestigious business event on the calendar, I have indeed followed it closely since my early days as a junior financial analyst working for a pension fund and later a stockbroking firm. I have things that I thought would make the event better and the panel of analysts I seated with to adjudicate the 2019 financial performance concurred on some the proposed changes. While elating, being given the chance to do this type of special work, in a very unique year such as 2019, was a very tall order.

At the outset, as I explain on the adjudicators’ page, 2019 was a unique year in a very significant way. Financial performance as seen through the lenses of financial reports was highly distorted. First, through Statutory Instrument (SI) 33, which introduced the RTGS currency and fixed its conversion at parity to the United States dollar. This was inconsistent with IAS21, an accounting standard which deals with effects of changes in foreign exchange rates as well as the Companies Act Chapter 24:03. The fundamental impact of assuming or converting the US dollar at parity with RTGS was that the financial position of reporting companies could no longer be relied upon for purposes of financial analysis.

The discrepancy therefore discredited most analysis techniques conventionally applied when rating companies. In our analysis we, however, still realised that there are some financial matrices that are independent of the impact, such as volumes performances and some liquidity ratios and therefore with a degree of moderation of the earnings, a reliable analysis would be conducted. We did just that.

However, 2019 was not only unique because of the impact of SI 33, but also because the currency changes brought about a lot of volatility in the economy which fundamentally changed the operating environment. As a consequence, inflation stemming from exchange rate weakness resulted in sharp contraction in sales as purchasing power was eroded.

Earnings were generally inflated showing wide swings abated by the distorted aforementioned positions. All these are, however, known challenges, but we went beyond this and took a moment to study other markets and took note that emerging and winning companies under Covid-19 are those that put technology in the front.

At present the top four companies on the NYSE are tech companies with business models that defy Covid-19. We, therefore, decided to include an award recognising innovation and technology. We also noted increased investor conscience on sustainability matrices and we included categories awarding companies doing well in this regard.

Zimbabwe will sure move beyond the turbulence but companies that survive and maintain market leadership are those that will self-disrupt.

Gwenzi is a financial analyst and MD of Equity Axis, a financial media firm offering business intelligence, economic and equity research. — [email protected]

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The Brett Chulu Column

INTWASA or Pfumvudza — the disruptive innovation farming model developed in the 1980s by two Zimbabwean white farmers — has been adopted by government and launched nationally as a result of the direct influence of this column. Specifically, the adoption by government was as a direct result of the lobbying of this writer to President Emmerson Mnangagwa at the Zimbabwe National Chamber of Commerce (ZNCC) congress in June 2019.

Mnangagwa did not have to think twice after listening to this writer’s submission — he gave his word that Pfumvudza would be considered for adoption under the Presidential Inputs Scheme. The president acted on his word — Pfumvudza is being rolled out nationally. Let me state upfront that I did this at no charge to government and I did not receive anything in exchange — it was my patriotic duty to assist our nation.

Two weeks ago, a well-known South African agricultural economist wrote an opinion piece commenting on the ambitious maize production targets set by Zimbabwe’s agriculture ministry for the 2020-2021 farming season. Government has set a target of 1,5 million hectares under maize; with a target yield of 2,4 tonnes per hectare. He was impressed that Zimbabwe would move from a five-year average maize yield of 0,7 tonnes per hectare to 2,4 tonnes per hectare.

He wondered how Zimbabwe would make an almost four-fold jump in maize productivity. The answer is Pfumvudza. Pfumvudza is a disruptive innovation in the original sense as defined and later refined by the discoverer of disruptive innovation, the late Harvard Business School professor, Clayton Magleby Christensen.

A disruptive innovation is a product or service that brings into consumption masses of people who were historically denied consumption because the existing offering was unaffordable or was too complicated for them to use. To fully express an important thought, allow me to create a new word: disruptive innovation de-elitisises consumption and production.

Disruptive innovations are also referred to as empowering innovations or market-creating innovations. Disruption turns non-consumption into consumption through simplifying both the cost structure and operational requirements.

This writer was the first published researcher to extend Christensen’s concept to production. In Christensen’s conception, the masses suffering deprivation experienced it (the deprivation) in the context of consumption. This writer discovered that masses of non-producers could also be brought into production by simplifying the cost structure of production and the production process itself.

Pfumvudza is a perfect example of a production-biased disruptive innovation. For less than US$50, a farmer can produce on one-sixteenth of a hectare at a top rate of 12,8-16 tonnes per hectare using non-mechanised farming methods.

On April 5, 2020, in this column, in an article titled Pfumvudza innovation can revive the economy, this writer tabled the idea that Pfumvudza could potentially contribute towards self-sufficiency in maize and soya bean through production by Zimbabwe’s ordinary rural households.

On maize, the article stated: “According to the 2017 Inter-censal Demographic Survey (ICDS), produced by Zimstat, there are three million households in Zimbabwe, with about 1,8 million of these households being rural. If each rural household, at the minimum, produces on one Pfumvudza plot, Zimbabwe will be assured of 1,44-1,80 million tonnes of maize from rural farmers, producing an excess of 475 000-600 000 tonnes per year, based on the fact that according to the ICDS, a household is an average of four members.”

On soya, this writer projected: “There is more: turning every rural farmer into a soya bean producer will be a massive development, never before experienced in this country. Rural farmers could produce 360 000-720 000 tonnes of soya beans annually from their own capital. Zimbabwe’s annual soya bean requirement is only 220 000 tonnes. Our rural farmers, on a mere 39 metres x 16 metres of (a) well-managed Pfumvudza soya bean plot, can produce a combined 120 000 tonnes in excess of our annual soya bean requirement with zero financial assistance from both the public and private sectors.”

This was two months before this writer presented the idea of Pfumvudza to His Excellency in June of 2019 at the ZNCC congress. Government chose to assist rural households with training and inputs for Pfumvudza. The production targets government has set for maize and soya for the 2020-2021 rain-fed farming is almost a carbon copy of the proposal this writer tabled on April 5, 2019 in this column. Government has set a target of 1,8 million Pfumvudza plots, corresponding to the total rural households in Zimbabwe, with each rural household producing one tonne of maize from the one-sixteenth of a hectare Pfumvudza plot.

For soya, government is targeting each rural household to produce 200kg of soyabean/oil-seeds on a Pfumvudza plot.

We turn to the price stability (inflation and forex rates) issue. The Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, revealed a few days before presenting his Mid-term Monetary Policy Review that Zimbabwe was importing 30 000 tonnes of soya bean a month at a cost of US$12 million.

This translates to US$144 million of imports of soya bean in a year. On maize, the RBZ chief revealed that we are importing 100 000 tonnes of maize every month at a cost of US$28 million.

If Zimbabwe were to become self-sufficient in maize and soya, a total of US$480 million would be saved through import substitution. This amount is very significant; on its own, it can contribute towards significantly strengthening the supply of forex on the forex auction market.

Maize and soya bean imports constitute close to 50% of current forex auction demand. In theory, local production of maize and soya bean to achieve self-sufficiency will significantly remove pressure on the forex auction, fostering and sustaining the stability of forex rates.

Stable forex rates will largely remove the urge to forward-price. Forward pricing is raising prices with the aim of restocking, taking into account anticipated future higher inflation levels. This causes a self-feeding upward inflation spiral.

There are more positive spin-offs from attaining self-sufficiency in maize and soya bean. Locally produced maize and soya bean will provide raw materials for secondary industries, helping to further depress demand for forex to import a number of raw materials.

Pfumvudza has the potential of producing in excess of national requirements, creating an opportunity for exports, not raw soya and raw maize, but value-added products.

In a country where people tend to be labelled in either-or terms, this writer may be taken to be a member and beneficiary of the ruling party. Let me state categorically that I am not a member of the ruling party and that I have not benefitted in any way from the ruling party. Equally, I am not a member of any opposition political party or am I a supporter of any opposition political party.

We will share more thoughts on Pfumvudza in next week’s instalment.

Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer-reviewed international journal. — [email protected]

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Editor’s Memo:Faith Zaba

IN the year 1634, the famous English poet and wordsmith, John Milton wrote a poem titled Comus: A Mask Presented at Ludlow Castle.

We borrow from Milton’s limerick and pose the question: did a sable cloud in Zimbabwe’s 2020 economic night, deepened by the global Covid-19 pandemic, turn her silver lining?

The five bright spots are discernible: adaptation, opportunity, innovation, people focus and outlook.

Covid-19 deepened an existing economic challenge characterised by acute foreign currency shortages, a debilitating liquidity crisis, hyperinflation that has resulted in skyrocketing prices of goods and services, company closures and job losses. In addition, more than half the country’s population is facing starvation.

Covid-19 has had disastrous consequences for Zimbabwe’s fragile economy.

According to a United Nations Development Programme assessment, the Covid-19 pandemic and global knock-on effects could sink or stall Zimbabwe’s efforts to revive its flagging economy, with devastating consequences; not only on the poor and vulnerable people, but also on already struggling businesses.

For some industries, the pandemic was an existential threat — a swift response, cutting through the normal bureaucratic spanners was not a luxury. Some service industries adapted remarkably.

As for print media, we, as Alpha Media Holdings, quickly experimented with e-papers, taking the lead on the market.

Banking services accelerated their pace towards reducing brick-and-mortar service delivery models through digital solutions. In the night of Covid-19, some industries that have had difficulty in implementing environmentally-friendly business practices, have become sustainable development champions due to reduction in carbon footprint as a result of digitalisation of both production, delivery and marketing.

Another boon has been a reduction in the importation of raw materials — digitalisation has been a driver of import substitution — a contributor to the trend of narrowing of the trade deficit.

Astute entrepreneurs and entrepreneurial corporates saw gaps and responded with marketable solutions occasioned by the global pandemic. Covid-19 created a huge demand for health-related products such as masks, sanitisers, hands-free sanitiser dispensers, for example. Online education delivery models have sprung up, ramping up demand for ICT-related services. Social distancing has led to people countering this anti-social phenomenon through massing around social media platforms.

Online seminars are becoming popular. Health consciousness has been sharpened, presenting opportunities for customised services in transport and food delivery.

Companies are discovering, by default, spaces for innovation around work. Telecommuting and online team-working is becoming a basic requirement for many service enterprises. This has helped reduce costs of production and saved workers money. Going forward, smart and nimble entrepreneurs in the service space are going to take advantage of the cost-reduction opportunities presented by telecommuting to launch low-cost but high quality product offerings.

Today, as we host the annual 2020 Quoted Companies Survey, the Zimbabwe Independent celebrates and applauds companies for continuing to stay afloat under very difficult times.

The annual premier event will be held under the theme Soaring Above Turmoil: Business Post-Covid-19. This year’s edition is being sponsored by Nedbank Zimbabwe.

The event celebrates the resilience of Zimbabwe Stock Exchange-quoted companies, which had to endure numerous challenges.

We celebrate the innovations that have ensured that the companies remained relevant in these tough times.

In the outlook period, there are signs of green shoots. Inflation has been slowing down. Foreign currency rate volatility has eased to almost stable levels. A La Nina climate event is expected — a good rainy season will have a positive impact on electricity generation and food production, potentially spawning stability in food prices and re-energising agro-based industry. A good harvest has the potential of reducing our food import bill by at least US$400 million a year.

Life is no different from the daily rhythm; night gives way to morning and morning fades into night. Business is no different; it always has its mornings and evenings. Even in the night, stars and the moon shed light. Congratulations to all the winners and we salute companies operating in Zimbabwe that continue to soldier on in these turbulent times.

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EDITORIAL COMMENT

CONCERNS raised this week by investors on whether they will be allowed to repatriate their funds if they list on the Victoria Falls Stock Exchange (VFSE), speaks volumes of the confidence deficit in government that has indicated right and turned left far too often.

At a Zoom meeting held on Wednesday this week about the VFSE with Finance minister Mthuli Ncube, head of research of sub-Saharan Africa at the Russian-headquartered Renaissance Capital, Yvonne Mhango, voiced the fears and distrust among investors of doing business in Zimbabwe.

“We are an investment bank targeting frontier and emerging markets and our current clients include institutional investors who have invested in these frontier markets, Zimbabwe being one of them. So, we have clients that have invested in Zimbabwe and the main concern has been the lack of ease in terms of repatriating capital and dividends as well as of course significant changes in foreign currency policy that has discouraged foreign investors,” Mhango said.

Mhango’s sentiments illustrate the failure by President Emmerson Mnangagwa’s government to lure the much-needed foreign direct investment due to knee-jerk policies that characterised the tenure of his predecessor, the late former president Robert Mugabe.

Policy inconsistency, which was the hallmark of Mugabe’s disastrous rule for nearly four decades, has continued under Mnangagwa.

The introduction of the Zimbabwean dollar through Statutory Instrument (SI) 142 of 2019, as the sole legal tender without the necessary benchmarks, which led to the collapse of the local unit stoking inflation figures to fluctuate between 700 and 800%, is an example.

After the chaos of the spectacular fall of the local currency, Mnangagwa’s government has since changed its tune allowing the United States dollar it had barred for domestic transactions to trade with the local currency through SI 185 of 2020.

The abrupt suspension of the Zimbabwe Stock Exchange for more than a month on allegations of illicit activities has further damaged investor confidence.

This is evidenced by the bourse losing a massive ZW$42,5 billion (US$520,2 million) shortly after the suspension was lifted as investors abandoned the ZSE. The bizarre comments by Ncube that those affected by the suspension should treat the stoppage as a long holiday, clearly shows the lack of seriousness that has scared away investment.

The figures make for grim reading. Foreign direct investment (FDI) has plummeted from US$717,1 million in 2018 to just US$259 million last year.

The country’s FDI is projected to plunge further this year to just over US$150 million, which is no small part due to the chaos that emanates from the corridors of government.

Mnangagwa has spearheaded the setting up of the Zimbabwe Investment and Development Agency to boost investment.

However, such moves will be in vain if his government continues with policy inconsistency and confusion.

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Kudzai Kuwaza/Tatira Zwinoira

THE United States will maintain sanctions on Zimbabwe for as long as President Emmerson Mnangagwa’s government continues with its human rights abuses which pose a threat to regional stability, a senior American official has said.

The US has maintained the Zimbabwe Democracy and Economic Recovery Act (Zidera), which was passed by the US Congress in 2001, which imposed economic restrictions on Zimbabwe because of the Southern African country’s chequered human rights record.

Government has pointed to the sanctions as the cause of the country’s economic decline, but the US has said the economic crisis in the country is as a result of the country’s mismanagement and corruption.

In a wide-ranging interview, the US Agency for International Development (USAid)’s new country director for Zimbabwe Art Brown said the sanctions will remain if there is no reform to the human rights deficit in the country.

“The absence of progress on the most fundamental reforms needed to ensure rule of law, democratic governance, and respect of constitutional rights leaves Zimbabweans vulnerable to ongoing repression and presents a continuing threat to peace and security in the region,” Brown said.

“Unfortunately, at this juncture, Zimbabwean authorities have not yet made sufficient progress to merit the lifting of sanctions, but our commitment to the people of Zimbabwe is ever solid.”

He said the US continues to call on the Zimbabwean government to fulfill its promises of upholding the rule of law, fighting corruption, respecting human rights, and fully implementing Zimbabwe’s 2013 Constitution.

“Progress on these goals is the path forward to prosperity and deeper engagement with the United States and the international community. We believe Zimbabwe’s civil society organisations, and political parties have critical roles to play in facilitating improved governance,” Brown said.

“As a general matter, and let me be clear, the United States does not maintain broad sanctions against the people or the country of Zimbabwe. US sanctions target 83 individuals and 37 entities who engage in corruption, violate human rights, and undermine democratic institutions or processes. We have maintained our Zimbabwe sanctions programme because of the absence of significant political and economic reforms.

“It is unfortunate that the Government of Zimbabwe tries to blame United States sanctions for the country’s current woes. Zimbabwe’s sovereign economic and political policy choices, not US sanctions, caused the economic challenges we see today.”

He said USAid will continue to work with the United Nations and various trusted non-governmental organisations NGOs that provide assistance directly to Zimbabweans, adding that none of the assistance goes directly to the Government of Zimbabwe.

“Initially within the key sectors that USAid engages in (for example, Health, Environment/Agriculture, Food Security), I am seeking minister level, vice-minister, department director level courtesy calls to introduce myself and some teammates from USAid to again articulate what I and the team are doing to advance human progress on behalf of the American people in Zimbabwe,” Brown said.

“Additionally, I am looking forward to meeting with a variety of stakeholders, including CSOs (civil society organisations) and local NGOs to reinforce our commitment to the people of Zimbabwe. I am also eager to engage with community members who benefit from our assistance. I can’t wait to get out into the field to hear directly from beneficiaries of US government support.”

Brown said the assistance programme managed by his team at USAid provides an ongoing testament to US commitment to the people of Zimbabwe.

“As the country’s largest bilateral donor of development and humanitarian assistance, I hope it is clear that we want to see Zimbabwe succeed,” he said.

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VENERANDA LANGA

SPEAKER of the National Assembly Jacob Mudenda has said Africa should define its own form of democracy and stop subjecting itself to the Eurocentric democratic concept.

Speaking in Kariba during a training session of MPs on the African Charter on Democracy, Elections and Governance (ACDEG) on Tuesday, Mudenda said while Africa had a targeted period when it was troubled by military rule, especially in West Africa, there has been a correction of the military regime appetite.

“Now Africa has embraced democracy as a political ideology, which arises from the authority of the people,” Mudenda said.

The event was organised by local humanitarian organisation, ActionAid, which has been at the forefront of popularising ACDEG ensconced in articles four, 14 and 17 of the African Union Charter.

It compels member states to observe democracy, the rule of law and human rights, to strengthen and institutionalise democratic institutions, and that state parties must reaffirm their commitment to regular holding of transparent, free and fair elections in accordance with the principles of governing democratic elections in Africa.

Article 14 (1) of ACDEG states that “state parties shall strengthen and institutionalise constitutional civilian control over the armed and security forces to ensure the consolidation of democracy and constitutional order”, while article 14 (2) states that “state parties shall take legislative and regulatory measures to ensure that those who attempt to remove an elected government through unconstitutional means are dealt with in accordance with the law.”

Mudenda said: “If you look at Eastern Europe and the Arab World, you ask yourself if there is democracy in the manner we understand it from a Eurocentric angle, and you will discover that what we call democracy in Africa and Europe may not have the same meaning in China and the Arab countries.

“Consequently we must ask ourselves and interrogate what democracy is in the East and West and where democracy fits in Africa and in this political triangle.

You will notice that Africa has not done badly in the tenets of democratic elections and governance.”

The speaker said the executive, judiciary and parliament derive their authority from the people, and therefore the people deserve democracy, good governance and credible elections.

“The US fought the British through the American war of independence and they won and then they decided that George Washington who was the commander in chief during that war should be the President of the US.

“Is it then surprising that in Zimbabwe, at Independence, we had people who commanded the liberation struggle and became the first rulers, for example the late former president Robert Mugabe, was the Zanla commander-in-chief.”

Mudenda then said during Washington’s tenure, there was a civil war for four years in the US and
600 000 people died in a country believed to be an icon of democracy.

He said Africa, therefore, has not done badly on democracy and that is why it came up with the ACDEG, adding that MPs must have constitutional and ACDEG literacy in order to exercise their legislative, representation and oversight duties well.

Although ACDEG speaks on observance of human rights and freedoms of assembly and expression, the Zanu PF government has been accused recently by the international community, the African Union and different international human rights organisations of failing to observe ACDEG principles and breaching human rights due to its heavy handedness on demonstrators, the arrests of political opponents and journalists.

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MTHANDAZO NYONI

THE majority of Zimbabweans are without cover against life cycle risks such as old age, invalidity, health care, employment injury, among others, a situation that does not only trap them in endless poverty, but leads to social exclusion as well, a National Social Security Authority (Nssa) official has said.

Speaking to journalists during a virtual 2020 insurance and pensions mentorship programme this week, Nssa chief social security officer Tambudzai Jongwe said Zimbabwe was facing the problem of social security exclusion, leaving the majority vulnerable and exposed to poverty.

“Nssa’s schemes are contributory-based, covering the formally employed who constitute 5,5% of the working populace, leaving 94,5% of informal sector workers vulnerable and not covered,” Jongwe said.

She said over the years the contribution base of Nssa has been shrinking due to the economic challenges the country has been facing, resulting in an increase in unemployment levels and the number of people in the informal sector, where the authority does not collect contributions and the emigration of the economically active Zimbabweans.

According to Nssa, the total number of registered employers is 106 310. Of this figure, only 26 997 are active.

“This scenario negatively affects the financial viability and sustainability of Nssa schemes in terms of financing and expenditure. It also affects benefit levels,” Jongwe said.

She said possible interventions to the shrinking contribution base include continuous and periodic reviews of contribution rates and insurable, increasing the retirement age, which would result in people being employed for longer periods and reducing the number of years in which they access a pension.

Currently Nssa schemes are 55 years for early retirement in arduous occupations, 60 years for normal retirement and 65 years for late retirement.

She also said extending tax financed coverage would assist.

Jongwe said investment should be inclined towards employment creation to broaden the pool of contributors.

“Another significant challenge to social security is the issue of migration. Zimbabwe has experienced high levels of migration of the economically active due to the economic challenges the country has faced. This negatively affects Nssa’s contribution base,” she said.

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Tinashe Kairiza

A forensic audit at moribund Ziscosteel (pictured) is underway to ascertain the losses suffered by the state enterprise in the wake of the cancellation of the US$255 million recapitalisation deal with ZimCoke, the Zimbabwe Independent can report.

The massive losses incurred by defunct Ziscosteel, estimated to be running into millions of dollars, arose from the systematic combination of asset stripping, mismanagement and vandalism of the company’s infrastructure during a near two-decade hiatus.

This month, the government reversed the multi-million-dollar revival deal, three years after ZimCoke snapped up Ziscosteel’s coke-making assets ranging from the plant and machinery, land, buildings, wagons and related coal handling implements. The deal, which was seen as key towards recapitalising Africa’s once largest integrated steelmaker, was cancelled because it was not favourable to Ziscosteel’s interests.

Under the deal, ZimCoke committed to inherit US$255 million owed by Ziscosteel to a Germany Bank in exchange for the state enterprise’s assets.

In yet another long-drawn-out transaction, which ended up being terminated, government in 2015 reversed the US$750 million Ziscosteel revival deal with Essar Holdings of India. The Indian conglomerate had acquired a 54% stake in the embattled steelmaker which used to boast a 5 000-workforce during the peak of its operations.

A similar deal with another Indian company, Global Steel Holdings, also failed to materialise.

Ziscosteel chief executive Farai Karonga this week told the Independent that the forensic audit, which will be undertaken during the last quarter of this year, would be used to determine the massive capital outlay required to resuscitate the insolvent company.

“The short and long (of it) is that we are carrying out a forensic audit within this quarter to quantify and ascertain the losses.

“We are now seized with an asset inventory management system that will assist us to start the bankable feasibility study. This will inform the Zisco information memorandum that will give investors a term sheet,” Karonga said, highlighting that security at the plant was being bolstered to curb asset stripping.

The systemic asset stripping, which was largely orchestrated by syndicates, is characterised by “theft of copper cables and metal scrap as well as vandalism of some metal structures”. Furnace slag and scrap metal were disposed of following a board resolution.

Ziscosteel chairperson Engineer Martin Manhuwa said management was also working towards determining the quantum of resources required to bring back the firm, though an assessment done in 2018 put the investment capital outlay at US$1 billion following negotiations with an interested Chinese suitor.

However, he said there was “no asset stripping” at the entity, which needs a massive capital injection for retooling and acquiring machinery.

To curb asset stripping, Manhuwa said, the entity had enlisted the services of the Central Intelligence Organisation (CIO), among other state security agencies in a bid to stop the entity from haemorrhaging further.

He said: “Zisco has increased co-operation between itself and national security agencies namely, ZRP and CIO.

“At the same time, Zisco has embarked on a process to increase security personnel as well as appropriately equipping them.”

With iron ore reserves estimated around 53,9 million tonnes, Ziscosteel’s turnaround strategy, which has suffered a still birth on a number of occasions, is pivoted around “promoting technological advancement and innovation and establishing a marketing organ for engineering, iron and steel products”, among other key result areas.

Industry and Commerce minister Sekai Nzenza, who also chairs the inter-ministerial taskforce set up to spearhead the company’s revival, said she expects work at the company’s Redcliff factory to resume soon.

“The president has given us the mandate to revive the steel industry and promote local production. We will revive Ziscosteel and deliver,” she said. “In order to do so, we will work with investors and follow a transparent due diligence process and we will commence operations very soon.”

At its peak, Ziscosteel contributed significantly in export receipts while it used to produce one million tonnes of steel annually. But decades of mismanagement, corruption and rampant vandalism militated against the firm, which closed operations in 2008.

Under the Ziscosteel revival plans, government is courting investors with the financial muscle to transform the insolvent company into a multi-billion-dollar spinning entity.

In 2019, government retired the steelmaker’s board that had been in office for more than a decade. At that time, Midlands Provincial Affairs minister Larry Mavima described the rampant asset stripping at the entity as “cannibalism”.

Subsequently, a new board was put in place in June this year, with the primary responsibility of spearheading the revival of the company, which supported downstream steel processing industries.

The company, which over the years has been surviving through selling scrap metal, is saddled with a gargantuan debt stock, part of which government started servicing to various creditors.

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THE country’s leading business weekly, the Zimbabwe Independent, will today announce the 2020 Annual Quoted Companies survey and awards winners.

The European Union (EU) ambassador to Zimbabwe, Timo Olkkonen will be guest of honour at the event in Harare.

The Zimbabwe Independent Quoted Companies Survey is an annual report, which measures the performance of firms listed on the Zimbabwe Stock Exchange (ZSE). This year’s edition is being sponsored by Nedbank Zimbabwe.

In the wake of the global Covid-19 pandemic, this year’s event will be physical for a few guests and largely virtual as the organisers take precautionary measures to prevent the spread of the virus.

The event comes at a time when companies are finding innovative ways to continue operations, amid a deepening economic crisis characterised by a crippling liquidity crunch, acute fuel and foreign currency shortages, currency volatility and runaway inflation, which is just below 800%.

The premier event, which will be held under the theme: Soaring Above Turmoil: Business Post-Covid-19, will celebrate the fortitude of companies operating in this turbulent period.

Lead analyst at Equity Axis, Respect Gwenzi, told the Independent that the distortive effect of hyperinflation and exchange rate depreciation compounded with legislative technicalities grossly made it very difficult to apply conventional models in analysing the performance of listed companies, as well as their share price performances within the same period.

“It is unsurprising that companies which scored better are those earnings foreign currency from their operations and among these are manufacturing companies. A liberalised and weakening exchange rate has helped locally manufactured finished goods fare better off in regional markets,” he said.

“However, a few of the companies that exploited the weaker currency to spur regional sales and cushion the domestic earnings have committed higher capital expenditure levels to modernise their plants and processes.”

Alpha Media Holdings (AMH) chief executive Kenias Mafukidze said the hosting of the event is testimony to the resilience of companies in the face of difficulties.

“As AMH we are once again excited about hosting this year’s Quoted Companies Survey. This really is testimony to the resilience of Zimbabwean companies, which continue to defy the odds and swim against the grain of pessimism and doom,” Mafukidze said.

“There is enough reason to give up and surrender. But these champions decided to soldier on and for this we salute you.”

He hailed Nedbank for sponsoring the event.

“We would also want to thank Nedbank for their now perennial sponsorship for the event. If there is anything Covid-19 has taught us, it is that we are stronger and safer together and through this sponsorship, Nedbank has paid tribute to the idea of supporting each other and showing light on our heroes,” Mafukidze noted.

“To the winning companies, I would like to recognise and salute your commitment to the economy. Through this, you have also become inspirational to other corporates as testimony that perseverance, innovation and creativity are the pillars of sustainable business.”

Diversified telecommunications group Econet Wireless Limited has topped the last two surveys. — Staff Writer.

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Tinashe Kairiza/Andrew Kunambura

FRESH details have emerged from last week’s stormy meeting between Zanu PF and South Africa’s ruling party, the African National Congress (ANC), revealing that the two former liberation movements maintained diametrically opposed standpoints on how to address Zimbabwe’s multifaceted political and economic problems.

Though both parties emerged from the meeting portraying it as having been cordial, sources this week told the Zimbabwe Independent that the discussions failed to yield a “meeting of minds”, with the two parties’ senior officials maintaining their entrenched positions.

The venue would at times turn into a theatre of dramatic confrontations, as discussions degenerated into verbal vitriol when debating thorny topics.

During the stormy meeting held at the Zanu PF headquarters, the high-powered ANC delegation, led by its secretary-general Ace Magashule, tabled five key talking points, which defined the interaction.

South Africa’s ruling party broadly expressed concern over the deteriorating political and economic crises gripping Zimbabwe.

Other members of the ANC delegation included the party’s chairperson and Energy and Mineral Resources minister Gwede Mantashe, Defence minister and ANC national executive committee (NEC) member Nosiviwe Mapisa-Nqakula, NEC and national working committee member Tony Yengeni, Social Development minister and chairperson of the NEC on international relations Lindiwe Zulu, as well as the chairperson of the NEC on economic transformation Enoch Godongwana.

The ANC delegation spoke first, with Magashule leading the way in expressing ANC’s exasperation over the worsening economic situation in Zimbabwe and escalating reports of human rights abuses.

Sources said he expressed concern and anxiety over the worsening political and economic crisis besetting Zimbabwe, characterised by runaway inflation, hovering just below 800%, escalation of human rights abuses, an influx of illegal Zimbabwean immigrants into South Africa and the heavy-handed approach by President Emmerson Mnangagwa’s administration towards handling dissent.

However, sources told this newspaper that Zanu PF, which was represented by secretary for administration Obert Mpofu, national chairperson Oppah Muchinguri, spokesperson Patrick Chinamasa and other senior officials, rebuffed the ANC’s standpoint that Zimbabwe was engulfed by a debilitating crisis, vehemently insisting that such claims were being fuelled by the country’s detractors.

The Zanu delegation, led by Mpofu, said the economic challenges facing Zimbabwe, which were also common to South Africa, were worsened by sanctions imposed by the US, while it said the reported abductions of opposition activists were a creation of Zanu PF’s enemies. The Zanu PF team reportedly presented what it said was irrefutable evidence that the abductions were stage-managed.

After Zanu PF’s submissions, the ANC was not swayed from its position, but rather advanced the argument that if the myriad of challenges bedevilling its neighbour were not addressed, they could plunge South Africa into turmoil, while also destabilising the whole region.

A source privy to the discussions said: “The ANC delegation was quite systematic and unequivocal in its submissions and concerns that Zimbabwe is crippled by a multi-dimensional crisis, which has a domino effect and impact on South Africa.

“If anything, the ANC delegation led by its firebrand secretary-general (Magashule) insisted that the myriad of problems stalking Zimbabwe amounted to a chronic crisis, and if they were not urgently addressed they would affect South Africa’s stability and growth prospects,” the source said.

Pursuant to that, the sources added, Zulu, known for her hardline views on Harare, insisted that the Zimbabwean crisis was evident; judging by the influx of immigrants from Zimbabwe to South Africa and the pinch Pretoria was already feeling in addressing social ills such as crime. She also said if a lasting solution to Zimbabwe’s crisis was not urgently found, South Africa, which is already constrained, would find it “extremely difficult” to uplift the livelihoods of its citizens through the provision of jobs, housing, education, among other socio-economic services.

In its response, Zanu PF, through Chinamasa, who, after the meeting declared that Zimbabwe was a sovereign state and not South Africa’s “province”, took the meeting on a historical tour, highlighting that the exodus of Zimbabweans to South Africa was not new, as it dated back to the Wenela era of the 1940s, when hordes of people trekked to the neighbouring country to work in mines.

The Witwatersrand Native Labour Association (WNLA), commonly known as Wenela, was established by a grouping of gold mines in South Africa, which was recruiting its labour force within the region. Eventually, it comprised a large organisation with its own depots, buses and aeroplanes spread across the whole of southern Africa.

A source close to the meeting said: “Chinamasa was not deterred, much to the bemusement of the South African delegation, which thought that his Wenela example was naïve and out of context. But Chinamasa insisted that the issue of immigrants was historical, and Zimbabwe should not be ostracised because of its people living in South Africa. He basically said the influx of Zimbabwean immigrants did not typify a crisis at home.”

After an exhaustive and comprehensive exchange on the Zimbabwean crisis and its attendant impact on South Africa, sources said, Magashule, supported by Zulu, noted that the ANC was also gravely worried by utterances from high-ranking Zanu PF officials who were advancing the narrative that the liberation movement, which uprooted apartheid, “was being deployed by the West to push a regime change agenda in Zimbabwe”.

Magashule and Zulu, supported by their fellow party members, sources said, reminded their Zanu PF counterparts that the ANC was the oldest liberation movement and “could not be corrupted to sell out Africa’s struggle”.

“Discussions then evolved to a discussion around the ANC’s concern that it was being used by Zimbabwe’s detractors to vilify Zanu PF in the hope of unseating Mnangagwa’s government,” another source told the Independent this week.

“At that point, the ANC, through Zulu, took umbrage at such accusations and reminded the meeting that the revolutionary party, founded in 1912, was a tried and tested organisation that could not be manipulated by neo-imperialists. Zulu went further and highlighted that the ANC’s involvement in Zimbabwe was out of genuine concern to extricate its neighbour from an acute crisis.”

As the candid discussions reached boiling point, Zanu PF, through Mpofu, is said to have deviated to what he said was the ANC’s “complicity in its failure to deal with opposition parties in South Africa”, such as the Economic Freedom Fighters (EFF), led by Julius Malema and the Democratic Alliance (DA), who have piled pressure on Mnangagwa’s administration to address the deteriorating human rights situation in Zimbabwe, among other glaring symptoms of the country’s deep-seated crisis.

“At that point Mpofu said Zanu PF was also worried that the ANC was folding its hands while Zanu PF was being attacked by the EFF and DA instead of expressing solidarity with it.

“If anything, Mpofu was basically suggesting that the ANC, using its power as South Africa’s ruling party, should take punitive action against the EFF, DA and other South African civil organisations that were castigating Zanu PF.”

However, the ANC delegation, at this point through submissions from Yengeni is also said to have reminded the Zanu PF representatives that South Africa was “a democratic state which provided constitutional rights” to opposition parties to express their political viewpoints.

“In short, the ANC delegation categorically said it had no right and power to stop the growing criticism against Zanu PF from within South Africa, including from the country’s opposition parties,” the source said.

But, the Zanu PF delegation was not impressed, prompting it to further suggest that the ANC should push for the extradition of G40 stalwarts such as Saviour Kasukuwere, Walter Mzembi and Patrick Zhuwao who fled to the neighbouring country when former president Robert Mugabe was toppled from power through a military coup in November 2017.

On Wednesday, while addressing a politburo meeting, Mnangagwa threatened to terminate Zimbabwe’s extradition agreement with South Africa as he pursues efforts to bring the G40 members to justice on a series of corruption charges.

“Magashule emphasised that the G40 members living in South Africa had satisfied all legal requirements to stay in South Africa, and as such, there could not be any legal justification for Pretoria to extradite them.

“He went further and emphasised that the ANC, acting on its discretion, had a right to interact with the former Zanu PF members. He said the ANC’s doors remained open to all those who wished to interact with the party,” sources told this newspaper this week.

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