A digital copy of the Business News 24 (25 July edition). Zimbabwe's premier business news free sheet published by the Zimpapers Newspapers Group (1980) Limited and available every week day from 1530hrs to give a summary of the day's business news.

1. News Update as @ 1530 hours, Friday 25 July 2014
Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw
By Lynn Murahwa
Zimbabwe's pharmaceutical industry
is buckling under the weight of import
costs for raw materials and are facing
closure as the impact of cheap imports
weigh heavy, Parliamentarians heard
today.
The pressures have largely been
blamed on a skewed government pro-
curement policy that favours imported
drugs.
The Pharmaceutical Manufacturers
Association (PMA) has requested for
policymeasurestoaidtheresuscitation
of the pharmaceutical manufacturing
industry in the country.
During a Parliamentarians tour of the
country's pharmaceuticals companies,
Plus Five Pharmaceuticals chief execu-
tive Emmanuel Mujuru said with Gov-
ernment support the local pharmaceu-
tical companies can be able to supply
up to 70 percent of Zimbabwe's drugs
needs.
Mujuru is also chairman of the PMA.
"We can supply up to 70 percent of
the drugs and medicines needed in the
country if we could get Government
support," he said.
According to Mujuru, the bulk of the
challenges being faced by the industry
are based on the country's policies that
are affect sustainability of the industry.
"OncetheenvyoftheSADCregion,the
local pharmaceuticals industry is facing
numerous challenges most of which
are of a policy nature, that are affect-
ing its viability and sustainability which
need urgent redress,' he said. "Capac-
ity utilisation was down to 20 percent
in 2013 from 58 percent in 2012.
Imported raw materials and imported
packaging materials are subjected to
customs duties and value added tax
(VAT)," he said.
He added that the current tax policy
had placed the local pharmaceuticals
industry at a disadvantage as it had left
out left out drugs imports.
"This has created an uneven playing
field that gives imported medicines
a price advantage by increasing the
cost of local production. This policy
favours importation of medicines at the
expense of local production and there-
fore works against some objectives of
ZimAsset," Mujuru added.
Speaking on behalf of the Parliamen-
tary Portfolio Committee on Indus-
try and Commerce chairperson Ray
Kaukonde acknowledged the need to
improve the country's operating envi-
ronment. •
Zim drugs manufacturers lament skewed tax policy

2. BH24

3. By Tawanda Musarurwa
Furniture group Pelhams Limited is far
from coming out of the woods as the
company's loss position for the year
ended March 31 2014 worsened to
$3,3 million.
That was a 94 percent decline from the
prior year loss of $1,7 million.
The company last year indicated that
it was in a "transitional phase" after
it earlier instituted measures such
as realignment of overheads, reloca-
tion and closure of non performing
branches, research and manufacturing
of exclusive lines to increase margins,
conclusion of capital raising initiatives
for working capital and funding of the
debtors book as it sought to return to
profitability.
Although the measures had some
notable effects. In a statement accom-
panying its financial results, company
chairperson Tawanda Nyambirai said:
"The closing of branches that were not
profitable together with the rationalisa-
tion of staff and other expenses con-
tributed towards a reduction in admin-
istrative expenses and other operating
expenses of $899 191 and $416 339
respectively from the prior period.
"The restructuring of expensive debt
and loan arrangements together with
the reduction in the company's loan
secured by a mortgage bond contrib-
uted towards a reduction in finance
costs of 41,02 million from the prior
year."
But external factors appear to have
negated these efforts. Nyambirai out-
lined a significant decline in sales of
goods:
"Sales of goods for the year declined
by 69 percent from a prior year level
of $8,36 million to $2,62 million due to
a combination of factors which include
the company's challenges in stock-
ing up its branches and the declining
demand for capital goods," he said.
The gross margin relating to the sale of
goods stood at 20 percent, a marked
decrease from the prior year's margin
of 26 percent as demand for big ticket
items with higher margins declined.
Finance income on trade receivables
declined from a prior year level of
$3,08 million to $1,11 million as the old
debtors' book matured and was repaid.
Management believes that overheads
alignment will be key in returning the
company to profitability.
"Overheads spanning beyond people
and occupancy costs will have to be
continously reviewed in an environ-
ment where cash management has
become singularly the most important
variable in business," said Nyambirai.
In view of the harsh economic envi-
ronment that the company was oper-
ating in, it could take much longer
than anticipated for full benefits of the
changes in the company’s strategic
focus are realised. •
3 NEWS
Pelhams' loss widens

4. AdM-DI156506-
BH24

5. BH24 Reporter
Zimbabwe says it will invest in infra-
structure for the hosting of interna-
tional events and major conferences
as the country gears for MICE tourism.
MICE is the acronym for meetings,
incentives, conventions and exhibi-
tions/events.
According to the National Tourism Pol-
icy that was launched yesterday, the
country could soon be having new
MICE facilities. "The Government will
invest in and support the development
of new MICE facilities and upgrading of
existing ones," reads the policy.
In August last year, Zimbabwe suc-
cessfully hosted the 20th session of the
United Nations World Tourism Organi-
sation (UNWTO) General Assembly in
Victoria Falls, and Tourism and Hospi-
tality Industry Minister Walter Mzembi
believes that the country is well-placed
to claim a stake of the global MICE
market.
Statistics show that the total global
MICE market is in excess of $270 bil-
lion and that output from this form of
tourism accounts for 1 percent of the
world’s gross domestic product.
MICE event locations are normally bid
on by specialised convention bureaux
in particular countries and cities and
established for the purpose of bidding
on MICE activities.
This process of marketing and bidding
is normally conducted well in advance
of the event, often several years, as
securing major events can benefit the
local economy of the host city or coun-
try. To this extent, the country will also
be establishing a National Conventions
Bureau.
"The Government will establish a
National Conventions Bureau to lobby
for regional and international confer-
ences and will facilitate and support ini-
tiations to host conferences in Zimba-
bwe," says the National Tourism Policy.
Zimbabwe expects tourism arrivals
to reach 2,5 million by year end, and
expects arrivals to rise to 3,2 million
next year.
Although the tourism policy has been
launched, the Ministry of Tourism is
yet to promulgate an implementation
matrix for the policy.
According to Minister Mzembi, this will
come in the form of a Strategic Imple-
mentation Plan which will clearly artic-
ulate how the policy pronouncements
will be translated into action plans
incorporating specific timelines and
appropriate responsibilities. •
5 NEWS
Zimbabwe to 'build' meetings industry
Minister Mzembi

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BH24

7. Zimbabwe's state-owned rail
company has agreed to borrow
$460 million from the Develop-
ment Bank of Southern Africa to
develop its unprofitable network
that relies mainly on rolling stock
acquired before independence in
1980.
The loan will be signed within the
next week or two, Lewis Mukwada,
general manager for National Rail-
ways of Zimbabwe, said by phone
today. Jacky Mashapu, a spokes-
man for the Midrand, South Afri-
ca-based DBSA, declined to
immediately comment.
“Now the real work starts,” Muk-
wada said from Bulawayo, Zimba-
bwe’s second-largest city. “This is
good news for NRZ.”
The country’s railways require
$1.9 billion of investment after
freight volumes declined by about
two-thirds since 2000 to 3.6 mil-
lion metric tons last year, Muk-
wada said July 7. Zimbabwe’s
economy has stalled and is threat-
ened by deflation after contracting
by 40 percent in the eight years
following land reform programs
that dispossessed white farmers
in 2000. ―Bloomberg •
7 NEWS
BH24 Reporter
Estimated revenue of $3,01 million
exchanged hands at Mbare Agriculture
Market in the month of May, figures
from eMkambo show.
eMkambo is an agriculture market
intelligence organisation. According to
eMkambo, the $3 million revenue is a
46,1 percent increase from revenues
posted in the prior comparable period.
The above income was generated from
49 produce types sold in the market
from various farming areas and dis-
tricts around Zimbabwe.
The month of May is significant in Zim-
babwean agriculture for two main rea-
sons. First of all, May
marks the beginning of winter. Sec-
ondly, by May, most field crops are off
the land and now at home.
Farmers will now be busy counting
their costs and thinking about diversi-
fying into other agribusiness
activities.
Experts at eMkambo have urged the
Government to spearhead the broad-
ening of agricultural market databases.
"Policymakersshoulddevoteresources
to local market development where the
country’s resilience is well expressed.
Although local knowledge is being
contaminated by various forms of
knowledge spill-overs, ordinary people
people’s capacity to mobilise solutions
stands tall in Zimbabwe," they said. •
$3m exchanged in agro-market in May
Zimbabwe to sign $460m Development Bank loan for railways

8. BH24

9. 9 mining
BH24 Reporter
Zimbabwe's production last year
dipped 14 percent to $538,5 million
for 10,41 million carats, data released
by the Kimberley Process Certification
Scheme (KP) shows.
The country's volume of production
also eased 14 percent to 10,411 million
carats while the average price dropped
3 percent to $51,72 per carat.
The Government has since instituted
a number of measures to boost ben-
efits from local diamond production,
including streamlining the number of
firms currently operating in Marange
and banning exports of rough gems for
prospective investors.
Zimbabwe's decline came at a time
when global diamond production by
value rose 11 percent year on year to
$14,09 billion.
Byvolume,globalproductionincreased
2 percent to 130,48 million carats.
The KP said this was attributable to a
rise in the average price of rough dia-
monds in the year, which grew by 9
percent to $107,95 per carat.
On the African continent, the value of
Botswana’s production rose 22 percent
to $3,63 billion with volume up 13 per-
cent to 23,19 million carats to retain its
position as the top diamond producer
in the world in terms of value.
Namibia's production increased 15 per-
cent to $1,36 billion from 1,689 million
carats as its average price leaped 46
percent to $805,24 per carat.
Italsohadthehighestpriceddiamonds
in the world overtaking Lesotho where
the average price of rough production
fell 7 percent to $584,88 per carat.
During the same period, Angola's out-
put grew 15 percent to $1,28 billion
from 9,36 million carats while its aver-
agepricerose2percentto$136,49per
carat.
South Africa’s output also increased
15 percent to $1,19 billion from 8,143
million carats while the average price of
its diamonds was flat at $145,54 per
carat.
Globally, Russia was ranked in second
place with production up 8 percent to
$3,11 billion and output up 8 percent
to 37,884 million carats.
Canada’s diamond production fell 5
percent to $1,91 billion but output rose
1 percent to 10,56 million carats. •
Zim diamond output dips 14 percent to 10,4 million carats: KP

10. BH24

11. The stock market lost 0.64 percent in
today's trades, maintaining a down-
ward trend that has the seen the
industrial index losing 2.17 points (or
1.17 percent) on a week-on-week
basis.
Activity has been generally subdued
during the course of the week just
ended. The industrial index closed
lower at 183.76 points after shedding
1.19 points as a number of heavy-
weight caps lost some ground.
Natfoods retreated 5 cents to trade
at 195 cents and Colcom dropped 3
cents to close at 22 cents.Giant tel-
ecoms Econet and Meikles both went
down a cent to 72 cents and 16 cents
respectively, while Zimplow also went
down, losing 0.60 cents to close at 8
cents. Only three industrial counters
traded in the positive territory. First
Mutual was 0.52 cents higher to close
at 5.52 cents, African Sun added 0.10
cents to close at 2.80 cents and ZPI
was up 0.01 cents to 0.90 cents.
The mining index added 5.40 points
(or 8.83 percent) to close at 66.53
points on the back of a positive per-
formance by Bindura, which gained
0.60 cents to close at 5.61 cents.
Falgold, Hwange and Riozim were
unchanged at previous trading levels.
On a week-on-week basis, the mining
index rose 8.70 points (or 15.04 per-
cent) ― BH24 Reporter •
11 ZSE REVIEW
Equities close week in the red

12. BH24

13. MostAfricancompaniesandfirmshave
failed to rise up because they allocate
salaries and benefits to workers based
on “labour regulations” rather than the
actual output produced by the worker.
“Why should I work extra hard
when I know my salary will come
at exactly the same amount I
negotiated for at the end of the
month and also that the employer
will find it difficult to chase me
away because of tight labour
laws” these are the hypothetical sen-
timents of one lazy worker.
The move by Government to reform
the labour laws has received mixed
responses from different stakeholders.
Employers applauded and welcomed
the move as they believe it will reduce
the labour cost burden that has been
weighing down on their production.
On the other hand for the workers the
reforms do not seem to favor them
much as the initial view was that the
labour laws are stringent and tend to
favor workers. Which arguably can be
true, but for us it is not really about
who is being favored or who is not. It’s
about economic growth and develop-
ment. Surely it can be agreeable that
at this stage in which the economy is
at we cannot look at who is in what
position but rather on what solution is
being offered to come out of this pre-
dicament.
If the reformation of the labour laws is
a step to improving economic growth
and well being then why not reform.
But one most important element
however is that labour laws should be
matched with productivity.
This, however, may be difficult to
measure for other sectors such as
teaching and for the civil servants, but
for those sectors were production can
be measured against effort it certainly
should be applied.
Production should be key, workers
actually need to be rational on this
matter it is only reasonable that a
worker receives what he/she works
for and should put more effort to
receive more.
However some may argue that they
may be working but their effort is not
recognised because of other linked
factors that may lead to low produc-
tivity, in such a scenario what can be
done?
This now becomes the labour experts
front to be able to explain how pro-
ductivity based remuneration can
work out.
Industrial Psychology Consultants,
a human resource consultancy
company, has been advocating for
employers to adopt the productivity
based remuneration structures.
This has received wide acceptance and
the explanation is that it will promote
productivity and cut labour costs.
The company proposed some sci-
entific measures that can be used to
make this proposal practical and appli-
cable. But the critical point here is that
the economy needs to grow and peo-
ple should be paid for what they have
worked for. •
13 BH24 COMMENT
Productivity based remuneration the way to go

14. BH24

15. Lonmin Plc said it’s looking at ways to
cut expenses as a five-month strike in
SouthAfricacrippledthird-quarterplat-
inum output, reduced sales by 68 per-
cent and will raise costs by more than
60 percent for the year.
Lonmin is “assessing our medium- to
long-term options around improving
the productivity and profitability of our
business, including cost reduction,”
Chief Executive Officer Ben Magara
said in a statement today.
Thewalkoutbymorethan70,000min-
ers at Lonmin, Anglo American Plat-
inum Ltd. and Impala Platinum Hold-
ings Ltd. cost the companies about 24
billion rand ($2.3 billion) in lost output
and workers 10.7 billion rand in wages
by the time it ended on June 24.
The strike pushed the economy into
contraction in the first three months
of this year as mining output plunged.
South Africa accounts for more than
two-thirds of mined production of the
metal.
Lonmin reported no output in its third
quarter ended June 30. The strike
affected 192,700 platinum saleable
ounces in the period, and resulted in
the loss of 348,400 ounces in the nine
months through June.
All 11 shafts are back in production
and the company is operating at about
30 percent of normal monthly output.
Lonmin will reach 80 percent of normal
production by the end of September
and a full steady state in the first quar-
ter of fiscal 2015, it said.
The company reduced its capi-
tal-spending forecast to $100 million
for the fiscal year ending Sept. 30 from
$210 million and sees the unit cost per
ounce of platinum group metals pro-
duced to be more than 60 percent than
a year earlier. This includes costs of
$322 million incurred mainly because
of idle production and security costs,
it said.
Lonmin forecasts production of
340,000 ounces of metals in concen-
trate for the fiscal year, and sales of
420,000 ounces. ― Bloomberg •
15 REGIONAL News
Lonmin seeks cost cuts as strike disrupts sales, lift expenses

16. BH24

17. 17 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
14 July 2014
Energy
(Megawatts)
Hwange 511 MW
Kariba 750 MW
Harare 30 MW
Munyati 28 MW
Bulawayo 0 MW
Imports 0 MW
Total 1320 MW
23 -25 July - Mine Entra, Place: Zimbabwe Inter-
national Exhibition Centre, Bulawayo
24 July - OK Zimbabwe Thirteenth Annual Gen-
eral Meeting Place: OKMart Functions Room,
First Floor, OKMart, 30 Chiremba Road, Hillside, Time:
15:00 hours.
1 August - Sixteenth Annual General Meeting
of the members of Econet Wireless Zimbabwe
Limited, Place: Econet Park, 2 Old Mutare Road,
Msasa, Harare, Time; 10.00am
THE BH24 DIARY

18. BH24

19. 19 zse
ZSE
Movers CHANGE Today Price USc SHAKERS Change TODAY Price USc
BNC 11.97% 5.61 Medtech -20.00% 0.04
First Mutual 10.40% 5.52 Colcom -12.00% 22.00
AfricanSun 3.70% 2.80 Zimplow -6.97% 8.00
ZPI 1.12% 0.90 Meikles -5.88% 16.00
Padenga -5.76% 7.35
Truworths -5.00% 2.85
CFI -3.91% 2.21
Natfoods -2.50% 195.00
Econet -1.36% 72.00
Indices
Index Previous Today Move Change
Industrial 184.95 183.76 -1.19 points -0.64%
Mining 61.13 66.53 +5.40 points +8.83%
Stocks Exchange

20. BH24

21. 21 AFRICA StockS
Botswana 8,664.65 -11.96 -0.14% 12July
Cote dIvoire 246.37 +2.18 +0.89% 07Mar
Egypt 7,949.60 -75.68 -0.94% 06Mar
Ghana 2,354.16 -7.26 -0.31% 18June
Kenya 4,896.77 -13.83 -0.28% 21July
Malawi 12,662.47 +0.00 +0.00% 07Mar
Mauritius 2,074.51 -3.51 -0.17% 07Mar
Morocco 9,544.10 +21.01 +0.22% 07Mar
Nigeria 42,784.30 -107.52 -0.25% 21July
Rwanda 131.27 +0.00 +0.00% 24Oct
Tanzania 2,018.97 +25.40 +1.27% 07Mar
Tunisia 4,624.39 -39.32 -0.84% 07Mar
Uganda 1,503.90 +0.81 +0.05% 10Sep
Zambia 4,242.74 +14.95 +0.35% 10April
Zimbabwe 185.72 -0.21 -0.11% 21July
African stock round up Commodity Prices
Name Price
Crude Oil 1,300.91 -0.21%
Spot Gold USD/oz 1,292.63 -0.26%
Spot Silver USD/oz 19.38 -0.46%
Spot Platinum USD/oz 1,421.25 -0.33%
Spot Palladium USD/oz 798.50 -0.64%
LME Copper USD/t 6,770 -0.18%
LME Aluminium USD/t 1,780 -1.17%
LME Nickel USD/t 18,230 -1.73%
LME Lead USD/t 2,095 -1.41%
Quote of the day — "There is
only one way to succeed
in anything, and that is to
give it everything." -
Vince Lombardi
Globalshareholder.com

22. The International Monetary Fund fore-
seestheglobaleconomyexpandingless
than it had forecast, slowed by weaker
growth in the United States, Russia and
developing economies.
The lending organization on Thursday
predicted that global growth will be 3.4
percent in 2014, below its April forecast
of3.7percent.Thefundstillexpectsthe
growth of the world's economy to accel-
erate to 4 percent in 2015.
The downgrade of this year's estimate
for the global economy reflects much
slower growth in the United States.
The IMF expects just 1.7 percent U.S.
growth in 2014, which would be the
weakest since the recession officially
ended five years ago.
That's down from its April prediction of
2.8 percent.
The U.S. economy shrank at an annual rate of 2.9 percent in the first three months of the year. ― AP •
Brent crude edged higher above $107
a barrel on Friday, on track to end the
week flat as plentiful supplies held down
any run-up in prices from geopolitical
tensions in oil producing regions. Oil
prices have traded in a tight range this
week with robust economic data from
the United States, China and the euro
zone also failing to push prices higher.
"It is very unusual that big geopolitical
events such as Iraq, Ukraine and Gaza,
which normally are very sensitive to
the price of oil, almost haven't affected
prices," said Jonathan Barrett, chief
investment officer at Ayers Alliance in
Sydney, noting that trading volumes
have dropped off. "The only conclusion
we can draw is that the world is awash
with oil," he said. Brent crude for Sep-
tember delivery traded 24 cents higher
at $107.31 a barrel by 0657 GMT. The
contract had closed 96 cents lower on
Thursday.
U.S crude for September delivery was
up 8 cents at $102.15 a barrel, after
settling$1.05lower.ConflictsinUkraine,
Gaza and Iraq raged on, but failed to
push prices higher as global supplies
remainedample.InLibya,oilproduction
has risen to 500,000 barrels per day,
but there is no progress on reopening
Bregaoilportafteranagreementtoend
a protest there, a spokesman for state-
runNationalOilCorporationsaid.Gazan
authorities said Israeli forces shelled a
shelter at a U.N.-run school on Thurs-
day, killing at least 15 people as the Pal-
estinian death toll in the conflict climbed
higherthan760andattemptsatatruce
remained elusive.
Members of the European Union on
Thursday also considered proposals tar-
geting state-owned Russian banks vital
to Moscow's faltering economy in what
would be the most serious sanctions so
far over the Ukraine crisis. ― Reuters
•
22 INTERNATIONAL NEWS
Brent holds above $107 as supplies outweigh political tensions
IMF cuts U.S., global growth forecasts for '14

23. By Ray Mwareya
Contunued from yesterday
The country's laws compel flue-cured
tobacco farmers to establish fast grow-
ing tree species as replacements. "For-
ests have a paramount contribution to
make as engines of future sustainable
development", says Saviour Kasuku-
were, Zimbabwe's water and climate
minister.
In 2011 the country's largest replant-
ing target was met with 10 million
new trees. However there is a doubt
how many of the new trees survived
due to the wild fires that often accom-
pany tobacco farming. Farmers are
also encouraged to grow fast-growing
eucalyptus on their own land to pro-
vide the wood. But many are reluctant
as this would mean giving up land for
tobacco cultivation, while the trees are
also highly water demanding.
Rocket barns
In an attempt to tackle the problem
British American Tobacco has intro-
duced what it called a 'rocket barn' -
a tobacco drying kitchen that uses 50
percent less firewood by burning only
wood harvested from commercial for-
ests not natural ones. 'Rocket barns'
are more fuel-efficient than traditional
drying barns, and work by using
emerging exhaust smoke to draw in
dry air. They are insulated with 50 mil-
limeters of grass thatch. Its wide chim-
ney not only removes smoke from the
furnace but also expels moisture from
the barn.
Where conventional tobacco barns
use 530kg of wood to cure 5 bales of
tobacco, a rocket barn uses 290 kg
of firewood to cure the same quan-
tity according to Zimbabwe's Tobacco
Research Board (TRB).
Dahlia Garwe, TRB chief executive,
says rocket barns are designed to pro-
mote high combustion efficiency mini-
mising the release of ozone pollutants
to the air, while "quality of cured leaf
is improved in rocket barns. Excessive
heat from metal pipes in old barns
damages the crop's leaves."
They also use small branches and
twigs, she adds, "thus making it pos-
sible for the farmers to use branches
for curing instead of cutting down the
while tree." The TRB has distributed 10
000rocketbarnstosmallscalefarmers
from 2013 at agricultural shows, field
days and auctions. Statistics show that
60 percent of farmers who received
bans adopted them.
But other farmers complain of the cost
of rocket barns. They cost $800 to $1
200 with labour and building - ruling it
out as an option for under-capitalised
farmers including most newly estab-
lished tobacco growers.
Also with the widely fluctuating tob-
cacco price, farmers feel insecure mak-
ing long term investments, even if they
have retained the money needed from
past profits.
Change, or disaster will follow
Tobacco stands as an unhealthy bal-
ancing act for Zimbabwe. It is earn-
ing vital dollars in the short term, and
bringing welcome prosperity to almost
100,000 farmers including women who
have benefitted from the country's land
redistribution programme.
But the sector must urgently move to
more sustainable pratices, or the long
term cost will surely prove disastrous
for the country and its people not least
its farmers. ― TheEcologist•
23 Analysis
Tobacco - Zimbabwe's forests are going up in smoke