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1. By Tawanda Musarurwa
HARARE – Clothing retailer
Edgars Stores says it sold
around $1 million worth of
products through its credit
facility to informal sector
customers in 2015.
Speaking on the sidelines
of the company's analyst
briefing, Edgars group chief
executive Linda Masterson
said the performance of the
facility was largely in line
with "expectations."
"We sold about a million
dollars worth of products to
informal sector customers
last year, which was about
4 percent of Jet turnover
and 1,8 percent of Edgars
turnover .
"The bad debts are higher
than they are in the formal
sector, but so far it's per-
forming within expectations,"
she said.
The performance of the
credit facility to the infor-
mal sector is in line with the
improved performance of the
group's Jet Chain compared
to its Edgars stores in view
News Update as @ 1530 hours, Wednesday 16 March 2016
Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw
Credit to informal sector boosts Edgars

2. of customers' preference for
the discount chain in the
present macro-economic
environment.
Mrs Masterson told ana-
lysts that the retail group
recorded a 12 percent dip in
total comprehensive income
for the 52-weeks to January
9, 2016, from a 13 percent
decline in topline.
In respect of operations,
the Edgars chain was largely
responsible for the reduction
in turnover due to a drop in
its sales, which down 24 per-
cent from the prior compara-
ble period.
The decline in sale was
attributed to a high base
of extended credit that was
launched in the prior year.
On a positive note, the Jet
Chain's turnover rose 23
percent to $19,1 million
from $15,6 million previ-
ously. Correspondingly Jet's
contribution to consolidated
group turnover jumped from
22 percent in 2014 to 31
percent in the period under
review.
Jet's profitability also
improved to 7,5 percent of
sales from 4,5 percent in the
prior comparable period "on
the back of credit and the
benefits of scale," said the
group.
With regards to credit man-
agement, the group said
total trade debtors were
$31,1 million net of provi-
sions for doubtful debt of 6
percent.
Meanwhile, Mrs Masterson
said the group will this year
close its Jet Store in Kar-
iba and Edgars branch in
Chipinge as the two have
continued to incur losses.
"The stores that we are
closing are the Jet store in
Kariba and an Edgars store
in Chipinge because they are
loss-making," she said.
The closures are part of a
restructuring process aimed
to "enhance accountability,
productivity and succession
planning."
Going forward, Edgars
management expects per-
formance to continue on a
flat-line basis, although tar-
geting to grow its number of
accounts to 300 000, while
keeping finance costs below
4,2 percent.●
2 news

3. BH243

4. BH244

5. By Funny Hudzerema
HARARE– FBC Holdings
Limited is targeting to reduce
the level of its non-per-
forming loans to less than 5
percent by December 2016 in
order to remain profitability.
Group chief executive John
Mushayavanhu told ana-
lysts and the media that the
group will continue to use
its aggressive strategies to
reduce the level of non-per-
forming loans to comply with
RBZ requirements.
“During the year our key
focus area is to reduce the
level of NPLs to 5 percent
by December 31, 2016 in
line with RBZ guidelines,” he
said.
Last year FBC reduced its
non-performing loans to 7,
96 percent from 15,91 per-
cent for 2014.
The group is also targeting
to open five more branches
despite economic challenges
but mostly targeting the
SMEs market which is not
currently serviced by banks.
“We are going to invest in
the SMEs there is a lot of
potential in that area, that is
where we are going to play
and in the housing sector we
will be also be targeting the
SMEs.
“A lot of SMEs can access
these facilities they have got
houses which they can use as
collateral to access funds,”
he said.
He added that the five
branches which the bank is
opening in partnership with
CARE and FAO will be target-
ing small business people in
the rural areas.
During the year ended
December 31, 2015 the
group recorded a profit
before tax of $21,3 million
compared to $17,1 million
last year while the group’s
net income registered a 6
percent growth to $81,9
million from $77,4 million
achieved last year.
The group’s interest income
grew by 12 percent to
$36,6 million from $21,2
million recorded last year
and its contribution to total
increased by 45 percent from
42 percent.
The FBC Building Society
recorded a surplus $6,3
million for the year ended
December 31, 2015 which is
relatively comparable to $6,8
million from $50,1 million.
Mr Mushayavanhu also said
the group is targeting to
construct more affordable
houses in the high density
areas in Harare and Bula-
wayo after successful com-
pleting two projects in Gweru
and Kwekwe.
●
5 news
FBC target reduction in non-performing loans
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8. BH24 Reporter
HARARE – Mobile telecoms
services provider Telecel
Zimbabwe says it is in the
process of upgrading its data
network in order to improve
the quality of its coverage.
The data upgrade project will
see enhancements being car-
ried out in Harare, Bulawayo,
Mutare, Gweru, Chinhoyi,
Karoi and Masvingo.
The network optimisation,
which is being conducted in
partnership with its network
equipment suppliers, will
replace low capacity base
stations with high capacity
ones.
Sites for half of Harare have
been replaced in the mas-
sive on-going project, and
the project is expected to be
completed for all the tar-
geted areas by end of May
this year.
Telecel Zimbabwe communi-
cations and branding director
Mr Obert Mandimika said the
data network upgrade will
allow Telecel to introduce
more innovative products
onto the market.
“We have responded to the
increased popularity and
consumption of data services
by our customers through
a national network upgrade
which will markedly improve
the quality of data coverage,”
said Mr Mandimika.
He added that the on-go-
ing data upgrade has given
the company flexibility to
introduce more products and
services for its subscribers.
“This data upgrade project
allows us to offer our sub-
scribers even more val-
ue-for-money services and
promotions. I am happy to
announce that our customers
can now access voice, SMS
and social media services
more affordably under our
new Mega Chat bundle.”
Meanwhile Telecel has
announced its latest Mega
Chat bundle offerings for
prepaid subscribers, which
offers on-net and off-net
voice minutes, Whatsapp,
Twitter, Facebook and SMS
depending on the value of
the bundle purchased.
The Mega Chat bundle comes
in five different price points,
50 cents, $1, $2, $5 and
$10. The bundles have differ-
ent validity periods ranging
from 24 hours for the 50
cent bundle all the way up to
30 days for the $5 and $10
Mega Chat bundles.●
8 news
Telecel in national data network upgrade project

9. BH249

10. BH2410

11. 11 news
02 03
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HARARE -Zimbabwe yes-
terday marked a full year
with its economy in negative
inflation as latest statistics
show the country’s annual
inflation closed the month
of February 2016 at -2,22
percent.
According to the Zimbabwe
National Statistics Agency
(Zimstat), the annual infla-
tion was down 0,03 percent
from -2,19 percent in Jan-
uary, pushed by a decline in
health prices as well as elec-
tricity, gas and other fuels.
This marks 12 full months
with inflation in the nega-
tive territory after having
slid into deflation in Febru-
ary 2015. Developments in
the economy have largely
restricted consumer spending
due to limited purchasing
power while authorities have
insisted that the negative
inflation was correctional as
it forced companies to re-ad-
just prices for goods and
services which were set at a
premium in 2009.
Zimbabwe adopted use of
multi-currencies five years
ago in 2009. According to
Zimstat, month-on-month
inflation in February stood at
-10 percent after shedding
0.05 percentage points from
0,05 percent the previous
month.
Government has forecast
that inflation will be hovering
around-1,6 percent by end
of 2016. The rate at which
the price of goods and ser-
vices increases in Zimbabwe
has largely remained steady
since adoption of multi-cur-
rencies. -
New Ziana●
Zim marks one year in deflation

12. BH2412

13. HARARE - The mainstream
industrial index added to
yesterday's gains, gaining
0.57 in today's trades to
close at 99.98.
Cigarette processor BAT
rose $0,2500 to close at
$11,0000, while Old Mutual
added $0,0932 to set-
tle at $2,0629 while giant
retailer OK Zimbabwe gained
$0,0034 to $0,0345.
Also on the up was telecoms
giant Econet, which closed
higher at $0,2320 after add-
ing $0,0010.
On the downside, crocodile
skin producer Padenga lost
$0,0002 to close at $0,0600.
Activity was limited to ten
counters.
The mining index was steady
at 19.22 as Bindura, Fal-
gold, Hwange and RioZim
all maintained previous
price levels at $0,0096,
$0,0050, $0,0300 and
$0,1040 respectively - BH24
Reporter ●
ZSE13
Industrials extend gains

14. Movers CHANGE Today Price USc SHAKERS Change TODAY Price USc
OK Zim 10.93 3.45 Padenga -0.33 6.00
Old Mutual 4.73 206.29
BAT 2.32 1,100.00
Econet 0.43 23.20
Index Previous Today Move Change
Industrial 99.41 99.98 +0.57 points +0.57%
Mining 19.22 19.22 +0.00 points +0.00%
14 zse tables
ZSE
Indices
Stock Exchange
Previous
today

15. 15 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
16 March 2016
Energy
(Megawatts)
Hwange 396 MW
Kariba 468 MW
Harare 19 MW
Munyati 0 MW
Bulawayo 0 MW
Imports 0 - 400 MW
Total 1199 MW
•Thursday 24 March 2016 - Annual General Meeting of Willdale Limited; Place: Boardroom, Willdale Administration Block,
19.5km peg Lomagundi Road, Mount Hampden; Time: 1100 hours...
• Upcoming AGM - TSL, Head office, 28 Simon Mazorodze Road, Southerton, 16 March, 1200hrs
• Analyst briefing - Old Mutual Zimbabwe, Steward Room, Meikles Hotel, March 30, 1430hrs
THE BH24 DIARY

16. The bitter public row between
the Hawks and Finance Minister
Pravin Gordhan escalated on
Tuesday as the unit threatened
legal action against the minis-
ter, causing the rand to crash
through the 16 to the dollar
level.
After three weeks of a verbal
war, the rise in tone is likely
to heighten investor fears over
SA, and whether Mr Gordhan
remained secure in his position.
It comes in the midst of a visit
to the country by ratings agency
Moody’s.
The rand first sank to 16 to the
dollar level in December last year
after the firing of Nhlanhla Nene
as finance minister. Mr Gordhan
hit back, describing a Hawks
statement that he had not met
the deadline to answer questions
on an alleged "rogue" unit at the
South African Revenue Service
(SARS) as "threatening".
The rand breached 16 to the dol-
lar level for the first time since
last month following the Hawks’
statement. The currency closed
at 15,5316 to the dollar on
Monday. Yields on the rand bonds
due 2026 surged 28 basis points
to 9,42 percent.
Mr Gordhan’s departure could
spell disaster for an economy
threatened with recession and
on the brink of having its credit
rating downgraded to junk.
President Jacob Zuma reap-
pointed Mr Gordhan in Decem-
ber as finance minister, to help
rebuild investor confidence.
Two weeks ago president Zuma
said Mr Gordhan was not in
jeopardy, but the Hawks’ pursuit
of him — first before the budget
and last week during global road
shows — raised fears he is at
risk.
"It’s a cause for concern," Rune
Hejrskov, at Jyske Bank in Silke-
borg, Denmark, said.
"Absolutely, we’re pricing SA with
the possibility that Gordhan may
not stay in his job."
"What they are doing is to under-
mine his credibility in the eyes
of the international community
by trying to make him out as a
criminal," George Herman, head
of South African investments
at Citadel Investment Services,
said. "I don’t understand the
agenda behind this. It is a cut-
your-nose-to-spite-your-face
strategy."
Mr Gordhan said on Tuesday that
he had instructed his attorneys
to prepare a response to the
Hawks’ questions.
The lengthy statement by the
Hawks accused Mr Gordhan of
attempting to stall its investiga-
tion into the unit and of seeking
"preferential treatment".
The fight between the Hawks and
the minister erupted after the
unit sent him a list of 27 ques-
tions on the "rogue" SARS unit
on the eve of the budget.
After African National Congress
(ANC) secretary-general Gwede
Mantashe also questioned the
timing of the letter, the Hawks
said it was not investigating Mr
Gordhan "per se".
The battle is tied to Mr Gordhan’s
tense relationship with SARS
commissioner Tom Moyane, who
began driving the probe into the
unit, and all those linked to it,
shortly after taking up the post
at the tax agency at the end of
2014.
Mr Zuma is meant to be dealing
with the problems between Mr
Moyane and Mr Gordhan. The
issue was high on the list of
concerns raised by investors with
the finance minister and others
on a road show last week.
Mr Gordhan has consistently
maintained that the SARS unit
had been established legally, and
with the consent of then finance
minister Trevor Manuel.
It also appears that at the heart
of the latest fight is a misun-
derstanding emanating from a
weekend media report containing
details of a letter sent by the
Hawks to Mr Gordhan.
On Sunday, Mr Gordhan issued
a harsh statement accusing the
Hawks of "intimidation and har-
assment" akin to apartheid era
police after the Sunday Inde-
pendent reported that he had
until Tuesday to respond to the
questions the Hawks had sent
him last month.
The Hawks in its statement on
Tuesday took issue with Mr Gord-
han’s comments on Sunday indi-
cating that he had not received a
"new" letter.... - BDLive●
regioNAL News16
Rand hit as Hawks threaten Gordhan

17. LONDON - Deutsche Boerse
AG and London Stock
Exchange Group Plc agreed
to merge, a deal that would
create a titan of European
trading as long as rival suit-
ors don’t upend the agree-
ment and regulators give it
their blessing.
LSE’s equity holders will own
45,6 percent of the enlarged
group, while Deutsche
Boerse stockholders will get
the remaining 54,4 percent,
according to a statement on
Wednesday. The two compa-
nies announced on Feb. 23
that they were negotiating
a deal. The companies are
valued at $30,5 billion.
“They are being very, very
careful to position this as
a merger and a merger of
equals,” said Scott Moeller,
a professor of corporate
finance at London’s Cass
Business School and a former
investment banker. “It’s very
close to being what a text-
book merger of equals would
look like.”
The companies predicted
they would have cost sav-
ings, or synergies, of 450
million euros ($499 million)
each year after the deal is
completed. Companies typ-
ically have to spend double
their forecast annual savings
from synergies in the first
year or two of the deal. That
means they have to come
up with cash to save money
later on.
This is the third time that
the German exchange group
has sought to buy LSE since
the turn of the century. Pre-
vious attempts failed in 2000
and 2005. The agreed tie-up
between the London- and
Frankfurt-based firms is also
the biggest deal between
market operators since Inter-
continental Exchange Inc.
bought NYSE Euronext in
November 2013.
The merged entity would
jump to the top ranks of
exchange operators, joining
CME Group Inc., Interconti-
nental Exchange and Hong
Kong Exchanges & Clearing
Ltd. The transaction could be
derailed by competition con-
cerns, and it may also have
to survive bids from other
major exchange companies.
Intercontinental Exchange,
which is known as ICE, is
contemplating making a
higher offer for LSE.
The Anglo-German alliance
will have a dominant posi-
tion in Europe from which to
expand into both Asia and
the US. It will be a pow-
erhouse for clearing listed
derivatives in Europe and
over-the-counter contracts.
The Euro Stoxx 50 Index, the
FTSE 100 Index and the DAX
Index will be under one roof.
The chief executive officers
have so far succeeded where
their predecessors had failed
at least twice previously. The
dealmakers, Deutsche Boerse
boss Carsten Kengeter and
LSE Chief Xavier Rolet, share
a Wall Street pedigree with
stints at Goldman Sachs
Group Inc. Kengeter will be
CEO of the combined com-
pany, while Rolet will step
away. - Bloomberg●
internatioNAL News17
London Stock Exchange, Deutsche Boerse agree on merger

18. By Connor Lovell
The New Development Bank
(NDB), or BRICS Bank, is to
begin lending next month
after four years of negotia-
tions. The Shanghai-based
institution is the latest
addition to the development
finance landscape and is
poised to announce a phalanx
of green energy projects in
the next quarter.
The NDB follows hard on the
heels of the Asian Infrastruc-
ture and Investment Bank
(AIIB), which has taken half
the time to become opera-
tional. Nonetheless the NDB is
a major step towards greater
cooperation between the
BRICS. First conceived as
a loose grouping of the four
emerging markets of Brazil,
Russia, India and China by a
Goldman Sachs economist in
2001, and with the addition
of South Africa in 2010, the
BRICS are remaking devel-
opment finance in their own
image.
“It is the rise of the South,
and so we are talking about
countries of the South coming
together and very humbly
saying that we can set up an
institution on our own,” says
KV Kamath, the bank’s first
president.
With multilateral loans set
to overtake bilateral ECA
lending and sovereign bond
markets as the largest source
of development financing in
the next five to ten years,
developments in the DFI
landscape are becoming ever
more important in emerging
economies.
Lean, mean and… green
All five stakeholders have
submitted between 15 and
20 proposals for projects,
with the main focus on green
energy. The bank hopes to
approve at least one for each
country by the end of April,
and a total of $2 billion by the
end of the year.
India is pressuring the bank
to earmark at least 15 percent
of its funds for renewable
energy projects. Kamath has
intimated that the its first
loan will be for a solar power
venture in India. South Africa
has submitted proposals to
fund the hydropower Lesotho
Highland Water Project and
also hopes to receive working
capital for Eskom, an energy
company. Russia is also
eyeing hydropower projects
and China is trumpeting its
Silk Road initiative. It is not
yet clear what the Brazilian
proposals are. Ultimately
their success will depend on
whether commercial lenders
are willing to partner with the
new institution and invest in
it.
Is it big enough?
According to the World Bank,
the BRICS have an annual
infrastructure spending needs
of $1 trillion to 1,5 trillion.
With an initial subscribed
18 analysis18 analysis
Brick by BRIC: the New Development ethos

19. 19 analysis19 analysis
capitalisation of $50 billion,
and a target of $100 billion to
raise on the capital markets,
the NDB is unlikely to fill this
gap alone. By contrast, the
World Bank alone has a sub-
scribed capital base of over
$252 billion.
“Our key role is as a catalyst,”
explains Kamath, “multilateral
banks cannot meet the entire
development effort. It is how
you innovate, add value and
bring together markets and
other players in the banking
system to make a difference.”
But Chris Humphreys, a devel-
opment finance specialist at
the University of Zurich, is
pessimistic about how much
the NDB can grow. He predicts
that the larger shareholder
base of the Asian Infra-
structure Investment Bank
(AIIB) — which includes major
industrialised countries — will
result in a portfolio twice as
large as the NDB’s within 10
years.
As a result, Humphreys thinks
the NDB will struggle to
attain an international AAA
rating even in the medium
to long-term and should
therefore expect higher
borrowing costs. Though,
domestic agencies in China
have already issued the bank
an AAA institutional rating.
Goldman Sachs and Stand-
ard Chartered have been
appointed advisors for inter-
national ratings, although no
grade has yet been given.
But development banks usu-
ally have a much higher rating
than that of their member
governments. For instance,
the European Investment
Bank retained it investment
grade rating even as member
governments were down-
graded during the Eurozone
crisis.
Anyway, a lower international
rating may not be that dam-
aging. The NDB, like the AIIB,
will have access to the Chi-
nese capital markets, which
remain largely closed to inter-
national bond issuers. The
bank plans to issue $1 billion
worth of long-term renmin-
bi-denominated bonds, known
as Panda Bonds, sometime in
the second quarter.
Regardless, the NDB is
already punching above its
weight. Part of the impetus
behind the NDB is that the
BRICS were fed up with not
being heard in the existing
Bretton Woods institutions.
Having an equal stake means
that the five emerging econ-
omies all have an equal say
and, uniquely, no one has
veto power.
The US-led World Bank has
welcomed the NDB but has
quietly set up a new infra-
structure fund. The IMF has
also responded by imple-
menting long held-up reforms
in its governance that give
the BRICS more influence.
But for development finance
the important thing is the
aggregate amount of funding
available.
Stephany Griffith-Jones, an
economist at Columbia Uni-
versity, tells TXF: “They have
not explicitly said why they
have done this, though they
clearly feel the need to com-
pete. I think that it’s healthy
competition, for the best
loans, conditions and projects
— It encourages a race to the
top.”
Breaking new ground
The NDB presents a prime
opportunity to break new
ground in development and
infrastructure finance. Merely
by forming the bank in the
first place, the participants
have shown their dissatisfac-
tion with the existing products
on offer. The fact that devel-
oping economies presently opt
for more expensive financing
options in the form of bonds
and bilateral loans shows
there is considerable scope
for to do things differently.
Primarily, the NDB intends
to streamline the application
process. “Speed is essential
for the developing world,”
Kamath has said. Existing
institutions can be bureau-
cratic and, in the case of the
IMF, loans can come attached
with very specific conditions.
Being able to show concrete
results can also be politically
expedient.

20. 20 analysis20 analysis
“The idea of having banks
that are quick is very attrac-
tive. Traditional lenders like
the World Bank and the IMF
can be very slow and can
come with ideological bag-
gage like privatisation,” says
Griffith-Jones. “It also takes
on average two years to get
a loan and three to five years
for a project to launch, so
for a politician with a limited
term, they are often leaving
office just as the money is
beginning to be spent and
don’t get to see the results.”
However, she warns that
speed must not come at the
cost of having good bank-
ing standards. Credit worthy
analysis must be a priority.
Though Kamath has already
strictly ruled out lending at
concessional rates.
At first, simplicity in the prod-
ucts offered will be key. “For
the New Development Bank,
‘plain vanilla’ will be most
appropriate — they should
excel in real engineering not
financial engineering,” said
Griffith-Jones.
In its early years the NDB will
focus on co-financing with
other multilaterals.
According to sources close
to the market, the NDB have
held a series of meetings with
the Development Bank of
South Africa. With a regional
office in Johannesburg open-
ing this week, the NDB can
be expected to make use of
existing institutions and their
expertise to insure the suc-
cess of future projects.
A report from the Institu-
tion of Development Stud-
ies recommends supporting
the preparation phase of a
project, enabling more to
be investment ready by the
time it is brought to market.
For later stages, NDB finance
could be phased in when the
private cash runs out, ena-
bling the tenor of the loans
to be extended beyond the
period that the private banks
are willing to lend.
The use of special infrastruc-
ture bonds, in which the
interest varies according to
revenue streams, have also
been recommended as an
innovative way of lowering the
risk of default. Another option
that DFIs have made little
use of to date are unfunded
instruments like guarantees.
Between 1994 and 2014, the
World bank only issued 50
guarantees and the African
Development Bank none at
all. The NDB could potentially
leverage more private capital
in this way.
The NDB also plans to lend
in local currency, the five
Rs — the real, rouble, rupee,
renminbi and rand. All the
BRICS are experiencing
problems with their foreign
exchange reserves so there
is unanimous enthusiasm for
this move.
The problem is particularly
acute in South Africa where
the government has had to
reprioritise spending in order
to meet its initial subscription
to the bank. Kutoane Kutoane
of the Export Credit Insurance
Corporation of South Africa
(ECIC) tells TXF that he wel-
comes the prospect of working
with the NDB, citing the
constraints on South African
financiers in accessing dollar
liquidity for infrastructure
projects in Africa.
Such currency swaps can help
avoid mismatches, which are
a major cause of debt crises.
“If development] banks man-
age to borrow in local cur-
rencies and then lend in the
same currencies, then they
could even securitise these
loans and sell them on the
market, creating a diversi-
fied source of local currency
bonds,” said Griffith-Jones.
Last month, Chinese finance
minister Lou Jiwei said he
wants the NDB to implement
a counter-cyclical policy to
kick-start faltering growth in
emerging economies.
The success of the BRICS
Bank will be measured in mor-
tar, in the projects that get
built. But in the meantime,
no one can accuse it of a lack
of ambition.- txfnews.com●