A digital copy of the BH24 (21 January 2016 edition). Zimbabwe's premier business news free sheet published by the Zimpapers Newspapers Group (1980) Limited and available every week day from 15:30hrs to give a summary of the day's business news.

1. By Tawanda Musarurwa
HARARE - The upcoming Mone-
tary Policy announcement will likely
focus on tightening money supply
measures, with Reserve Bank of
Zimbabwe governor Dr John Man-
gudya lamenting poor retention of
cash in the economy.
The RBZ governor told a Herald
Business/Confederation of Zim-
babwe Industries Symposium this
morning that one of the key issues
undermining the performance of
the local economy was poor utilisa-
tion of money.
"In terms of the utilisation of (mon-
etary) resources in Zimbabwe, we
need to increase transparency and
accountability for those resources
so that we have a positive outlook
for the economy
"We are talking about efficient use
of the United States dollar, and
from the office where I am sitting
I am not seeing it. Discipline is the
missing link in this economy," said
Dr Mangudya.
He said in respect of the country's
diamond exports, the financial
wherewithal from the export of
diamonds had not been felt by the
economy.
"We are exporting both the product
(diamonds) and the currency."
Dr Mangudya said money should be
utilised in production rather than
consumption.
Basic economic theory entails that
businesses respond to increased
money supply by focusing on
improving production, and as such
the spread of business activity
increases the demand for labor
and raises the demand for capital
goods.
On the contrary when money sup-
ply declines economic activity also
declines, which causes deflation.
The RBZ governor said if Zimba-
bwe's rate of money retention does
not improve, then it automatically
minimizes the positive conse-
quences of the country's current
re-engagement efforts with the
bi-lateral creditors.He said if the
country's rate of retention remains
at nil, it would basically be useless
to have the country's borrowing
capacities post Lima
"If our rate of retention is zero
and we bring in $10 billion into the
economy, it simply goes out. So we
need to put in place policies that
will ensure that we retain money in
Zimbabwe, and we need to change
usage of money from consumption
to production then Zimbabwe's
economic outlook will be positive
"And these are some of the issues
as we shall present our Monetary
Policy statement later this month
that we will look at," said Dr Man-
gudya. ●
News Update as @ 1530 hours, Thursday 21 January 2016
Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw
Expect resolute 2016 Monetary Policy
Dr John Mangudya

2. BH242

3. By Funny Hudzerema
HARARE -Zimbabwe must
protect its tobacco indus-
try from unfair tobacco leg-
islation from countries that
import the country's golden
leaf.
This will help to improve
benefits from local tobacco
exports.
Tobacco Industry and Market-
ing Board (TIMB) chief exec-
utive Dr Andrew Matibiri said
the tobacco industry contrib-
utes a lot to the development
of the economy hence there is
to protect it.
“Being a major producer of
leaf tobacco, Zimbabwe must
protect its industry from neg-
ative effects of unbalanced
and poorly informed tobacco
control legislation adopted by
countries which import the
leaf produced here.
“We are therefore here to dis-
cuss some of the challenges
facing the tobacco industry
and collectively find a way to
address them in the most sat-
isfactory way,” he said.
Currently Zimbabwe is con-
tributing 20 percent of the
world’s high quality flue-
cured tobacco trade.
“One particular concern for
us is the current threat to
exclude tobacco from interna-
tional trade agreements and
to treat it in a special way
differently from other prod-
ucts which may affect health
or the environment.
“Therefore any form of
restrictions and bans on
tobacco has serious implica-
tions on the livelihoods of our
farmers and will definitely
and significantly impact the
economy of the country.
“Facing the problem together
can be a way to increase our
ability to have a balanced
approached and ask other
countries to adopt balanced
legislation which will not
affect our combined produc-
tion,” he added.
Zimbabwe currently exports
its tobacco to 58 countries
with China have imported 41
percent, Belgium 13 percent
and South Africa 9 percent
tobacco produced last sea-
son.●
3 news
Need to protect Zim tobacco exports from imbalanced international laws
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4. BH244

5. BH24 Reporter
HARARE – Raw milk produc-
tion in Zimbabwe increased
to 57 million litres last year
from 55 million litres in 2014,
official figures show.
According to figures released
by the dairy services depart-
ment in the Ministry of Agri-
culture, Mechanisation and
Irrigation Development, the
rise in output was due to
an increase in availability of
stock feed.
For the period under review,
intake of raw milk by proces-
sors was 50 million up from
last year at 49 million litres
while milk retailed by produc-
ers stood at 7 million litres.
Despite the growth in milk
production in the second half
of 2015, Zimbabwe is still
lagging behind other SADC
countries in terms of produc-
tion with South Africa leading
the pack.
Zimbabwe has become a net
importer of milk and milk
products as the country
struggles to meet national
demand of 120 million litres
per annum.
At its peak in 1999, Zimba-
bwe produced over 150 mil-
lion litres of milk annually
and was exporting into the
region and beyond. Zimba-
bwean processors have, how-
ever, embarked on a drive to
increase the heifer herd and
this has been shown in the
increase in milk production.
Market watchers believe more
training to smallholder dairy
farmers can help increase
production.
In December last year a total
of 5,2 million was produced
as compared to 4,2 million
produced the same period
last year to give a difference
of 8,16 percent.
Government is targeting that
the country will attain its
target of producing 200 mil-
lion litres of milk per year by
2020.●
5 news
Zim milk production rises year-on-year

6. BH246

7. HARARE - American owned
Mashonaland Tobacco Com-
pany (MTC) invested at least
$26,9 million into contract
farming this cropping season,
supporting over 10 000 farm-
ers who are growing the crop,
an official has said.
MTC managing director Ken-
neth Langley told New Ziana
the company's investment in
contract growing of tobacco
was sharply increasing over
the years.
“In terms of direct investment
into tobacco contract farming
for 2015/16 cropping season,
MTC injected $25,5 million,”
he said.
Langley said in addition, MTC
also invested in sustainability
programs involving growing
of tobacco, including industry
initiatives such as establish-
ment of woodlots for curing
purposes.
“At least $1,4 million was put
towards sustainability issues,
bringing the total investment
to $26,9 million,” he said. He
said the company had con-
tracted at least 10 759 grow-
ers, 98 percent of who were
small holder farmers.
“The remaining 2 percent
of our contract farmers are
medium and large scale farm-
ers,” he said.
Mr Langley said while the El
Niño induced weather pat-
tern being experienced in the
country was of great concern,
it did not impact on the MTC
contract farming program.
“We are educating farmers in
terms of planting tobacco in
dry season or anticipating low
rainfall to minimize the effects
of drought on tobacco,” he
said.
MTC is the largest single con-
tractor of small holder tobacco
farmers in Zimbabwe. The
company, which started con-
tracting tobacco farmers in
2004, has been operating
as a leaf merchant in Zimba-
bwe since 1936 and supplies
packed tobacco to global mar-
kets.
Tobacco has become Zimba-
bwe’s major foreign currency
earner, with close to 92 000
farmers growing the crop dur-
ing 2014/15 season, a number
significantly higher than 52
000 farmers three years ago.
Last year the country pro-
duced 198, 7 million kg of
tobacco, down from 216, 1
million kg in 2014 due to a
poor rainfall season. Over the
years, many farmers have
abandoned traditional crops
like maize and cotton in pref-
erence for tobacco due to its
orderly marketing and com-
petitive prices.-New Ziana●
7 news
MTC invests over $26 million in contract tobacco farming

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9. HARARE - Losses dom-
inated today's trades as
the mainstream industrial
index’s bearish form con-
tinued.
The index dropped 1.81
(or 1,72 percent) to settle
at 103.38.
Giant insurer Old Mutual
was again in the red, los-
ing a significant $0,0718
to close at $1,8082, while
NatFoods eased $0,0275
to $2,6700.
Heavyweight Delta shed
$0,0232 to trade at
$0,5500, while FBC Hold-
ings and TSL were each
$0,0100 weaker at $0,0600
and $0,1375, respectively.
The only counter to trade
positively was CFI, which
added a marginal $0,0006
to close at $0,0572.
BAT, Edgars and Willd-
ale were unchanged at
$12,2000, $0,0600 and
$0,0020 in that order.
The mining index was
unchanged at 21.74 as
Bindura, Falgold, Hwange
and RioZim maintained
previous price levels
- BH24 Reporter ●
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10. BH2410

11. Movers CHANGE Today Price USc SHAKERS Change TODAY Price USc
CFI 1.06 5.72 FBC -14.28 6.00
TSL -6.77 13.75
Delta -4.04 55.00
Old Mutual -3.81 180.82
Econet -1.01 19.60
NatFoods -1.01 267.00
SeedCo -0.73 82.39
Simbisa -0.31 15.95
Index Previous Today Move Change
Industrial 105.19 103.38 -1.81 points -1.72%
Mining 21.74 21.74 +0.00 points +0.00%
11 zse tables
ZSE
Indices
Stock Exchange

12. BH2412

13. 13 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
21 January 2016
Energy
(Megawatts)
Hwange 475 MW
Kariba 520 MW
Harare 30 MW
Munyati 27 MW
Bulawayo 20 MW
Imports 0 - 100 MW
Total 1145 MW
21 January 2016 - CZI/Herald Business Annual Economic Outlook 2016 Half Day Symposium; Venue: Meikles Hotel, Harare; Time:
08:30 to 12:50hrs
10 February 2016 - Nampak Zimbabwe Annual General Meeting: Venue 68 Birmingham Road, Southerton, Harare: Time 12:00
THE BH24 DIARY

14. BH2414

15. JOHANNESBURG - The rand
was weaker in the morning as
the market awaited the lat-
est policy statement from the
European Central Bank (ECB).
Weaker commodity prices
added to the pressure on the
local currency.
As expected, consumer infla-
tion rose from 4,8 percent
year on year in November
to 5,2 percent in December,
Statistics SA data showed on
Wednesday.
At 8.53am the rand was at
16,8361 against the dollar
from 16,7584 previously.
Against the euro, the rand
was at 18,3556 from 18,2506
previously. It was at 23,8851
against the pound from
23,7803.
The euro was at $1,0901 from
$1,0893 previously.
Barclays Research said in a
morning note that although
today’s ECB policy meeting
was likely to contain more
dovish language, they did not
expect president Mario Draghi
to announce further stimulus
measures, "which together
with persistently subdued
commodity prices, leads us to
believe that the rand is likely
to weaken toward the top end
of the its recent trading range
today".
Meanwhile, local retail sales,
released on Wednesday, rose
much more than expected
in November compared with
a year ago, suggesting that
while consumer spending was
slowing, it had not collapsed.
Sales increased by 3,9 per-
cent year on year in November
after rising a slightly revised
3,4 percent (3,3 percent) in
October.-BDLive●
regioNAL News15
Rand weaker ahead of ECB policy announcement

16. A SELLOFF yesterday gave
global equity markets the worst
start to a year on record, as oil
again tumbled to 13-year lows.
Emerging market assets were
especially hard-hit, as the slide
in oil made traders and inves-
tors increasingly sceptical that
governments and central banks
could shore up currencies and
stimulate their economies.
Developing-country stocks
extended their worst start to a
year ever, currencies slumped
to a record low and the risk
premium on emerging-market
debt climbed to the highest in
more than six years.
Concern that an oil-supply glut
will worsen sent Brent crude
towards the lowest close since
2003, while the slowest growth
in China in a quarter of a cen-
tury damped the outlook for
the global economy.
Brent slipped $1,12, or 3,9 per-
cent, to $27,64 a barrel on the
ICE Futures Europe exchange.
"It’s Black Wednesday for
emerging markets, as a whole
range of bad news whips out
billions of dollars from stocks
and currencies," said Bernd
Berg, an emerging-markets
strategist in London at Société
Générale.
"The rout in emerging markets
could continue for some time,
especially as the major global
central banks have exhausted
their ammunition in recent
years, making it unlikely that
they will rescue global markets
this time around."
The panic pushed Wall Street
deep into the red on its open-
ing. The blood-letting in global
markets dominated corridor
talk last night as business
leaders and policy makers met
in the town of Davos, although
the view so far was that it did
not signal a financial crisis.
The MSCI Emerging Markets
index dropped 3,3 percent in
New York and it was set for the
lowest close since May 2009.
A gauge tracking 20 develop-
ing-country currencies fell 0,9
percent. More than $2-trillion
has been wiped off the value
of developing-country equities
this year, as the MSCI Emerging
Markets index slid 13 percent,
the worst start to a year since
data began to be recorded in
1988.
The drop has exceeded the 7,9
percent decline in the gauge in
the same period in 1998 dur-
ing the Asian financial crisis
and the drop in 2009 amid the
global financial crisis.
internatioNAL News16
Bloodbath as panic engulfs markets

17. internatioNAL News17
The JSE suffered its sharpest
one-day fall so far this year.
The rand weakened to 16,96/$
before recovering in afternoon
trade. The all-share index
closed 2,73 percent down to
46,329.80, with mining, bank-
ing and financial shares the
worst hit.
Major European market indi-
ces, including the FTSE and
Paris CAC 40, fell more than
3 percent. The JSE all-share
index fell 2,72 percent on Jan-
uary 4, the first trading day of
the year. It has closed nega-
tively seven times in the first
13 trading days of 2016 and
is 8,61 percent weaker for the
year.
"It is difficult to call a bot-
tom for this market," Afrifo-
cus Securities portfolio man-
ager Ferdi Heyneke said. "All
the negative news — ranging
from China to US rate hikes to
the drought and low growth in
SA — is affecting our market
badly."
Britain’s blue-chip equity index
entered "bear market" territory
after falling more than 20 per-
cent from its record highs in
April last year. The benchmark
FTSE 100 index ended 3,5 per-
cent lower at 5,673.58 points,
after touching 5,639.88, its
lowest level in more than three
years.
"The FTSE is now in a bear
market," said Brenda Kelly,
an analyst at London Capital
Group. "It’s not a pretty sight,
with every single sector in the
red."
Technical analysts define a
"bear market" as one in which
the index falls more than 20
percent from its previous peak.
The Dow Jones industrial aver-
age dropped 500 points.
Commodity shares remained
at the forefront of the selloff,
with energy companies sinking
further to five-year lows, and
on pace for their worst monthly
slump since 2008.
The Standard & Poor’s 500
index dropped 3,4 percent, the
most in almost five months,
and was on track for its lowest
level since April 2014. The Dow
lost 521.05 points, or 3,3 per-
cent, and the Nasdaq Compos-
ite index fell 3,4 percent.
As the World Economic Forum’s
annual meeting in Switzerland
wrestled with topics rang-
ing from the effect of robots
on jobs to gender and wealth
inequality, the MSCI World
equity index fell to its lowest
since July 2013. If sustained,
the 9,9 percent fall in the
index in January would be the
worst monthly loss since 2009,
towards the end of the global
financial crisis.
"I don’t believe this is a repeat
of 2008... That is not to say
that there are not some very
significant risks impacting the
market — not least of which is
China’s slowing growth," John
Veihmeyer, global chairman of
accounting group KPMG, said
in the Reuters Global Markets
Forum on Wednesday.
The International Monetary
Fund cut its global growth fore-
casts for the third time in less
than a year to 3,4 percent on
Tuesday, as new figures showed
that the Chinese economy had
grown at its slowest rate in a
quarter of a century last year.
While China’s rapid slowdown,
combined with a dramatic fall
in the price of oil, has spooked
investors around the globe,
European Economics Commis-
sioner Pierre Moscovici told
Reuters he too did not believe
there would be any return to an
international financial crisis.
"I don’t feel that the finan-
cial crisis is coming back...
but there are downsides that
we need to address," he said.
"There are worries... especially
about China, which is undergo-
ing a transition (that) is diffi-
cult and uncertain."
However, some in Davos were
less confident about the out-
look for 2016 after the rocky
start to the year.
"There are a lot of things
behind" the selloff, said Ste-
ven Schwarzman, CEO of the
Blackstone Group, from Davos
on Wednesday. "You have
economic things, such as the
slowing of the US economy,
which has been pretty gradual.
You’ve got energy going down
so quickly that you can almost
get windburn. You’ve got China
as an issue, which is probably
overdone," he said.
"So when you put those factors
together, you have an unat-
tractive brew along with the
concern the US Federal Reserve
will raise rates and slow the
economy further."
Bloomberg, Reuters,
Maarten Mittner●

18. If an equilibrium exchange rate is
one where importers and exporters
are equally unhappy, then the rand
at close to 17 to the dollar should
have exporters dancing in the
streets. A few are.
Farmers, miners and tourism oper-
ators are some of the sectors gain-
ing from extreme rand weakness.
Commodities are usually best
placed to benefit from a weak cur-
rency because they are exported
in extracted form, so producers
receive the dollar price with little
to detract from it in the way of pro-
cessing costs.
For instance, the prices of South
African wool have surged to record
levels, gaining more than 14 per-
cent in the past week alone, thanks
in part to the weak rand. This is the
largest recorded increase between
consecutive auctions in the past five
years, according to Cape Wools.
As wool is traded in US dollars but
farmers are paid in rand, there is an
almost perfect correlation between
the drop in the rand-dollar exchange
rate and farmers’ revenue.
The same should hold for mining.
However, Chamber of Mines CEO
Roger Baxter counters that while
rand weakness has provided relief
to some miners, especially in the
gold sector, it hasn’t compensated
fully for the collapse in the com-
modity prices of other chief South
African exports such as iron ore and
coal.
"The weak rand is not a boon for
mining," Mr Baxter says. "There
are just too many domestic factors
challenging the industry — from
Eskom’s demand for further tariff
hikes to the planned introduction of
a carbon tax."
Tourism should be another clear
winner from the weak rand. How-
ever, while Statistics SA data show
the number of foreigners visiting SA
grew by 3 percent in October 2015
year on year, the number of over-
seas arrivals was down 0,3 percent
in the same period.
"The exchange rate will play a big
role in 2016," says Southern African
Tourism Services Association CEO
David Frost. "If we can get rid of
the last shackles imposed by home
affairs on unabridged birth certifi-
cates, this would help. We have the
opportunity to claw back lost mar-
kets and open up new segments."
Mr Frost finds it "unfortunate",
therefore, that some luxury lodges
have reportedly attempted to push
up prices by 10 percent -20 percent
to capitalise on the weak rand.
"My sense is that we should be
using the exchange rate to our ben-
efit and our growth rates (for over-
seas arrivals) should be (in) double
digits," he says.
The manufacturing sector should
also be humming. Not only does
rand weakness make exports more
competitive, but pushing up the
prices of imported goods should aid
domestic substitution of these prod-
ucts. However, manufacturing pro-
duction has declined in five of the
last 12 months and the sector is on
the brink of a recession.
Manufacturing Circle executive
director Philippa Rodseth believes
the rand’s depreciation will result
in increased exports in the coming
quarters, noting that it can take six
months or more for customer sup-
ply chain obligations to be unwound.
Unfortunately, the sector is ham-
strung by low demand from export
destinations, rand cost increases for
imported inputs and exchange rate
volatility, which affects planning.
Tru-Cape Fruit Marketing, the larg-
est apple and pear marketing com-
pany in SA, is a case in point. While
the weaker rand has increased its
export revenue, it has also caused
the cost of imported inputs to soar.
In the coming year, the company
expects packhouse and farm costs
to rise by almost 30%, driven by
packing material and post-harvest
chemicals, both of which are priced
in dollars.
The company has also invested
in the latest imported technology
including flow-wrap machines and
internal defect cameras, at a total
cost of more than R20m to stay
globally competitive.
"If our industry doesn’t get the
break from a weak exchange rate,
we won’t survive," says Tru-Cape
chairman Pieter Graaff.
- BDLive●
18 analysis18 analysis
Weak rand’s profit wand makes magic for only a few