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‘Govt creating direct competition for Air Zimbabwe’
1. By Tawanda Musarurwa
HARARE – Government has
not been effectively protecting
Air Zimbabwe insofar as it has
been licensing private airlines
to service the same routes
currently being serviced by the
national airliner, the Zimba-
bwe Flight Crews Association
(ZFCA) has said.
Appearing before the Parlia-
mentary Portfolio Committee
on Transport and Infrastruc-
ture Development, ZFCA
chairman Captain Ottis Shonai
said there was apparent little
engagement at policy level
with the airliner.
“A national airline is a national
asset and half the time it is
controlled from the Ministry
(of Transport and Infrastruc-
ture Development) and it is
run by the management and
as such the Government has
to make every effort to protect
it, and we have seen recently
we have seen new airlines that
have been given licences to fly
exactly the same routes that
Air Zimbabwe ply.
“It doesn’t happen anywhere
else in the world except in
Zimbabwe. All national airlines
are protected by their Govern-
ment and they are given the
first right of refusal.
“We are not saying we must
not have competing airlines
as competition is always
good, but we are saying that
the national airline should
have the first right of refusal
rather than just put a direct
competitor on the same route
that the national airliner is
plying as we might not be
able to compete in financing
particular routes. Some will
come at very low fares just
to make sure that they sweat
out the national airliner until it
closes,” he said.
South African Airways plies
the Harare-Johannesburg
route and budget airliner,
Fastjet Zimbabwe, currently
plies the Harare-Victoria Falls
News Update as @ 1530 hours, Monday 06 June 2016
Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw
‘Govt creating direct competition for Air Zimbabwe’
2. route three times a week, as
well as flights between Harare
and Johannesburg, both of
which are also serviced by Air
Zimbabwe.
Competition on the Harare-Jo-
hannesburg route is threat-
ening to ground the national
airliner due to the intense
competition on that route.
The Government is however
on record that it would pro-
tect the Harare-London route
exclusively for Air Zimbabwe
– although it is not currently
servicing the route.
Earlier in February, Transport
and Infrastructural Develop-
ment Minister Joram Gumbo
the Harare-London route would
remain a preserve for Air Zim-
babwe.
And the ZCFA told the commit-
tee that to the extent that Air
Zimbabwe successfully imple-
ments a fleet modenisation
programme, the Harare-Lon-
don route should be revived
expediently.
“We need the Harare-London
route as soon as possible,
that’s what we believe in as
an association and we think
that route is a cash-cow…if
you look at how many Zimba-
bweans in the diaspora who
are flying KQ, who are flying
Ethiopian Airways, who are
flying Emirates everyday these
flights are full, almost 80
percent load factors and that’s
Air Zimbabwe traffic. We used
to fly to London five times a
week,” said the association’s
secretary First Officer Gutu
Kachambwa.
The association added that the
national airliner’s fleet had
outrun its economic life, and
it has become more costly to
maintain the current fleet.
Captain Shonai said an effec-
tive fleet modernisation should
see Air Zimbabwe acquiring
two turbo-props (to service
the regional and domestic
markets), two medium range
planes (for the regional and
intra-regional markets), and
three long haul jets (for the
international markets).
Air Zimbabwe pilots on
allowances
ZCFA lamented the “poor
working” conditions at the
national airline, revealing that
its pilots were not on con-
tracts.
“We haven’t got proper work-
ing contracts with the com-
pany, we are just on a working
allowance, but we have
remained professional in our
duties” said Captain Shonai.
And the ZCFA says it has two
unfulfilled settlement agree-
ments by the parent ministry
on outstanding salaries.
He added that the poor work-
ing conditions and a “lack of
interest to retain manpower
skills” had seen Air Zimbabwe
losing pilots to other airlines.
Between the beginning of
2015 and the present moment,
the national airliner’s pilots
declined from 45 to 35.●
2 news
5. By Funny Hudzerema
HARARE - The Ministry of
Macro-Economic Planning
and Investment Promotion is
planning to release the Mac-
ro-economic Policy Framework
before the presentation of the
2017 National Budget which is
expected to work as a guideline
to economic growth and meeting
regional targets on economic
growth.
Secretary in the Ministry of
Macro-Economic Planning and
Investment Promotion Dr Desire
Sibanda said the country’s cur-
rent economy is characterised
by continued decline in eco-
nomic growth mainly due to the
EL Nino-induced drought, lower
commodity prices and reduced
capacity utilisation.
“We want to link all the sectors
of the economy to the Africa
vision 2063 which as a country
we want to streamline with our
five year vision and also to the
SDGs.
“The framework is going to be
produced before the presenta-
tion of the 2017 budget as a
guide line to economic growth of
the country,” he said.
He said this while speaking
during a workshop which was
organized by the Ministry of
Macro-Economic Planning
and Investment Promotion in
collaboration with the United
Nations Development Pro-
gramme [UNDP] to gather
macroeconomic policies to grow
the economy as well guiding the
budgetary process.
“The purpose of the framework
is to grow the economy, cur-
rently the economy is growing
below 1,4 percent which is less
than the average Africa growth.
“In order for us to grow the
economy we need to get infor-
mation from the key sectors
such as mining, manufacturing
and transport the purpose to
is to gather problems which
are affecting growth in order
to come up with alternatives to
attract investment to those sec-
tors such that they can grow,”
he said.
He added that the recommen-
dations of the workshop are
going to be used to guide the
budget and the recommenda-
tions are within vision 2063, the
SDGs and the ZimAsset plan.
The economic growth factors
have resulted in revision of the
2016 economic growth forecast
from an initial projection of 2,7
percent to 1,4 during the first
quarter in 2016. The growth
performance is below the
ZimAsset target for 2016 of 6,5
percent.
In his remarks during the event
Zimbabwe Strategic Economic
Research and Analysis (SERA)
Mr Ashok Chakravarti called on
Government to remove export
licenses for companies that want
to export local products and
increase import tax to grow the
economy.
“There is need to remove export
licenses to local companies
which need to export because
banning imports will not work
towards economic growth and
promoting local producers,” he
said.●
Macro-economic Policy Framework to guide national budget
5 news
Dr Desire Sibanda
8. BH24 Reporter
HARARE – ZSE-listed sugar
processor Hippo Valley
Estates has reported a loss
of $8, 5 million for the year
ended March 31, 2016 from
an after tax profit of $7, 3
million last year.
The massive slide into the
red was largely due to a
decline in production during
the period under review.
Hippo, which is 50,3 percent
owned by the South Afri-
ca-headquartered Tongaat
Hulett, saw its sugar output
for FY2015 drop 11 percent
to 204 000 tonnes from 228
000 tonnes due to a decline
in raw cane deliveries from
private farmers as well as
poor growing conditions.
`Private farmers delivered
631,000 tons down from
745,000 tons
The sugar miller’s capacity
utilisation dropped to 64
percent from 71 percent last
year.
Revenue for the year
amounted to $116, 8 million
down from $146, 8 million,
while operating loss for the
year amounted to $6, 2 mil-
lion compared to an operat-
ing profit of $16, 2 million.
Cash generated from oper-
ations totalled $5, 4 million
for the year under review
against $17, 8 million prior
year.
Sugar exports fell 45 percent
to 98 000 tonnes largely as
a result of lower production
volumes.
Of these 9 000 tonnes were
exported into the regional
markets while 74 000 tonnes
and 150 000 tonnes were
exported to the European
Union and the United States
respectively.
The company’s export rev-
enues were also negatively
impacted by lower interna-
tional sugar prices.
Total industry sugar produc-
tion for the 2016/17 season
is estimated between 379
000 tonnes and 440 000
tonnes compared to 412
000 tonnes produced in the
2015/16 season.
In terms of outlook, man-
agement said will focus on
cost-containment in order
to mitigate against future
potential volume volatility. ●
8 news
Hippo falls into the red with $8, 5m FY loss
11. HARARE - The International
Monetary Fund (IMF) has
said it will assess the impli-
cations of Zimbabwe’s plans
to introduce bond notes in
October, and other measures
announced by the Central
Bank to deal with the current
liquidity crisis.
The Reserve Bank of Zim-
babwe (RBZ) last month
announced a cocktail of
measures to deal with the
prevailing cash shortages,
including introducing bond
notes, backed by a $200 mil-
lion Africa Export and Import
Bank bond facility.
But the bond notes have
been met with mixed feel-
ings, and partly fueled the
current high demand for
cash. The bond notes will be
at par with the US dollar and
will circulate alongside the
foreign currencies in use.
IMF deputy spokesman
William Murray told a press
briefing in Washington that
the global lender will assess
Zimbabwe’s plans to deal
with the current cash situa-
tion.
“We are currently assess-
ing the implications of the
measures on the economy,
including the more recently
announced issuance of bond
notes and we will engage in
further discussions with the
authorities with regard to
their strategies,” he said.
Murray attributed the cash
shortages mainly to declin-
ing commodity prices on the
international markets which
in turn resulted in low export
earnings.
He said drought in the coun-
try had also worsened the
situation.
“The Governments had to
increase its food imports to
mitigate the impact of crop
failures on its people and the
strengthening of the mul-
ti-currency system through
the conversion of export
earnings to euro and rand.”
The RBZ also introduced a
foreign exchange priority list,
withdrawal limits and called
for greater use of plastic
money to ease the cash
shortages.-New Ziana
●
11 news
IMF to engage Zim on bond notes
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12. HARARE - The equities
market started the new week
on a low as the mainstream
industrial index opened lower
at 104.10 after losing 0.20
on the back of losses in
heavyweight Delta.
The beverages manufacturing
giant was the only loser to
close at $0, 6950 after a $0,
0050 loss.
Conglomerate Innscor and
starafrica corporation were
unchanged at $0, 2025, $0,
6500 and $0, 0085 respec-
tively.
On the upside, giant insurer
Old Mutual advanced by
$0, 0049 to $2, 2400 while
telecoms giant Econet inched
up $0, 0005 to close at $0,
2305.
Activity remains rather low
on the local bourse as 11
counters traded today, with
total turnover amounted to
$233 759.
The mining index was flat at
25.77 as Bindura, Falgold,
Hwange and RioZim main-
tained previous price levels
at $0, 0120, $0, 0050, $0,
0300 and $0, 1640 respec-
tively.
BH24 Reporter ●
Equities open lower
12 zse
14. 14 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
06 June 2016
Energy
(Megawatts)
Hwange 415 MW
Kariba 583 MW
Harare 0 MW
Munyati 25 MW
Bulawayo 0 MW
Imports 0 - 400 MW
Total 1448 MW
9 JUNE -- First Mutual Holdings Annual General Meeting; Place: Royal Harare Golf Club, Harare; Time: 14:30hrs
15 JUNE 2016 -- Rainbow Tourism Group 7th Annual General Meeting; Time: Jacaranda Rooms 2 and 3 at the Rainbow Tour-
ism Hotel and Conference Centre, 1 Pennefather Avenue, Samora Machel Avenue West, Harare; Time: 1200 hours...
16 JUNE 2016 -- RioZim 60th Annual General Meeting; Place: No. 1 Kenilworth Road, Highlands, Harare; Time: 10.30 hours...
22 JUNE 2016 -- Zimre Holdings Limited 18th Annual General Meeting; Place: NICOZDIAMOND Auditorium, 7th Floor Insur-
ance Centre, 30 Samora Machel Avenue, Harare; Time: 1430 hours...
22 JUNE 2016 -- GB Holdings Limited Annual General Meeting; Place: Cernol Chemicals Boardroom, 111 Dagenham Road, Wil-
lowvale, Harare; Time: 11.30 hours...
23 JUNE 2016 -- Zimpapers 89th Annual General Meeting; Place: Zimpapers Ltd Boardroom, Sixth Floor Herald House, Cnr. G.
Silundika/Sam Nujoma Street, Harare; Time: 1200hrs…
THE BH24 DIARY
15. Naspers last week became
the fourth company on the
JSE with a market value
of more than R1-trillion
and it may take a while
for another company to
achieve this milestone.
Global beer giant Anheus-
er-Busch InBev is the
biggest company on the
JSE, with a market cap of
R3,1-trillion, followed by
British American Tobacco
with R1.9-trillion and SAB-
Miller with R1,6-trillion.
Naspers edged into the
trillion rand league on
good results from its 34%
investment in Chinese com-
pany Tencent, and several
new investments including
Udemy, an online learning
marketplace.
"Obviously, the weaker
rand has been helping
these companies of late, as
they are all big, industrial
rand hedges — meaning
they are internationally
diversified," said Stanlib
retail investment director
Paul Hansen. "And the JSE
all share has been hitting
new highs lately."
Naspers is the biggest local
share on the JSE at 13,2
percent followed by SAB-
Miller at 13,1 percent.
"SABMiller is, of course,
pegged to the dollar
because of its pending buy-
out," Hansen said.
The big four in the tril-
lion league have a market
cap of R7,6-trillion, of the
JSE’s total R14-trillion.
The market cap of the
16 next biggest compa-
nies on the all share is
R3,9-trillion. The other six
shares in the top 10 have a
combined market value of
R2,2-trillion.
Global luxury goods group
Richemont is fifth in line,
with a market cap of
R479bn. Richemont has
been retreating this year,
down 16,5 percent on
diminished Asian sales.
The traditional dominance
of the miners on the all
share has evaporated, but
BHP Billiton and Glencore
remain among the top
10. Anglo American has
rebounded into the top
20 at 15th place, but all
the big gold and platinum
miners of the past have
vanished from the top 20.
Hansen says BHP Billiton is
the fourth biggest share on
the JSE excluding the beer
giants, but is nearly 50
percent down from its 2014
record high in rand terms
and is now at 2007 levels.
"Some of the other play-
ers in the top 20 including
MTN and Standard Bank,
are also still way off their
highs," he said.
Sasol is at number nine,
hit hard by the weaker oil
price, falling 16 percent
in 2014 and 2,6 percent
in 2015. It is up 16 per-
cent so far in 2016 on the
recovery in the Brent crude
price.
The top 40 on the JSE
now derive more than 50
percent of their revenue
outside SA, according to a
recent Prudential report.
Chances of other local com-
panies making it into the
top league would depend
on structural issues, such
as the US maintaining its
relatively large current
account deficit.
"Many countries would
struggle to achieve the
economic growth rates
they currently enjoy should
US growth contract," said
Stanlib economist Kevin
Lings. - BDLive●
15
Naspers edges into JSE trillion-rand league
regioNAL News
16. OPEC meetings aren’t what
they used to be.
Far from sending the oil
market into gyrations, the
run-up to last week’s OPEC
meeting kept oil pinned near
$50 a barrel and sent hedge
funds to the sidelines.
Speculators cut their total
long and short positions on
West Texas Intermediate
crude to the lowest since
January 2015 and one meas-
ure of market volatility fell
to a 10-month low before the
Organisation of Petroleum
Exporting Countries’ June 2
meeting.
Ministers emerged from
the gathering voicing unity
and continuing a policy of
no production limits. US
data released the same day
showed oil supplies are drop-
ping, a sign that the supply
glut that sent prices plum-
meting this year is finally
dissipating.
"It’s very clear that OPEC is
less relevant than US pro-
duction data," Rob Thummel,
a managing director and
portfolio manager at Tortoise
Capital Advisors LLC, who
helps oversee $14,1 billion.
"We’re going to trade near
$50, plus of minus five bucks
for quite a while," though
higher prices are inevitable,
he said in a phone interview.
Prices rallied from a 12-year
low to reach $50 a barrel as
consumers burned through
a supply glut. OPEC has
rejected a production freeze,
in part because Iran has
said it will continue to boost
output after the removal of
international sanctions in
January.
The group estimated it
pumped 32,4 million barrels
a day in April. That supply
has been balanced by dis-
ruptions in Canada, Libya,
Nigeria, and Venezuela.
WTI rose by 1 percent to
$49,10 a barrel on New York
Mercantile Exchange during
the CFTC report week.
The U.S. benchmark added 1
percent to $49,09 at 12:15
p.m. Singapore time on
Monday. Implied volatility on
near-term options fell May
27 to the lowest since July.
Cutting Back
Money managers reduced
their short positions on WTI,
or wagers that prices will
fall, to 53,377 futures and
options during the CFTC’s
report week, the lowest level
since May 2015. Long posi-
tions, or bets that prices will
rise, declined 2,9 percent to
294,105 contracts, the low-
est since March.
Stockpiles in the U.S. fell
1.37 million barrels for the
week ended May 27, accord-
ing to Energy Information
Administration data released
June 2.
Nationwide production
declined to 8.74 million bar-
rels a day, the lowest level
since September 2014. Still,
the number of active US oil
rigs rose by nine to 325 last
week, the largest gain of
the year, according to Baker
Hughes Inc.
“There’s been a lot of big
news and little movement,”
said Rob Haworth, senior
investment strategist in
Seattle at US Bank Wealth
Management, which over-
sees $128 billion in assets.
“Slightly higher prices could
bring back US shale produc-
ers.”
In other markets, speculators
remained bullish on US ultra-
low sulfur diesel as net-long
contracts rose by 16 percent
to the highest level since
July 2014.
Net longs on Nymex gasoline
declined by 24 percent to
16,128 contracts, with bull-
ish bets falling to the lowest
level since October 2013.
"There was long liquidation
in the week spanning the
Memorial Day holiday, which
is the traditional start of the
driving season," in the US,
Tim Evans, an energy analyst
at Citi Futures Perspective
in New York, said in a phone
interview. Speculators "are
not looking for gasoline price
strength this summer," he
said.
– Bloomberg●
16
OPEC unity keeps oil near $50, sends speculators to sidelines
internatioNAL News
17. Zimbabwe’s leading plati-
num mining giant, Zimplats
Holdings, allegedly set up an
offshore company more than
a decade ago to pay salaries
for its senior managers, leaked
documents reveal.
The offshore company was
allegedly set up without the
knowledge of the Reserve Bank
of Zimbabwe. According to doc-
uments, HR Consultancy was
set up for the sole purpose of
receiving funds and remunerat-
ing Zimplats’ senior managers.
Northern Wychwood, the off-
shore company that registered
HR Consultancy in the Isle of
Man, sought the services of
Mossack Fonseca to facilitate
the process.
The leaked records claim that
the shareholders and direc-
tors at HR Consultancy are
foreign corporations, and that
the named senior officials are
Zimbabwean.
However, neither the names of
the recipients nor the payment
amounts are given. It is also
not clear how the payments were channeled to the offshore company.
17 analysis17 analysis
Zimbabwe: The case of the invisible company
Zimplats
18. 18 analysis18 analysis
But the leaks indicate that
Northern Wychwood continues
to update HR Consultancy’s
certificate of incumbency, with
the latest filing having been
done through Mossack Fonseca
last year.
Zimplats denies any relation-
ship with HR Consultancy or
Northern Wychwood. This raises
the possibility that Zimplats
was fraudulently used by
Northern Wychwood to set up
HR Consultancy as a conduit of
Zimplats’ salaries.
HR Consultancy is owned by
the British Virgin Islands-regis-
tered Hanoverian Ltd. Hano-
verian lists Palatinate Ltd as its
corporate director. Palatinate
Ltd in turn lists Hanoverian Ltd,
alongside three Zimbabweans.
A senior corporate lawyer who
spoke off-the-record to Voice of
America’s (VOA’s) Studio7 said
the fact that Northern Wych-
wood continues to pay consul-
tancy fees to Mossack Fonseca
suggests that its relationshiop
with HR Consultancy remains
intact.
Setting up an offshore firm
to pay managers without
the knowledge of the central
bank, says a banking expert,
implicates Zimplats in illegally
expropriating money and tax
evasion.
“As long as the central bank
was not involved in this,
Zimplats would be involved in
money laundering, externalisa-
tion and tax evasion,” says the
expert.
In a telephone interview with
VOA’s Studio7, central bank
governor, Dr John Mangudya
who only last December
revealed that Zimbabwe had
lost $500m to illicit money
movements, said: “If proven,
this is a blatant violation of
the country’s exchange control
policy, which is a punishable
offence.”
Northern Wychwood, the
offshore registering company,
declined to comment while both
Mossack Fonseca and Zimplats
denied any relationship with HR
Consultancy.
Implats, the world’s biggest
platinum producer, which owns
87 percent of Zimplats and has
significant executive control
there, also denied any knowl-
edge of HR Consultancy.
Said Johan Theron, Implats’
head of corporate affairs: “We
don’t subscribe to the use of
such services at all. In fact, we
have prioritised transparency
in all our dealings and gone out
of our way to transact fairly,
openly and as far as possible,
to pay taxes in the countries in
which we operate.”
But correspondence in 2012
between Northern Wychwood
and Mossack Fonseca strongly
suggests that HR Consultancy
handled the remuneration for
the senior managers at Zim-
plats.
“We receive the funds to cover
the total salaries from Zimplats
and pay the managers accord-
ingly,” says an HR Consultancy
employee in correspondence
dated 5 November 2012.
A source of funds or wealth
declaration form signed by
Palatinate in July last year says
it is a director on Northern
Wychwood Ltd. It lists Zimba-
bwe, South Africa, UK and Isle
of Man as countries where its
activities are conducted.
Former minister of finance
between 2009 and 2013, Ten-
dai Biti, says if it is true that
Zimplats set up an offshore
company to pay salaries for its
managers, then the managers
at Zimplats also evaded paying
taxes since they were being
remunerated for work they did
on Zimbabwean soil.
A recent central bank report
claims Zimbabwe lost three
billion dollars through illicit
financial flows between 2009
and 2012, while Africa lost
many billions of dollars in
illicit financial flows during the
same period. – New African
Magazine ● • This
article was produced by the
African Network of Centers
for Investigative Reporting
(ANCIR).