BH24 Reporters

HARARE – Zimbabwe Stock Exchange-listed hospitality group Rainbow Tourism Group yesterday closed its three-star Beitbridge Hotel due to persistent loses, with the hotel incurring losses of more than $2 million since it started operating in January 2014.

But the closure of the hotel has again put the spotlight on the National Social Security Authority (NSSA)’s seemingly spur-of-the-moment invest-ment strategies, which have placed pensioners’ funds at risk.

According to an audit by Deloitte Advisory Services on the construction of the

Beitbridge Hotel last year stated that feasibility study conducted before the project was initiated had indicated that “that the hotel would be loss-making.”

But NSSA – which has a 40 percent shareholding in RTG – insisted on forging ahead with the project despite its appar-ent non-viability.

Efforts to get a comment from NSSA chairman Mr Robin Vela were fruitless as his mobile went unanswered and eventu-ally unavailable.

News Update as @ 1530 hours, Wednesday 01 June 2016

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NSSA’s bad investments under spotlight as Beitbridge Hotel flops

In closing down the hotel, RTG said that major contributing factors to the losses included depressed occupancies, low margins and high operating costs.

“Operational costs of the hotel were no longer sustainable. Since opening in January 2014 the hotel has incurred losses amounting to more than $2 million.

“The latest projections show a declining market demand and rate yield with strong indications that the hotel will continue to make losses into the foreseeable future.

“This poor performance has continued to weigh down the overall performance of the group,” RTG said in a state-ment.

The Beitbridge Hotel was constructed at an eventual cost exceeding the initially set budget of $3 million in 2007.

The initial budget for the pro-

ject had been pegged at US$3 million in 2007. The cost of the project rose to $17 million and then to $33 million, and is believed to have been com-pleted at cost of at least $49 million.

According to the Deloitte Advi-sory Services audit report, one of the main reasons why the cost of the project inflated was that NSSA was meeting some of the contractor’s obligations.

Deloitte said the NSSA board had in October 2014 said it was aware of the exorbitant overheads after the main con-tractor, CZL, had failed to pay workers and subcontractors, forcing the authority to inter-vene by directly paying the workers and the subcontrac-tors using pensioners’ funds.

The closure of the 140-room hotel is just one of NSSA’s bad investments over the years, with the social security body estimated to have

According to the Deloite

report, NSSA’s poor invest-ments included money markets investments to the tune of $34 million invested in distressed financial institutions and closed banks of which $11, 4 million did not have adequate security.

Meanwhile, RTG says it had made plans to ensure a seam-less transition for its cus-tomers, suppliers and service providers.

“Of primary importance are the staff affected by the closure of Rainbow Beitbridge Hotel, who have been offered alternative employment within the group,” it said.

RTG operated six hotel around the country.

The closure of the hotel leaves Beitbridge with no major hotel after the closure of African Sun’s Beitbridge Express Hotel in February this year.

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2 NEWS

BH243

BH244

BH24 Reporter

HARARE - Former Chamber of Mines Zimbabwe president Mr Winston Chitando has been appointed as the new chair-man of the Hwange Colliery Company (HCC) board.

He replaces Mr Jemister Chin-inga who was acting chair-man.

Mr Chitando is a seasoned executive whose experience in the mining sector spans close to three decades.

He began his career in 1984 when he joined Anglo Amer-ican Corporation as a gradu-ate trainee based at Hwange Colliery Company, where he rose to the position of chief accountant. For a total of 11 years, Winston worked for the Anglo American Corporation group.

During this period he rose through the ranks to hold various positions and director-ships in a number of industrial

and mining companies which were part of the Anglo Ameri-can group.

At the time he left the group to join Zimasco in 1997, he held the position of divisional commercial manager in the Mining and Industrial Division. From 1998 until September 2007, Winston was an exec-utive director with respon-sibility for Finance for both Zimasco (Pvt) Ltd and Mimosa Mining Company.

He at various periods also held executive responsibil-ity in Zimasco for sales and North Dyke Mining during this

time. He was subsequently appointed managing direc-tor of Mimosa Mining Com-pany effective October 1, 2007. In May 2013, Mimosa restructured and Winston was appointed to the position of executive chairman of Mimosa Holdings and Mimosa Mining Company.

He also served as vice presi-dent of the Chamber of Mines of Zimbabwe from 2008 until 2011 and as president from 2011 to 2013.

The new Hwange chairman continues to serve on the Chamber of Mines executive

committee and is currently chairman of the Platinum Pro-ducers Association.

He sits on various other boards including Zimbabwe School of Mines where he chairs the Audit Committee. HCC has also announced the appointment of past president of the Association of Mine Managers of Zimbabwe Mr Wenceslaus Tarugarira Kutek-watekwa and former Zim-babwe Mining Development Corporation (ZMDC) board member Mrs Ntombizodwa Masuku as a non-executive directors.

The two replaced Messrs Norman Chibanguza and Ian Haruperi who both stepped down as non-executive direc-tors. Meanwhile, HCC released a cautionary today in which it said it is in the process of engaging its creditors come up with a “mutually acceptable debt management plan.”●

Chitando is new Hwange chairman

5 NEWS

Mr Winston Chitando

HARARE – Zimbabwe has a friendly and secure invest-ment climate, contrary to media reports that portray the country as a risky investment destination, Canadian miner Caledonia Mining Corporation has said.

Caledonia, which has been oper-ating in Zimbabwe since 2006, owns 49 percent of Gwan-da-based Blanket gold mine.

Foreign Direct Investment into Zimbabwe has been low over the years owing to a number of reasons including portrayal of the country as an unsafe investment destination by Western media.

But, in a statement, Caledonia said the perceived risks were non-existent and that security of foreign investment was guaran-teed.

“We believe that the Zimba-bwe risk has been overplayed considering the operating history demonstrated by Caledonia,” the company said.

“Repatriation of cash from Zimbabwe has also never been a problem for Caledonia and we note that the change of refining the gold with a requirement for all Blanket’s gold to be refined within Zimbabwe (which spooked the market for a while back in

early 2014) has also passed off without a hitch – Caledonia has always been paid the correct gold price and has always received its cash for the sale on time.”

The company said it maintained good relationships with all levels of government and its indige-nous partners after the ven-dor-financed sale of 51 percent of the mine in 2012. The sale of the majority stake to indigenous players was in compliance with the indigenisation laws of Zim-babwe.

“The mine operates well and is doubling capacity through an internally funded capital pro-

gram,” it said.

Zimbabwe has embarked on mas-sive efforts to improve confidence in the country’s economic envi-ronment. Initiatives to improve the ease of doing business are also being implemented includ-ing amending various laws that have in the past hindered ease of doing business.

Some of the laws being amended include the Companies Act, Shop licensing Act and the Procure-ment Act. Government is also aiming to reduce the days it takes to register a business from 30 days to between 10 and 15 days.- New Ziana●

6 NEWS

Canadian miner endorses Zim investment climate

BH24 Reporter

HARARE-Pearl Properties reported a12,7 percent increase in profit for the four months to April 30, 2016 mainly driven by savings realised from manag-ing administration costs by the company during the period.

Despite an increase in profit, the company’s revenue for the period fell 5,12 percent to $2,74 million from $2,9 million in the prior period. Revenue during the period included rental income and property services income.

Speaking during an annual general meeting Pearl Proper-ties managing director Fran-cis Nyambiri said the market remains very difficult but prop-erty occupancy for company increased. “The profit after taxation we are looking at the profit of $1,2 million which is ahead of 2015 position of $1,1 million which is 12,87 percent.

“We have to work hard on the administration costs after notic-ing that they were not chang-ing. Administration costs for the four months are below the 2015 position by 3,78 percent which have seen us having a

operation profit ahead of the comparative period last year of $1,4 million against $1,35 million in 2015,” he said. The company’s property occupancy for the period by 6,14 percent from 77,84 percent last period to 73,06 percent this quarter.

“The market remains very diffi-cult in terms of revenue we are below the comparative period of 2015 by 5,12 percent. Our rev-enue driven by rental income and rentals has been under a lot of pressure during the past four months,” he said.

Rental arrears for the period

was 0,83 percent below the same period last year. He added that property income is 1 percent ahead the compar-ative period last year at $2,2 million against $2,18 million in 2015. The operating profit after taking into account of financial income and other dividends was $1,46 million which is 8,85 percent ahead of the compar-ative period last year of $1,34 million.

We have not done any revalu-ation of investment properties and there is no revaluation adjustment of our properties.●

7 NEWS

Pearl properties profits up 12,7pc

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HARARE -The equities mar-ket rebounded today after the mainstream industrial index added 0.04 to close at 104.74 as three counters gained ground.

Fidelity Life led the movers with a $0, 0070 rise to trade at $0, 1100, followed by tel-

ecoms giant Econet Wireless which edged up $0, 0002 to $0, 2300 while starafrica was $0, 0001 higher at $0, 0085.

There were no trades in the negative territory while activity was limited to nine counters.

The mining index was again flat at 25.54 as nickel-pro-ducer Bindura, Falgold, Hwange and RioZim main-tained previous price levels at $0, 0120, $0, 0050, $0, 0300 and $0, 1610 respec-tively.

. BH24 Reporter ●

Industrials rebound

8 ZSE

MOVERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

FIDELITY LIFE 6.79 11.00

STARAFRICA 1.19 0.85

ECONET 0.08 23.00

INDEX PREVIOUS TODAY MOVE CHANGE

INDUSTRIAL 104.70 104.74 +0.04 POINTS +0.04%

MINING 25.54 25.54 +0.00 POINTS +0.00%

9 ZSE TABLES

ZSE

INDICES

Stock Exchange

PREVIOUS

TODAY

10 DIARY OF EVENTS

The black arrow indicate level of load shedding across the country.

POWER GENERATION STATS

Gen Station

01 June 2016

Energy

(Megawatts)

Hwange 302 MW

Kariba 285 MW

Harare 0 MW

Munyati 30 MW

Bulawayo 23 MW

Imports 0 - 400 MW

Total 1205 MW

2 JUNE -- Zimplow Annual General Meeting; Place: Zimplow Holdings Limited Head Office, 36 Birmingham Road, Harare; Time: 10:00hrs

9 JUNE -- First Mutual Holdings Annual General Meeting; Place: Royal Harare Golf Club, Harare; Time: 14:30hrs

22 JUNE -- Lafarge Cement Zimbabwe Annual General Meeting; Place: Manresa Club, Arcturus Road, Harare; Time: 10:30hrs

30 JUNE -- African Sun Annual General Meeting; Place: Inyangani Room, ground floor at Holiday Inn Harare, Corner 5th Street and Samora Machel Avenue; Time: 12:00hrs

THE BH24 DIARY

JOHANNESBURG - South Afr ica 's rand was a touch f i rmer aga inst the do l lar today, but was un l ike ly to post s ign i f i cant ga ins dur ing the week as inves-tors f ret ted about Fr iday 's cred i t rat ing rev iew f rom Standard & Poor 's .

Stocks were set to open sof ter, wi th the JSE secu-r i t ies exchange's Top-40 futures index down 0,5 percent f rom Tuesday 's c lose.

At 0650 GMT the rand t raded at 15,6900 to the greenback, up 0,1 percent f rom where i t ended New York t rade overn ight .

Traders sa id data on Tues-day showing a t rade sur-p lus for the second month in a row had prov ided a minor boost for the rand, a l though the cumulat ive ba lance for th is year is in def ic i t .

Another pos i t ive headl ine for the currency th is week has been the condi t iona l

approva l for the wor ld 's largest brewer Anheus-er-Busch InBev to acqui re SABMi l ler, a dea l which should see do l lars f low into South Afr ica i f i t gets the f ina l nod f rom regulators .

But overa l l , investors are l ike ly to be j i t tery towards South Afr ican assets ahead of Fr iday 's sovere ign rat ing rev iew by S&P which cou ld resu l t in a downgrade into sub- investment grade.

"I therefore see no reason to get uber-bu l l i sh on the rand just yet because of th is (AB InBev) announce-ment," Standard Bank forex t rader Warr ick But ler cau-t ioned.

"I am in the watch and wai t camp," he added, pred ict-ing a 15,60-15,90 t rad ing range for do l lar/rand for the day.

In f ixed income, the y ie ld on the benchmark issue due in 2026 d ipped 1 bas is po int to 9,38 percent . - Reuters●

11

In rare compromise, Nigerian emerges as frontrunner for OPEC boss

Rand edges up, but rating review poses risk

REGIONAL NEWS

VIENNA - A Nigerian oil technocrat has emerged as frontrunner to take the top job at OPEC, with members seeing Mohammed Barkindo as what would be a rare compromise candidate to lead the group amid rising tensions between Saudi Ara-bia and Iran.

Barkindo has been a key face of the Nigerian oil industry for the past dec-ade, during which various governments tried and effectively failed to reform national oil company NNPC.

Today, Nigeria has along-side Venezuela become one of the main victims of oil's price collapse, with the country's output declin-ing sharply due to militant attacks on pipelines and infrastructure.

OPEC is likely to choose Barkindo, a former head of NNPC, as the next secre-tary-general of the producer group, three sources with

knowledge of the matter said.

The Organization of the Petroleum Exporting Coun-tries has since 2012 been looking for a replace-ment for Libya's Abdullah al-Badri, who was elected acting secretary-general in December until the end of July after serving full terms. - Reuters●

Oil slipped a fourth day, heading for the longest run of declines since April, as OPEC ministers gather in Vienna ahead of a meeting on Thursday to discuss pro-duction policy.

Futures fell as much as 1,1 percent in New York, after declining 0,9 percent the previous three sessions. Canadian oil-sand producers, including Suncor Energy Inc., began resuming operations after wildfire threats eased, while supply disruptions continued to reduce out-put in Nigerian and Libya. The global oversupply that caused prices to slump since 2014 is correcting itself, the United Arab Emirates oil minister said in Vienna on Tuesday.

Oil has surged about 85 percent since touching a 12-year low in February on signs the global surplus is easing amid declining output. The Organisation of Petroleum Exporting Coun-tries is unlikely to reach an agreement limiting produc-tion this week as the group

sticks with Saudi Arabia’s strategy of squeezing out rivals, according to analysts surveyed by Bloomberg.

“There is very low expec-tations for anything con-structive to come out of this meeting,” Angus Nicholson, a markets analyst in Melbourne at IG Ltd., said by phone.

“The base-case scenario will be a continuation of Saudi Arabia’s recent announce-ment where they refuse to commit to any sort of supply freeze if Iran is not party to it.”

West Texas Intermediate for July delivery fell as much 55 cents to $48,55 a barrel on the New York Mercantile Exchange and was at $48,66 at 8 a.m. London time. The contract dropped 23 cents to close at $49,10 on Tuesday. Total volume traded was 20 percent below the 100-day average.

Renewed Optimism

Brent for August settlement fell as much as 1,3 percent to $49,25 a barrel on the London-based ICE Futures Europe exchange. The July

contract expired Tuesday after slipping 7 cents to $49,69 a barrel. The global benchmark crude traded at a 36-cent premium to WTI for August.

UAE Oil Minister Suhail Al Mazrouei’s comments -- the first by an OPEC minister this week ahead of their meeting on Thursday -- suggest renewed optimism among producers. He also said on Twitter OPEC’s policy of giving the market time to balance itself has proven to work but it stil l needs some time. – Bloomberg●

12

Oil set for longest losing streak in 6 weeks before OPEC meeting

INTERNATIONAL NEWS

By Sandile Swana

There are two features of life on the African continent that are fundamentally deadly to socio-economic development. These are a lack of cleanli-ness and punctuality.

There is plenty of discussion on macro and micro econom-ics and the big theories of economic development, but it seems the African world-view is a primary problem. It is opportune to discuss more fundamental inhibitors to economic development and growth. This entails a funda-mental change in how things get done.

Other countries and conti-nents have managed to make serious advances in dramati-cally improving cleanliness as well as timeliness, which has resulted in accelerated eco-nomic development.

On the continent there are two examples that show how cleanliness and punctuality can positively affect devel-

opment. The first is in the Rwandan capital Kigali.

It is setting the pace in Africa as one of the cleanest cities and steadily one of the most punctual. This is on a conti-nent where both city cleanli-ness and punctuality are rare.

When you look at African cit-ies you see dirt, unkempt gar-dens, unkempt fences, cha-otic traffic. And these cities run on "African time", itself a discredited concept.

The other example is in SA, where the government has launched Operation Phakisa.

The initiative seeks to speed up high-impact government projects, signalling an emerg-ing awareness of the need for timeliness.

From my own experience of working in various locations across SA, there is stil l a long way to go to improve on cleanliness and punctuality. Cleanliness speaks directly to mortality and morbidity.

Timeliness speaks to the pace and exactness at which things get done, addressing effectiveness and efficiency. Cleanliness has at least two clear advantages.

The first is that it protects people from diseases. It ensures good health, which links to productivity, vitality and longevity. The second advantage is that it makes localities more pleasant to visitors, including tourists.

In the Western world the idea and practice of a daily bath and properly plumbed and controlled sewage for the

majority of people only gained traction in about 1850. This improved health was accom-panied by widespread eco-nomic growth in the Western world.

Japan achieved the same life expectancy as the West at the end of the 19th century, although the country was very poor economically. It did so mainly through clean-liness.

This change in culture was then accompanied by improvements in longevity. In the West it was largely in the wake of the industrial rev-olution that the majority of people were given meaningful access to sanitation.

Thus, both Eastern and West-ern culture have evolved. This shows it is not inher-ently European or Asian to be clean. Cleanliness tends to go with tidiness and orderliness, which increases safety, health and efficiency.

Well-organised cities have

13 ANALYSIS13 ANALYSIS

Eradicate the discredited idea of ‘African time’ to lift growth on the continent

14 ANALYSIS14 ANALYSIS

planned suburbs, build-ings and infrastructure. This organisation reduces anxiety and time being wasted. My own experience bears this out.

I have visited a number of local towns in SA where the general state of municipal buildings signals a poor atti-tude towards hygiene. This is not particular to SA. It is not uncommon anywhere on the continent, from the Cape to Cairo, to find dilap-idated government build-ings, uncontrolled sewers and unmaintained private homes. This shows infrastructure is being allowed to go to waste through lack of care.

Kigali is an exception to this rule, although its government appears to have used heavy-handed tactics to achieve its objectives. In SA, towns such as Hermanus, Cape St Francis and George are also good examples. But these are exceptions.

The other issue is punctu-ality. Science and technol-ogy cannot progress outside measurement and precision. I believe that attitudes need to change to reflect the xiTsonga saying "Mintirho ya vula vula" (one’s work speaks, not just words), with the addition that your work must be punctual.

Embracing time and punctu-ality across all of activities leads to innovation, human development, growth in gross domestic product (GDP) and more effective government. This, in turn, fuels socioeco-nomic development.

Again, my own experience attests to this. It is not uncommon in SA to visit a town council by appointment and spend two days at an office without ever seeing the official who made the appoint-ment, nor a substitute. This takes up unnecessary time and requires spending extra money — a night at a hotel and food.

And recently I had to visit Roodepoort, Pretoria and Brakpan, to get charts that South African labour law requires to be displayed at a workplace. In total, I invested three days in this matter.

The idea that it should be possible to download the charts from the internet has not yet crossed the minds of those responsible for their dissemination. Not doing so increases the cost of doing business and creates a waste of time.

A lax attitude to using time optimally also extends into the social sphere. It is stil l common to be invited to a function in SA with notifica-tion that says the starting time is 6.30pm for 7pm.

This on its own encourages laxity. On top of that, a great many people generally believe that functions typically get going 30 minutes late, mean-ing that 6.30pm for 7pm is actually 6.30pm for 7.30pm.

Time for a change in atti-tude

Ideas about hygiene and punctuality can only become part of how people in Africa behave if leaders and intellec-tuals start insisting on them, both at work and socially.

Punctuality and cleanliness are learnt behaviours. School-children need to be exposed to punctuality, accuracy and tidiness in everything they do.

Remember that Japan and many Asians had to learn punctuality.

Take the progress made in timeliness in Japan. By 1900, the country’s train timetable was just a hint of more or less the time a train might arrive. Today Japan is very punctual and precise.

It is time to jettison the vague notion of African time. And for Africa to clean up its act. – BDLive●