News Update as @ 1530 hours, Tuesday 6 January 2015

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Weak Brent crude prices to have limited effect on Zim's pump prices

By Tawanda Musarurwa

Although the pump prices of petrol and diesel in Zimbabwe have declined about 1,9 percent and 4,1 percent, respectively since October last year, observers say local fuel prices will not go down any further.

This is despite the global Brent crude oil price today hitting below $50 a barrel, levels which were last experienced in April 2009.

A survey by BH24 shows that fuel prices at local service stations today was averaging $1,52 per litre for petrol and $1,38 per litre for diesel.

In October last year, Zimbabwe's pump fuel prices average of $1,55 per litre for petrol and $1,44 per litre for diesel.

African Development Bank chief

regional economist (Zimbabwe Field Office) Mary Manneko Monyau says there are a number of factors that help

determine the fuel pump price in Zim-babwe.

This means local fuel prices will not automatically and/or directly respond to developments on the global arena.

"Domestic fuel prices are driven by refinery costs, fixed costs (shipping costs, sea handling costs, pipeline charges, government levies and taxes) and also retail and wholesale margins," she said.

Brent crude oil prices have been vola-tile since the Organisation of Petroleum Exporting Countries (OPEC) height-ened its policy of testing rival produc-ers’ tolerance for lower prices during the second half of last year.

And in a November 27 meeting, OPEC announced it would not cut its output anytime soon. Observers say the move

was targeted at out-pricing the US domestic shale production, which could result in Brent crude oil prices remain-ing weak in the medium-to-long-run.

As 2014 came to a close, the Zimbabwe Energy Regulatory Authority (ZERA) said the largely unchanging local pump prices of petrol and diesel were within the provisions allowed by Statutory Instrument 80 of 2014, which provide Zimbabwe's pricing schedule.

Notwithstanding that statement, ZERA also commissioned a study on fuel prices with results expected anytime soon.

The energy regulatory body does not set the local price of fuel, but functions to monitor prices prevailing on the market to ensure that the cap is not exceeded. •

The Zimbabwe Commercial Farmers Union (ZCFU) has described the lack of affordable medium-to long-term loan facilities as having badly impacted on the agricultural sector.

ZCFU president Wonder Chabikwa said here Monday that the government's decision to adopt the multi-currency system in 2009 had resulted in farmers

failing to access funding.

Zimbabwe adopted the multi-currency system to curb runway inflation which peaked at 243 million per cent in 2008 and destroyed its local currency. Zim-babwe is the only country in Africa using the United States dollar as its currency.

We have to get back to our own cur-

rency because as long as we are using the multi-currency system we will not get loans," said Chabikwa.

"We cannot develop in a country where there are no medium- and long-term (credit) facilities. When we were using our own currency we had loan facilities of up to 25 years but now because of the multi-currency system no bank can

do that."

The Reserve Bank of Zimbabwe (RBZ) last year widened the multi-currency basket and included currencies of China, India, Japan and Australia as legal tender, alongside the greenback, South African Rand, Botswana Pula, the Pound Sterling and the Euro. - New Ziana •

By Rumbidzayi Zinyuke

Diversified conglomerate Innscor Africa Limited has announced the appoint-ment of commercial lawyer Addington Chinake as the new chairman of the Innscor board to replace David Morgan who resigned prior to the group’s AGM in November last year.

“After conducting a series of interviews the Nominations Committee recom-mended to the Innscor Board that Addington Chinake, the senior partner of Kantor and Immerman Legal Practi-tioners, was the most suitable person to appoint and the Innscor Board has

unanimously approved the appoint-ment of Chinake as an independent non – executive director and as chair-man of the Innscor Board with effect from 1st January 2015,” the group said in a statement.

Innscor also appointed Irvine's Zimba-bwe finance director Godfrey Gwainda as the group finance director filling the post left by Julian Schonken who is now the executive director in charge of the Innscor Light Manufacturing Sector.

Gwainda has also been appointed to the Innscor Board as an executive director.

Meanwhile, National Foods, an asso-ciate of Innscor Holdings has also appointed Michael Lashbrook as chief executive with effect from January 1 2015.

Lashbrook, who was the company’s chief operations officer prior to the appointment, had been acting chief executive since the retirement of Jer-emy Brooke in October last year. •

2 NEWS

Chinake appointed Innscor chairman

ZCFU bemoans multi-currency system

BH24

44 BH24

Cost of living declines marginally

55 NEWS

BH24 Reporter

Due to the numerous promotions run by supermarkets during the festive sea-son, prices of most commodities went down resulting in a marginally lower cost of living for the month of Decem-ber.

The cost of living as measured by the Consumer Council of Zimbabwe’s low income urban earner monthly bas-ket for a family of six decreased from $592.47 in November 2014 to $590.46 by end December 2014, showing a decrease 0.34 percent.

“As CCZ we have observed that the slight decreases in prices are as a result of promotions like Amazing Christmas cheers(0K), Festive Savings (TM), Fes-tive season (Food World) etc. This is generally a strategy devised by retailers to attract more customers whilst keep-ing the competitive edge,” CCZ said.

According to the consumer body, the food basket decreased by $1.74 from US$147.74 to $146.00 while the price of detergents decreased by 27c from $10.73 to $10.46 as a result of decrease in the price of laundry bar.

Increase in prices was recorded in

flour which went up by 5c from $1.84 to $1.89, a 2kg of rice by 4c from $1.63 to $1.67, sugar went up by 12c from $1.67 to $1.79 while cooking oil

increased by 4c from $1.56 to $1.60 and washing powder increased by 15c from $1.15 to $1.30.

Decreases were recorded in the price of margarine which went down by 2c from $1.71 to $1.69 while a 20kg of roller meal decreased by 15c from $11.50 to $11.35. The price of tea leaves also went down by 17c from $1.27 to $1.10, salt by 8c from $0.28 to$0. 20, a kilo-gramme of tomatoes by 3c from $0.68 to $0.65, a kg of onions decreased by 5c from $0.75 to $0.70 and cabbage by 10c from $0.59 to $0.49 per head.

There was a 5c decline in the price of beef from $4.83 to $4.78 while bath soap went down by 11c from $0.66 to $0.55 and laundry bar decreased by 7c from $1.16 to $1.09.

The price of bread and fresh milk remained unchanged from the end November 2014 figures. •

BH24

Systems records, submissions of returns and accounts and manage-ment of state property and resources.

The audit also noted that Government may fail to recover the funds due to the fiscus through writing off of debts.

For a country like Zimbabwe that is in desperate need of every cent we can lay our hands on, this revelation is wor-rying.

The Office of the Auditor-General has a Constitutional mandate to exam-ine, enquire into and audit all public accounts, the accounts of all account-ing officers, receivers of revenue and other persons entrusted with public moneys or property of the State. It is the voice of reason-so to speak.

It is therefore of interest to the general public to follow closely the findings of the Auditor-General that are period-ically published giving an insight on the goings on in various Government departments.

Weak procurement systems for goods and services especially in the wake of diminished resources can only result in the enrichment of only a few undeserv-ing individuals against an expectant population that deserves more.

Government should therefore be held accountable for every dollar that goes in and out of their coffers. We have been preaching about how ZimAsset will bring sanity to this economy but the first step should be bringing about accountability and transparency within our systems.

There is so much corrective measures required to realign the performance of a number of Government departments

and what is definitely required is a culture change towards efficiency and accountability that will see the levels of service delivery scaling even greater heights.

Maybe the problem is that ministries are just paying lip service to ZimAsset but they are not doing much to scale down on their spending and improve on service delivery, take a step towards the implementation of the blueprint.

According to the report, 31 ministries out of 33 had material audit findings warranting management’s attention while most ministries had partly imple-mented prior years audit recommen-dations.

While it is good that some ministries are listening to the auditor general’s recommendations, it is just taking too long for the change to come. And we do not have the time to wait around for ministries to decide to be accountable. It has to happen sooner rather than later and at a faster pace.

According to the Auditor general: “If audit recommendations are imple-mented, accountability, transparency, corporate governance, efficiency and effectiveness of operations of ministries would improve.”

The reason why the office of the auditor general was created was to become the voice of reason, pick up such anomalies within government and other organi-sations and try to correct them. So it is about time government heeds that voice and starts implementing the nec-essary changes so that we can experi-ence some changes in the economy.•

8 BH24 COMMENT

Government needs to heed to the ‘voice of reason’

Giant cigarrete maker BAT and Inns-cor contributed to the losses recorded in today’s session as the equities mar-ket continues to nosedive since the beginning of the year.

The industrial index shed 1.75 points

to close at 160.69 points. BAT slipped 20 cents to 1100 cents, Innscor went down by 5 cents to settle at 55 cents and Fidelity life dropped 0.50 cents to close at 7 cents. Dawn was the only counter in the positive territory as it gained 0.05 cents to trade at 1.10

cents.The mining index lost 4.50 points to close at 68.11 points as Bind-ura slid 0.50 cents to 6 cents. Falgold, Hwange and RioZim were unchanged at 3 cents, 4.80 cents and 15 cents respectively. ― BH24 Reporter •

8 ZSE REVIEW

BAT, Innscor weigh ZSE down

REGIONAL NEWS 9

The rand halted its recent slide against the U.S. dollar and bonds traded close to fresh one-month highs as the likeli-hood of deeper stimulus measures by the European Central Bank boosted the local currency.

The rand firmed 0.31 percent by 0634 GMT to 11.6725 per dollar, reversing losses of the previous session that saw it sink to 11.7085 overnight.

The benchmark government bond due in 2026 continued a recent strong run,

with the yield shedding 10 basis points in early trade to 7.835 percent, its low-est since Dec. 10.

Analysts said bonds benefited from a sharp selloff in local equities as investors repositioned some of their debt.

Chances of further policy easing by the ECB increased after Germany's Decem-ber inflation slowed to its lowest in five years, pushing the euro lower and tem-porarily easing pressure on some riskier emerging market assets. - Reuters •

South Africa's rand, bonds firmer as eurozone woes ease pressure

Equatorial Guinea, Taleveras to build giant oil storage hubNigerian energy firm Taleveras Group said on Monday it had signed a deal with the government of Equatorial Guinea to build a giant oil storage hub in the cen-tral African country.

The Bioko Island facility will have a total capacity of 1.34 million tonnes of stor-age for crude oil and products such as gasoline, naphtha, jet fuel and fuel oil, the firm said. It will be the largest crude

and products storage facility in Africa.

"The terminal will be built at Punta Europa, located on the Bioko Island part of Equatorial Guinea, and will therefore be ideally located to service the key oil supply and demand centres throughout West Africa," the statement said.

Taleveras, a growing trading firm with more than $2 billion in credit lines, did not give a value for the deal or a start

date. It said it obtained the rights in December through an open negotiation process which involved several compa-nies, without naming them.

Global trading houses are vying for access to Africa's booming gasoline and diesel markets where demand is expected to grow by nearly 60 percent by 2025, according to African energy consultancy CITAC.

Storage hubs near big markets can help trading firms boost profits by allowing them to quickly exploit arbitrage oppor-tunities resulting from changes in supply and demand.

Switzerland's Gunvor signed a similar deal with Gabon in 2013 to create a joint trading company to sell oil prod-ucts along the western coast of Africa. - Reuters •

10 DIARY OF EVENTS

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

POWER GENERATION STATS

Gen Station

6January 14

Energy

(Megawatts)

Hwange 314 MW

Kariba 614 MW

Harare 30 MW

Munyati 19 MW

Bulawayo 26 MW

Imports 0 MW

Total 1003 MW

29 December - Extraordinary General Meeting of the members of Zimplow Holdings Limited; Place: Main

Lounge, Royal Harare Golf Club, 5th Street Extension, Harare; Time: 12:00 hours

12 January 2015 - CBZ Extraordinary General Meeting; Place: CBZ Wealth Management Centre, Pomona;

Time: 08:30am

THE BH24 DIARY

11 ZSE

ZSEMOVERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

DAWN PROPERTIES 4.76 1.10 INNSCOR -8.33 55.00

BNC -7.69 6.00

FIDELITy LIFE -6.67 7.00

BAT -1.79 1,100.00

IndicesINDEx PREVIOUS TODAY MOVE CHANGE

INDUSTRIAL 162.57 162.44 -0.13 POINTS -0.08%

MINING 72.61 72.61 0.00 POINTS 0.00%

Stocks Exchange

12 AFRICA STOCKS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire 256.50 -1.58 -0.61% 02Jan

Egypt 8,942.65 +16.07 +0.18% 04Jan

Ghana 2,287.32 +26.30 +1.16% 02Jan

Kenya 5,117.43 +4.78 +0.09% 02Jan

Malawi 14,886.12 +0.00 +0.00% 02Jan

Mauritius 6,795.35 +24.31 +0.36% 31Dec

Morocco 9,643.19 +23.08 +0.24% 02Jan

Nigeria 34,657.15 -27.17 -0.08% 31Dec

Rwanda 143.39 +0.20 +0.14% 02Oct

Tanzania 2,602.19 -30.74 -1.17% 28Oct

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,942.77 -12.69 -0.65% 10Dec

Zambia 6,160.66 +12.17 +0.20% 31Dec

Zimbabwe 162.57 -0.22 -0.14% 02Jan

African stock round up Commodity Prices

Name Price

Crude Oil 1,300.91 -0.21%

Spot Gold USD/oz 1,292.63 -0.26%

Spot Silver USD/oz 19.38 -0.46%

Spot Platinum USD/oz 1,421.25 -0.33%

Spot Palladium USD/oz 798.50 -0.64%

LME Copper USD/t 6,770 -0.18%

LME Aluminium USD/t 1,780 -1.17%

LME Nickel USD/t 18,230 -1.73%

LME Lead USD/t 2,095 -1.41%

Quote of the day — "It IS EaSy to SIt up and takE notIcE. What IS dIFFIcult IS gEttIng up and takIngactIon." - Al BAtt

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13 INTERNATIONAL NEWS

Oil extended losses below $50 a bar-rel amid speculation that U.S. crude inventories will expand, exacerbating a global supply glut that’s driven prices to the lowest level since April 2009.

Futures fell as much as 1.1 percent in New york, declining for a fourth day. Stockpiles in the world’s biggest oil consumer probably rose by 750,000 barrels last week, a Bloomberg News survey shows.

A gauge of the dollar held near a nine-year high, diminishing the investment appeal of commodities, as the Federal Reserve weighs raising interest rates and amid concern that Greece will leave the European Union.

Oil slumped almost 50 percent in 2014, the most since the 2008 financial cri-sis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as they compete with U.S. producers.

The market faces “more problems” this year, according to Morgan Stanley, with surging exports from countries includ-ing Russia and Iraq contributing to a

surplus that Qatar estimates at 2 mil-lion barrels a day.

“No one is willing to cut supplies while the strong dollar is playing a nega-tive role with uncertainties growing in Europe,” Will yun, an analyst at Hyun-dai Futures Corp. in Seoul, said by

phone today. “Even if prices fall below $40, the market may not be too sur-prised.”

West Texas Intermediate for February delivery dropped as much as 53 cents to $49.51 a barrel in electronic trading on the New york Mercantile Exchange

Oil falls below $50 as U.S. stockpiles seen contributing to glut

14 INTERNATIONAL NEWS

and was at $49.58 at 3:15 p.m. Sin-gapore time. The contract slid $2.65 to $50.04 yesterday, the lowest close since April 28, 2009. The volume of all futures traded was about 4 percent below the 100-day average.

U.S. Stockpiles

Brent for February settlement decreased as much as 68 cents, or 1.3 percent, to $52.43 a barrel on the London-based ICE Futures Europe exchange. It lost $3.31, or 5.9 percent, to $53.11 yesterday, the lowest since May 1, 2009. The European bench-mark crude traded at a premium of $2.96 to WTI today.

U.S. crude inventories probably increased to 386.2 million barrels in the week ended Jan. 2, according to the median estimate in the Bloomberg survey of eight analysts before a report from the Energy Information Adminis-tration tomorrow.

Distillate stockpiles, including heating oil and diesel, are projected to have gained by 2.13 million barrels, the sur-vey shows, while gasoline supplies may have climbed 4.5 million.

The euro was steady after weaken-ing against the dollar yesterday amid speculation the European Central Bank has moved closer to large-scale sover-eign-bond purchases. Greece began an election campaign that Prime Minister Antonis Samaras said may lead to an exit from the euro region should the opposition Syriza party win.

Saudi Discount

Saudi Arabia, the world’s largest oil exporter, raised prices for shipping crude to Asia in February. Its main Arab Light grade will sell for $1.40 a barrel below the average of Middle East benchmark Oman and Dubai grades, according to an e-mailed statement yesterday.

Last month, state-owned Saudi Ara-bian Oil Co. offered a $2 discount for Arab Light exports, the steepest in at least 14 years. The move was followed by Iraq, Kuwait and Iran, bolstering speculation that OPEC’s Middle East producers were prepared to let prices fall to defend market share amid the North American shale boom.

U.S. output climbed to 9.14 million barrels a day through Dec. 12, the

highest in weekly data that started in January 1983, according to the EIA. OPEC’s 12 members, which supplies about 40 percent of the world’s oil, pumped 30.56 million a day in Novem-ber, exceeding their collective target of 30 million for a seventh straight month, a separate Bloomberg survey of com-panies, producers and analysts shows.

Libyan Conflict

Production may expand from fields in West Africa, Latin America, the U.S. and Canada in addition to increased supplies from Russia and Iraq, Mor-gan Stanley said in an e-mailed report yesterday. Iran may boost overseas exports by about 500,000 barrels a day if western sanctions are lifted, the bank said.

In Libya, a Greek-operated oil tanker was bombed near a port in the east after it failed to provide details of its itinerary, said Ahmad al-Mismari, a spokesman for the military. The air strike killed two sailors, underscoring a rising threat to shipments from the OPEC nation where violence is escalat-ing. — Bloomberg •

By Nigel Gambanga

It’s only a few days into the new year and a lot of things have started to change in the Zimbabwean technology space. From tariff reductions to promo-tions being ended it looks like there is going to be a lot to expect. In all of this here are some of our predictions for 2015.

The adjustment of promos, new voice offers from the MNOs

Econet Wireless took the lead on this one when it retired its Buddie Bundles Of Joy. It came on the same day as the tariff reductions that POTRAZ, the industry regulator, had effected.

This is not going to be the only promo to be tweaked or killed altogether by the mobile networks. All things being fair to the MNOs though this is a logical step because after all the promos we have are a derivative from the previous tar-iffs.

The end result will be new products and services as each MNO tries to sell of new voice packages that factor in any reduc-tion in revenue and still make a decent

profit at the end of the day.

OTT Service adjustment: The shuffle of the bundles

In the dying hours of 2014 we saw

a combination of Opera Mini and WhatsApp bundles courtesy of Econet. This is likely motivated by a need to buttress one bundle service with a more popular one.

The prediction here will be that one of the networks, (most likely Econet first) will try out other combinations that will likely include a comprehensive social media OTT service. If it works here as it has done in other markets then the

15 aNalySiS

Predictions 2015: What can we expect from the Zimbabwean technology space?

15 ANALYSIS

other MNOs will follow suit.

All this is because OTT services are now such a prominent feature on the MNO map that they have to be modified to add appeal. This is very important in a market that now has diminishing reve-nues courtesy of not only tech advances but regulator involvement.

Mobile Money Tariff Reduction

The noise already started late last year with legislation calling on the Competi-tion and Tariffs Commission to look into the reduction of mobile money tariffs.

This year will likely see the enactment of this, seeing that these tariffs haven’t come under any downward review since 2013 when the Reserve Bank Governor made a directive in the Monetary Policy. It’s going to be another bleak outcome for the already stretched MNOs that are getting taxed on all fronts.

More Mobile Money related products

2014 had Mobile money services take many forms with the MNOs working with various financial service providers to harness the power of their financial platforms. 2014 was all about remit-

tances, mobile money cards and insur-ance.

In 2015 look out for a further expansion of the reach of mobile money services. Easy picks would be the integration of payment for basic services and amen-ities like what has been achieved with ZESA and OneWallet. Perhaps this year be the launch of a service for the pay-ment of taxes?

The rise of the MNO lobby

A lot of developments in tech for 2015 point to the tightening of screws on the MNOs so don’t expect these operators to take everything lying down.

After paying huge license fees (well Econet at least, and to some extent Telecel) and contributing significantly to the country's coffers MNOs will state their case regarding changes to tariffs and tighter tax demands. While the legal channel has been used extensively in the past to do this, even as recently as last month, an appeal to legislation will be taken as a way to rein in regula-tory interference.

The new ICT Policy

Zimbabwe’s ICT Policy has been on the cards for what now seems like a lifetime. In all honesty the finalisation of this doc-ument after so many of review should be the first port of call for the new ICT-PCS Minister Supa Mandiwanzira.

The reasons behind its likely rollout include the proposal for a new Broad-band Policy which should come after the main ICT Policy, and the rapid change in ICT’s role in the economy that is now being noticed by other sectors.

Work between MNOs and startups

Let’s not get excited here and expect MNOs to just get into bed with any startup that comes knocking on the door. The story of the big operator that does everything on its own isn't likely to play out this year, hence the need to reach out.

This will only happen to the handful of start-ups that can craft services that are viable and can be taken up by any oper-ator that sees a strong business case. The reason why this is likely this year unlike any other year is the changing landscape in MNO services.

These operators now need to come

up with products and services that can boost revenue and optimise the infra-structure that has been invested in. It’s a great opportunity for the aggressive startup to take advantage of, as long as they are willing to accept the Ts and Cs presented by the network.

More foreign startups setting up locally

We saw the pattern emerging in 2014 and earlier with startup factories like Rocket setting up shop locally through subsidiaries like Lamudi.

This will likely be taken a notch up this year. The monster called the Indigeni-sation Policy is slowly taking a friendlier form which will mean more of these opportunists landing right in our back-yard.

In terms of an expansion strategy the Zimbabwean market does have its mer-its which will lure these guys. We have an increasing internet penetration rate, zero challenges with currency (until the bond coins become something else) and a competition friendly market (local startups please take what’s yours). - TechZim •

16 aNalySiS16 ANALYSIS