News Update as @ 1530 hours, Friday 6 June 2014Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

By Tawanda Musarurwa

Giant retailer OK Zimbabwe yesterday reported a decline in profitability for FY2014 as overheads increased and deflationary pressures weighed heavy.

Profit for the year ended March 31, 2014 amounted to $9,68 million com-pared to $12,3 million in the prior year.

Basic earnings per share was 0,85 cents down from 1,19 cents last year. The decline in profitability was attrib-utable to depressed demand but also mainly to an increase in overheads, which went up by 6,3 percent ahead of the growth in revenue of 0,9 percent. CEO Willard Zireva told analysts yes-terday that the tight liquidity situation that prevailed during the period under review resulted in depressed demand.

"Deflationary cycle for retail trade set

in around July 2013 and official operat-ing environment negative inflation was -0,91 percent by March 2014...there were reversals in sales growth at some locations," he said.

Overheads increased by 6,3 percent to $69,4 million from $65,2 million prior year. The increase in overheads was mainly a result of increase in employee

benefit to $31 million up from $27 mil-lion last year.

"This increase was mainly a result of increases in employee benefits as more employees were engaged to man both the new branches opened during the year and the refurbished branches in order to provide adequate service to match the improved and broadened

product offering," said management. OK Zimbabwe's total number of stores has increased from 54 in FY2013 to 59 in FY2014.

Revenue was up a marginal 0,9 percent to $483,6 million against $479,6 mil-lion prior year comparative. The group said the cost of borrowing decreased to $0,2 million from $0,8 million in the prior year as the more expensive Investec Africa Frontier Private Equity Fund loan was converted to equity on April 1, 2013.

Capital expenditure for the year was $12,4 million, up from $12,1 million in the prior year and was mainly in respect of opening of new shops, store refurbishments and replacement of old plant and equipment. OK Zimbabwe declared a final dividend of 0,22 cents per share. •

Increased overheads dampen OK Zimbabwe FY2014 earnings

2 NEWS

BH24 Reporter

Listed sugar manufacturer Star Africa appears to be struggling to dispose of its investments in Tongaat Hulett Bot-swana and BlueStar Logistics.

In its latest update on the matter, the company said:

"Earlier efforts to dispose of THB and BSL, as reported in previous updates, have not yielded the intended results as the prospective purchasers failed to raise the funds thereof."

The disposal of Tongaat Hulett Bot-swana and BlueStar Logistics was initially targeted to be completed

by February 28 after a Scheme of Arrangement between Star Africa Cor-poration Limited and its lenders and creditors was sanctioned by the High Court in August last year.

But latest indications from the group point to earlier interested buyers hav-ing turned their backs on the deals.

Star Africa has said "fresh efforts were then made to approach other prospec-tive purchasers."

In an update today, Star Africa said two prospective purchasers are carrying out due diligence on BlueStar Logistics.

"It must be pointed out that while there

is interest on the local market for this asset, the liquidity crunch obtaining in the economy is militating against an expeditious disposal thereof," said Star Africa.

"A prospective purchaser is in the pro-cess of conducting due diligence on this asset, with cooperation from Starafrica and the other shareholders in THB. Scheme members will be advised of progress on this transaction in the next update.

This is a good asset, whose disposal must yield maximum value, hence the need to allow due process in respect of its disposal," said the group of its investment in Tongaat Hullet Bot-swana.

Meanwhile, the sugar producer says significant progress has been made on the plant upgrade at Gold Star Sugars Harare.

"All 47 containers have been shipped of which 41 containers have been delivered at Harare Refinery and the balance will be delivered to site within the next 7 days. Installation of the new equipment is ongoing and is 95 percent complete," said the company. •

Star Africa struggling to sell investments

Tongaat Hullet fields

BH24

BH24 Reporter

Zimbabwe has so far sold tobacco worth $582,8 million as the 2014 sell-ing season target of 180 million kilo-grammes has been exceeded.

Latest figures from the Tobacco Mar-keting Industry Board (TIMB) show that the country has to date sold 183,2 million kgs of the golden leaf.

This reflects a 31,7 percent positive

variance from last year's prior compa-rable period figure of 139 million kgs.

But the value sold to date is only 13 percent up from last year's $514,8 million. This is largely due to prevail-ing lower prices, which are 14 percent down from last year.

The contract floors continue to dom-inate trading, with 136,2 million kgs worth $453 million having been sold.

The auction floors have purchased 46,9 million kgs to the value of $129 million.

Tobacco is one of Zimbabwe’s major agricultural exports, accounting for 10,7 percent of gross domestic prod-uct.

The agricultural sector is expected to grow by 9 percent and the continued growth of the tobacco sector in particu-lar bodes well for the broader sector. •

4 NEWS

Zim may introduce empowerment levy on foreign companies

Tobacco target exceeded

Zimbabwe may introduce a levy on foreign and white-owned companies to pay for the training of unemployed black Zimbabweans, Indigenisation Minister Francis Nhema said.

The southern African nation has said its law on local ownership, which requires companies to sell or cede 51 percent of shares to black Zimbabweans, may soon be amended to encourage invest-ment into the cash-strapped country.

“The emphasis has to do with training of our people by companies,” Nhema said by phone today from the capital, Harare. “This will assist the unem-ployed and those who did well at

school.”

The ruling Zimbabwe African National Union-Patriotic Front’s politburo met this week to order Nhema to make the indigenisation law “less confusing and more attractive” to investors, Informa-tion Minister Jonathan Moyo said June 4. ‘Investors Happy’ “Right now inves-tors are happy with what we’re doing,” Nhema said. “The response from investors has been good -- a greater understanding of what we’re trying to achieve.”

Miners including Anglo American Plat-inum, Impala Platinum Holdings Ltd and Aquarius Platinum Ltd have indi-

cated to the government they will com-ply with the 2010 law and give some shares to community trusts.

“I’m not ready to discuss the finer details yet, but non-exploitive indus-tries outside mining and agriculture can negotiate the percentage they allocate to indigenous Zimbabweans,” Nhema said.

That would leave lenders such as Bar-clays Plc and Standard Chartered Bank Plc free to negotiate levels of local own-ership, University of Zimbabwe econ-omist Tony Hawkins said May 29. — Bloomberg •

• The FAO Food Price Index aver-aged 207.8 points in May 2014, down 2.5 points (or 1.2 percent) from April and nearly 7 points, or 3.2 percent, below May 2013. After rising to a ten-month high of 213 points in March, the Index fell in April and again in May, pressured by lower dairy, cereal and vegetable oil prices. However, sugar made strong gains in May, while meat remained firm.

• The FAO Cereal Price Index aver-aged 204.4 points in May, down 2.4 points (or 1.2 percent) from April and 30 points (or 13 percent) below last year.

The decline in May was mostly triggered by maize prices, which fell in response to favourable growing conditions and good supply prospects in 2014/15. Rice prices were little changed.

However, wheat prices, which had firmed at the start of the month on slow spring planting in the United States and tensions in Ukraine, declined during the second half of the month, with weather conditions improving in the United States and shipments from Ukraine continuing normally.

• The FAO Vegetable Oil Price

Index averaged 195.3 points in May, down 3.7 points (or 1.8 percent) from April, reflecting lower quotations of palm, soy and rapeseed oils.

Palm oil prices fell for the second con-secutive month on rising output in Southeast Asia, continued strength in Malaysia's currency and subdued global import demand. The softening of soy oil was caused by strong soybean crushing in South America and initial forecasts of an ample global soybean crop in 2014/15.

The drop in rapeseed oil prices mainly stemmed from an improvement in global export availabilities and the prospect of a record harvest in the EU.

• The FAO Dairy Price Index aver-aged 238.9 points in May, represent-ing a second sharp monthly fall, and a decline of 12 points (or 5 percent) over April. The market for dairy commodi-ties is readjusting, following a period of exceptionally high prices in 2013 and early 2014, caused by limited export supplies.

In recent months, the production out-look has improved and, in general, buyers are purchasing only for imme-diate needs, in the expectation that

prices may fall further; consequently, average prices for all commodities declined during the month.

• The FAO Meat Price Index aver-aged 189.1 points in May, nearly unchanged from April, as prices of all the products that make up the index moved little.

Concerns that export supplies of pig-meat might be constrained by an outbreak of Porcine Epidemic Diar-rhea virus in the United States appear to have been allayed as prices for this product registered only a slight increase. Ovine meat prices are mov-ing seasonally higher, as the production year draws to a close in Oceania.

• The FAO Sugar Price Index aver-aged 259.2 points in May, up 9.3 points (or 3.7 percent), from April. Prices rose amid early forecasts for the 2014/15 season pointing out to a possible pro-duction deficit, with El Nino weather likely to exacerbate the fall in output.

Overall, the price increase was more pronounced during the first half of the month, while in the second half, the price rally was somewhat subdued by indications of large sugar inventories in India and Thailand. — FAO •

5 AGRICULTURE

May FAO Food Price Index in FULL

The National Social Security Author-ity has been given the green light to attach Tetrad Bank property to recover nearly US$5 million owed to it by the embattled bank.

The bank, which is reeling under a seri-ous liquidity crunch, has been failing to service its loans with many creditors. Last week, High Court judge Justice Happias Zhou granted a default judg-ment against Tetrad Bank after it failed to defend the claim.

He ordered that properties belonging to 10 companies that had given surety mortgage bonds to NSSA in respect of their immovable properties in Harare be attached. “The first and eleventh defendants be and is hereby ordered to pay the sum of $4 988 564 29 together with interest thereon at the rate of 7

percent per annum with effect from 11 September 2013 up to date of pay-ment in full and such interest being capitalised monthly,” reads part of the order.

“The immovable properties situated in the district of Harare, which properties are described in the schedule hereto, be and hereby declared especially execut-

able.” NSSA had sued the bank along with 10 other companies that acted as guarantors for the loans advanced to the troubled-financial concern.

NSSA general manager James Matiza represented the company and in his papers stated that sometime in Sep-tember last year, NSSA and Tetrad Bank entered into a verbal agreement in terms of which the company granted loans amounting to $953 000.

According to the agreement, interest would accrue on the loans at the rate of 7 percent per annum and such other rates and interest applied by NSSA from time to time being capitalised on monthly balances. It was also agreed that Tetrad would be liable for the val-uation and bond registration fees. “The loans were advanced subject to the

plaintiff’s special and general lending conditions,” said Matiza. “They would be repaid on monthly dates between October 2013 and November 2013 and in the event of default in paying install-ments due, the full sum of the out-standing would automatically become due and payable.”

Matiza stated that the 10 companies whose properties would be attached passed surety mortgage bonds to NSSA of immovable properties as security for the loans. “The second to eleventh defendants guaranteed the repayment of these loans as sureties and co-principal debtors with the first defendant,” he stated. After the bank reneged on its obligation to settle the loans, Matiza said, NSSA issued sum-mons in a bid to force it to repay, but nothing materialised. — Herald •

NEWS6

NSSA gets green-light to attach Tetrad Bank property

BH24

Qatar Airways will soon introduce flights to Harare, initially flying into Zimbabwe three times a week, the new envoy from the oil rich country said on Thursday.

Qatar’s new ambassador to Zimba-bwe Salem Al- Jaber told journalists soon after presenting his credentials

to President Robert Mugabe at State House that the move was part of a number of business ventures his country was prepared to bring to Zimbabwe.

“We are looking forward to bringing Qatar Airways soon because Qatar Airways as you know, is a big airline.

Last week we opened the biggest air-port in the Middle East,” he said.

“We have 10 flights a week to Johan-nesburg and we would like to extend it from Johannesburg to Harare at least three flights a week initially and then later on maybe as a direct flight.” Qatar Airways is the state-owned flag

carrier of Qatar, headquartered in the capital Doha. Founded in 1993, it is one of the world’s leading five-star airlines, flying to over 125 destina-tions in six different continents using a fleet of more than 100 aircraft.

The airline has more than 30 000 staff, with 17 000 people employed directly and a further 13 000 in its subsidiaries. Qatar Airways joins a host of other airlines that have intro-duced or resumed flights to Zimba-bwe including Air Namibia, Emirates, KLM and Mozambique’s LAM.

Other airlines have also shown renewed interest to fly into Zimba-bwe including Air France, Swiss Air, Bulgarian Airlines and Lufthansa of Germany. In 1996 Zimbabwe had 45 international carriers servicing the country.

The renewed interest in Zimbabwe’s aviation industry is mainly as a result of the demise of Air Zimbabwe which has suspended most of its regional and international routes due to via-bility challenges and an inadequate fleet. — New Ziana •

8 NEWS

Qatar Airways to introduce flights to Harare

The local equities market has closed the week on a bullish trend that has seen it ganing for 11 consecutive days.

The positive run is being driven by selected heavyweights that continue to rally. The trend continued today push-ing the Industrials Index up 1.54 points (or 0.87 percent) to 178.58 points.

Week on week the industrial index pushed up 3.69 points (or 2.11 per-cent).

Hippo led the top risers, gaining 10 cents to trade at 65 cents, while cement manufacturer PPC inched up by 2.50 cents to 215.70 cents. Giant telecoms Econet gained 0.85 cents to

close at 69 cents, while another heavy-weight Innscor increased by 0.44 cents to settle at 73.50 cents. Fidelity Life was up 0.52 cent to close at 7.52 cents, while SeedCo bumped 0.50 cents to trade solid at 73 cents.

Two industrial counters traded in nega-tive territory compared to the nine that rallied. Dairibord eased 0.30 cents to settle at 8.20 cents and ZHL lost 0.15 cents to 0.75 cents.

In minings, Bindura added 0.10 cents to trade at 2.60 cents to push the Min-ing Index up 0.90 points (or 2.38 per-cent) to close at 38.69 points. Falgold, Hwange and Riozim all maintained previous trading levels. On a week-on-week basis, the Mining Index gained 3.25 points (or 9.17 percent). — BH24 Reporter •

9 ZSE REVIEW

Equities close week on eleventh straight gain

Nigeria did it. And it is now stands as Africa's largest economy.

The benefits are immense, not least the attraction of foreign investors which Zimbabwe urgently requires at this present time.

We were stirred by a recent analytical article by Perry Munzwembiri who pos-tulates that African countries can ben-efit from re-benchmarking their Gross Domestic Products statistics.

He writes: When Ghana revised its Gross Domestic Product (GDP) fig-ures in 2010, the resultant 60 per cent jump in its GDP estimates saw it being upgraded from low-income country to a lower-middle income country. Simi-larly, Guinea Bissau and The Gambia also discovered that their economies were more than double the size of what had previously been reported after embarking on exercises to recalculate their GDP statistics. Perhaps more pro-nounced was the giant 89 per cent leap by Nigeria to the title of Africa's biggest economy (with a GDP of around $510 billion) after rebasing its GDP figures in April of this year.

The numerous examples of economy re-basing on the continent point to

possible benefits for the country. But let's look at the merits for Zimbabwe. Zimbabwe’s current GDP estimate is even lower than that of Zambia, a country that is historically economically smaller than Zimbabwe.

But more empirically, local economists say judging from the revenue buoy-ancy that may be inferred from current GDP figures the country's economy may be understated.

Revenue buoyancy is the ratio of rev-enue to GDP, while ‘GDP’ represents the total market value of all final goods and services produced in a country in a given year. On current GDP figures for Zimbabwe, the country’s revenue buoyancy is estimated to be around 30 percent. Such a figure is rather too high for the country considering the exten-

sive informalisation of its economy. Analysts at ZB Financial Holdings say the number of workers going into infor-mal employment will continue to rise and the tax base will resultantly shrink, although the Government is earmark-ing to increase its tax base by taxing the informal sector. With the economy almost being driven by the informal sector, Zimbabwe's revenue buoyancy should be much lower.

And this veritably points to our GDP being understated. In 2010, Botswa-na-based financial services company Imara raised similar concerns around the International Monetary Fund’s projections of Zimbabwe’s GDP of $5 billion. “We remain totally unconvinced and further don’t believe that the underlying number used for the econ-omy, being US$5 billion, is correct,”

then Imara Asset Management (Zim-babwe) chief executive John Legat had said at the time. Zimbabwean fiscal authorities seem to confirm a lack of conviction on their part on GDP figures that have been thrown around as this has shifted over the years without ade-quate justification.

For example, in the 2012 national budget the Government revised upward the size of the economy from $3,5 billion to $5,1 billion but with barely a corresponding uplift in the growth rate. Furthermore in the 2011 national budget, the then Minister of Finance Tendai Biti gave a re-rating of the GDP of up to $8 billion. The sim-ple reason for this is that our GDP base may be simply outdated, and re-basing could take us a long way. •

10 BH24 COMMENT

Should Zim consider re-basing its economy?

South Africa's rand was largely stable against the dollar on Friday as growing concerns about the health of the local economy offset boost from a generally a risk-positive global environment.

The local unit briefly retreated after cen-tral bank data showed South Africa's gold and foreign exchange reserves were slightly lower in May compared with the previous month.

The rand struggled to keep the previous day's momentum, when it snapped four days of losses after the European Cen-

tral Bank eased monetary policy, boost-ing demand for high yielding emerging markets. By 0655 GMT the rand was trading at 10.6935 to the dollar, little changed from its close at 10.6950 in New York on Thursday.

The risk of a sovereign credit down-grade next week and the possibility of more widespread industrial action, should keep the rand under pressure, Barclays Africa said in a note.

Fitch and Standard and Poor's are due to release their latest credit reviews on

South Africa on June 13, with analysts expecting downgrades after the econ-omy contracted in the first quarter of the year, hit by a crippling platinum strike.

"There is a risk that this afternoon's U.S. employment report could prove stronger than expected, and the rand could lose more ground into the week-end if this report does surprise to the upside," Barclays Africa added. Unlike the rand, government bonds were still on a firm footing after Thursday's post-ECB rally, pushing yields lower. —Reu-ters •

11 REGIONAL NEWS

South Africa's rand vulnerable, could weaken on U.S. jobs, credit ratings

12 DIARY OF EVENTS

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

POWER GENERATION STATSGen Station

6 June 2014

Energy

(Megawatts)

Hwange 384 MW

Kariba 750 MW

Harare 43 MW

Munyati 24 MW

Bulawayo -- MW

Imports 105 MW

Total 1306 MW

11 June - Rainbow Tourism Group 15th Annual General Meeting of the Shareholders, Place: Jacaranda Rooms 2 and 3 at the Rainbow Towers Hotel and Conference Centre, 1 Pennefather Avenue, Harare, Time: 12:00

13 June 2014 - Securities and

Exchange Commission of Zimbabwe 2nd Shareholders Forum & Responsible Invest-ing in Zimbabwe Conference 2014 Place : Cresta Lodge, Harare, Time : 8am -2pm

26 June - Masimba Holdings Limited Thirty-Ninth Annual

General Meeting of Mem-bers for the period ended 31 December 2013, Place: 44 Til-bury Road, Willowvale, Harare, Zimbabwe, Time: 12:00

THE BH24 DIARY

BH24

14 ZSE

ZSEMOVERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

TURNALL 20.00% 2.10 ZIMRE -16.67% 0.75

HIPPO 18.18% 65.00 DAIRIBORD -3.53% 8.20

FIDELITY 7.43% 7.52

BNC 4.00% 2.60

OK ZIMBABWE 2.27% 18.51

COTTCO 1.25% 0.81

ECONET 1.25% 69.00

PPC 1.17% 215.70

SEEDCO 0.69% 73.00

Indices

INDEx PREVIOUS TODAY MOVE CHANGE

INDUSTRIAL 177.04 178.58 +1.54 POINTS +0.87%

MINING 37.79 38.69 +0.90 POINTS +2.38%

Stocks Exchange

15 AFRICA STOCkS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire 246.37 +2.18 +0.89% 07Mar

Egypt 7,949.60 -75.68 -0.94% 06Mar

Ghana 2,324.35 +5.23 +0.23% 02June

Kenya 4,881.56 -13.57 -0.28% 30May

Malawi 12,662.47 +0.00 +0.00% 07Mar

Mauritius 2,074.51 -3.51 -0.17% 07Mar

Morocco 9,544.10 +21.01 +0.22% 07Mar

Nigeria 41,502.00 +27.60 +0.07% 02June

Rwanda 131.27 +0.00 +0.00% 24Oct

Tanzania 2,018.97 +25.40 +1.27% 07Mar

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,503.90 +0.81 +0.05% 10Sep

Zambia 4,242.74 +14.95 +0.35% 10April

Zimbabwe 174.91 +0.02 +0.01% 02June

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 —"Many hands and hearts and Minds generally contribute to anyone's notable achieve-Ments." — Walt disney

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16 INTERNATIONAL NEWS

Peripheral euro zone bond yields at new lows after ECB stimulus

Money and oil: Will the ECB rate cut hurt oil prices?

Lower-rated euro zone government bond yields fell to fresh record lows on Friday, as markets were buoyed

by another wave of European Central Bank stimulus to fight the threat of deflation and prop up the bloc's fragile economic recovery.

Italian, Spanish and Irish bonds led the way in a rally that stretched across all euro zone government debt, with traders citing the ECB's measures on Thursday aimed at promoting bank lending in some of the continent's most

vulnerable economies. Italian 10-year bond yields opened 8 basis points lower at 2.87 percent, Spanish equiv-alents opened 7 bps lower at 2.76 per-cent and Irish yields fell 7 bps to 2.51 percent.

The yield on 10-year German bonds, the benchmark for euro zone borrow-ing, opened 3 bps lower at 1.33 per-cent. — Reuters •

The ECB has taken the boldest step imaginable by adopting a deposit rate of -0.1%, the first time apparently that any central bank has gone to negative interest rates.

Although there are no fears of soft-ware crashes as in the famed Y2K catastrophe, there could be some con-sequences for oil markets. (Rumors that depositors will have to give tellers toasters are unfounded.)

Most important, a weaker euro can be expected (it is down about 3% from recent highs against the dollar), which theoretically would mean pres-sure on oil prices, since the stronger dollar means more revenue (or more

valuable revenue) for OPEC and other exporters. This does not occur formally, with members adjusting prices accord-ing to currency shifts, but reflects indi-rectly the price they desire.

The connection, though, is indirect and primarily in the perceptions of traders. OPEC has done little to alter prices since the collapse in 2008, and has been content to watch them fluctuate in a fairly narrow range the past few years. However, traders might sell oil in consequence of expectations for a stronger dollar.

It is hard to resist being snide, but to the question: is the value of the dollar and the price of oil linked? the appro-

priate answer is, “Yes, when it is, other-wise, no.” There are significant periods where the two move together, albeit it opposite directions, but other events often overwhelm the influence.

Most specifically, any sign of weaken-ing oil demand in the US, which might be a forerunner to a weaker economy, could trigger a correction in oil prices, which are quite high despite robust US oil inventories.

Demand of late has been strong and that, combined with ongoing geopolit-ical difficulties, has kept prices above $100. But one of the first laws of mar-kets is: things change. — Forbes •

By Andrew Robinson

Zimbabwe is never far from the head-lines of South African newspapers. This is understandable. We have close ties to our northern neighbour and SA has pro-vided a home to fleeing Zimbabweans, both white and black, for decades.

That there are highly complex political, economic and social problems in Zimba-bwe is beyond doubt.

But while Zimbabwe’s past will shape its future, it need not define it. I, for one, see the country as a slumbering giant about to awaken and I believe that when it does, it will rocket into a new era of prosperity that will fundamentally rede-fine our region. This isn’t something I am saying lightly. I am not shouting the odds from the sidelines safe in the knowledge that if I am wrong I have nothing to lose.

I head up a group of private-sector investors who are looking over the year to inject more than $100 million into Zimbabwe. I cannot disclose the details of the deal as it is at a sensitive stage, but this substantial investment is being made on the basis that the returns are

there to be made and that we will be able to get the money out of the country again when and if we need to. We do not for a second ignore the downside risks, which include political uncertainty, liquid-ity challenges and very high real interest rates on short-term credit, ballooning public-sector wage bills, ailing infrastruc-ture and an unreliable power supply.

Rather, we put more stock in pent-up demand, an educated population, increasingly pragmatic policy makers and wonderful commercial opportunities — not only is much of the land lying fal-low, so too is the industrial infrastructure. We are taking a long-term view. History has shown that entrepreneurs make their money when everyone is running and we believe that, as investors, now is the time to be getting in.

I have visited Zimbabwe more than 44 times in the past 18 months and what I see is different from what the media are communicating. The reality is that the country has all the underlying com-ponents of a healthy economy. While its human and physical capital have been degraded over the past 20 years, I have seen a rising corps of sensible, educated

and ideologically pragmatic business people, bureaucrats and politicians com-ing through. Take the case of the policy on indigenisation. The latest elections were fought around a campaign of indi-genisation, resource nationalism and job creation. Promises were made that locals would be protected from, and preferred to, foreigners. Certain sectors, such as retail, were demarcated as being entirely for locals, while others, including financial services and banks, were to be majority owned by black Zimbabweans.

In March, new Indigenisation Minister Francis Nhema went out of his way to say there would be no moderation of the indigenisation drive under his watch. His appointment had been seen as indicating there would be some. However, he later said the government would be prepared to be more flexible with banks if they agreed to lend more to local businesses. There is also increasing contact between the state and the Commercial Farmers Union, which represents the remnants of the once vibrant white farming com-munity, and real partnerships between the state and farmers that will restore the country’s "breadbasket" label are becoming possible again. These talks will

probably not see title deeds returned to farmers, but could see them back on the land with the security of tenure needed to recapitalise the industry and return the land to large-scale farming.

I am also heartened by the appointment of the former CE of banking group CBZ Holdings, John Mangudya, as gover-nor of the Reserve Bank of Zimbabwe. Because of his commercial-banking ped-igree, he will be the right man to steer monetary policy.

The creation of a stable, understood and consistent investment environment and a reinvigorated agricultural sector will give Zimbabwe the boost it needs if it is to reindustrialise and grow employ-ment again. Downside risks undoubtedly remain and, in investing as in life, there are no guarantees that things will work out the way we predict. But we believe that a positive outcome is far more likely than a negative one — and we are bet-ting heavily, using our own money, on being right about this. — BDLive

• Robinson, an entrepreneur and private equity investor, is CEO of Siand. •

17 ANALYSIS

Zimbabwe has all elements of a healthy economy