Zim shifting to services, knowledge-based economy: World Bank

By Tawanda Musarurwa

HARARE - The World Bank has lauded the growth of service based industries and a knowl-edge based economy in Zimba-bwe.

In its latest Zimbabwe Eco-nomic Update: Changing Growth Patterns, the World Bank said highlights shifting trends in local industrial eco-nomics as traditional linchpin sectors such as mining, agri-culture and manufacturing have been negatively affected by varying internal and exoge-nous factors.

"Agricultural production now represents a broadly constant share of total output, while the service sector is experiencing

News Update as @ 1530 hours, Wednesday 03 February 2016Feedback: [email protected]: [email protected]

Zim shifting to services, knowledge-based economy: World Bank

dynamic growth.

"However, the manufacturing and mining sectors are strug-gling to cope with rising capital costs, a difficult business cli-mate and a decline in external competitiveness. "As a result, there has been a shift in eco-nomic activity from industry to services," said the World Bank.

"The service sector, currently 60 percent of gross domestic product, grew at an average rate of 8,5 percent per year during 2010-14, 4,3 percent in 2015 and is projected to grow by over 3 percent in 2016.

"Construction, finance and insurance and hotels and distri-bution recorded strong growth in 2015.

"Telecommunications is also expected to continue to make important contributions to overall growth as its customer base continues to expand. In 2015, the mobile phone pene-tration rate (active) rose to 93 percent, and internet access reached 47 percent of the pop-

ulation.

"While the telecommunications industry remains pivotal to the service sector’s development, signs of weakening domestic demand are likely to dampen its growth prospects in the short-term. Knowledge-inten-sive subsectors that employ skilled workers and serve upper-income consumers led the sector’s growth."It added:

"Non-tradable services such as, education and public adminis-tration also experienced rapid growth, partly in response to increasing fiscal expenditures and rising public sector wages, including teachers’ salaries.

"The rise of knowledge-in-tensive subsectors such as finance, transport and com-munications underscores the growth potential of Zimbabwe’s

service sector."

The international financial institution expects Zimbabwe's GDP growth to remain at 1,5 percent. "Zimbabwe has enor-mous potential for inclusive growth, but it will be a complex challenge to ensure that recov-ery is truly broad-based and not regressive," said the World Bank.●

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HARARE – Hospitality group, African Sun Limited has closed its Beitbridge Express Hotel due to losses it was consist-ently making over much of the two decades it has been running.

Like most other African Sun hotels, the 104-roomed Beitbridge Express Hotel, is owned by Dawn Properties.

The hotel was opened in 1998, with African Sun tar-geting to capitalise on the traffic between Zimbabwe and South Africa.

African Sun said it had agreed

with owners of the building, Dawn Properties to terminate the lease agreement for the hotel.

“The rationale for the termi-nation was as a result of the prolonged loss making by the hotel which was eroding the group’s equity,” African Sun said.

Beitbridge Express had con-tinued to make losses in spite of various initiatives imple-mented to turn around its for-tunes, the group said.

In the past two years, the hotel’s accumulated losses

amounted to $507 944.

“The financial losses contin-ued despite various initiatives implemented as such the board was left with no other option, but to take the con-sidered view that disinvesting was the most prudent option,” African Sun said.

As at the end of December 2015, the hotel recorded a loss of $217 910 while its net current liabilities stood at $194 607.

Other African Sun hotels stil l in operation include Crowne Plaza Monomotapa and Hol-

iday Inn in Harare, Elephant Hills and Kingdom Hotel in Victoria Falls, Holiday Inn Mutare and Carribea Bay in Kariba.

In trying to enhance its via-bility, African Sun - which posted a $3,36 million loss for its financial year end-ing September 2015 - exited another loss making entity, Amber Accra Hotel in Ghana.

It also entered into a deal with Legacy Hotels of South Africa to manage five of its local hotels for the next five years.-New Ziana.●

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African sun shuts down Beitbridge Hotel

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By Tawanda Musarurwa

HARARE - Telecoms giant Econet Wireless Zimbabwe continues to extend its ten-tacles into the educational technology and e-learning platforms through its intro-duction of a second zero-rated product - Ruzivo Digi-tal Learning.

Although the platform, which was endorsed by the Minis-try of Primary and Second-ary Education Curriculum Development Unit (CDU), presently caters for primary education, Econet says it has plans to extend to secondary learners.

Zimbabwe has over 3,6 mil-l ion pupils enrolled in primary and secondary schools. CEO Econet Services Dr Jimmy Shindi said "we are develop-ing secondary school content in the background and we wil l let you know soon."

Similar to Econet's other

digital educational platform - EcoSchool - Ruzivo Digital Learning is zero-rated, which basically means that it can be assessed without data charges.

But on creating an account and signing up for the ser-vice the pupils are required to pay a minimum of $2 a month, which is only paya-ble via the telecoms firm's mobile money platform, Eco-Cash. The learning material

is also specif ic to the Zimba-bwean learning curriculum

"Content is developed by an internal team in l ine with the national curriculum," said Dr Shindi.

The novel interactive digital learning platform is expected to complement the Govern-ment’s efforts in providing education resources to help improve overall pass rates.

Econet Wireless CEO Mr Douglas Mboweni said: “At Econet we believe that investing in the education of our children is key to unlock-ing the nation’s economic prosperity across all sectors.

"Zimbabwe is rated amongst the top l iterate countries in Africa and we would l ike to see that great achieve-ment maintained for this and future generations.” ●

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Econet's Ruzivo Digital Learning targets 3,6 million users

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BH24 Reporter

HARARE – The Zimbabwe Rev-enue Authority is working on a raft of measure to increase revenue collection after failing to meet successive targets.

The revenue authority has in recent years failed to meet its target, including last year, a factor that chairperson Mrs Willia Bonyongwe attributed to the depressed economy and Zimra’s limitations.

Net revenue collections for 2015 fell 3 percent to $3,50 billion from $3,60 billion in the previous year. It was however marginally above the revised target for the year of $3,46 billion. The initial target for the year was initially $3,76 billion.

“The revenue collections for 2015 reflect largely the sub-dued state of the economy during the reporting period. However, it also reflects the limitations of ZIMRA in terms of lack of robust enforcement

particularly on Local VAT, incomplete digitalisation and budgetary constraints.

“ZIMRA is working on a com-prehensive tax management system to increase the effi-ciency and cost of collect-ing while at the same time increasing revenues by plug-ging all the leakages. The tax management system should be operational by end of 2016. This will have a huge positive impact on all tax heads. In the meanwhile, ZIMRA is going to vigorously enforce all current fiscal legislation to increase

the level of compliance. The public is urged to assist the Authority in identifying busi-nesses which do not offer fis-cal receipts or who do not pay their taxes.

“ZIMRA is also working on introducing cargo tracking in 2016 and on increasing the number of scanners, subject to availability of funding. This will cut down on smuggling.

All these initiatives will greatly improve the convenience of our stakeholders and also fulfil our goal to serve efficiently,” Mrs Bonyongwe said.●

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Zimra in bid to boost revenue collection

BH249

HARARE -The equities market dropped for a third straight day, losing 1.34 to close at 100.99 as heavyweight counters lost ground.

NatFoods lost a hefty $0,4700 to close at $2,2000, while PPC dropped by $0,0975 to settle at $0,8000.

Giant insurer Old Mutual decreased by $0,0299 to $1,6700, and other losses were in Meikles which was $0,0026 lower at $0,0740 and Padenga which closed at $0,0690 after a $0,0010 loss.

However, Econet added $0,0005 to trade at $0,2205 while GetBucks

rose $0,0001 to close at $0,0370.

The mining index was flat at 19.53 as Bindura, Fal-gold, Hwange and RioZim maintained previous price levels at $0,0100, $0,0050, $0,0300 and $0,1040 respectively.

- BH24 Reporter ●

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Industrials in third consecutive loss

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14 DIARy oF EvENTs

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

PoWER GENERATIoN sTATs

Gen Station

03 February 2016

Energy

(Megawatts)

Hwange 420 MW

Kariba 285 MW

Harare 30 MW

Munyati 29 MW

Bulawayo 24 MW

Imports 0 - 300 MW

Total 1371 MW

—10 February 2016 - Nampak Zimbabwe Annual General Meeting: venue 68 Birmingham Road, southerton, Harare: Time 12:00

—18 February 2016 - 70th Annual General Meeting of the members of CAFCA ; Place: Boardroom at the company’s registered office at 54 Lytton Road, Workington, Harare; Time: 12:00 hours

—23 February 2015 - 38th Annual General Meeting of the members of Powerspeed Electrical Limited; Place: Powerspeed Board-room, Gate 1, Powerspeed Complex, Corner Cripps Road and Kelvin Road North, Graniteside, Harare; Time: 1100 hours

25 February 2016 - Extraordinary General Meeting (“EGM”) of the shareholders of Radar Holdings Limited; Place: Tanganyika House, 6th Floor Boardroom, Harare; Time: 0900 hours...

25 February 2016 - The 49th Annual General Meeting of Mashonaland Holdings Limited; Place: The Boardroom, 19th Floor, ZB Life Towers, 77 Jason Moyo Avenue, Harare; Time: 1200 hours...

THE BH24 DIARy

WAsHINGToN - The Interna-tional Monetary Fund said on Tuesday it stands ready to help sub-Saharan Africa's oil export-ers cope with plunging crude prices and growing fiscal pres-sures but has not received any new funding requests from the region.

Nigeria and Angola instead have turned to the World Bank for assistance, even though the IMF is typically viewed as the world's go-to crisis lender.

Facing an estimated $15 billion budget deficit in 2016, Nige-ria's finance ministry has said it is looking to borrow as much as $5 billion. It has held dis-cussions with the World Bank, African Development Bank and China's Export-Import Bank due to their "concessionary rates of interest."

The World Bank is discussing potential financing for Nigeria and Angola through a program to support structural changes in an emerging market country's economy and government insti-tutions.

The two sub-saharan African countries are the latest in what

may become a long line of oil-exporting countries to seek financial assistance to help stem growing deficits as falling crude prices crush revenues. The IMF and World Bank are already talking to Azerbaijan about a $4 billion financing package.

On Tuesday, US crude fell back below $30 a barrel, half its price

in June 2015 and down from about $100 two years ago.

"The sharp decline in oil prices represents a formidable shock on the oil exporting countries of sub-Saharan Africa, especially in view of their strong reliance on oil receipts for fiscal and exter-nal revenues," an IMF spokes-woman said in a statement.

The IMF noted that despite rising deficits, several of these coun-tries still have adequate foreign exchange reserves and low lev-els of overall debt. This would suggest that a balance-of-pay-ments crisis is not imminent.

When IMF managing director Christine Lagarde visited Nige-ria in January to meet new Pres-ident Muhammadu Buhari, she insisted that she was not there to negotiate a loan program..

"With the exception of Chad, which already had a program in place with the IMF prior to the oil price shock, we have not received any new request for financial assistance from sub-Saharan African oil export-ers," the IMF spokeswoman added. "We indeed stand ready to assist the authorities, should such a request materialise."

Although wealthier Gulf oil pro-ducers are expected to fare bet-ter due to deeper reserves, the IMF issued a warning last week to Bahrain that it, too should cut deficits now reaching 15 percent of economic output, which have weakened investor sentiment. - Reuters●

REGIoNAL NEWs 15

IMF says ready to lend to African oil producers; no requests yet

Gold stabilised near a three-month top early on Wednes-day, its safe-haven appeal kept intact by concerns over a wobbly global economy that has put share markets under pressure.

FUNDAMENTALs

* Spot gold was off 0,2 per-cent at $1 127,07 an ounce by 0044 GMT, not far below Tuesday’s peak of $1 130,30, its strongest since Nov. 3.

* US gold for April deliv-ery was flat at $1 127,70 an ounce.

* Global interest rates are likely to go even lower before they rise as financial market volatil ity and the spectre of deflation raise fresh doubts about central banks’ ability to fulfi l their mandates, policy-makers and economists said.

* That should be supportive for gold, an asset that thrives on uncertainty. Expectations that the Federal Reserve may also go easy on raising inter-est rates amid the global eco-nomic headwinds had helped gold rise the most in a year in January.

* But Kansas City Fed Bank President Esther George said the Fed should push ahead with interest rate hikes because of the strong funda-mentals of the US economy.

* India’s latest attempt to curb the country’s love for gold – by forcing buyers of high-value jewellery to dis-close their tax code – has

boosted unofficial trading in the world’s second-biggest gold consumer, rather than promote transparency and dent demand.

MARKET NEWs

* Asian shares sagged as oil prices sank again due to fad-ing hopes of a deal to curb a global glut, prompting inves-

tor to seek shelter in safe-ha-ven assets and lifting bonds and gold to multi-month highs.

* The yen and euro held on to overnight gains against the dollar, driving down US debt yields to nine-month lows and dulling the greenback’s appeal. - Reuters●

INTERNATIoNAL NEWs 16

Gold prices stick near 3-month high

By Ben sharples

Oil bulls distressed that last week’s rally fizzled can find some comfort in forecasts for a bigger and longer rebound by the end of the year.

Analysts are projecting prices will climb more than $15 by the end of 2016. New York crude will reach $46 a bar-rel during the fourth quar-ter, while Brent in London will trade at $48 in the same period, the median of 17 esti-mates compiled by Bloomberg this year show. A global sur-plus that fueled oil’s decline to a 12-year low will shift to deficit as US shale output falls, according to Goldman Sachs Group Inc.

US production will drop by 620 000 barrels a day, or about 7 percent, from the first quarter to the fourth, according to the Energy Information Administration. Meanwhile, the International Energy Agency forecasts total non-OPEC supply will fall by 600 000 barrels a day

this year. That may pave the way for a rebound as lower prices have stimulated global demand. Oil is the “trade of the year,” according to Citi-group Inc., which is among banks from UBS Group AG to Societe Generale SA that pre-dict a gain in the second half.

“US shale should take the hit, that’s where you will see cuts and supply should start to taper off,” Daniel Ang, an investment analyst at Phill ip Futures, said by phone from Singapore. “On top of that, there are bullish demand forecasts for the second half.”

West Texas Intermediate and Brent both closed at the low-est level since 2003 on Jan. 20. WTI for March delivery ended the session at $29,88 a barrel on Tuesday and would need to gain 54 percent to reach the median estimate of $46 a barrel. The London contract for April delivery settled at $32,72 and needs a 47 percent boost to hit $48. The median price was taken from estimates provided this year by 17 analysts who gave forecasts for both oil grades.

shrinking output

WTI and Brent added 4,4 per-cent and 8 percent last week, respectively, amid speculation Russia and OPEC will meet to discuss trimming crude out-put. They have since given up most of those gains.

The oil price rout will shut sufficient production to erode the global glut and crude will turn into a new bull mar-ket before the year is out, analysts including Goldman Sachs’ Jeff Currie said in a Jan. 15 report. US produc-tion hit a record high of 9,61 million barrels a day in June, according to weekly data from the EIA, and is forecast to average 9,11 million barrels a day in the first three months of the year. It may fall to average 8,49 million barrels a day during the fourth quarter, according to the agency.

‘Drown in oversupply’

“We’ll see higher oil prices” with “supply and demand tightening in the second half of the year,” Bob Dudley, chief executive officer of BP Plc,

17 analysis17 ANALysIs

oil prices could jump 50pc by year- end

18 analysis18 ANALysIs

said in a Bloomberg Televi-sion interview Tuesday. The market will remain “tough and choppy” in the first half as it contends with a surplus of 1 million barrels a day, he said.

A worldwide oversupply con-tributed to a 30 percent slump in WTI and 35 percent decline in Brent last year. US crude supplies have swelled to a record and the Organi-sation of Petroleum Export-ing Countries have effectively abandoned output targets as they seek to defend market share.

“We need to see supply giving up and I think that all falls to the US,” Dominic Schnider, the head of commodities and Asia-Pacific foreign exchange at UBS’s wealth-management unit in Hong Kong, said Fri-day in a Bloomberg Televi-sion interview. Schnider at the beginning of this year correctly predicted Brent would drop near $30 a barrel. “We’re stil l oversupplied.”

Ratings Cut

Natixis SA lowered its fore-casts for 2016 and 2017 over concerns that Iran will boost exports after sanctions were lifted and on the possibility a more stable Libyan govern-ment will increase produc-tion. The Paris-based bank projects WTI will average $38 a barrel in the fourth-quar-ter, the lowest of 17 esti-mates compiled by Bloomb-erg. And while the IEA sees supply outside OPEC sliding, it warned last month that “the oil market could drown in oversupply.”

The price slump prompted Exxon Mobil Corp. to cut its dril l ing budget to the lowest in 10 years, while Stand-ard & Poor’s reduced Chev-ron Corp.’s credit rating for the first time in almost three decades. The agency also cut Royal Dutch Shell Plc’s debt rating to the lowest since S&P began coverage in 1990.

There are signs supply and demand will start to come

back into balance this year, OPEC Secretary-General Abdalla El-Badri said January 25 at a conference in London. Global demand is forecast to increase by about 1,3 million barrels a day, while supply from outside the producer group is expected to contract by about 660 000 a day, he said.

Russia Production

Output from Russia, which vies with Saudi Arabia and the US as the world’s top pro-ducer, may fall this year by as much as 150 000 barrels a day, or about 1,3 percent, according to analysts includ-ing Neil Beveridge, at San-ford C. Bernstein & Co. The country’s production set a post-Soviet high in January as output of crude and a light oil called condensate climbed 1,5 percent from a year ear-lier to 10,878 million barrels a day, according to the Energy Ministry’s CDU-TEK unit.

Iraq, the second-biggest pro-ducer in OPEC, and Pierre

Andurand, the founder of the $615 million Andurand Capital Management, predict oil may rise to $50 a barrel, while the United Arab Emirates sees the glut shrinking, even after Iran boosts exports.

While prices continue to fluc-tuate, buy the December 2016 WTI contract below $40 a barrel because prices are forecast to average $48 by the end of the year, accord-ing to Mark Keenan, the head of commodities research for Asia at Societe Generale in Singapore. There may be “meaningful signs” of shale production balancing in the second half, Keenan predicts.

“The combination of contin-ued demand growth and fall-ing U.S. production will even-tually help create a floor in the market from where it will be able to rally back towards the $40 to $50 range by year-end,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. - Bloomberg●