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18 The Standard September 21 to 27 2014 Business Radar back to profitability There was little confidence in the economy, company closures increased and unemployment reached alarming levels BY TARISAI MANDIZHA Radar Holdings recorded an after tax profit of US$288 006 for the year ended June 30 2014 from a loss of US$49,2 million in 2013. Last year, Radar suffered a loss from discontinued operations of US$46,9 million after agreeing to dispose its controlling shareholding in Border Timbers Limited. Revenue declined by 11% to US$8,2 million as compared to US$9,2 million in the comparable period last year. In a statement accompanying the group’s audited results, Radar chairperson Zondi Kumwenda said the year under review was “very challenging for the operating divisions”. “The group experienced normal trading patterns in the first half and a market downturn in the second half. There was little confidence in the economy, investment continued to decline, company closures increased and unemployment reached alarming levels. All these led to reduced disposable income and reduced demand for the group’s products and services,” Kumwenda said. Kumwenda said the sales volumes dropped by 9% at Macdonald Bricks from the prior year due to reduced construction activity in Matabeleland. “Demand for bricks was subdued despite inroads made in supplying products to Mashonaland, Midlands and Masvingo regions. The division experienced low orders in the second half of the year, particularly as a result of the reduced construction activity in the Matebeleland region. The subdued demand necessitated the mothballing of Willsgrove factory for four months during the wet season,” Kumwenda said. He however said Radar Properties’ occupancy level declined to 60% in the period under review from 62% last year compared with the previous year. “The operating environment continued to be characterised by a high rate of default on rental payments,” Kumwenda said. He added that the country at large had a huge infrastructure backlog which presents a potential market for construction and building materials. “In the short term, it is anticipated that demand will slacken in line with the declining economic activity. In response management is focusing on cost containment and process efficiencies,” he said. Zondi Kumwenda Livestock situation under control BY OuR CORReSpONDeNT The livestock situation in Matabeleland South province, which lost over 12 000 cattle last year, is now under control due to an improved supply of pasture and water, an expert has said. Over 12 700 cattle reportedly perished last year in Matabeleland South due to drought. However, Matabeleland South chief livestock specialist Simangaliphi Ngwabi said this year the livestock was not under threat. “The situation is under control because there was good rainfall this year. If you travel around the entire province you can see that the condition of our livestock is fair to good and I am confident that we will have a fair season up to the onset of the rain season. I am confident that we are not likely to have any deaths and so far we have not lost any cattle,” said Ngwabi. Gwabi said some Non-Governmental Organisations (NGOs) were also providing supplementary feed to needy areas such as Gwanda South. “There is feed which was provided by FAO and farmers are buying it to supplement their pastures, especially in Gwanda South where there is a problem of grazing ,” said the official. She said that during the same period last year, the province had already recorded many livestock deaths. “In 2012, we started losing cattle as early as March and so far we have not recorded any deaths. The water situation is quite good and the boreholes have not dried up. We had good rains that actually raised the water table,” she said. A visit to some areas in Matabeleland South also confirmed that the situation had improved as some dams still had water that could last up to the beginning of the rainy season. A farmer in the area, Thabani Mpofu, said due to the improved water situation this year, the calving rate was high. “We hope this coming season we will again have more rains and be able to restock our cattle that have died in the past years due to drought,” said Mpofu. Matabeleland South region has an estimated 556 619 cattle, contributing about 10% to the national herd. The region used to be the country’s prime cattle producing area but the recurrent droughts since 1992 decimated about 60% of the province’s head. The condition of livestock in Matabeleland South this year is better than previous years.
Business The Standard September 21 to 27 2014 19 Debt stands in the way of Zim-China courtship Could China be tightening its funding requirements for its ally of over 34 years? If that is the case, what could be the next source of funding for the country? in the money with NESBERt RUwO In my last week column, I highlighted that there is a “beauty contest” for international capital. The RBZ, in its July 2014 monetary policy statement, states that on “a cumulative basis, and compared to other countries in the region, Zimbabwe’s foreign direct investment inflows amounted to US$1,7 billion over the period 1980 to 2013, whereas, Zambia and Mozambique received US$7,7 billion and US$15,8 billion, respectively. Of the total of US$25,2 billion received between the three countries since 1980, Zimbabwe has accounted for a mere 7% which underpins the “need for the country to create an investor-friendly environment” to tap into international capital targeting African opportunities. China has been one of the key investors with a keen interest on investments in Zimbabwe. But with Chinese looking for a “financing channel of reciprocity” with Zimbabwe, the financial relationship between the two could be in a process of being redefined. Zimbabwe’s relationship with China dates back to the 1970s when China supported the liberation war. The Chinese support for Zimbabwe became more pronounced as Zimbabwe became isolated by the western world through sanctions. In response to the sanctions by the west, Zimbabwe adopted a “Look East Policy” in the early 2000s, which saw Harare strengthening its ties with countries like China and Malaysia. A lot of transactions have been concluded between China and Zimbabwe, with Zimbabwe importing goods ranging from military, agriculture equipment to basic goods, while China has been interested in Zimbabwe’s mineral resources, particularly platinum. Zimbabwe holds the second largest platinum reserves in the world after South Africa. China has also invested in other sectors like energy generation and water supply. while there has been increased investments by the East, Zimbabwe still requires US$27 billion to fund its Zim Asset, a national fiveyear plan to improve basic services and rebuild the country. The country will be looking towards China (among other funders) to bankroll this plan, but China wants Zimbabwe to use its mineral earnings to guarantee its funding, showing that the future of Chinese funding is underpinned by national income generating capacity. That is akin to cash flows in project finance. The Zimbabwe presidential delegation was in China in August in a bid to unlock “more Chinese enterprises to invest and more Chinese tourists to travel in Zimbabwe”. A number of agreements meant to strengthen the relationship between the two countries were signed. These will see increased cooperation between the two, with China supporting the economic development of Zimbabwe in the areas of industrial zone development, infrastructure, mining and agriculture. However, China points out the need to “discuss with Zimbabwe the co-operation pattern and financing channel of reciprocity and mutual benefit”, implying that tangible numbers were not penned down. Could China be tightening its funding requirements for its ally of over 34 years? If that is the case, what could be the next source of funding for the country? Look back west? Maybe not in the near future. Zimbabwe, however, resumed engaging the IMF in 2013 after a decade of non-engagement. A team of IMF staff is expected in Harare this month to assess progress on the Staff-Monitored Programme (SMP). IMF insists that Harare pays it’s debt in arrears before any further loans can be granted. In its July 2014 country report on Zimbabwe, IMF estimates that the country’s external debt at end-2014, will stand at US$12,8 billion (94,5% of GDP) of which US$5,6 billion is in arrears. That external debt is projected to grow to US$22,5 billion (122% of GDP) by 2019. That is staggering! within a month of the President’s visit to China, Russia sent its Foreign minister Sergey Lavrov to Harare with a view to strengthen “bilateral trade-andeconomic and investment cooperation, primarily in the fields of mining, geological prospecting, energy, agriculture, infrastruc- Power station . . . China has already committed to funding a power generation project in Kariba ture construction, and tourism” but eyeing Zimbabwe’s platinum reserves through the US$3 billion Darwendale Comprehensive Development Project, as platinum “will be the driving force behind all bilateral trade, economic and investment relations”. with the President holding the vice-chair position and eligible for the rotating African Union chairmanship in 2015, and currently being the Sadc chairman, this could be the opportunity for China to work with Zimbabwe to push for “the new type of China-Africa strategic partnership to a new level”. Ironically, Russia sees the same, that Zimbabwe enjoys “a high level of authority” in African affairs. It’s obvious that China and Russia have found some “beauty” in Zimbabwe, but beauty is in the eye of the beholder. • Nesbert Ruwo is a Zimbabwean-born investment banker currently based in South Africa. He can be contacted on nesr@opportunvest.co.za PROCUREMENT NOTICE Russia’s Foreign minister Sergev Lavrov. Picture: Aaron Ufumeli The United Nations Development Programme (UNDP) would like to solicit bids from qualified entities for the Supply and Delivery of the following financed through a grant from The Global Fund, To Fight AIDS, Tuberculosis and Malaria (GFATM); Invitation to Bid Reference Number: ITB-ZIM-GF-031-2014 Designing and Printing of Forms and Registers The programme is implemented by UNDP Zimbabwe Office in collaboration with the Ministry of Health and Child Care in Zimbabwe. Interested potential bidders should download the detailed ITB documents on: http://www.undp.org.zw/about-undp/work-with-us/procurement; http://procurement-notices-admin.undp.org/; https://www.ungm.org/Public/Notice for their further action and submission of bid by 2 nd October 2014 no later than 1300 hours. Hand delivered, sealed envelopes to be submitted at UNDP Zimbabwe, Tender Box in Block 7, Arundel Office Park, Norfolk Road, Mt Pleasant, Harare Please note that this advert is not to be construed in any way as an offer to contract with your firm. Furthermore, UNDP reserves the right to reject part or all of the proposals. Block 10, Arundel Office Park, Norfolk Road, Mt Pleasant, P O Box 4775, Harare, Zimbabwe Tel: (263 4) 338836-44; Fax: (263 4) 338294; Email: Registry@undp.org
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