By Tawanda Musarurwa

HARARE -Nestlé Zimbabwe has increased the capacity of its Egron milk powders and Cremora plant following an $8 million capital expenditure on the project this year .

The $8 million capital expenditure this year is part of $30 million investment the Swiss food giant has undertaken at its Southerton factory in Harare over the last four years.

In respect of the upgraded plant, the company's milk powder (NIDO and Everyday brands) output will rise from 900 kilogrammes per hour to 1 500kgs/hr, while output of the Cremora brand will rise from 900kgs/hr to 1 600kgs/hr.

Speaking at the commissioning of

the refurbished plant this morning, Industry and Commerce Minister Mike Bimha said the investment by Nestlé was indicative of a business

operating environment that was still attractive for investors despite prevailing economic challenges.

"The expansion in milk powders and Cremora manufacturing line comes at a time when many Zim-babwean companies are struggling

News Update as @ 1530 hours, Wednesday 02 December 2015

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Nestlé Zimbabwe spends $8m in milk powders plant upgrade

or closing shop mostly because of lack of capitalisation.

"Nestlé Zimbabwe's resilience in a difficult environment is a positive story and is testimony to other potential investors that Zimbabwe is a safe destination for invest-ment," he said.

He however acknowledged the need for Government to do more to improve the business operating environment:

"The currently obtaining low level of capacity utilisation in the man-ufacturing sector has resulted in influx of imported goods in our supermarkets mostly from the region thereby offering an unlevel playing field."

Nestlé South Cluster manager for Zimbabwe, Zambia and Malawi Mr Ben Ndiaye said the company now has capacity to meet national demand but volumes are still low due to shortage of raw materials.

As a mitigatory measure, the com-pany introduced a dairy empow-erment scheme to economically empower small scale dairy pro-

ducers as well as rebuild the dairy industry in Zimbabwe through increased raw milk supplies.

“For the last two years, 110 small scale farmers have been trained by Nestle’ agricultural services in ani-mal nutrition, hygiene and maize silage making,” he said.

Last week Nestle’ distributed 100 dairy cows worth $2 000 each to 20 small scale farmers in Chitom-borwizi.

The Nestle dairy empowerment scheme is a ten year programme launched in 2011 in which the food processor will distribute 4 000 heifers to dairy farmers par-ticularly in Mashonaland East and Mashonaland West provinces.

Under the programme, Nestle trains farmers on milk production covering subjects like hygiene in handling milk, caring for the cows and calves as well as the type of grass and quantities required for dairy cows.●

2 NEWs

By Funny Hudzerema

HARARE - Zimbabwe should expe-dite the establishment of a Sover-eign Wealth Fund (SWF) to drive long-term economic growth, Zim-babwe Economic Policy Analysis and Research Unit (ZEPARU) executive director Dr Gibson Chigumira has said.

Dr Chigumira said the SWFs could be used to develop other sectors of the economy, similar to what other countries are doing.

“Zimbabwe has a diverse mineral sector with immense potential to anchor inclusive economic growth and development,” he said. “The money from minerals can be saved to create a SWF for future genera-

tion use.”

He was speaking during a 'Global practice in establishing and manag-ing a sovereign wealth fund valida-tion workshop'.

SWFs are most common in resource rich countries and usually serve two purposes. The first use of SWFs is for stability of government revenue under fluctuations in commodity prices. When commodity prices are high, governments set aside some of the money from commodity sales, and when prices are weak; this is injected back into government’s fis-cal revenues.

The second use of sovereign wealth funds is to have a national savings fund in order to have something

left over once the commodity runs out or is no longer in demand. It is done to benefit future generations Countries like Botswana, Norway and Dubai have introduced the SWF which have helped to develop other economic sectors.

“A major proportion of mineral resource revenues could be accu-mulated into a stabilisation fund to be drawn down by the fiscus when commodity prices fall below pre-determined long-term projections, protecting the budget from revenue shocks.

“This fund could finance the mas-sive investment required for geo-logical survey to acquire a better understanding of the geology and

to uncover new exploration targets,” he said.

Many countries in South East Asia like, China, Singapore and Hong Kong for example have SWFs funded by budgetary surpluses instead of commodity exports.

The first sovereign wealth fund to be created was in Kuwait in 1953, was funded by oil revenues and today currently holds assets of US$350 bil-lion (Over US$100,000 per capita).

In this fund royalties were admin-istered to this fund, which then invested the money globally. Since then, many countries have created SWFs.

.●

3 NEWs

sovereign Wealth Fund critical for economic growth: ZEPARU

BH244

By Munesu Nyakudya

HARARE -The Deposit Protection Corporation (DPC) has commenced the payment of demonetisation pro-ceeds to qualifying Zimbabwe Dollar account holders for banks under liq-uidation.

According to DPC the process - which is in pursuance of the Zimbabwean Government demonetisation exer-cise - will run up until the second quarter of next year.

The DPC shall be paying the equiva-lent United States dollars amount for each account balance as at Decem-ber 31, 2008 converted by the United Nations exchange rate of $1 to Z$5 quadrillion.

“Accordingly, DPC shall pay any per-son who was a holder of a Zimbabwe dollar denominated bank account for AfrAsia Bank Zimbabwe Limited (In Liquidation) and Allied Bank Limited (In Liquidation as at 31 December 2008,” it said in a statement today.

“It will be paid as five United States dollars for every account that was held with a balance of zero up to

one hundred dollars and seventy five quadrillion Zimbabwean dollars and for any Zimbabwean dollar balances above one hundred and seventy five quadrillion Zimbabwe dollars at the rate of one United States dollar to thirty five quadrillion Zimbabwe dol-lars.”

DPC said Zimbabwe dollar account holders for AfrAsia and Allied Banks are therefore advised to approach DPC offices for payment with valid proof of identification.

Only holders of active deposits and savings accounts as at December 31,

2008 are eligible for payment whilst holders of investment accounts are not eligible for payments.

The broader demonetisation exer-cise began in June following the Reserve Bank of Zimbabwe's mid-term monetary policy.●

5 NEWs

Demonetisation exercise reaches banks under liquidation

BH24

TAA:DI251386-Y22

Laz DI324241-D15

6

HARARE -The mainstream industrial index was again affected by selected heavy-weights, losing 1.69 (or 1,46 percent) to close at 114.39.

Dragging down the bourse was beverage giant Delta, which dropped $0,0251 to trade at $0,7000, while sugar proces-sor Hippo declined by $0,0200

to $0,3700 while conglomerate Innscor closed at $0,2900 fol-lowing a $0,0050 loss.

Crocodile skin producer Padenga dipped $0,0043 to settle at $0,0750 and giant retailer OK Zimbabwe was $0,0030 weaker $0,0450.

On the upside, Old Mutual advanced by $0,0012 to trade at

$2,1162 and Turnall was margin-ally up by $0,0005 to $0,0095.

Activity on the bourse was lim-ited to 16 counters.

The mining index was flat at 22.33 as Bindura, Falgold, Hwange and RioZim all main-tained previous price levels - BH24 Reporter ●

ZsE7

Equities market extends losses

BH248

MovERs CHANGE ToDAy PRiCE UsC sHAKERs CHANGE ToDAy PRiCE UsC

Masimba 10.00 1.10 OK ZIM -6.25 4.50

TURNALL 5.55 0.95 PADENGA -5.42 7.50

OLD MUTUAL 0.05 211.62 HIPPO -5.12 37.00

DELTA -3.46 70.00

EDGARS -2.85 6.80

INNSCOR -1.69 29.00

iNDEx PREvioUs ToDAy MovE CHANGE

INDUSTRIAL 116.08 114.39 -1.69 points -1.46%

MINING 22.33 22.33 0.00 0.00%

9 ZsE TABlEs

ZsE

iNDiCEs

stock Exchange

BH2410

11 DiARy oF EvENTs

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

PoWER GENERATioN sTATs

Gen Station

02 December 15

Energy

(Megawatts)

Hwange 296 MW

Kariba 468 MW

Harare 30 MW

Munyati 18 MW

Bulawayo 24 MW

Imports 0 MW

Total 799 MW

•11 December 2015 - Buy Zimbabwe Awards; venue: Rainbow Towers, Harare

THE BH24 DiARy

BH2412

Johannesburg -The rand remained on fragile ground against the dollar on Wednes-day, with scope to revisit the previous day's record lows as investors fretted about a pos-sible credit rating downgrade for South African at the end of the week.

The JSE securities exchange's Top-40 futures index was flat, pointing to a similar start for the local bourse at 0700 GMT.

By 0652 GMT the rand, which hit an all-time low of 14.4950 versus the greenback in the previous session, was trad-ing at 14.4405, more on less where it ended Tuesday trade.

Traders said investors were focused on Friday's reviews from Fitch, which rates South Africa at BBB with a negative outlook and warned of a pos-sible downgrade in September, and from Standard & Poor's, which has it at BBB- with a stable outlook.

U.S. jobs data also due out on Friday could add pressure on the rand if it hardens the case for interest rates in the world's biggest economy to

start rising in December.

"The local unit tested technical resistance around 14.50/dol-lar (on Tuesday) and further losses seem unavoidable as we approach release of sover-eign credit rating reviews and U.S. non-farm payrolls data,"

NKC African Economics said in a note.

In fixed income, the yield for debt due in 2026 eased 4 basis points to 8.585 percent

- Reuters●

REGioNAl NEWs 13

Rand under pressure ahead of ratings reviews

European stocks traded at a three-month high, extending gains after inflation data reinforced the case for further central-bank stimulus.

The Stoxx Europe 600 Index rose 0.5 percent at 10:09 a.m. in London, with all its industry groups up. Infla-tion in the euro area unexpectedly remained unchanged at 0.1 percent in November. While up today, the equity gauge has been hovering around the same level for almost a week, as traders are waiting for European Central Bank President Mario Draghi to unveil his monetary plans tomorrow.

“It’s all about central banks now, but there’s still substantial upside for the markets,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “The problem is that Draghi has to deliver something quite big. Markets don’t just want a rate cut, they’re also looking for an extension of QE in terms of volume, asset classes and also timeline. He needs to give us that combo.”

Anticipation for a boost in the ECB’s quantitative easing pushed the Stoxx 600 up 13 percent from its low in September through the Tuesday close. All the economists surveyed by Bloomberg predict the central

bank will expand stimulus tomorrow, and traders are so confident about the outcome that they saw little need to hedge: The number of Euro Stoxx 50 Index options changing hands last month was the lowest since July 2014.

Swedish drugmaker Meda AB climbed 3.3 percent on Wednesday after Pareto Bank ASA recommended buying the stock, while Roche Hold-ing AG added 1.5 percent as Cit-igroup Inc. upgraded it to a buy. Novo Nordisk A/S, whose injected diabetes therapies are under pres-sure from pills that may delay the

use of its products, advanced 1.7 percent after saying a new analysis shows its Victoza helps patients con-trol their blood-sugar levels better than tablets.

Restaurant operator Greene King Plc rallied 9.1 percent after reporting a jump in quarterly earnings. Wirecard AG rose 3.6 percent after forecasting 2016 profit will be as much as 300 million euros ($319 million). Inves-tors had been growing bearish, with short interest on the stock reaching 18 percent, the highest level since 2013, according to Markit data.

ArcelorMittal tumbled 6.4 percent after Vale SA predicted steel prices will slump more next year. Anglo American Plc lost 1 percent, trading near a record low.

The Stoxx 600 slipped on Tuesday from its high, after a report showed U.S. manufacturing unexpectedly contracted in November, indicating some weakness in the economy just as the Federal Reserve considers raising interest rates. Traders are pricing in a 72 percent chance that the central bank will act this month. - Bloomberg●

iNTERNATioNAl NEWs 14

Europe stocks rise toward three-month high after inflation data

By Phyllis Johnson

The International Monetary Fund has recognized the reality of China’s place in global finance by adding the Chinese currency to its global basket of curren-cies.

An IMF announcement on 30 November said the renminbi (RMB) will be added to its Special Drawing Rights (SDR) bas-ket which includes four other interna-tional currencies.

The IMF said the value of SDR will be based on a weighted average of the val-ues of the currencies, and other sources said the RMB would be weighted at a value of 10.92, which is below the US dollar and the euro, but above the Brit-ish pound and Japanese yen.

The change in the international status of the Chinese currency in terms of the Bretton Woods financial institutions, which is effective from 1 October 2016, recognizes the RMB (also call the yuan) as a major reserve currency.

The IMF reviews its basket of currencies at five-year intervals, and rejected the RMB five years ago in 2010, saying the currency did not meet its criteria, which are essentially two: volume of interna-tional trade and use of the currency in

international trade.

China without doubt has the largest vol-ume of international trade, but only 2.5 percent of tabulated international trade uses the Chinese currency, due to lack of recognition as a tradable currency, and RMB is used only in transactions involving China. For comparison, while the US dollar is used for US trade, it is used mainly for trade involving third parties.

But now, on 30 November 2015, the IMF says the Chinese currency meets the “freely usable” standard, and that trading is up significantly in two of three international time zones.

Recognition of the currency globally is more than symbolic and, while not an

objective of Chinese economic policy, is another step towards a globally traded currency.

A main result could be that countries in Africa, such as Zimbabwe and others, will accept the RMB for exchange.

A contributor to forbes.com said this announcement tells us that the IMF, and by extension the world financial com-munity, believes in China as “an unar-guable top tier player in the global econ-omy; that it supports China’s efforts to internationalize its currency; that it believes in Beijing’s process of economic reform.”

Sanjiv Shah, the chief investment officer of Sun Global Investments says, “The longer term impact of the event will

be more significant as it will lead to a greater use of the yuan in international transactions.”

A Japanese holding company and consulting firm, Nomura, said that it expects the RMB to pass the yen and sterling within five years in terms of its level of usage in world trade, and join the dollar and euro by 2030.

“After years as the world’s largest exporting nation,” said Nomura, “China is now attempting to export the ultimate ‘Made in China’ product: the Renminbi.”

The founder of Hao Capital, Charles Liu, while positive about the impact of the decision, told China Central Television (CCTV) that recognition of the RMB by the international financial institutions is “belated” and “begrudging”.

The IMF announcement came just hours before the Chinese President Xi Jinping touched down in Harare, Zim-babwe, the capital of President Robert Mugabe, who is the current chairperson of the African Union.

President Mugabe told the media in an impromptu press conference at State House that President Xi is “our greatest friend in the international community”. - sardc.net●

15 analysis15 ANAlysis

iMF recognises Chinese currency as global