By Tawanda Musarurwa

HARARE - No foreign companies have approached the Government seeking exemptions to the 51percent /49 percent indigenisation requirement.

Zimbabwe's Indigenisation and Eco-nomic Empowerment Act of 2007 (Chapter 14:33) requires that at least 51 percent ownership of any foreign business must be in the hands of indige-nous Zimbabweans with non-indigenous ownership limited to a maximum of 49 percent.

But in terms of new regulations that were gazetted recently, there is now an indig-enisation levy that takes into account a rebate scoring system that encourages indigenisation in the form of economic empowerment credits.

What this basically means is that the

new frameworks provide for two possi-ble pathways for ensuring compliance, namely compliance through provision of a lesser share of indigenisation for the economic empowerment of indigenous Zimbabweans; or implementation of the Indigenisation Compliance and Empow-erment Levy that takes account of the rebate scoring system.

In an interview this morning, Youth Development, Indigenisation and

Empowerment Minister Patrick Zhu-wao said he was not aware of any new requests by foreign firms for exemptions.

"I have not received any (requests of firms seeking exemptions), these are issues dealt by the various line minis-tries, but so far I have not heard of any companies that have requested exemp-tions," he said. He however added that Government would only consider grant-ing exemptions to firms that apply and

have not already been caught offside of the indigenisation law.

"There is a provision for lesser shares in the Act, but these have to be submitted to the line ministries. But you can't say then that when you are breaking law then you want to ask for an exemption when you have already starting breaking the law. For you to at least show good faith abide by the law." The Minister however said sectors "reserved for indig-enous Zimbabweans", will remain exclu-sively reserved for local, while those foreign businesses currently operating in these areas would not have their licences renewed.

"We will not accept a position where the lesser share provisions are looked at within the reserve sectors. Conceptually within the reserve sectors we should get companies that are 100 percent indige-nous," said Minister Zhuwao.●

News Update as @ 1530 hours, Wednesday 13 January 2016Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

'No foreign firms seeking indigenisation exemption'

Minister Zhuwao

BH242

By Munesu Nyakudya

HARARE - Independent Power Pro-ducer Lueven Investments (Pvt) Ltd is seeking to establish a 10 mega-watt (MW) solar photovoltaic power plant in Marondera.

Energy regulator, the Zimbabwe Energy Authority (ZERA) says it has received an application from Lueven Investments to construct own, operate and maintain a 10 mega-watt solar photovoltaic power plant for the purpose of generation and supply of electricity in Zimbabwe.

In a statement ZERA said the solar project would also include the con-struction of a 5 kilometre 33 kil-ovolts (Kv) single transmission line from Millgrove farm, Lueven Investments Solar plant to existing Marondera 132/33kV Substation.

“The proposed plant will be located at Milgrove Farm, Marondera, Mash-onaland East province,” said ZERA.

The licence application by Lueven Investments was done in terms of the provision of Section 40 of elec-tricity Act (Chapter 13: 19) of 2002.

Meanwhile SolGas (another IPP), has also approached ZERA seeking a licence to set up a 5 MW solar photovoltaic power plant in Matabe-leland North province.

ZERA has however so far licensed four players with a combined gener-

ating capacity of 155MW from solar.

The approved IPP projects include: Marondera-based De Green, Geo-base of Gwanda, Yellow Africa in Ntabazinduna and Bulili-ma-Mangwe’s Plum Solar.

Zimbabwe is currently grappling

with power shortages as the coun-try is producing around half the required national demand of around 2 000MW, and observers are of the opinion that if successfully imple-mented, the numerous solar energy projects being carried out by IPPs could help ease the energy woes.●

3 NEWs

Lueven Investments eyes solar plant in Marondera

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5 NEWs

Emirates enhances Zimbabwe, Zambia serviceBH24 Reporter

HARARE - Global airliner Emirates says it will enhance its on-board experience and increase capacity on its Zimba-bwe and Zambia route with the deployment of a larger Boeing 777-300ER aircraft from next month.

The Boeing 777-300ER will replace the current Airbus A340-300 and offer an additional 97 Economy Class seats per flight. The aircraft will have eight pri-vate suites in First Class, 42 lie-flat seats in Business Class and 310 spacious seats in Economy

Class.

Emirates senior vice president, commercial operations, Latin America, Central and Southern Africa Mr Orhan Abbas said: “As Emirates we are constantly seeking ways to enhance our services, and the upgauge to the Boeing 777-300ER on the Lusa-ka-Harare route is part of our commitment to offer Zambian and Zimbabwean travellers even more comfort and entertainment on our daily service,” he said.

“In addition to the enhanced on-board product, we are also able to offer more seats, ensur-

ing capacity to meet growing demand on the route, not just outbound from Zimbabwe and Zambia, but also inbound from the United States, UK and Aus-tralia, as we continue to build and strengthen trade and tour-ism links between Zimbabwe and Zambia with markets in the rest of Emirates’ extensive global network, through seamless and convenient connections via our Dubai hub.”

Popular destinations for both Zimbabwean and Zambian trav-ellers include Dubai, London, Beijing, New York, Hong Kong, Manchester and Delhi, amongst

others.

With 155 Boeing 777s in service and a further 190 on order, the aircraft is the backbone of the Emirates fleet and very popular with customers.

The deployment of the aircraft on the Lusaka and Harare route also makes Emirates’ southern Africa network an all Boeing 777 operation, with flights to Durban, Cape Town and Johannesburg in South Africa, and Luanda in Angola, highlighting the impor-tance of the region with a grow-ing and vibrant tourism and busi-ness sector.●

BH246

HARARE - Tourism and Hos-pitality Industry Minister Wal-ter Mzembi is keen to see the number of tourists visiting Vic-toria Falls grow and on Tuesday appealed for support to increase the frequency of flights touch-ing down at the resort town’s new look $150 million Chi-nese-built airport.

The new airport was built to accommodate bigger aircraft but airlines have reportedly said the volume of traffic to Victoria Falls, the waterfall rated the seventh wonder of the world, was still too low to sustain via-ble business.

At least four airlines namely Air Zimbabwe, South African Air-ways, Com Air and Fast Jet are flying to the resort town. And with Zimbabwe working on its Tourism Master Plan, which is aimed at boosting arrivals in the country, Minister Mzembi said the Victoria Falls airport should be turned into a “vibrant port of entry” into Zimbabwe.

“Let us not turn Victoria Falls Airport into a white elephant. That airport we built it so that planes can land and take off. That is the primary purpose of that airport. To receive and to see off,” he said.

“I dream of a Victoria Falls air-port where every 20 minutes there is either a plane land-ing or taking off, it is not for

us to be busy crocheting in our offices waiting for one airline, South African Airways to land or take off. That is not the purpose of the Victoria Falls airport. It is there to receive the world,” he said.

He said the Ministry of Trans-port and Infrastructural Devel-opment, responsible for licens-ing airlines to fly into the

country, should assist in getting more airlines to land in the resort town.

Meanwhile, Minister Mzembi said his Ministry had finally been granted title deeds for 274 hectares of land in Victoria Falls, set aside specifically as a tourism development zone.

He has previously described proposed developments within the area, which has been des-ignated as a Special Economic Zone (SEZ), as the “Disneyland of Africa.”

The dream is to have a theme park in the resort town housing among other things, world class shopping malls, banks, exhibi-tion and entertainment facilities to assist in attracting, especially the young generation of foreign tourists, to visit the world herit-age site. Investors into the SEZ are expected to benefit from a long list of incentives which include tax holidays.

-New Ziana●

7 NEWs

Mzembi keen to see more airlines landing at new Victoria Falls airport

BH248

HARARE - The mainstream industrial index continued in the negative trend, los-ing 0.62 to close at 111.56 on the back of selected heavyweight losses.

Beverage giant Delta led the shakers with a $0,0100 loss to trade at $0,6700 while OK Zim and Padenga

both shed $0,0020 to settle at $0,0480 and $0,0700, respectively. Edgars was $0,0010 lower at $0,0600.

No counter traded in the positive territory as activ-ity was limited to fourteen counters.

The mining index retreated

0.08 to settle at 21.74 after Bindura dropped by a marginal $0,0001 to trade at $0,0128.

Falgold, Hwange and RioZim maintained pre-vious price levels at $0,0050, $0,0300 and $0,1040 respectively. - BH24 Reporter ●

ZSE9

Equities market slips

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MoVErS CHANGE TodAy PRiCE UsC sHAKERs CHANGE TodAy PRiCE UsC

OK ZIM -4.00 4.80

PADENGA -2.77 7.00

EDGARS -1.63 6.00

DELTA -1.47 67.00

BNC -0.77 1.28

iNdEx PrEVIouS TodAy MoVE CHANGE

INDUSTRIAL 112.18 111.56 -0.62 points -0.55%

MINING 21.82 21.74 -0.08 POINTS -0.37%

11 ZSE taBLES

ZSE

iNdiCEs

Stock Exchange

12 DIarY oF EVENtS

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

PoWER GENERATioN sTATs

Gen Station

13 January 2016

Energy

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Hwange 508 MW

Kariba 699 MW

Harare 0 MW

Munyati 28 MW

Bulawayo 24 MW

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21 January 2016 - CZI/Herald Business annual Economic outlook 2016 Half Day Symposium; Venue: Meikles Hotel, Harare; time: 08:30 to 12:50hrs

THE BH24 diARy

JoHANNEsBURG - South Africa's rand climbed as much as 1.5 percent against the dol-lar today, mainly reflecting a recovery in global risk appe-tite after better-than-expected Chinese trade data.

The rand remains hostage to worries about the ailing local economy, which is beset by a crippling drought and uncer-tainty over fiscal policy after a bungled cabinet reshuffle in December.

The rand briefly touched a ses-sion high of 16.4200 to the greenback in early Johannes-burg trade and was 1.14 per-cent firmer at 16.4800 by 0645 GMT compared with Tuesday's close.

Stocks were also set to open slightly firmer at 0700 GMT, with the JSE securities exchange's Top-40 futures index adding 0.26 percent.

This was in line with Asian

shares which made their first real rally of the year on Wednesday after Chinese trade data beat expectations, offer-ing a rare chink of light for the global economy.

The rand has had a bumpy start to the year, tumbling on Mon-day as much as 9 percent to a record 17.9950 on technical short-selling in volatile Asian trade.

"Local sentiment has recov-ered somewhat from the shock of Monday. This has allowed for some rand gains but cau-tion is still high and liquidity still slightly constrained," Rand Merchant Bank currency ana-lyst John Cairns said.

"The 'flash crash' damage is still evident in wider bid-of-fer spreads, most importantly in the spot market but more accentuated in the derivative space."

On the debt market, the yield for the benchmark government bond maturing in 2026 added 5 basis points to 9.615 percent from Tuesday's closing level- Reuters●

REGioNAL NEWs 13

rand recovers as investors cheer China trade dataS.a mining union

says to fight planned 700 job

cuts

JoHANNEsBURG - South Africa's National Union of Mine-workers (NUM) said today it would fight plans by Dilokong Chrome Mine to cut up to 700 jobs, appealing to the mines minister to intervene.

The NUM said in a statement it had been served with a notice for the layoffs, adding that the un-listed mine planned to retain a few employees to carry out maintenance.

"The NUM requests Minister of Mineral Resources Mosebenzi Zwane to intervene imme-diately to stop this drastic action," the union said.- Reu-ters●

sHANGHAi - China's central bank held the line on its yuan for a fourth straight session on Wednesday while putting the squeeze on off-shore sellers of the currency, calm-ing fears of a sustained depreciation - at least for now.

Having been alarmed by a near 5 percent slide in the yuan since August, investors globally appeared relieved by the stabilisation over-night.

Asian share markets outside China rose, and proxies for the yuan in currency markets, such as the Australian dollar, also firmed, while investors retreated from the safe-haven yen.

Chinese shares, however, ended the day sharply lower after a posi-tive start, shrugging off December trade data, which beat forecasts and tempered some of the fears about the slowdown in the world's second largest economy.

The People's Bank of China (PBOC) fixed the daily mid-point for the yuan at 6.5630 to the dollar, lit-tle changed from firm fixes on the previous two days. The market is allowed to deviate 2 percent either side of the daily fix.

By mid-afternoon the onshore spot

rate had weakened a little to 6.5764 from the overnight close of 6.5756, and offshore the yuan was just a pip or two away, little changed on the day.

The central bank has used aggres-sive intervention to force a huge leap in yuan borrowing rates in Hong Kong, essentially making it prohibitively expensive to speculate against the currency offshore.

The implied overnight borrowing rate shot over 90 percent on Tues-day, and while it moderated to around 10 percent on Wednesday, the central bank's signal was clear.

"We believe China is sending a strong message to speculators and trying to stabilize RMB deprecia-tion expectations," HSBC said in a research note.

The result has been to drag the off-shore level of the yuan back toward the official onshore level, closing a gap that had threatened to get out of control just a few days earlier.

HSBC said it expected the PBOC would allow the onshore rate to con-tinually adjust in line with its com-mitment to a more flexible currency regime, and would periodically intervene to squeeze out specula-tors when the offshore rate strays

too far.

"High volatility will be the theme for 2016," it added.

LatE SHarE rEVErSaL

Domestic equity markets started positively in the morning, clocking up gains of around 1.2 percent, but went sharply into reverse in the afternoon.

The Shanghai Composite Index ended down 2.4 percent, dipping below the 3,000 mark, while the CSI300 index shed 1.9 percent.

The indexes have now lost around 16 percent so far in 2016.

Analysts said trading volume con-tinued to wane, suggesting many investors were staying on the side-lines or putting their money else-where.

Perceived mis-steps by the authori-ties and the wild swings on the forex and equities market had stoked concerns that Beijing might be los-ing its grip on economic policy, just as the country looks set to post its slowest growth in 25 years.

China is expected to post its weak-est quarterly economic growth since the global financial crisis, when

it releases fourth quarter gross domestic product data on Jan. 19. A Reuters poll of economists forecast growth slipping to 6.8 percent from 6.9 percent in the third quarter.

The World Bank has forecast growth to slow from 6.9 percent in 2015 to 6.7 percent this year.

More positively, trade data released during the morning showed exports denominated in dollars fell much less than expected and in yuan terms actually rose, which could be an early sign that the yuan's depre-ciation has helped exporters.

A customs spokesman said the impact would weaken over time, however, and China faced chal-lenges in 2016 due to weak external demand.

Imports also fell less than expected, and the volume of imports of cop-per, iron ore, crude oil, coal and soy-beans all rose in December from the preceding month.

Nomura said the data offered a sign of the economy stabilising, albeit at a low level.

"Nevertheless, we still expect growth to resume a downtrend later in the year, given ongoing structural headwinds," it added. - Reuters●

iNTERNATioNAL NEWs 14

China holds line on yuan, stocks weaken again

By Persistence Gwanyanya

We emerged from the year of learning, “Gore rezvidzidzo”, more enlightened than before. For those who have had the opportunity to learn, let your can-dles of knowledge light the minds and souls of those who missed this oppor-tunity. Knowledge shared is wealth cre-ated for all of us.

Otherwise “gore rezvidzidzo” will go down the lane of history as a missed opportunity to create a more enlight-ened and vibrant population prepared to implement necessary structural and economic reforms in Zimbabwe.

With debt to GDP ratio of more than 77 percent, Zimbabwe is one of the highly indebted countries in Southern Africa. High debt levels largely reflect the struc-ture of its economy, being a consump-tive economy.

More than 80 percent of the country’s annual budget go towards current expenditures mainly payment of wages.

Given low industrial activity in Zimba-bwe, high consumption rates means huge dependence of imports.

This has seen the country accumulating BOP deficit in excess of $15 billion since 2009, which was mainly funded from short term debt as national savings were destructed by dollarisation. If Zim-babwe continues borrowing at the cur-rent rate it risks falling into a debt trap.

A country falls into a debt trap when GDP growth is no longer enough to service its annual interest rate. Once a country falls into this situation it is

difficult to get out without considering unpopular options such as the Highly Indebted Poor Country (HIPC) status. A country in a debt trap will not grow as increases in GDP are consumed into interest repayment, leaving little room to increase investment.

Zimbabwe should negotiate with its creditors to restructure or resched-ule its debt, which currently stands at $8,37billion. The recent negotiations with IMF, World Bank and African Devel-opment Bank (ADB) on the sidelines of the Lima conference is therefore seen as

a good initiative, which may unlock new borrowings with favourable terms and interest rates.

I must stress that any new borrowing should go towards productive and not consumptive uses.

I understand the Government is under pressure to pay wages at the moment, but my advice is that borrowing to pay wages is an unviable option. Debt option will only delay the problem but has deeper long run ramifications. Government should instead expedite the measures to rationalise the public

15 analysis15 ANALysis

Stay away from consumptive borrowing - the Economist's advice

SOURCE: WWW.TRADING ECONOMICS.COM/RESERVE BANK OF ZIMBABWE

16 analysis16 ANALysis

service sector as spelt out in the 2016 National Budget Statement.

These measures include freezing of certain posts, reduction or removal of a number of allowances, expediting the civil service cleanup exercise by reduc-ing redundancies and removing dupli-cated tasks among others.

By implementing these measures, Government is expected to unlock savings of $17,2million per month and $170,4million per year, which is about 5 percent of the country’s annual wage bill. These measures should be com-plemented by increasing efficiency in revenue collection, tackling corruption head-on, increasing transparency and reducing revenue leakages.

My feeling is that Government is los-ing a lot of revenue through corruption and other illicit activities, and thus bold actions should be taken to deal with these economic vices. If above meas-ures fail to generate enough financial resources, then the civil service should content with some delays in wage pay-ments for now.

On the other hand the Government should work hard to put the economy back on track and set the stage for quick

recovery. For both parties the essence is to sacrifice current consumption or benefits for more consumption in the future.

The same advice apply to the private sector, both corporates and households. The private sector in Zimbabwe is over borrowed. Like the case of the public sector the private sector debt is a legacy issue, which predates the dollarisation era. Faced with hyperinflation situation, it made more economic sense for com-panies to borrow rather than save. Dol-larisation wiped away the country’s sav-ings and to recapitalize their businesses, most companies resorted to debt.

Due to liquidity challenges the cost of borrowing was high and not matched with the productivity levels. As a result most companies were unable and are still unable to pay back their debts. This is reflected by the huge Non Performing Loan book, which reached peak of more than 16 percent in 2015.

In the new environment the economy is going to be tough both at global and national level such that reliance on past business models will not work. Busi-ness should foster productivity and price their products based on productivity, not need.

The same goes for labour. This means cost plus pricing is dead, and produc-tivity based pricing is the new baby in town. Faced with deflation borrowing for payment of recurrent expenditures is highly discouraged.

Most business need to recapitalise and retool from sources other than bor-rowing. Otherwise we will continue to witness corporate distress and more foreclosures. In most cases it is the households who bear the brunt of Gov-ernment and business debt problems.

Most employees have been going with-out pay for a long time and a number of them have resorted to money lend-ers and microfinance houses to finance their daily expenses. It is hard to believe that given the low wages in Zimbabwe and the generally high propensity to consume, the households can afford the exorbitant interest rates by these lenders.

The household sector is over borrowed and a look at the distribution of loans as at June 30, 2015 bears testimony to this fact. Out of the total loans of $5 billion, household borrowings accounted for 25,65 percent.

Adding this to the unrecorded borrow-

ings from money lenders it is clear that Zimbabwe is over borrowed. Surely there is a problem brewing and will one day burst. Like in the scenario I have given on Government, most of individu-als are in debt trap and may find it very difficult to get out of.

Otherwise they will have to lose their properties and other belongings to pay back their debts, better if they do so sooner rather than later. I know there are some who believe that debt will provide the necessary impetus to stim-ulate the economy but my take is that can only happen if the country has the productive capacity to respond to this stimulus.

This is not the case at the moment. Debt will aggravate the country’s eco-nomic woes, and has serious psycho-logical problems which kills our creativ-ity, innovation and imagination. In fact it is one of the biggest cause of death in highly indebted countries.●*Persistence Gwanyanya is an Economist and Banker. He is also a member of the Zimbabwe Eco-nomics Society. He writes in his personal capacity and this article does not represent the views of his employer