By Tawanda Musarurwa

HARARE - The Zimbabwean economy can benefit from the re-basing of its gross domestic product (GDP) statistics, analysts have said.

There have been concerns that the country's GDP could be understated, which may be a factor that may be dissuading potential foreign investors.

According to the World Bank, rebasing is basically a process of replacing an old base year for GDP comparisons with a new and more recent base year or price structure. This process helps the data reflect a more current snap-shot of the economy since econ-omies are typically dynamic in nature.

BancABC Zimbabwe group econ-omist Mr James Wadi told BH24

that a re-jig of the country's GDP stats will give potential investors

a more accurate picture of the local economy.

News Update as @ 1530 hours, Monday 04 January 2016Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

A rebase of Zim's GDP could benefit economy: analysts

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"In broad terms, it is important to rebase GDP regularly, to reflect the new measuring techniques, changing consumer patterns and changing economic conditions. Internationally it is recommended that rebasing be done every five (5) years.

"The rebasing of GDP shows a more representative changes in the structure of the economy and may reflect introduction of new products or sectors. Over time, some sectors that may not be fully captured may finally be accounted for by the new meas-uring techniques," said Mr Wadi.

"Rebasing Zimbabwe's GDP may influence certain investment decision – for instance, there is a possibility that Zim is underesti-mating its GDP size. So investors may think that it’s a small market yet its huge."

And with the Government mak-ing inroads to clear its arrears to the international financial institutions, notably the IMF, the World Bank (WB), and the Afri-can Development Bank (AfDB),

the economist says rebasing the local GDP may influence debt ratios.

"This may influence the classifi-cation of country in the eyes of international creditors – where it is heavily indebted country or not. Hence it may also influence the country’s risk profile," said Mr Wadi.

But with a total debt of $8,4 bil-lion and a GDP of about $13,8 bil-lion, Zimbabwe's debt represents around 60 percent of the GDP.

Since 2014 a number of African countries including Zambia, Nige-ria, Kenya and Uganda among others have rebased their GDPs and experienced rises in the sizes of their economies.

But economic observer Mr Perry Munzwembiri says a bump in the size of the economy is not always an automatic outcome.

"African countries differ in their economic structures and it would be overly simplistic to assume that the experiences of one coun-

try would mirror another. For Nigeria and Kenya for instance, the rise in the size of their econ-omies was on the back of a ris-ing middle class as well as more developed services sectors in their economies. For Nigeria, for example, the prices of oil had rose sharply since the last rebas-ing in 1990 and its film industry had become a more active con-tributor to the economy," he said.

"For a country such as Zimbabwe, it's economic structure hasn't really changed that much as Min-ing and Agriculture continue to underpin the economy and the services sector has not really grown that much. So even after a rebasing, there might not be an appreciable change in the size of the economy."

Mr Munzwembiri however said the case might be made of the rise of the informal economy and the need to account for this.

He added: "Also the effect of factors such as increased mobile phone usage by Zimbabweans would need to be accounted for.

Statistics show that rebasing the GDP may increase the size of an economy by at least 25 percent."

But whether or not the size of Zimbabwe's economy will rise on the basis of a GDP rebase, other key benefits are that it will ena-ble policy makers, analysts and investors to obtain a more accu-rate picture of economic struc-ture; assist authorities to make appropriate policy decisions and program design, and in some cases when GDP is revised, cer-tain ratios - such as the debt/GDP ratio - may actually improve.

But more needs to be done to tap into the small-scale gold produc-ers sector.

Meanwhile, according to projec-tions by Finance Minister Patrick Chinamasa, the mining sector next year is expected to rebound, growing 2,4 percent "on the back of planned investments, and largely driven by strong perfor-mance of gold, chrome, coal, nickel, platinum and diamonds," he said in his 2016 National Budget statement.●

BH243

BH24 Reporter

HARARE - Gwanda-based Blan-ket gold mine’s parent company, Caledonia Mining Corporation is seeking to set up a new base in the Channel Islands from Canada.

The Toronto Stock Exchange-listed mining firm expects shareholders to approve the re-domicile, which it says will benefit the company.

Chief executive Mr Steve Curtis said in a statement: "The proposal to re-domicile Caledonia from Can-ada to Jersey is a further step in simplifying our corporate struc-ture, reducing compliance costs and increasing tax efficiency. .

"The re-location to Jersey, if approved by shareholders, will result in Caledonia's head office being located in Jersey, Channel Islands, which is more centrally located within the area of Caledo-nia's operations in Zimbabwe and its shareholder base in Europe, the UK, South Africa and North Amer-ica.

"The proposed re-domicile will

have no effect on the contin-ued trading of Caledonia shares in Toronto, London and on the OTCQX".

The main reason for the proposal is the effect of tax on some of the company's shareholders. Under Canadian law, shareholders in the company who do not live in Canada must pay Canadian withholding tax on their dividends - something

that would no longer be applicable should the proposal be approved.

Caledonia stressed its current div-idend policy to pay 1,5 Canadian cents per quarter would remain unaffected apart from the with-holding tax issue.

However, the company has already announced it plans to move its accounting methods from Cana-

dian dollars to US dollars from 2016, meaning its 1,5 Canadian cent dividend is equal to around 1,09 US cents.

The company also said Jersey is closer to its operations, with its primary asset being a 49 percent stake in the Blanket gold mine in Zimbabwe, and said there is no reason to be domiciled in Canada as it has no operations there.●

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Caledonia eyes new base in Jersey

BH245

BH24 Reporter

HARARE - Beitbridge Bula-wayo Railway (BBR) Pvt Ltd has announced the appoint-ment of Mrs Thembi Moyo as its new chief executive officer

Mrs Moyo has served the organisation in various capaci-ties since its inception.

In a statement announcing the appointment, BBR chairperson Ms Bonigwe Ntuli said: “She has served the company as Finance Executive, Acting CEO, Business Development and Corporate Affairs Director and Shareholder Representative.

“She brings with her a wealth of experience not only from Neuro-linguistic Program-ming (NLP) Limited Group that locally comprised of BBR, New Limpopo Bridge (NLB) private limited and NLPI Logistics pri-vate limited.”

The appointment took effect on December 1, 2015. Mrs Moyo has also worked for other

reputable international organi-sations before joining the NLPI Groups.

BBR is a privately owned rail-

way company that provides a rail link in between Zimbabwe and South Africa through the Beitbridge border post.

BBR is one of the three con-

nected NLPI railway operations in Zimbabwe and Zambia that form a rail link between South Africa and the Democratic Republic of the Congo.●

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Beitbridge Bulawayo Railway appoints new CEO

BH247

HARARE -The mainstream indus-trial index began the new year on a low note after dropping 0.50 to close at 114.35 on the back of some heavyweight losses.

Giant insurer Old Mutual led the losers with a $0,013 loss to close at $2,0211, while Fidelity Life lost $0,0100 to trade at $0,1000.

Delta shed by $0,0084 to close at $0,6966 and pharmaceutical firm Medtech lost $0,0003 to close the day at $$0,0001.

On the upside telecoms giant Econet and banker NMBZ were each $0,0001 higher to close at $0,2110 and $0,0351, respec-tively.

The mining index added 0.55 to close at 24.27 after Bindura, went up a further $0,0007 to trade at $0,0160. Gold producer Falgold, Hwange and RioZim maintained previous price levels at $0,0050, $0,0300 and $0,1040 respec-tively

. - BH24 Reporter ●

ZsE8

Equities markets opens 2016 on a low

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BH249

MOvERs CHANGE TOdAy PRiCE UsC sHAKERs CHANGE TOdAy PRiCE UsC

Bindura 4.57 1.60 MEDTECH -75.00 0.01

NMBZ 0.28 3.51 FIDELITy LIFE -9.09 10.00

ECONET 0.04 21.10 DELTA -1.19 69.66

OLD MUTUAL -0.63 202.11

iNdEx PREviOUs TOdAy MOvE CHANGE

INDUSTRIAL 114.85 114.35 -0.50 points -0.44%

MINING 23.72 24.27 +0.55 POINTS +2.32%

10 ZsE TABlEs

ZsE

iNdiCEs

stock Exchange

BH2411

12 diARy OF EvENTs

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

POwER GENERATiON sTATs

Gen Station

04 January 2016

Energy

(Megawatts)

Hwange 420 MW

Kariba 468 MW

Harare 0 MW

Munyati 15 MW

Bulawayo 0 MW

Imports 50 MW

Total 1115 Mw

THE BH24 diARy

JOHANNEsBURG - South Afri-ca's rand was under early pres-sure against the dollar on the first trading day of 2016 on Monday, with pressure on the currency set to continue as weak domestic fundamentals weigh.

The JSE securities exchange's Top-40 futures index was down 1,25 percent, suggesting the local bourse would start the year at 0700 GMT more than 570 points lower.

By 0650 GMT the local unit was down 0,78 percent at 15,5800 to the greenback compared with its Dec. 31 close of 15,4600.

"Given that most investors are expected to still be away on holiday, we expect rand moves to prove erratic amid thin trad-ing this week," Barclays Africa said in a note.

Government bonds edged higher in early trade, with the yield for the benchmark 2026 issue dipping 2.5 basis points to 9,745 percent.

The local currency lost about a quarter of its value against the greenback in 2015, mainly due to investors dumping emerg-

ing markets in anticipation of higher US interest rates.

Concerns about weak growth in

Africa's most developed econ-omy also weighed and the shock removal of the finance minister in early December triggered a

heavy sell-off that pushed the currency to a historic low of 16,0485. - Reuters●

REGiONAl NEws 13

Rand off to weak start for the year

Gold climbed with silver on the first trading day of 2016 as ris-ing tension between Saudi Ara-bia and Iran spurred a return to haven assets.

Bullion for immediate delivery climbed as much as 0,5 percent to $1 066,04 an ounce and traded at $1 064,04 at 12:29 p.m. in Singapore, according to Bloomb-erg generic pricing. The metal lost 10 percent in 2015 for a third annual drop, the longest slump since 2000.

Gold, traditionally seen as a store of value during political turmoil, climbed after Saudi Arabia cut ties with Iran, a day after its embassy in Tehran was attacked to protest the Saudi execution of a prominent Shiite cleric. While unexpected incidents last year such as the Paris terror attacks lifted prices briefly, gold still fell over 2015 as prospects for ris-ing US interest rates boosted the dollar.

“When you look across the board, there’s just a little bit of geopo-litical risk coming back into the market,” Jonathan Barratt, chief investment officer at Ayers Alli-ance Securities in Sydney, said by phone.

Holdings in gold exchange-traded products declined 2.56 metric tons to 1,463.9 tons on Friday, near the lowest in more than six years, according to data compiled by Bloomberg. The assets shrank

8,3 percent in 2015 to cap a third year of contraction.

Bullion of 99,99 percent purity rose as much as 0,4 percent to 223.85 yuan a gram ($1 068,84

an ounce) on the Shanghai Gold Exchange. Spot silver advanced 0,4 percent to $13,8728 an ounce, platinum dropped 1.2 per-cent and palladium retreated 1.9 percent. - Bloomberg●

iNTERNATiONAl NEws 14

Gold opens 2016 with a rally as saudi tensions fan haven demand

The new climate agreement adopted in early December has laid a firm foundation for the global community to combat the impacts of climate change although there is little joy for Africa as some key expecta-tions were not met.

African climate change experts highlighted that the Paris Agreement adopted by the 21st Conference of Parties (COP21) to the United Nations Framework Convention on Cli-mate Change (UNFCCC) held on November 30 to December 11 in France failed to give the issue of agriculture the atten-tion it deserves.

“Throughout the negotiations, we have been trying to intro-duce agriculture so that it is mainstreamed in the nego-tiation text,” said Estherine Fotabong, the Director of Pro-gramme Implementation and Co-ordination for the New Part-nership for Africa’s Develop-ment (NEPAD).

The lack of attention given to agriculture in the agreement is

a worrisome development con-sidering the important role of agriculture in the developmen-tal agenda of Africa.

The agricultural sector is regarded as an engine for socio-economic development in most African countries.

According to the African Union (AU), agriculture accounts for about one-third of the conti-nent’s gross domestic product, and more than two-thirds of its citizens rely directly on the sector for their livelihood.

A related item that Africa had on the list for COP 21 was the need for clarity on financing for losses and damage associated with the adverse effects of cli-mate change.

Apart from recognizing the importance of averting, mini-mizing and addressing losses and damage and recommend-ing for the continuation of the Warsaw International Mech-anism (WIM),the agreement lacks clarity on how this would be financed.

The WIM for loss and dam-age was established at COP19 in Warsaw, Poland to address impacts of climate change, including extreme events and slow onset events, in develop-ing countries that are particu-larly vulnerable to the adverse effects of the changing climate.

Washington Zhakata, Director of the Climate Change depart-ment in the Ministry of Envi-ronment, Water and Climate in Zimbabwe, said “developed countries refused to accept lia-bility for compensation, thus resulting in lack of clarity on financing for losses and dam-age.”

Article 8.1of the agreement only states that WIM for losses and damage “may be enhanced and strengthened as deter-mined by the COP,” leaving Africa at a disadvantage as there is no guarantee that the mechanism will in future be transformed to benefit the con-tinent.

The agreement only gives ref-erence to small island states

and developing countries with-out specifically mentioning Africa, a continent that has a large proportion of its popula-tion severely affected by the impacts of climate change.

This is despite the fact that Africa is the least contributor to greenhouse gas emissions that cause climate change, yet the continent is the hardest hit due to limited financial resources to adapt to such changes.

Mr Zhakata said Africa pre-ferred to be particularly men-tioned in the Finance Article and vulnerability section.This was, however, not the case.

On provision of finance, Arti-cle 9 of the agreement states that “developed country Par-ties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Conven-tion and that other Parties are encouraged to provide such support voluntarily.”

15 analysis15 ANAlysis

COP 21 adopts Paris Agreement but little cheer for Africa

16 analysis16 ANAlysis

This clause has left the conti-nent doubtful of the commit-ment of developed countries to provide funding for adaptation and mitigation as it is on a vol-untary basis and the commit-ment is non-binding.

The agreement states that par-ties resolved to “enhance the provision of urgent and ade-quate finance, technology and capacity-building support by developed country Parties in order to enhance the level of ambition of pre-2020 action.”

The agreement strongly urged developed countries to scale up their level of financial sup-port, with a concrete roadmap to achieve the goal of jointly providing US$100 billion annu-ally by 2020 for climate change mitigation and adaptation.

However, past experience has shown that developed coun-tries have failed to live up to this commitment and the pace at which developed countries are contributing to climate financing is very slow.

African countries think that the major and historic pollut-ers must take a fair share of responsibility not only to cut their emissions but help the victims to adapt to climate impacts.

So far accessing money from the Green Climate Fund has been a challenge since it was created due to the stringent conditions imposed by devel-oped countries.

Although Article 9.9 of the agreement aims to ensure efficient access to financial resources through simpli-fied approval procedures and enhanced support for develop-ing countries, it still remains to be seen if this will be the case.

With regard to temperature increases, the agreement emphasises the need to keep global average well below 2°C in the context of sustainable development and efforts to eradicate poverty.

Article 4 of the agreement states that in order to achieve

the long-term temperature goal, parties should aim to reach a peak of greenhouse gas emissions as soon as possible, while recognizing that develop-ing countries will take longer to reach peak on greenhouse gas emissions before cutting to accepted levels.

In this regard, the parties acknowledged that countries are at different levels of devel-opment. Equally important is the recognition of resilience to climate change as a global challenge faced by all at local, subnational, national, regional and international levels.

The agreement highlights that adaptation is a “key component of and makes a contribution to the long-term global response to climate change to protect people, livelihoods and ecosys-tems.”

The Paris pact emphasizes that “adaptation action should follow a country-driven, gen-der-responsive, participatory and fully transparent approach, taking into consideration vul-

nerable groups, communities and ecosystems.”

This should be based on and guided by “the best available science and, as appropriate, traditional, indigenous and local knowledge systems, with a view to integrate adaptation into relevant socio-economic and environmental policies and actions, where appropriate.”

For Africa, recognition of Indig-enous Knowledge Systems (IKS) in resilience is crucial considering that communities on the continent use IKS to adapt to floods and drought, and other climate challenges.

Parties agreed that the agree-ment shall be open for signa-ture and subject to ratification from 22 April 2016 to 21 April 2017.

The agreement will enter into force after at least 55 UNFCCC parties have deposited their instruments of ratification, acceptance, approval or acces-sion - sardc.net●