By Tawanda Musarurwa

HARARE – Listed Zimbabwean heavyweights Delta Corpora-tion and Econet Wireless Zim-babwe continue to be the only two local firms making the Top 250 African companies list.

The list which is published annually by pan-African business magazine African Business, uses the companies’ financial data as provided by Bloomberg as at March 31, 2016.

The beverages maker is the best placed local firm at a ranking of 140, with a total market capitalization of $703 million and net income of $92 million.

Delta however slipped 40 places from last year’s ranking of 100. Econet came in at

number 214 this year, from a ranking of 153 in 2015. At the time of computing the ranking,

the mobile telecoms operator had a total market capitalisa-tion of $402 million and net

News Update as @ 1530 hours, Tuesday 07 June 2016

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Delta, Econet in Top250 African companies

income of $70 million.

Analysts attribute both firms’ decline to a challenging eco-nomic operating environment last year, with corporate earn-ings generally subdued with most local companies record-ing negative earnings growth rates.

Interestingly, in 2015 both Delta and Econet posted neg-ative returns on the Zimbabwe Stock Exchange (ZSE) of -30, 88 percent and -64, 85 per-cent, respectively.

The only large cap stocks to post positive returns last year were Afdis (+18, 47 percent), Barclays (+70 percent), BAT Zimbabwe (+7, 96 percent), CBZ Holdings (+9, 90 percent) and Simbisa (+30 percent).

But in terms of market cap-italization Delta and Econet remained the two largest stocks on the local bourse.

The negative earnings growth was however not peculiar to

the two Zimbabwean firms on the Top250 African companies list.

According to an analysis by African Business the total value of the top 250 compa-nies fell by 20 percent from the previous year due, largely due to the decline in commod-ity prices.

“The drop in combined market capitalization from $948 billion in our 2016 table to $764 billion this year is largely the result of tumbling commodity prices, particularly for oil and mining commodities, and the associated impact on the wider continental economy.

“Low commodity prices influ-ence exporting nations in many different ways. Obvi-ously they affect the balance sheets and therefore market value of companies involved in the specific sectors con-cerned.”

And it could be much of the same for the sub-Saharan Afri-

can region going forward.

The World Bank, in its latest outlook for the region, expects sub-Saharan Africa to continue to face notable challenges in the short to medium term.

It forecasts commodity prices to stabilise but remain low through to 2017, while the normalisation of monetary policy in the United States is expected to tighten global financial conditions.

Meanwhile, equity analysts still see Delta and Econet’s prospects in the outlook as bright.

“From a fundamental perspec-tive our top picks for the year are as follows Delta (TP $1,02, PER 8.9x (+1)) on account of valuation….while Econet (TP $0,22, PER 11.9x (+1)) intuitively appears attractive, however we remain concerned around regulatory headwinds (tariffs),” says IH Securities in its Zimbabwe Equity Strategy 2016.●

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By Funny Hudzerema

HARARE - The Zimbabwe Energy Regulatory Authority (ZERA) has so far licensed 24 Independent Power Producers despite the fact that most of the projects are being undermined by the shortage of funds and lack of clear poli-cies in the energy sector.

ZERA chief executive officer Gloria Magombo said among all the registered IPP pro-gramme only 10 are producing electricity to the national grid at low capacity.

“We have licensed about 24 power projects to date under the Independent Power Pro-ducers programme of the 24 projects we have got 10 pro-jects which are operational.

“Our market have got very serious liquidity issues and most of the power projects to move from prefeasibility to bankable feasibility they need access to funding for project preparation,” she said.

She added that there is need to come up with an integrated energy resources plan and after its development will come up with competitive pro-curement framework for IPP.

“We believe that as a country we need to move from the current unsolicited bids which tend to be expensive because we don’t have control of those bids and there is no compe-tition.

“Once we have finalised the integrated energy resources plan we should be able to come up with a competitive bidding process for procure-ment of additional capacity going forward which will be based on list costs of the economy,” she said.

This was said during a work-shop which was organised by the Ministry of Macro-Eco-nomic Planning and Invest-ment Promotion in collabora-tion with the United Nations Development Programme

(UNDP) to gather macroe-conomic policies in order to grow the economy as well as guiding the budgetary pro-cess.

“Among the IPPs we are looking at the coal genera-tors Tongaat Hullet project in Triangle and sugar mill producing power mainly for own consumption with Hippo Valley being able to add an additional of 4 or 6 megawatts when they have surplus to the grid.

“We also have green fuel which is producing 18, 3 megawatts and supply 5 megawatts when it has excess and we have five generators mainly small hydro now with the capacity of 24 megawatts which are mainly in the Honde Valley area,” she said.

She also said ZERA is set to license a number of small solar projects apart from the ZPC once which can produce 5 to 25 megawatts contributing

a total of 300 megawatts.

“There is need for clarity on the policies and laws of indi-genization applicable to the energy sector which is an area where there is consistently having questions. People are saying it’s not about the pol-icy but they want to see clear policies on paper which they can use in their operations,” she said.

She added that there should be a clear pricing policy of energy which will reflects the cost of production and if there is need to subsidies because there are certain sectors which needs to be subsidies there should also be a clear subsidy indicating where that subsidy is coming from.

The IPPs are also raising the issue that there is need to strengthen ZETDC as an off taker in terms of its credit worthiness to be improved.

●

ZERA licences 24 independent power producers

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HARARE – Zimbabwe’s larg-est retail chain, OK Zimba-bwe took a massive hit on net profit, slumping to $672 000 for the year ended March 31, 2016 from $7,5 million last year owing to a com-bination of factors, chiefly weak consumer demand.

The retailer also saw its revenues drop to $438 million from $463 million, as consumers spent less due to shrinking disposable incomes.

As a result, OK Zimbabwe said it will not declare a

dividend, and instead re-in-vest the small profit in the business.

“Gross margins softened in a market whose consump-tion is increasingly weighted towards slow margin basic products and which is expe-riencing ever-increasing competition,” OK Zimbabwe chairman David Lake said.

“Operating costs declined but the decrease was not ade-quate to counter the nega-tive effect of lower sales and gross margins.”

Attributable earnings per share also dropped signifi-cantly to 0.06 from 0.65 last year.

To maintain its market share in the wake of increasing competition, Mr Lake said the group will open two new OK Mart Stores in Gweru and Victoria Falls, a new outlet in Waterfalls while two other branches would be moved to “larger stores” which are under construction in Harare.

In the review period, two new stores were opened in Mutare and Zvishavane.

“Despite the difficult envi-ronment, the group will take the necessary steps to improve margins without losing market share,” Mr Lake said. “Focus will be on further cost reductions to improve profitability.”

He said product supply for the group remained consist-ent in the review period, with South Africa remaining the major source of goods for the retail chain.

-New Ziana ●

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OK Zim in massive profit drop

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HARARE - Zimbabwe risks losing up to four months of mineral production this year due to the prevailing cash shortages which have led to delays in processing crucial external payments, the Chamber of Mines has said.

Zimbabwe is currently battling to contain a cash crisis which has been caused by a number of reasons including the depletion of bank nostro balances and the dysfunctionality of the multi-cur-rency system because of the pre-dominant use of the US dollar.

The US dollar has virtually sub-stituted all the other currencies

including the South African Rand, the Pula and the Euro that were in use at the adoption of the mul-ti-currency regime in 2009.

Chamber of Mines president Toen-depi Muganyi said delays of up to 20 days in processing external payments were being faced and this was affecting mining oper-ations.

“The mining industry has not been spared from the current crisis which has manifested in production disruption as mining houses fail to effect payments to suppliers timeously. Delays in the process of external payments

have crippled their operations,” he said.

“With potential production loss of up to four months, this will remain a huge potential risk to the outlook.”

Mr Muganyi said small scale miners were also affected as they were failing to access funds to purchase crucial inputs. Zimba-bwe’s mining sector recorded improved productivity in the first three months of 2016 compared to the same period last year, but earnings dropped by about 3.5 percent to $420 million on the back of low mineral prices.

First quarter production figures show that there was an increase in production ranging between eight and 64 percent for the bulk of the top minerals such as gold, platinum, copper and palladium. Coal and chrome are the two minerals that recorded a negative growth in production.

The loss of output would further dent national export earnings, and increase strains on a sector bat-tling low international commodity prices. According to the chamber, most mines in Zimbabwe were operating at between 60 and 85 percent of capacity.-New Ziana●

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Chamber of Mines predicts reduced mineral output

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BH2412

HARARE - – The mainstream industrial index dropped 0.77 in today’s trades to close at 103.33.

Dragging down the bourse was SeedCo, which lost $0, 0168 to trade at $0, 5532 and beverages giant Delta, which declined $0, 0150 to close at $0, 6800.

Gains were noted in CFI Holdings, which added $0, 0120 to $0, 0726, giant insurer Old Mutual, which rose by $0, 0025 to settle at $2, 2425.

Also on the upside was Padenga, which closed at $0, 0750 after a $0, 0008 gain and Ariston, which was up

$0, 0003 to $0, 0045.

The mining index moved up 0.47 to settle at 26.24 on the back of a $0, 0060 rise in RioZim to close at $0, 1700. Bindura, Falgold and Hwange maintained previous price levels at $0, 0120, $0, 0050 and $0, 0300, respec-tively BH24 Reporter ●

Equities market extends losses

13 ZsE

MovERs CHANGE ToDAy PRiCE UsC sHAKERs CHANGE ToDAy PRiCE UsC

CFI HOLDINGS 19.80 7.26 SEEDCO -2.94 55.32

ARISTON 7.14 0.45 DELTA -2.15 68.00

RioZim 3.65 17.00

PADENGA 1.07 7.50

OLD MUTUAL 0.11 224.25

iNDEx PREvioUs ToDAy MovE CHANGE

INDUSTRIAL 104.10 103.33 -0.77 points -0.74%

MINING 25.77 26.24 +0.47 POINTS +1.82%

14 ZsE TABlEs

ZsE

iNDiCEs

stock Exchange

Previous

today

15 DiARy oF EvENTs

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

PowER GENERATioN sTATs

Gen Station

06 June 2016

Energy

(Megawatts)

Hwange 415 MW

Kariba 583 MW

Harare 0 MW

Munyati 25 MW

Bulawayo 0 MW

Imports 0 - 400 MW

Total 1448 Mw

9 JUNE -- First Mutual Holdings Annual General Meeting; Place: Royal Harare Golf Club, Harare; Time: 14:30hrs

15 JUNE 2016 -- Rainbow Tourism Group 7th Annual General Meeting; Time: Jacaranda Rooms 2 and 3 at the Rainbow Tour-ism Hotel and Conference Centre, 1 Pennefather Avenue, samora Machel Avenue west, Harare; Time: 1200 hours...

16 JUNE 2016 -- RioZim 60th Annual General Meeting; Place: No. 1 Kenilworth Road, Highlands, Harare; Time: 10.30 hours...

22 JUNE 2016 -- Zimre Holdings limited 18th Annual General Meeting; Place: NiCoZDiAMoND Auditorium, 7th Floor insur-ance Centre, 30 samora Machel Avenue, Harare; Time: 1430 hours...

22 JUNE 2016 -- GB Holdings limited Annual General Meeting; Place: Cernol Chemicals Boardroom, 111 Dagenham Road, wil-lowvale, Harare; Time: 11.30 hours...

23 JUNE 2016 -- Zimpapers 89th Annual General Meeting; Place: Zimpapers ltd Boardroom, sixth Floor Herald House, Cnr. G. silundika/sam Nujoma street, Harare; Time: 1200hrs…

THE BH24 DiARy

lUANDA - Isabel dos San-tos, the billionaire daughter of President Jose Eduardo dos Santos, pledged a root and branch overhaul of state energy firm Sonangol on Monday to improve its efficiency and margins to offset the "huge" impact of depressed oil prices.

A presidential decree carried on Angolan state media last week said Isabel dos Santos, ranked as Africa's richest woman by Forbes magazine, would become chief executive after the firing of Sonangol's board.

After being sworn in as chief executive on Monday, dos Santos told reporters she was looking to split Sonangol into three units overseeing operations, logistics and con-cessions to international oil companies.

The 43-year-old business-woman, who is a major investor in various Angolan and Portuguese telecoms, banking, media and energy companies, also pledged to improve transparency at

Sonangol, the central pillar of sub-Saharan Africa's third biggest economy.

With militants causing serious production outages in Nige-ria's Niger Delta, Angola is currently Africa's biggest oil producer.

"Our objective is to increase the revenue, efficiency and transparency of the com-pany," dos Santos said. "We want to implement govern-ance rules similar to the international standards." Angola, which relies on oil exports for 95 percent of its foreign exchange, is often cited by anti-bribery campaigners as one of the world's most corrupt coun-tries. President dos Santos's administration says it has a "zero tolerance" approach to graft.

Isabel dos Santos also said on Monday she was looking into the possibility of devel-oping a domestic oil refinery to reduce Angola's need to import nearly all its diesel and gasoline. - Reuters●

16

Rand weaker, focus on Fitch, GDP dataAngola's dos santos promises overhaul of state oil firm Sonangol

REGioNAl NEws

JoHANNEsBURG -South Africa's rand weakened in early trade on Tuesday as market focus shifted to a rating review from Fitch and first-quarter eco-nomic growth numbers both expected on Wednesday.

At 0646 GMT, the rand traded at 14,9510 per dollar, 0,34 percent softer from its New York close on Monday.

The currency broke below 15,0000/dollar for first time in nearly four weeks on Monday after S&P Global Ratings on Friday affirmed the investment-grade credit status of Africa's most industrialised country.

"While rating reprieve was welcomed by government, Fitch is also due to issue rat-ing update this week, while

real GDP data is set to be released on Wednesday that should provide clearer pic-ture of South African econ-omy," NKC African Economics said in a note.

Analysts expect Fitch to affirm South Africa's invest-ment grade credit rating but lower its outlook to negative.

Fitch, which rates South Africa one step above spec-ulative grade with a stable outlook, has not said when it will publish its review. The Treasury says it expects the review on June 8.

In fixed income, the yield for the benchmark instru-ment due in 2026 added 4.5 basis points to 9,1 percent, losing some momentum after firming on Monday following S&P's review - Reuters●

European shares advanced for a second day as investors speculated that the Federal Reserve may delay its next interest rate increase beyond July.

The Stoxx Europe 600 Index climbed 1 percent to 345.65 at 8:16 a.m. in London. The equity benchmark yester-day rebounded from its first weekly drop in a month as energy and raw-material producers advanced, with UK shares rising the most among major western-Euro-pean markets as the pound weakened amid heightened concerns of a Brexit.

Speaking after the close of European trading yester-day, Fed Chair Janet Yellen reiterated her belief that the US economy stil l has forward momentum and that consum-ers could provide a signif-icant step up in spending this quarter to propel overall growth. But she was silent on when another rate increase would be needed, playing down a June move and rais-ing doubts about July.

The central bank will announce its next rate deci-sion on June 15. Traders are now pricing in a 2 percent chance of an increase this month -- down from 22 percent before disappointing payroll data on Friday -- and a 22 percent probability in July. December is now the first month with more than even odds for a move.

After falling as much as 5,4 percent from an April 20 high, European shares regained momentum at the end of May, before stumbling last week amid resurgent worries about global growth. The Stoxx 600 is stil l down 5,5 percent this year.

Rio Tinto Group and BHP Bill iton Ltd. led a gauge of

commodity producers to the best performance of the 19 industry groups on the Stoxx 600 for a second day. Energy companies advanced as oil held gains at about $50 a barrel. Among stocks moving on corporate news, Burck-hardt Compression Holding AG rose 1,1 percent after posting an annual increase in sales. - Bloomberg●

17

European shares climb as Fed interest rate rise horizon recedes

iNTERNATioNAl NEws

By Michael Adeyeye oshi

Although it’s problematic to generalise about a large, diverse place it’s fair to say that Africa is fast emerging as a consumer continent. It is pop-ulated by “Afropolitans”, who are sometimes also referred to as Pan-Africanists. These are young, urban, well educated people. They are willing to spend money on luxury goods.

However, these people are a relatively small middle class in a sea of poverty. They are unlikely to drive a classical “trickle down” improvement to Africa’s general economic picture.

It’s also worth noting that not much of what these young con-sumers covet is actually being produced on the continent. I would argue that Africa should be called the “borrowed conti-nent” rather than a consumer continent. Its raw materials are exported, refined elsewhere and generate big profits for other countries. Researchers come, conduct their work and run

their experiments. Then they leave again to write it all up.

How did people’s high hopes during the era of independence lead to this? And can those high hopes ever be resurrected? Can Africa discard the mantle of “borrowed continent”?

A history of control

To understand the situation that Africa finds itself in now, it’s worth looking back into the continent’s history.

Most countries started to gain independence from colonial powers during the 1960s and 1970s. At this time there were two primary blocs on the con-

tinent: the Casablanca and the Monrovia groups.

The Monrovia group envisaged a continent whose controlling power remained with West-ern governments. Develop-ment would come through the exchange of resources with the western world, trading Africa’s vast mineral resources and agricultural produce.

The Casablanca group, mean-while, envisaged a self-reliant continent that would be capable of governing itself through intra-continental trade. This continent would integrate socio-economic cultural values among all countries.

Although the two had differ-ent missions, they upheld a singular vision – the idea of a united Africa. Over time these aspirations were swept under the carpet and in May 1963 a partially unified body emerged: the Organisation of African Unity. This was relaunched as the African Union in 2001, at which time it adopted grandiose plans to improve governance in its member states through a process of peer review and monitoring. These plans haven’t been seriously implemented. Instead, the relative pluralism and openness witnessed during the late 1990s and early 2000s is being eroded by a new wave of authoritarianism.

Ordinary Africans have not enjoyed much of the oneness imagined by this “union”. Much of the blame for this lies with western powers that remain embedded on the continent. African leaders have also compromised notions of unity through grievous maladminis-tration and systemic oppression of their own people. And so

18 analysis18 ANAlysis

How to turn Africa from a “borrowed continent” to a global powerhouse

19 analysis19 ANAlysis

Africa remains little more than a test site for new scientific experiments and a place from which raw materials can be extracted. This is known as neo-colonialism.

Today the neo-colonialists are more likely to come from the East than the West. Against this backdrop, how can Africa shift its role from borrower to creator and producer?

The answers lie with integrating the continent’s people, tapping into existing indigenous knowl-edge and focusing on capacity development. Technology is key to all of this work.

Technology a great leveller and limiter

Technology can reform how people interact – think of cheap communication services like mobile phone and social media apps. It can be used to estab-lish free, open, world class research facilities like physical and applied science laboratories and engineering installations. In these spaces, Africans can

create their own products and services. Technology also has the power to reform governance by, for instance, offering online government services.

Digital copying and sharing cost next to nothing, which means that classical scarcity-based economic theory becomes less applicable.

Also, when all but a coun-try’s poorest people have the means of recording, sharing and publishing – in the form of a smartphone, tablet or laptop – classical methods of social control begin to fail.

On one hand, the classical path to industrialisation seems more distant than ever. Manufactur-ing is ever more automated worldwide. So much so, that some people are turning away from demanding job creation and protection to demanding basic income grants to alleviate mass unemployment.

But on the other hand, the glo-balised economy is seeding its own destruction. High energy

use is leading to climate change and its unnatural disasters. A growing global population is leading to conflict over resources.

It seems possible that rapid social change must not only aim for decentralisation, but use decentralisation as its method.

Paradoxically, the technology that brainwashes us for mass consumption can also help us to grapple with local survival and dignity. For instance, there’s a need to hybridise universal scientific knowledge with local indigenous wisdom, as well as local biodiversity – including traditional crops.

This process mustn’t be propa-gated by wasteful bureaucratic agencies but by grassroots movements that are empow-ered by cheap instant commu-nication and locally produced energy.

working collectively

Of course technology does not come without risks or dangers.

It’s important that ordinary people and their governments are well prepared to use tech-nology effectively. In this, as in all endeavours related to turning Africa from borrowed continent to creator, it’s crucial that countries on the continent identify their weaknesses and strengths.

This will help when setting and working towards common goals. There’s already a template countries can use for this work: the AU 2063 Agenda, whose call for seamless borders in Africa resonates to the new world.

Although the countries in the continent remain largely closed off, some – such as Namibia, Rwanda and Ghana) – are gradually opening their arms to accept other government officials and ordinary Africans using a “no visa” or visa on arrival policy.

All of these developments also progressively create a mental shift for Africans.

– The Conversation ●