By Tawanda Musarurwa

HARARE – Hwange Col-liery Company Limited says it expects to resume nor-mal production within the next couple of months as it is dealing with the issue of faulty equipment purchased last year.

Hwange managing direc-tor Mr Thomas Makore said recently that the company had engaged the supplier to deal with the faults.

We have had problems with the new equipment at commis-sioning, which is not uncom-mon. We are dealing with the problems at the moment, the supplier who supplied us with the equipment has agreed to

quickly resolve the problems.

“Infact we are at a stage where those machines are

currently stable. We are mon-itoring their performance and I think in the next month or so we should be getting the

correct performance and pro-duction,” he said.

Last year, Hwange purchased equipment worth $31,2 mil-lion from a Belarus firm, Belaz and BEML of India through a vendor financing scheme secured from PTA Bank and India Exim Export Bank respectively.But a few months after it was commis-sioned, at least five of the new heavy equipment became faulty.

Meanwhile, Mr Makore said they split the company into three divisions aimed at cap-italising on all its assets by seeking to run them profita-bly.

“We have divisionalized the

News Update as @ 1530 hours, Tuesday 23 February 2016Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

Hwange Colliery expects normal production in 2 months

company into three major divisions, which is mining, the estates (the houses located at the mine) and as well as the hospital because we run a fully-fledged hospital in the Matelebeland North Province.

“We want to run these divi-sions as strategic business units, as commercial entities that are viable as standalone entities, and that is the thrust of this divisionalization.”

We have made strong pro-gress, we have set ourselves up into strategic business units and there are just issues with intercompany accounts

that we are sorting out and that is why that pillar is not completely built yet.

The local coal producer is pri-marily listed on the Zimba-bwe Stock Exchange and also listed on the Johannesburg Stock Exchange and the Lon-don Stock Exchange.

The MD said the company had made some significant head-way in its goal for tapping into regional markets, but was stil l rather constrained by the limited capacity of the National Railways of Zimba-bwe.

“We have made very strong inroads in terms of exports into South Africa, Zambia and Malawi. So we have made really good progress.”

“Regionally we think we have a market of a million tonnes per year, consisting of cement plants, power genera-tion especially in Zambia and some markets in South Africa. We have also had inquir-ies from overseas for coking coal as well as for industrial coal and we think that there is a market of about 600 000 tonnes per year.

“The only challenge with

moving coal from our mines to the region and overseas is obviously transport. NRZ, we want to move coal by rail because it ’s a bulk product, however sometimes we have to use trucks because the capacity of our rail system is not adequate.”

Hwange - which requires fur-ther capex - said the balance sheet restructuring through a debt to equity conversion “should be completed in the next three months or so,” paving the way for recapi-talisation of its underground operations.●

2 NEws

BH243

By Funny Hudzerema

HARARE - Government requires $635 million to reha-bilitate the country’s railway system and is calling on pub-lic and private partners to invest in the sector.

In an interview with BH24 Minister of Transport and Infrastructural Development Joram Gumbo said partner-ships will assist in the raising of funds to resuscitate NRZ.

“The rehabilitation of the rail l ine from Mutare to Harare up to Victoria Falls will cost roughly $635 million for the entire job to be done while the budget for new railway systems is to yet there.

“Right now we are negotiating with many companies from India, South Africa and China who want to work with us on a PPP to resuscitate the rail-way system which was van-dalised,” he said.

NRZ has a few railway system

and cargos which are operat-ing.

“We want first and foremost to make sure that we are con-nected to the sea because we are a landlocked country.

“So we want to make sure that we revitalise or reha-bilitate Victoria Falls line through Bulawayo, Harare, Mutare so that we connect Mozambique and resuscitate Gweru through Somabula so that we connect to Lusaka,” he added.

Dr Gumbo also said Govern-ment has plans to come up with new railway lines and negotiations with companies to resuscitate existing lines and come up with new lines are underway.

“We are interested in new line on the Lion Den-Lusaka railway line which I think is very important and is shorter to get to Lusaka and Victoria Falls.

“There are many plans that are on the table for the National railways of Zimba-

bwe and it ’s a fact that the sector have got its challenges basically from the economic challenges that we encoun-tered,” he said.

“We must not hide the chal-lenges that our railway sector is facing but the only way is to go out there and look for partners so that we resusci-tate that railway line so that it will be back on its rails.

“Rehabilitation of our railway lines will enforce some of the activities the rail sector is sharing with other stakehold-ers both local and interna-tional,” said Dr Gumbo.

He added that the time line for starting the projects is not yet there but they are stil l engaging with partners and talks are underway.

Preparations for new railway routes which will be con-structed experts are currently taking a feasibility study of the route as we are talking right now.●

4 NEws

$635m required to revitalise national railway system

BH245

BH246

HARARE - NMB Bank Limited on Tuesday dismissed reports that it was on the verge of collapse saying it was instead expanding its branch network and issuing loans.

At the end of December last year, the Reserve Bank of Zim-babwe rated the bank as the eighth most capitalised out of the 13 commercial banking institutions operating in the country.

The bank had a core capital of $42,1 million, exceeding the RBZ stipulated minimum cap-ital requirement of $25 mil-lion. But on Monday, the bank turned "fire fighter" as it was forced to douse a rumour cir-culating on social media that it was facing imminent collapse.

Such rumours are not taken lightly in a highly sensitive sector where customers lost over $185 million and are yet to regain confidence in the banking system after more than five banks closed shop in

the past few years.

AfrAsia, Allied Bank, Genesis, Interfin, Royal and Trust Banks are among those interred in the banking sector cemetery. NMB Bank chief executive officer Benefit Washaya said the bank was “in a safe and sound financial position.”

“I am not sure where such rumours emanated from but nothing could be further from the truth,” he said.

“The bank is in a sound finan-cial position and is in fact expanding its branch network and issuing loans, including

mortgages, on the back

of credit lines arranged with help from our international shareholders.”

Mr Washaya said the bank’s liquidity position remained strong, adding it was an active lender on the interbank market where banks lend each other

money.

Speculation was rife the rumour might have its origins from the fact that NMB Bank is one of the local banks that was recently forced to secure a new international correspond-ent bank.

This followed a decision by its foreign banker, Germany’s Commerzbank that it was no longer dealing with Zimba-bwean financial institutions. Reasons behind the decision were not mentioned.

Mr Washaya said NMB had since entered into agreements with Ecobank International in

France and the Bank of China in South Africa to hold its Nos-tro accounts.

Nostro accounts are foreign currency accounts of a bank opened outside the country with an internationally recog-nized bank to facilitate inter-national transactions on a local bank’s behalf.

“We moved quickly to estab-lish agreements with Ecobank International and the Bank of China in Johannesburg to ensure that we can still trans-act business internationally on behalf of our clients and that their foreign transactions are not disrupted,” Mr Washaya said.

But banking sector watch-ers feared the closure rum-ors could have sparked a run on the bank as depositors feared that their cash might be locked inside when it closed operations. NMB is generally referred to as a bank for the "well to do.”-New Ziana●

7 NEws

NMB denies closure rumour

BH248

BH249

BH2410

HARARE - The local equities market was bullish for a sec-ond day on the trot as the mainstream industrial index gained a further 0.17 to close at 99.31.

Beverages giant Delta moved up $0,0050 to settle at

$0,5300 while General Belt-ings doubled to $0,0002.

But the gains were countered by losses in CAFCA which shed $0,0550 to close at $0,2245, while Simbisa retreated by $0,0020 to $0,1400 and Zimre Holdings lost $0,0002

to trade at $0,0125.

The mining index continued flat at 18.74 as Bindura, Fal-gold, Hwange and RioZim all maintained previous price levels at $0,0090, $0,0050, $0,0300 and $0,1040 respec-tively - BH24 Reporter ●

ZsE11

Industrials maintain bullish trend

BH2412

MovERs CHANGE TodAy PRICE UsC sHAKERs CHANGE TodAy PRICE UsC

General Beltings 100.00 0.02 CAFCA -19.67 22.45

DELTA 0.95 53.00 ZIMRE -1.57 1.25

SIMBISA -1.40 14.00

INdEx PREvIoUs TodAy MovE CHANGE

INDuSTRIAL 99.14 99.31 +0.17 points +0.17%

MINING 18.74 18.74 +0.00 PoINTS +0.00%

13 ZsE TABlEs

ZsE

INdICEs

stock Exchange

Previous

02 03

ADD TO CARTSave big on selected

Products of your choice

PAYMENTYou can purchase

whenever, wherever using:

DELIVERYSpend $30 or moreon your purchases

and get freedelivery

01 Hello Convenience

www.hammerandtongues.com

BIG CONVENIENCE+BIG SAVINGS+BIG OPPORTUNITIES = BIG HAPPINESS

SHOP ONLINE!!

today

BH2414

BH2415

16 dIARy oF EvENTs

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

PowER GENERATIoN sTATs

Gen Station

23February 2016

Energy

(Megawatts)

Hwange 418 MW

Kariba 285 MW

Harare 30 MW

Munyati 27 MW

Bulawayo 18 MW

Imports 0 - 450 MW

Total 1341 Mw

—23 February 2015 - 38th Annual General Meeting of the members of Powerspeed Electrical limited; Place: Powerspeed Board-room, Gate 1, Powerspeed Complex, Corner Cripps Road and Kelvin Road North, Graniteside, Harare; Time: 1100 hours

25 February 2016 - Extraordinary General Meeting (“EGM”) of the shareholders of Radar Holdings limited; Place: Tanganyika House, 6th Floor Boardroom, Harare; Time: 0900 hours...

25 February 2016 - The 49th Annual General Meeting of Mashonaland Holdings limited; Place: The Boardroom, 19th Floor, ZB life Towers, 77 Jason Moyo Avenue, Harare; Time: 1200 hours...

26 February 2016 - The sixty-ninth Annual General Meeting of Ariston Holdings limited; Place: Ariston Holdings limited Main Boardroom, 306 Hillside Road, Msasa woodlands, Harare: Time: 14.30 hours:

THE BH24 dIARy

BH2417

JoHANNEsBURG - The South African rand reached its strongest level in two months against the dollar on Tues-day, although traders were expecting underlying caution to prevail ahead of Finance Minister Pravin Gordhan's Wednesday budget speech.

Stocks opened lower, with the JSE Top-40 blue-chip index easing 0.3 percent.

At 0724 GMT, the rand traded at 15.2450 versus the dollar, off Monday's New York close at 15.1950.

The rand had briefly scaled 15.1620 earlier in Tuesday's session, the firmest it has been against the dollar since late December, according to Thomson Reuters data.

The rand has been buoyed by a global return to high yield-

ing assets due to a bounce in oil and commodity prices, although the rally appeared to be stuttering on Tuesday. Technicals suggested the rand stil l had more upside, traders and analysts said.

"The rand is stil l following its corrective phase nicely," Standard Bank's Warrick But-ler said.

"The break below 15.65 has yielded 50 cents and there is every chance that it will extent this run to at least the next support level of 14.85."

Sustained gains would also depend on whether Gord-han could reassure investors in his budget speech that South Africa's prudent fis-cal policy remained intact. Investors have been nervous since President Jacob Zuma inexplicably changed finance ministers twice in less than a week in December, sending the rand tumbling about 10 percent.

Government bonds edged lower on Tuesday, with debt maturing in 2026 adding 1 basis point to 9.205 percent. - Reuters●

REGIoNAl NEws 18

Rand near 2-month highs, further gains hinge on budget

BH2419

BH2420

Stocks fell on renewed concern over the strength of the Chinese economy. The yen rallied, while the pound declined and crude slumped.

European stocks dropped from a three-week high, while u.S. index futures retreated. The yuan weak-ened after the People’s Bank of China lowered its daily reference rate by the most in six weeks. Sterling extended Monday’s slump on concern over Britain’s possible exit from the European union. The yen climbed against all 16 major peers. New York oil tumbled after surging above $33 a barrel on Monday, while nickel and zinc led industrial metals lower.

The first indicators for Asia’s big-gest economy this month showed private gauges of manufacturing and services falling to new lows, while a reading of business con-fidence slipped. The impact of China’s slowdown and the com-modity-price collapse was in focus Tuesday as BHP Billiton Ltd. made a larger-than-expected cut to its dividend, lowering the payout for the first time in 15 years. Britain’s referendum on its Eu membership in the European union is raising currency-market risks across the continent, with the cost of options protecting against losses on the

euro jumping.

“China’s slowdown is yet to fully play out and markets are watching what policies will be rolled out to address that," said Nescyn Pres-inede, a trader at Manila-based Rizal Commercial Banking Corp., which manages $1.8 billion in trust assets. “The environment remains volatile with investors focused on oil prices.”

stocks

The Stoxx Europe 600 Index lost 0.8 percent at 8:03 a.m. in Lon-don.

The Shanghai Composite Index retreated 0.8 percent. The Topix index lost 0.7 percent in Tokyo, while Australia’s S&P/ASX 200 Index slid 0.4 percent. India’s benchmark index retreated 1.1 percent. The MSCI Asia Pacific Index dropped 0.1 percent, falling from its highest level since Feb. 8.

BHP added 2.6 percent in Sydney, paring its 12-month drop to 41 percent. underlying profit fell to $412 million at its continuing oper-ations in the six months to Dec. 31, from $4.9 billion a year earlier, the world’s biggest mining com-pany said Tuesday in a statement.

Futures on the Standard & Poor’s 500 Index slid 0.3 percent.

Currencies

The yuan fell 0.08 percent to 6.5283 a dollar, according to China Foreign Exchange Trade Sys-tem prices. The People’s Bank of China lowered the daily reference rate for the yuan by 0.17 per-cent, the most in six weeks. The fix was lower than most models were expecting, said Sue Trinh, the head of Asia foreign-exchange strategy at Royal Bank of Canada.

“It seems to be a direct policy sig-nal to weaken the yuan, at least for today, and that is seeing dol-lar-yen leading the way lower and cross-yen selling off as well,” Hong Kong-based Trinh said. “If today’s fix is the start of a trend, then it would be consistent with our view that China needs a more flexible exchange rate and, in other words, a weaker exchange rate.”

The pound dropped 0.3 percent to $1.4109, while the euro added 0.1 percent. The u.K.’s potential exit may damage trade and encour-age other members to renegotiate their relationship with the Eu, sig-naling scope for further losses in the euro in the run-up to Britain’s June 23 referendum.

The pound “has underperformed ahead of u.K. political events in the past,” Commonwealth Bank of Australia strategists, including Peter Dragicevich, wrote in a note. “The upcoming referendum will be no different.”

The yen gained 0.5 percent to 112.33 per dollar, rallying from a decline Monday. options traders are close to the most bullish on the yen since 2011, pricing on six-month contracts show.

Commodities

oil traded near $33 a barrel as the International Energy Agency said a global surplus will persist into next year and limit any chance of a short-term price rebound. April futures in New York slid 2.3 percent after the March contract expired Monday up 6.2 percent. While supply and demand will be aligned next year, large accumu-lated stockpiles will slow the pace of recovery in prices, the IEA said in its medium-term report.

Nickel retreated from the high-est close this year, with the metal used in stainless steel falling 0.9 percent to $8,690 a metric ton. Copper dropped 1 percent and zinc declined 0.9 percent.-Bloomb-erg●

INTERNATIoNAl NEws 21

Global stock rally falters as pound extends losses, oil declines

BH2422

By Miguel Rodríguez Mendoza

The establishment of the Afri-can Continental Free Trade Area (CFTA) is gaining speed. At last year's African union Summit, par-ticipants agreed to get the CFTA agreement in place by 2017, and to immediately initiate negoti-ations on the liberalisation of trade in goods and services. A first round of these negotiations is expected to take place in Feb-ruary 2016, and the preparatory process is now intensifying.

Continental integration has fig-ured high on the African agenda ever since African countries gained political independence, but the CFTA initiative is the latest and perhaps the most ambitious of intra-African trade initiatives. It may be considered “the” Afri-can “mega-regional” trade agree-ment, even if the economic and trade weight of the participants cannot be compared to those of other mega-regionals currently in the making, i.e. the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Part-nership (RCEP) and the Trans-At-lantic Trade and Investment

(TTIP) agreement.

once fully implemented, the CFTA agreement would offer African countries considerable benefits. According to most estimates, the opening of the regional mar-ket to African goods and services will increase intra-African trade significantly. The uN Economic Commission for Africa (uNECA), for instance, estimates that the removal of tariff barriers for intra-African trade could raise their share in total African trade from 10.2 percent to 15.5 percent in 10 years, and the gains would be greater if informal traders are better integrated into formal trade channels.

Challenges and opportunities of the CFTA

The path towards an accelerated pan-African economic integra-tion presents formidable political, economic, legal, and functional challenges. High on the list of these challenges is the conflict-ing disciplines of the different Regional Economic Communities (RECs) already in place. Most Afri-can countries are parties to more

than one REC, and convergence between different RECs should be made compatible with the goals and timelines set for the CFTA. Also, consideration should be given to the fact that most RECs have missed the 2014 deadline to establish FTAs and this in itself calls for an adjustment in their calendar and plan of action, thus effecting on the CFTA timelineit-self.

Moving decidedly towards the CFTA agreement would also require harmonising the multitude and varied trade commitments undertaken by practically all Afri-can countries at the multilateral, regional, and bilateral levels. Most African countries are bound by their WTo commitments, and many have entered into or are negotiating comprehensive trade agreements with outside coun-tries, such as the Economic Part-nership Agreements (EPAs) with the Eu. In addition, most African countries are beneficiaries of uni-lateral trade preferences granted by developed, developing, and emerging economies. Thus, a key strategic consideration for African countries would be to ensure that

existing trade arrangements act as “building blocks” of the CFTA, and do not impede progress to fulfil its objectives or make them more difficult to achieve.

Another important considera-tion would be to design a CFTA that is comprehensive enough to cover all issues that make mod-ern trade agreements economi-cally meaningful, while keeping the scope of the agreement within the boundaries of African needs and concerns. The CFTA frame-work should include disciplines in a large number of areas, from market access for goods and ser-vices to investment disciplines, intellectual property, unfair trade practices, dispute settlement, and institutional issues, among oth-ers.

Last but not least, the negotiating process itself should be carefully organised. Regional and inter-national organisations, working closely with the AuC, could play an important role in assisting Afri-can negotiators to move the CFTA process forward, and they can do it efficiently by cooperating among themselves, and coordinating

23 analysis23 ANAlysIs

The CFTA: Moving towards an African “mega-regional” agreement?

24 analysis24 ANAlysIs

their different contributions to the CFTA negotiations.

sequencing and pacing the negotiations

As indicated, African countries have recognised eight RECs as “building blocks” for the CFTA. This includes, in particular, the dedicated efforts of three RECs, namely CoMESA-EAC-SADC, to establish the Tripartite Free Trade Area (TFTA). The TFTA is a col-lective representing nearly 60 percent of Africa’s population and aggregate output, and although negotiators missed the deadline to conclude their work by early 2015, agreements have been reached on a number of areas.

other RECs are also lagging behind their own schedules. Thus, consideration should be given to a more realistic approach regarding the “building block” function that they are called to perform. A pos-sibility would be for the RECs to focus on issues that do not belong strictly to a CFTA agreement—such as macroeconomic stability and supporting the establishment of regional value chains—and let

the dismantling of trade barriers to goods and services be dealt with at the CFTA level. Indeed, to fulfil the ambitious deadlines set for the CFTA, consideration should be given to undertake immedi-ately some continent-wide nego-tiations on a number of areas, i.e. trade in services, building on pro-gress (or lack thereof) achieved at the RECs level, but not wait-ing until they complete their own objectives in these areas.

It would also be very impor-tant to make trade agreements with outside partners “compat-ible” with the CFTA. As regional trade agreements among African countries support the growth of intra-African trade, the preferen-tial treatment granted to Africa by many developed and developing economies support African export growth to the outside world. The trade preferences granted by the Eu, the uS, China, India, and Japan benefit the bulk of Africa exports. Their impact on LDCs' exports, for example, is undenia-ble: more than 70 percent of their exports go to these five destina-tions.

In addition to unilateral pref-erences, African countries are negotiating reciprocal, although asymmetrical, trade agreements with the Eu and other countries. With regard to these “reciprocal” agreements, CFTA compatibility is to be sought by making current rights and/or obligations under these agreements the starting point of CFTA market access and rule-making negotiations by, for instance, granting to intra-African trade the same degree of market access currently granted to out-side partners.

African countries may need to re-think the relationship between RECs and the CFTA and move towards a clearer division of labour between them. They may consider launching

continental-wide negotiations on the issues to be included in the CFTA agreement, “build-ing” on progress achieved so far in some RECs and particularly on the important achievements of the TFTA. They also need to carefully balance the future CFTA agreement and the current trade arrangements with countries out-

side the region.

Conclusion

Summing up, a regional under-standing on any of the issues to be included in the CFTA frame-work when considered individ-ually would represent a major challenge to African negotiators; taken together the issues may look almost unsurmountable. Har-monising those issues and the regional and external trade com-mitments would be particularly complex.

Time is of the essence, though. The international trading arrange-ment may change drastically if the on-going negotiations on the “mega-regional” agreements come to fruition, as African coun-tries may see diluted many of their existent trade preferences and trade relations.

To counter this possibility, it is imperative for Africa not to be left behind and to instead move ahead with its own ambitious, continen-tal-wide “mega-regional” trade agreement, the CFTA. – Bridges Africa ●