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The Worst is over for Zim says Chinamasa

Johannesburg -Zimbabwe’s economy is on the mend as the worst is over, the country’s finance minister said Friday in a bid to assure investors in South Africa that its neighbour was “not a basket case”.

“We are a giant waking up,” Zimbabwean Finance Minister Patrick Chinamasa told investors. “We are out of the trenches. We are not a basket case.”

Chinamasa was leading a high profile delegation of Zimbabwean government ministers to drum up foreign investment from neighbouring South Africa, the continent’s most developed economy.

The panel said the economy – which six years ago suffered a world record hyperinflation – was on the mend and that its controversial black empowerment laws were being clarified to show they were flexible.

Ease of doing business

The “worst is over”, Chinamasa said, adding that work was being done to improve the ease of doing business in the country.

The new central bank governor John Mangudya, who has been in office for just six months, sounded an upbeat note claiming the country was heading in the right direction.

“Don’t judge us by the way we fell. We fell apart in 2008 when the Zimbabwe dollar was destroyed and confidence levels went down,” the bank chief told AFP. “We are starting afresh.”

Chinamasa said Zimbabwe is now “open for investment and the opportunities are enormous,” telling AFP that already there has been a “stampede of investments into power generation.”

Most investors in the energy sector have been Chinese.

The indigenisation law

The Zimbabwe team also spoke about the country’s controversial indigenisation law, first implemented in 2010, which forced foreign companies to cede 51 percent of shares to Zimbabwean partners, spooking investors.

But they said the problem was that they had failed to communicate the law clearly and the government was now working at making it a “clear, consistent and predictable policy”.

“It’s no one-size-fits-all policy,” said Chinamasa.

Mangudya also told AFP Zimbabwe owed investors clarification of the indigenisation law.

“It’s a very feasible policy, but the way it was being marketed scared away investors, maybe we over-politicised it,” said the Reserve Bank of Zimbabwe chief.

In urging investment by South African firms, the Zimbabwean officials said it was in the interest of South Africa to help grow its neighbour’s economy to stop the tide of economic refugees.

“I believe South African investors have a moral and business obligation to invest in Zimbabwe, or we will continue bothering you,” said Chinamasa. “It’s in your interest.”

‘We went through hell’ 

Zimbabwe’s economy entered a tailspin after the launch of controversial land reforms 14 years ago. By 2008, inflation had officially peaked at 231 million percent before the government stopped counting.

Chinamasa described that phase as “hell”.

“Zimbabwe’s problem is all just about confidence and this lack confidence was caused by the demonisation against the country, against our president.”

He said the government has taken steps to improve the investment climate, including re-engaging the International Monetary Fund.

Early this month the IMF had said Zimbabwe’s economy was showing no signs of recovery after adverse weather, low exports and election year uncertainty shattered growth prospects.

The global lender said the government needs strong macro-economic policies and debt relief along with a strategy to clear arrears in order to overcome its economic challenges.

The gross domestic product (GDP) had averaged an annual 10% between 2009 and 2011 when the country was run by a power-sharing government of President Robert Mugabe and his arch-foe Morgan Tsvangirai.

The new central bank chief has forecast GDP growth of up to 4.0% next year before it heads upwards to between 5.0 and 7.0% in 2016.

 

Source – Fin24

Succession War: VP Mujuru Ousted

Harare – Zimbabwe Vice President Joice Mujuru has been ousted from the ruling party’s powerful central committee after being accused of plotting to assassinate President Robert Mugabe, state media reported on Wednesday.

A provincial executive committee refused to accept Mujuru’s election papers ahead of a key Zanu-PF party congress next week after a campaign against her led by Mugabe’s wife Grace.

Mujuru’s home district “rejected her application in elections that saw a number of other Zanu-PF bigwigs linked to her nefarious activities to oust President Robert Mugabe also failing to make it,” the paper said.

Mujuru has been the target of sustained attacks in pro-government newspapers as factions within the party jostle to take power when 90-year-old Mugabe steps down or dies.

Mujuru and powerful Justice Minister Emmerson Mnangagwa were seen as the leading contenders to replace Mugabe, who has been in power since independence from Britain in 1980.

The battle escalated following Grace Mugabe‘s surprise nomination to lead the powerful women’s wing of Zanu-PF, prompting speculation that she wanted the top job herself.

Robert Mugabe, Africa’s oldest leader, is expected to be confirmed as the party’s leader at the congress early in December, but the fight for positions on the powerful politburo could be decisive for the campaign to succeed him.

Mujuru’s failure to win a place in the central committee means she ceases to be in the party’s top leadership even before the congress starts on 3 December.

 

Source – News24

ArcelorMittal furnace to help lift output

ARCELORMITTAL SA said on Friday, in an operational update for the third quarter ended September, that the relining of a blast furnace at its Newcastle works — which began in May — was completed, paving the way for higher production.

This comes as SA’s primary steel producer experiences “tough trading conditions”, mainly due to lower steel demand, rising competition from Indian and Chinese imports and “low operating efficiencies”.

But the group said that it was entering a “turnaround phase”, driven by a strategy of producing to capacity, reducing costs and embarking on a more aggressive sales strategy, along with “improving relations with government”.

The South African unit of the Luxembourg-based global group has faced a barrage of criticism from both Trade and Industry Minister Rob Davies and Economic Development Minister Ebrahim Patel over its pricing methods. They say this has inhibited the growth of downstream manufacturing in SA.

“Completion of the Newcastle reline bodes well for the execution of management strategy,” Imara SP Reid head of research Stephen Meintjes said on Friday.

“The question is whether, by the time this has been achieved, an improved local and global outlook for steel will be able to drive another phase of profit recovery.”

The group had posted a headline loss of R6m in the six months to June, an improvement from a headline loss of R123m in the corresponding period last year.

New CEO Paul O’Flaherty said subsequent to the results that the company needed to make a profit or it would not survive.

ArcelorMittal SA has recently changed its financial reporting periods from quarterly to six-monthly, in accordance with the Companies Act. The third-quarter production and sales report is the first since this change took effect.

Liquid steel output was 340,000 tonnes in the quarter, or 25% lower than in the same period last year, due to the relining of the furnace. This was partly offset by higher output volumes at its Vanderbijlpark works, but the group was only running at 62% capacity overall compared to 83% in the period last year.

Domestic sales were 12,000 tonnes, or 3% lower, than in the corresponding period last year. This was driven mainly by lower levels of flat products production due to the metals and engineering sector strike at the beginning of the quarter.

Despite the furnace reline at Newcastle, the firm said domestic sales of long products were in line with last year as a result of buffer stocks produced beforehand, and the import of billets that were used to continue producing long steel. But exports plunged 19%, mainly driven by the lower availability of long products, following the furnace reline.

Sales of commercial coke were 50,000 tonnes, or 32% lower, than in the corresponding period. The firm said it experienced sorting problems of coal in the second quarter at Newcastle, which limited the amount of stock available in quarter three.

The outlook for quarter four looks better as the blast furnace at Newcastle ramps up. Total steel capacity utilisation is expected to return to above 80% if all production units maintain existing output.

Source – BD Live