MFIs loaned $187m in 2015, but fell into consumptive lending trap
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MFIs loaned $187m in 2015, but fell into consumptive lending trap
- 1. By Tawanda Musarurwa HARARE – Zimbabwe’s MicroFinance Institutions (MFIs) may have largely failed to improve the capaci- ties of small businesses, with a large portion of their loans going towards consumption. An MFI is an organisation that offers financial services to low income populations, and although there is no pre- requisite for these institu- tions to focus on productive sector funding, expectations were that they would cater to funding small-to-medium enterprises. Small businesses are a sector that the larger local banks have had a generally low appetite for due to per- ceived credit risk. However, Reserve Bank of Zimbabwe (RBZ) statistics show that the MFI loans distribution trends in the country between 2013 and 2015 has been invariably dominated by consumptive lending. 2013 figures show that MFIs extended loans total- ing $164,2 million, of which 70,8 percent ($116 million) went to consumption, while the balance ($47,8 million or 29,1 percent) went towards the productive sectors. There was an improvement in 2014 in respect of the ratio, but the key trend was unchanged as MFIs loaned out a total of $156, 9 million, with consumption absorbing 53,3 percent of those loans ($83,5 million). 46,7 percent or $73,4 million went to production. And as at the end of last year, MFIs had a total loan book of $187,1 million and only $85, 6 million, rep- resenting 45,7 percent of the total loan book, was channeled to the productive sectors, with the remaining $101,5 million (54,2 percent) being consumptive loans. Analysts say that the liquid- ity challenges characterising the economy has compelled MFIs to take a predatory approach to lending at the cost of broader economic recovery. Meanwhile, RBZ deputy gov- ernor Dr Charity Dhliwayo says the country now has News Update as @ 1530 hours, Monday 23 May 2016 Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw MFIs loaned $187m in 2015, but fell into consumptive lending trap Dr Charity Dhliwayo
- 2. four deposit-taking MFIs, which has expanded the range of services available to low income earners and small businesses. “Following the promulga- tion of the MicroFinance Act (Chapter 24:29) in 2013, the registration of deposit-taking microfinance institutions has broadened the product range for the target clientele of low income segments of the pop- ulation. To date four micro- finance banks have been registered,” she said. Dr Dhliwayo added that SMEs’ deposits would be treated as any other in case of a bank failure. “The RBZ intervenes in the resolution (including exit) of troubled banking institutions to minimise loss to deposi- tors. Where a bank is closed, SMEs are treated in the same manner as other creditors or depositors.” .● 2 news Tobacco volumes, income rise from last year BH24 Reporter HARARE - Tobacco farmers have received $221 mil- lion after selling 80 million kilogrammes of flue-cured tobacco since the opening of the marketing season on March 30. Statistics from the Tobacco Industry and Marketing Board (TIMB) shows that the volumes and income from the crop have increased 34 percent compared to the same period last year. TIMB statistics indicated that a total of 58 million kg of tobacco worth $166 million was sold during the same period last year. Prices for this season have increased since the opening of the season. The average price of tobacco for this season has declined from $2,86 last year to $2,76 on day 36. TIMB statistics show that the highest price at the auc- tion remained at $4,99 per kg while the crop at the contract floors has fetched a highest price of $6,25 per kg. The lowest price has remained at $0,10 for both at auction and contract floors. The number of bales laid this year are 1 104 236 compared to 808 957 laid during the corresponding period last year. The sta- tistics show that bales sold this year are 1 034 271 an increase of 36 percent from 731 448 bales sold last year same period. The number of bales rejected are 60 291 which is a decline from 77 509 rejected bales during the corresponding period last year.●
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- 5. BH24 Reporter HARARE - Ecobank Trans- national Incorporated (ETI), parent company of the Eco- bank Group (which operates EcoBank Zimbabwe) and Old Mutual Emerging Markets have announced an enhanced bancassurance partnership arrangement. Old Mutual Emerging Markets currently has a bancassur- ance partnership with the Ecobank Group. This latest agreement will grow the existing strategic alliance by offering seamless insurance services to Eco- bank clients across selected countries where the two groups have operations. In terms of the enhanced strategic partnership clients will benefit mutually though access to a range of finan- cial services that include life insurance, savings and short- term insurance solutions across a greater network on the African continent. Ecobank group CEO Mr Ade Ayeyemi said plans for the integrated model include pro- viding access to Old Mutual solutions for Ecobank’s banking operations across selected countries. “This is a productive and valued partnership between two pan-African institutions to provide complete finan- cial services solutions to our customers,” he said. Old Mutual Emerging Markets CEO Mr Ralph Mupita said:“It is in our mutual interest to ensure that this alliance grows from strength to strength, as we now look to complement Ecobank’s range of banking services to its customers with Old Mutual’s trusted financial products across the Ecobank network on the continent.” Pan-African banking group, Ecobank currently has a presence in 36 African coun- tries, including Zimbabwe. And Old Mutual’s Africa footprint includes operations in Ghana, Nigeria, Kenya, Malawi, Namibia, Swaziland, Zimbabwe, Uganda, Tan- zania, Rwanda and South Sudan.● 5 news Ecobank, Old Mutual announce enhanced bancassurance partnership
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- 7. BH24 Reporter HARARE - The Government through the Minister of Tour- ism and Hospitality Industry has intensified efforts to attract more airline to Victo- ria Falls as a way of increas- ing capacity at the newly build Victoria Falls Airport. Tourism and Hospitality Industry deputy Minister Anastacia Ndlovu said that they were already in dis- cussion with Turkish airlines officials to have the airline introduce direct flights into Victoria Falls. “We are negotiating with Turkish Airlines to operate the direct flights into resort town of Victoria Falls. “There is a business dele- gation from Turkey which is coming sometime this month and we should use that meeting to also promote our operations here,” she said. The deputy minister was speaking on the sidelines of the International Air Travel Association day that was held in Victoria Falls last week. She said that attracting more airlines into Victoria Falls was key to the success of airport, which underwent a multi-million dollar facelift and expansion at a cost $150 million. “We’ve completed the refur- bishment of Victoria Falls International Airport, but we don’t want it to be a white elephant, so besides Turk- ish Airlines Ltd., we are also negotiating with other long haul flights to come here,” she said. Some of the features of the upgraded airport include an expanded runway that is now four kilometres long from 1,5 kilometres, which allows it to accommodate long haul jets and a new terminal that can handle 1,2 million passengers per annum up from 500 000. ● Govt intensifies efforts to market Victoria Falls 7 news
- 8. BH24 Reporter HARARE- The Institute of Chartered Secretaries and Administrators in Zimbabwe (ICSAZ) has introduced an affiliate scheme for corporate governance professionals who carry out company secretarial, risk, compliance, accounting and administration related work but do not hold the ICSA qual- ification. ICSAZ chief executive Dr Farai Musamba said the scheme is designed to provide support structures for people engaged in corporate governance, administration and account- ing-related duties who need professional support but are not chartered secretaries. “It will provide a professional home for those who are cur- rently involved in the profes- sional sector covered by the Institute,” he said. He added that this professional support should help the affiliates per- form better in their roles. “This is in line with ICSAZ’s mission to promote and advance efficient administration in commerce, industry and the public sector,” he said. Dr Musamba explained that participation in the scheme would not accord the affiliates ICSAZ membership, that is, it would not allow them to use the post nominal ACIS or FCIS nor would it give them chartered secretary status. However, the affiliates would be allowed to describe themselves as Affiliates of ICSAZ. He said the initiative to intro- duce the scheme was taken after noticing the high number of people operating in corporate governance related work who wished to be associated with a professional body. A number of these professionals had approached the institute with proposals for an affiliate scheme, but these proposals could not be effected previously due to constitutional issues. “These constitutional issues were recently addressed through the gazetting of the new chartered secretaries by-laws,” he said. Anyone carrying out company secretarial work, accounting or other governance, risk and compliance roles or allied work to the satisfaction of the ICSAZ council can become an affiliate of ICSAZ. “Other people who can qualify for the scheme include those who have been appointed by companies as secretaries pur- suant to Section 173A of the Companies Act,” he added. Members of other constitu- ent bodies forming the Public Accountants and Auditors Board (PAAB) who are practising as company secretaries or govern- ance and compliance profes- sionals are also eligible. Those who studied but did not complete the ICSA programme and lawyers who are working as company secretaries but are not chartered secretaries also qualify to become affiliates. ICSAZ is a division of the global United Kingdom-based Institute of Chartered Secretaries and Administrators with a mandate to promote good corporate governance and compliance through the efficient adminis- tration of commerce, industry and the public sector. The ICSA qualification is an all-round business qualifica- tion which enables one to be employed in various capaci- ties that include accounting, finance, administration, general management, tax, informa- tion technology and human resources. ● 8 news ICSAZ sets up affiliate scheme for governance professionals
- 9. HARARE -After closing Friday in the red, the mainstream industrial index opened the new week in similar territory, closing at 105.10 points fol- lowing a 0.70 loss on the back of key heavyweight losses. Conglomerate Innscor weighed on the index the most with a $0, 0150 drop to trade at $0, 2200 and giant beverages producer Delta eased $0,0067 to close at $0,7183. Other losses were in tel- ecoms firm Econet which shed $0, 0038 to $0,2162, giant insurer Old Mutual was $0,0025 lower at $2,1875 and FBC lost $0,0010 to close at $0,0660. Three counters traded in positive territory. Meikles was $0,0080 firmer at $0,0780, Fidelity Life added $0,0010 to close at $0,1040 and Nat- Foods was up by $0,0005 to trade at $2,1000. The mining index was flat at 25.19 as Bindura, Falgold, Hwange and RioZim main- tained previous price levels at $0,0120, $0,0050, $0,0300 and $0,1565 respectively . BH24 Reporter ● Heavyweights weigh on index as week opens 9 zse 02 03 ADD TO CART Save big on selected Products of your choice PAYMENT You can purchase whenever, wherever using: DELIVERY Spend $30 or more on your purchases and get free delivery 01 Hello Convenience www.hammerandtongues.com BIG CONVENIENCE+ BIG SAVINGS+ BIG OPPORTUNITIES = BIG HAPPINESS SHOP ONLINE!!
- 10. Movers CHANGE Today Price USc SHAKERS Change TODAY Price USc Meikles 11.42 7.80 Innscor -6.38 22.00 Fidelity Life 0.97 10.40 Econet -1.72 21.62 NatFoods 0.02 210.00 FBC -1.49 6.60 Delta -0.92 71.83 SeedCo -0.24 57.00 Old Mutual -0.11 218.75 Index Previous Today Move Change Industrial 105.80 105.10 -0.70 points -0.66% Mining 25.19 25.19 +0.00 points +0.00% 10 zse tables ZSE Indices Stock Exchange Previous today
- 11. 11 DIARY OF EVENTS The black arrow indicate level of load shedding across the country. POWER GENERATION STATS Gen Station 23 May 2016 Energy (Megawatts) Hwange 471 MW Kariba 485 MW Harare 15 MW Munyati 28 MW Bulawayo 24 MW Imports 0 - 400 MW Total 1360 MW 24 MAY -- Mashonaland Holdings Annual General Meeting; Place: 44 Tilbury Road, Willowvale, Harare, Zimbabwe; Time: 15:00hrs 26 MAY -- Proplastics Annual General Meeting; Place: Meikles Hotel, Cnr 3rd/Jason Moyo Avenue, Harare; Time: 10:00hrs 27 MAY -- ZB Financial Holdings Limited Twenty-Seventh Annual General Meeting; Place: Board Room, Ground Floor, 21 Natal Road, Avondale, Harare; Time: 10:30hrs 31 MAY -- Pearl Properties (2006) Limited Annual General Meeting; Place: Royal Harare Golf Club, Harare; Time: 14.30hrs 2 JUNE -- Zimplow Annual General Meeting; Place: Zimplow Holdings Limited Head Office, 36 Birmingham Road, Harare; Time: 10:00hrs 9 JUNE -- First Mutual Holdings Annual General Meeting; Place: Royal Harare Golf Club, Harare; Time: 14:30hrs THE BH24 DIARY
- 12. JOHANNESBURG - South Africa's rand strengthened early on Monday after the police said they had no plans to arrest Finance Minister Pravin Gordhan over his role in the formation of a surveil- lance unit within the revenue service. At 0700 GMT the rand had edged 0,2 percent firmer to 15,6050 per dollar. Bonds were also firmer in early trade, with the yield on the benchmark government issue due in 2026 cutting 6 basis points to 9,33 percent. The elite Hawks police unit told Reuters it had no plans to arrest Gordhan as part of an investigation into a surveillance unit set up by the revenue service during his time in charge. Gord- han headed the tax agency between 1999 to 2009. Numerous political upheav- als since President Jacob Zuma's shock sacking of then Finance Minister Nhlanhla Nene in December have seen the rand suffer. Traders said the rand would benefit if political tensions around the finance minister eased. "The rand has rebounded somewhat since hitting all- time lows in thin liquidity during mid-January, aided by hawkish action from the SARB (South African Reserve Bank) and generally calmer emerging markets," analysts at NKC Africa Economics said in a note. "However, further gains will be difficult given the height- ened political risk environ- ment." The rand has gained more than 1,5 percent against the greenback since slipping to a new one-month low after last week’s decision by the central bank to keep lending rates unchanged at 7 per- cent. Stocks opened weaker, with the benchmark Top-40 index shedding 0,38 percent to 46,356 points by 0708 GMT - Reuters● regioNAL News12 Rand gains after police say have no plans to arrest finmin
- 13. Bayer AG made an unsolic- ited $62 billion all-cash offer to acquire Monsanto Co. and create the world’s biggest supplier of farm chemicals and genetically modified seeds, disclosing the terms of its bid amid investors’ growing concern that it might overpay. Bayer offered $122 per share in an all-cash bid in its May 10 written proposal, the Leverkusen-based com- pany said in a statement on Monday. That’s a 37 percent premium to Monsanto’s May 9 closing price. The payment would be funded with a com- bination of debt and equity, with about 25 percent of the enterprise value coming from selling shares to existing investors. Shares of Bayer dropped to its lowest in more than 2 1/2 years. The proposal gives investors insights into Chief Executive Officer Werner Baumann’s style and ambitions as he attempts to pull off the big- gest corporate takeover ever by a German company after less than a month at the helm. Buying St. Louis-based Monsanto would give Bayer the world’s largest seed sup- plier and a pioneer of crop biotechnology. The kind of genetically modified seeds that Monsanto started to sell two decades ago now account for the majority of corn and soybeans grown in the US. The two companies are engaged in “constructive discussions,” the CEO said. Bayer fell 3,4 percent to 86.48 euros, the lowest since October 2013, as of 9:07 a.m. in Frankfurt trading. ‘Uneducated Reaction’ Bayer’s stock had plunged by the most in seven years when it confirmed having made an offer, without dis- closing the financial details, on Thursday. Monsanto hasn’t responded to the offer publicly, beyond saying that it was reviewing the terms. “What we saw last week was an uneducated reaction in the media and the press because we did not com- municate the details of our proposal,” Baumann said on a conference call on Monday. “We are utterly convinced of the rationale” of the pro- posal. The deal will add to core earnings per share by a mid- single-digit percentage in the first full year after com- pletion, and a double-digit percentage thereafter, Bayer said. The German company also expects earnings to be bolstered by savings of about $1,5 billion from the fourth year following the deal. Role Reversal The offer marks a reversal of roles for Monsanto. The company previously sought to buy Swiss pesticide maker Syngenta AG, but had to abandon the $43,7 billion bid in August after the other company refused to agree to a deal. The crop and seed indus- try is being reshaped by a series of large transactions. China National Chemical Corp. agreed in February to acquire Syngenta for about $43 billion, months after Monsanto abandoned its own bid. Meanwhile DuPont Co. and Dow Chemical Co. plan to merge and then carve out a new crop-science unit. Bank of America Corp. and Credit Suisse Group AG are the financing banks for Bayer, while Rothschild has been retained as an addi- tional financial adviser. – Bloomberg● internatioNAL News13 Germany’s Bayer offers $62 billion in cash to buy Monsanto
- 14. By Dianna Games Mistrust between the private sector and governments in Africa is one of the biggest impediments to the delivery of infrastructure, the CEO of a South African multinational company says. This issue has dogged Afri- can development for many years — suspicion and even animosity between the two "sides", whose strategic collaboration is critical to delivering better lives for Africans. At various pan-African events I have attended in the past few weeks, the private sector, when mentioned at all, has been characterised largely as "the enemy". Talk about development in organisations such as the African Union and UN Economic Commission for Africa (UNECA) tend to place the state at the centre of everything. The private sec- tor is viewed as an unreliable 14 analysis14 analysis Public-private sector mistrust undermining Africa’s progress
- 15. 15 analysis15 analysis adjunct, focused on exploit- ing Africans rather than pro- viding any benefits to people or the state. Although the mistrust issue has been around for a long time, it has been given new impetus in the corridors of continental power by the findings of the AU’s high- level panel on illicit financial flows, which estimates that $60bn a year is leaving the continent illicitly, a figure later revised upwards to $80bn. Of this, the panel’s report says, 60 percent derives from the activities of large commercial companies in the form of transfer pricing, tax dodges, trade misinvoicing and corruption. Also men- tioned are tax incentives, which are not about outflows, nor are they illicit. But, the report asserts, they also rob the continent of much-needed revenue, with companies pushing govern- ments eager for investment in a race to the bottom. The actions of large companies are undermining the ability of governments to mobilise domestic resources for devel- opment, officials say. UNECA released a report earlier this year, examin- ing bilateral treaties African countries have with other countries, mostly outside Africa. The findings sug- gest governments have been victims of treaties that tend to favour the interests of western nations and their companies rather than those of Africans. On the other side of the coin, many in the private sector do not trust governments to serve their interests and argue that safeguards are necessary to guard against high risk, to deal with the consequences of poor and unpredictable policy, and to ensure good returns in high-cost, corrupt and inefficient environments. African economist and devel- opment specialist Nkosana Moyo has offered a view on why suspicion of the pri- vate sector is so pervasive in Africa. He says many Africans view business as representing the colonial era and, by extension, their interests as being those of foreign nations and not those of the economies in which they invest. This makes true engagement difficult. It speaks to the fact that few countries at independence had a domestic business sector of any size and most economies were dominated by companies from western colonial powers. But these stereotypes ignore several things. One is the fact that not all companies in Africa are large multinationals. Rather, more than 60 percent of business in Africa is undertaken by small, informal entrepre- neurs. Another is that Afri- can-owned companies and multinationals with a real stake in domestic economies are in the ascendancy. And another is that, while there are companies that may not play by the development rules and may act in ways that run counter to the inter- ests of African countries, there are many more that are good corporate citizens. There are many examples of successful public-private partnerships across the con- tinent, often with large west- ern companies. But these are seldom raised at conferences where the private sector is being cast as the villain and where business representa- tives have no voice. The mis- trust malaise is not helping efforts to develop Africa — it is having the opposite effect. In the end, it is not about the private sector or govern- ment interests directly, but about win-win partnerships for Africa. – BDLive● • Games is CEO of busi- ness advisory Africa @ Work