Bri­tish in­vestors eye Zim­babwe:

The Sunday Mail (Zimbabwe) - - FRONT PAGE - Africa Moyo Se­nior Busi­ness Re­porter

FUEL con­sump­tion has spiked 24 per­cent to 752,4 mil­lion litres be­tween Jan­uary and June this year, largely in re­sponse to ris­ing eco­nomic ac­tiv­ity sparked by re­newed in­vestor con­fi­dence fol­low­ing the com­ing in of the new dis­pen­sa­tion.

Apart from new in­vest­ments such as Varun Bev­er­ages — which is pro­duc­ing Pepsi, Moun­tain Dew and Mirinda soft drinks — a num­ber of ex­ist­ing com­pa­nies have also ramped up pro­duc­tion in the last nine months.

The surge in busi­ness con­fi­dence has re­sulted in high de­mand for fuel, par­tic­u­larly diesel, and for­eign cur­rency, as com­pa­nies ramp up pro­duc­tion.

In­dus­try gob­bles 60 per­cent of diesel in the coun­try.

Since Novem­ber 24 last year when Pres­i­dent Em­mer­son Mnan­gagwa was sworn-in fol­low­ing the res­ig­na­tion of for­mer Pres­i­dent Mr Robert Mu­gabe, for­eign in­vestor ap­petite for lo­cal op­por­tu­ni­ties is at an all-time high.

Zim­babwe was strug­gling to at­tract high value in­ter­na­tional in­vestors amid mar­ket sen­ti­ment that Mr Mu­gabe’s con­tin­ued stay in of­fice had im­posed a 50 per­cent risk on in­vest­ment.

The In­di­geni­sa­tion and Eco­nomic Em­pow­er­ment Act, which de­manded that lo­cals hold 51 per­cent share­hold­ing in all for­eign-owned in­vest­ments, also kept for­eign di­rect in­vest­ment at bay.

But af­ter Pres­i­dent Mnan­gagwa’s ad­min­is­tra­tion tweaked the law to al­low for­eign in­vestors to hold 100 per­cent share­hold­ing in their busi­nesses ex­cept in the di­a­mond and plat­inum sec­tors, high-pro­file in­vestors such as Gen­eral Elec­tric from the United States have ex­pressed in­ter­est in lo­cal in­vest­ments.

Be­tween Jan­uary and June this year, the Zim­babwe In­vest­ment Author­ity (ZIA) ap­proved in­vest­ment ap­pli­ca­tions of a record US$16 bil­lion, a clear in­di­ca­tion that the econ­omy has turned the corner.

In­creased eco­nomic ac­tiv­ity has seen the Re­serve Bank of Zim­babwe (RBZ) bat­tling to process for­eign pay­ments for both fuel and raw ma­te­ri­als de­manded by in­dus­try.

Zim­babwe En­ergy Reg­u­la­tory Author­ity (Zera) chief ex­ec­u­tive of­fi­cer En­gi­neer Glo­ria Magombo told The Sun­day Mail Busi­ness last week that fuel im­ports rose 24 per­cent in the first half of the year.

“Gen­er­ally, fuel im­ports into the coun­try have been in­creas­ing be­tween 2017 and 2018. Diesel im­ports in­creased by 17 per­cent from 360,7 mil­lion litres in 2017, petrol im­ports in­creased by 47 per­cent from 207,6 mil­lion litres in 2017 (and) jet A1 im­ports in­creased by 24 per­cent from 27,8 mil­lion litres in 2017.

“The over­all in­crease for all the fu­els is 24 per­cent when com­par­ing 2017 and 2018,” said Eng Magombo.

Only paraf­fin im­ports de­creased by 44 per­cent from 14,7 mil­lion litres in 2017 and this is largely at­trib­uted to the shift in en­ergy use pat­terns as most cit­i­zens have moved from us­ing paraf­fin for heat­ing to gas and elec­tric­ity.

The jump in fuel im­ports has re­sulted in the RBZ in­creas­ing for­eign cur­rency al­lo­ca­tions.

In May, RBZ Gov­er­nor Dr John Man­gudya said fuel im­ports had chewed US$85 mil­lion.

There plans to ramp up al­lo­ca­tions to about US$100 mil­lion in Novem­ber to meet de­mand.

More money is now re­quired for fuel im­ports con­sid­er­ing that crude oil prices have gen­er­ally been ris­ing from June 2017 to July 2018 from lev­els of US$46 per bar­rel to US$78 per bar­rel in July 2018, rep­re­sent­ing an al­most 70 per­cent in­crease. In­dus­tri­al­ists and bankers op­ti­mistic In­dus­tri­al­ists and bankers be­lieve there is a ray of hope on the hori­zon for the econ­omy as the new ad­min­is­tra­tion has laid a firm foun­da­tion for trans­for­ma­tion.

In a state­ment ac­com­pa­ny­ing Tur­nall Hold­ings Lim­ited’s re­sults for the half ended June 30, 2018, board chair­per­son Mrs Rita Likukuma ac­knowl­edged the im­prove­ment in eco­nomic for­tunes.

“The group’s im­proved fi­nan­cial per­for­mance for the pe­riod was an­chored on in­creased pro­duc­tion and sales vol­umes,” said Mrs Likukuma.

“Sales vol­umes of 25 432 tonnes were 63 per­cent above the pre­vi­ous com­pa­ra­ble pe­riod. The group ex­pe­ri­enced strong prod­uct de­mand in the first quar­ter, which was sup­ported by con­sis­tent prod­uct sup­ply and af­ford­able prices.

“Pro­duc­tion vol­umes we 29 630 tonnes, which was 79 per­cent above the pre­vi­ous com­pa­ra­ble pe­riod.”

How­ever, like any other com­pany, Tur­nall had for­eign cur­rency chal­lenges due to height­ened eco­nomic ac­tiv­ity.

The man­u­fac­tur­ing sec­tor is rid­ing high, spurred by Statu­tory In­stru­ment 64 of 2016, an im­port re­stric­tion pol­icy in­tro­duced by the Govern­ment to pro­tect lo­cal in­dus­try.

Mrs Likukuma says SI64 of 2016, which has since been up­graded to SI 122 of 2017, has im­proved the com­pet­i­tive­ness of lo­cally pro­duced goods.

Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) pres­i­dent Mr Sife­lani Ja­bangwe last week said lo­cal firms will be key to turn­ing around the econ­omy as the na­tion seeks to achieve mid­dle in­come sta­tus by 2030.

Stan­dard Char­tered Bank Zim­babwe board chair­man, Mr Love­more Manatsa also be­lieves that the econ­omy will con­tinue to grow driven high gold, di­a­monds and to­bacco out­put, de­spite for­eign cur­rency chal­lenges.

The World Bank projects the coun­try’s an­nual GDP growth at 2,7 per­cent while the IMF puts it at 2,4 per­cent while the Min­istry of Fi­nance re­mains more op­ti­mistic at 4,5 per­cent growth.

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