The IMF and the mid-term review of Zimbabwe Finance Minister Tendai Biti incline to caution. Yet local companies are much more upbeat, according to an assessment from Imara Asset Management Zimbabwe, a subsidiary of the Pan-African Imara financial services group.

Imara has given a lead with investment facilitation into Zimbabwe and provides regular updates to international investors.

In his latest analysis, John Legat, Chief Executive of Imara Asset Management Zimbabwe, notes: “We find it hard to understand why both the IMF and government are being as cautious as they are… Their views give a rather sobering view of the economy rather than an upbeat and exciting outlook for a country barely in its second year of reform.”

The IMF believes Zimbabwe has an economy worth just over US$5 billion, though it admits supporting data has “serious shortcomings”.

Legat thinks the IMF arithmetic does not add up and uses the neighbouring Zambian economy – worth US$14 billion – as a yardstick. The countries have populations of a similar size, but until its ‘lost decade’ Zimbabwe’s economy was about 50% bigger.

Zimbabwe’s argriculture, tourism and manufacturing sectors gave it the edge over its copper-rich neighbour. By some measures, Zimbabwe still outdoes its neighbour.

Zambia’s two major breweries sold US$230 million worth of beverages last year while sales at Zimbabwe’s Delta brewery totalled $324 million.

In 2010 Zimbabwe’s Econet mobile phone service expects sales of about US$500 million while Zambians are expected to spend about US$280 million with Zain, their major network provider.

Significant Zimbabwean spending power is also indicated by food purchases from the Innscor fast foods business, Colcom, National Foods and the Spar retail chain. Imara estimates sales here at over US$1.1 billion a year.

Legat adds: “According to the IMF and government, Zimbabwe’s gross national product per capita is US$450, which compares with Zambia at US$1,200 per head. Spending patterns in both countries suggest the opposite!”

Zimbabwean exports also appear buoyant.

Government’s mid-term review estimated the half-year value of platinum, ferrochrome and gold shipments at US$550 million, suggesting that full-year shipments would run to US$1.2 billion – though Legat expects the figure to be higher.

He believes agricultural exports could top US$1 billion.

He adds: “Excluding manufacturing and tourism, exports from agriculture and mining might top $2.3 billion or higher in 2010. That’s a bigger number than the IMF forecast that includes manufacturing exports.”

Zimbabwe’s mid-term review indicated that half-yearly tax revenues were 12% above target, VAT receipts were 9% above budget and PAYE was 22% higher than projected. Corporation tax was 54% above target.

Yet the mid-term review reduced government’s economic growth forecast from 7% to 5.4% while the IMF revised its down to 2.2%.

“We remain unconvinced.” Says Legat, “and further don’t believe the underlying number used for the economy – US$5 billion – is correct.

“In last year’s December budget, the Government revised up the size of the economy from $3.5 billion to $5.1 billion … We would not be surprised to see a similar re-rating in future.”

Imara stands by its 2009 assessment that Zimbabwe’s formal economy is worth $8 billion to $10 billion.

Says Legat: “That makes the current stock market capitalisation of $3.0 billion look very cheap… The Zim economy is pumping!”

The deal is designed to offer a more complete solution to their respective clients’ needs in the OHADA region and further develop their regional law practices. 

OHADA – the Organisation for the Harmonisation of Business Law in Africa – is an international organisation created in 1993 and currently comprising 16 member states.

Both firms have collaborated on projects and transactions in West Africa for a number of years.

Roddy McKean head of Webber Wentzel’s Africa Practice said that Webber Wentzel’s work in Africa now represents a significant and growing part of the firm’s practice. 

“Being able to draw on the recognised expertise and know-how of one of Africa’s leading law firms is a boon for us. Webber Wentzel gains access to Bile-Aka, Brizoua-Bi & Associés’ capability, knowledge and expertise under OHADA business law and its on-the-ground experience throughout West-Africa
 
“By combining our expertise with the insight of local partners, we provide our clients with a competitive advantage when operating in Africa. “

The firms will also share business and legal intelligence and set in place a secondment programme amongst other strategies to service clients.

Michel Brizoua-Bi, Head of the International Department at Bile-Aka, Brizoua-Bi & Associés commented: “Webber Wentzel has strong industry experience in key sectors in Africa.  The association of the two firms’ strengths and knowledge of African business environment reinforces our ability to provide legal advice of an international standard. 

“We have worked extensively with Webber Wentzel and have found that we share a similar vision about the need for more collaboration and integration between leading African firms”.

In a move to service better its clients in Francophone Africa, Webber Wentzel also recently appointed Steven De Backer as a director in the Africa Practice. Steven, who grew up in the Democratic Republic of Congo and was previously with Freshfields in Brussels and Mkono & Co in Burundi and Dar-es-Salaam, has brought extensive on-the-ground experience of leading transactions in Francophone Africa. 

Steven is backed by a team of French speaking and civil law qualified lawyers who are able to assist clients in relation to their transactions and operations in Francophone Africa.

Webber Wentzel is currently acting for Vale SA, the world’s largest iron-ore producer, in relation to its investment in Guinea and its implementation of the multi-billion dollar Zogota project. 

The firm is also currently advising clients on a variety of matters in Francophone countries such as the Democratic Republic of Congo, Burkina Faso, Côte d’Ivoire, Burundi and Senegal.

Leading international fund managers have confirmed their attendance at the event in Harare on June 7 and 8, says Sean Gammon, MD of Harare-based Imara Capital Zimbabwe.

Imara expects investment professionals from the USA, UK, Europe and South Africa. Last year the Pan-African financial services group created history by successfully staging Zimbabwe’s first in-country international investment conference since the formation of an inclusive government.

“The follow-up indaba has a ‘let’s get down to business’ feel about it,” says Gammon. “The accent this time around will be on assessing the reality of corporate Zimbabwe, rather than just the undoubted blue-sky potential.

“The major signal sent on the run-in to the conference is that solid support is forthcoming from fund managers, despite concerns about the final form that Zimbabwe’s indigenisation legislation may take.

“It is no longer a novelty for African ‘frontier markets’ to be represented in the portfolios of major fund managers. Investment risk is different in Africa, but we’ve seen that developed economies also carry risk. All in all, the risk-and-return proposition within African markets has growing appeal. A follow-up investment indaba here in Harare confirms it.”

The conference format is designed to facilitate serious investment. After macro scene-setting, senior executives from major listed Zimbabwean companies will make individual presentations to fund managers.

One-on-one sessions will give prospective investors an in-depth look at the performance of market leaders that have achieved sustained growth with little reliance on debt.

Says Gammon: “Dollarisation has helped to resuscitate Zimbabwe’s economy and enabled many companies to step up production. The timing of the conference is important as it gives fund managers a chance to assess corporate performance post-dollarisation.

“Some investors may have taken a position soon after dollarisation and will be checking corporate performance one year on. Those who took a wait-and-see approach will be just as keen to assess dollarisation’s impact.

“In either scenario, the Imara conference fulfils a vital role.”

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The private placement of 18,5 million shares, which was taken up by three local institutions, was significantly oversubscribed, and a further 40,7 million shares are being sold by way of an initial public offer (IPO). The balance of 3,7 million shares have been earmarked for an employee share trust. The offer dilutes BDC’s stake in Cresta Marakanelo from 60% to 26%.

The offer closes on June 7. Shares are offered at P1,45 a share, equivalent to a price/earnings multiple of 13, a discount to the BSE’s current market average.

“The offer is well priced and we’re confident that all the Cresta shares will be taken up,” said Grant Molyneaux, Corporate Finance Executive at Imara Botswana, financial advisors to Cresta for the transaction. “Within four days of the opening of the offer we had to print additional prospectuses to keep up with demand.

“This indicates strong interest from retail investors which will complement institutional demand. It also suggests that the citizen empowerment objectives of the BDC will be realised
 

“Strong public participation is good news for local capital market development as the listing will contribute to an improvement in the BSE’s liquidity and trading volumes.”

The listing of Cresta Marakanelo has received BSE approval, subject to the achievement of a minimum spread of 300 public shareholders. The new share (CML) will be quoted on the Domestic Sector of the BSE’s Main Board, taking the total number of counters on the exchange to 33.

The hotel group operates eight hotels with 724 rooms. Average occupancy runs at 67%.

“We’re delighted that the public response has been so positive,” said Tawanda Makaya, Managing Director of Cresta Marakanelo. “We have a broad geographic footprint across Botswana are well established as the nation’s leading hotel brand.

“We have achieved significant expansion over the past 11 years. The listing will further enhance our profile and position us for the next stage in our growth strategy – our emergence as a major regional brand.”

Botes, who is also the inventor of the technology, said that the system addresses seven key challenges embodied in the low cost and affordable housing shortages facing developing countries namely: lack of resources, insufficient funds, skills shortage, time constraint, work flow control, time constraints, waste, and reduction of building materials cost “The modular components are assembled into easy to handle panels which are configured into a mould of the desired structure. These panels are joined to form wall configurations of any desired length and height with a wall cavity of either 100mm or 150mm. Once the assembly of the panels are complete, it does not need to be repeated. The formwork panels can be re-used 50 times; making the technology cost effective due to its repetitive application scheme, reducing the cost of construction and transportation significantly. The steel reinforcing, window and door block-outs, conduits and other fittings are positioned prior to the wall cavity being filled with the mortar mix. The result is a wall with a smooth off-shutter finish that does not require any plastering, beam filling or chasing. Once the pre-assembled formwork panels have been removed they can be immediately re-erected on an adjoining site to be used on a repetitive basis; again saving valuable time in the construction process.

“With its streamlined and simplistic approach to construction, the application of the technology is not dependant on skilled labour to assemble, erect, fill or strip and enables community involvement in the construction of their own homes. It brings to the field of construction all the benefits of a factory assembly line; quality assured work by unskilled labourers at a maximum rate of production with a high production output capacity. The technology is versatile in that it is easily adaptable to the specified design requirements and is suitable for all types of buildings, yet highly suited for use in repetitive housing schemes. This alleviates many of the logistical problems facing the construction of affordable repetitive housing projects.

By utilizing indigenous materials the benefits of the technology are spread to local communities.” he stated. Botes said that the concept came to him in 1986 while building a wall around his first home. He said that the building process took up quite a bit of time prompting him to investigate alternatives to reduce the construction time and still create a good quality wall. According to him, Moladi is a low construction cost technology and has nothing to do with low-cost housing systems. “The principle can be applied to any house, whether low-cost housing or for up market developments.” Earlier in his welcome remarks, Sen.

Bode Olajumoke, Chairman, Moladi Nigeria Ltd., the Nigerian partners of the SA firm, said that having followed the impact of the technology on the delivery of mass housing in South Africa, they decided to enter into partnership with the company by incorporating it in Nigeria. The Moladi building technology was established in South Africa in by Hennie Botes in 1986 to address the basic need for durable and quality housing that is affordable, and a viable alternative to traditional building methods. The company is presently operating in Panama, Mexico, Ghana Namibia and Mozambique. Others are Botswana, Sierra Leone, Haiti, Angola and Tanzania. “We want Moladi to become a global leader in house building technology,” Botes asserted.

Contact Information:
moladi
www.moladi.net

The internet and its commerce based opportunities is still a relatively new concept in Kenya but is fully supported by government.  Internet access has improved dramatically over the past few years; usage has increased from around 1.9 million users in 2003 to approximately 3.5 million users currently.  At the same time, the number of .ke domains has also increased from less than 2 000 domains in 2006 to more than 10 000 domains registered this year.  These range from simple businesses like flower selling to high tech offerings, all ready and waiting to make use of ecommerce technology.

With an already captive market of over 4 million card holders (50% of whom are Kenyan), Visa plays a vital role in the growth of the East African ecommerce market.  While many banks in Africa are not yet technologically ready for ecommerce, Visa worked with Kenya’s I&M bank to ensure they were compliant with international standards, setting the bar for future interested financial institutions.

Speaking at the launch of I&M bank’s ecommerce license, Victor Ndlovu, Visa’s Country Manager of Sub Saharan Africa said, “Ecommerce is one of the most important facets of the Internet to have emerged in recent times. Ecommerce allows people to carry out business without the barriers of time or distance. One can log on to the Internet at any point of time, be it day or night and purchase or sell anything one desires at a single click of the mouse.”

Ndlovu also pointed out that the direct cost-of-sale for an order taken from a web site is lower than through traditional means (retail, paper based) as there is no human interaction during the on-line electronic purchase order process. It is therefore the cheapest means of doing business.  Also, electronic selling virtually eliminates processing errors, as well as being faster and more convenient for the visitor.

This pioneering venture has boosted the entire ecommerce market, attracting interest from several of Kenya’s larger banks including Barclays, Standard Chartered, Coop Bank and Equity Bank.  “We believe our commitment to making banking services more accessible will stimulate the already robust drive towards a modern electronic payments industry in Kenya,” commented Ndlovu. “This will have significant social benefits for the people of this wonderful country, promote economic growth and improve efficiencies in government service and delivery, particularly to those people who exist on the very margins of society.”

Kenya’s improved internet connectivity has contributed to the smooth launch of ecommerce although access to stable lines and indeed computers is still a challenge.  Statistics from recent years indicate that phone line penetration density is relatively low, with about 4 and 1.6 lines
in every 100 people in urban and rural areas respectively.   However
Ndlovu is upbeat about the East African market in general.  “Although ecommerce is currently only viable in Kenya, we predict that within the next six months, progress will be made in neighbouring countries.  Kenya is a very mature market and sets a good example for ecommerce business opportunities in the region.”

Analysts echo Ndlovu’s optimism, predicting that the leap in internet businesses will grow dramatically over the next few years.

2009 SETS THE STAGE FOR 2010 GROWTH POTENTIAL (Release Date: 27 December 2009)

The African capital markets surged in 2008, but deflated in 2009. What’s the outlook in 2010? Preiss said that some analysts believe that opportunities in BRIC countries are overdone. “Flat markets in 2010, like Africa, present excellent opportunities for investors,” indicated Price.

The best performer in 2009 in Africa was in the currency market, which also boosted stock market increases. The South African Rand was a top currency in 2009. “In effect, the 25% stock market increase in South Africa translated to a 60% increase in dollar terms because of the gains in the South African Rand against the U.S. Dollar,” shared Preiss.

In most African markets, the annual GDP remained positive in 2009. South Africa was an exception with a contracted economy. Preiss pointed out, however, that the real story is the inflation rates in African markets went down significantly. He adds, “A reduction in inflation also helps the real economy since the local businessman doesn’t have to fight rising costs due to inflation.”

THE POSSIBILITIES OF AFRICA IN 2010 (Release Date: 4 January 2010)

The first major opportunity is in the African bond markets. Bond markets in Africa have strong potential since inflation rates have lowered.

The second major opportunity is in South Africa with the 2010 Soccer World Cup being held there. “Take the German market as an example, when Germany hosted the 2006 Soccer World Cup, you will see it became the best performing market globally that year, “ says Preiss.

A third opportunity is in the transportation market, particularly air transport. “If you look at Angola’s growth, you will see that air routes directly into the country supported the economic climate in the country,” mentioned Preiss. Delta Airlines added a route to Abuja, Nigeria in 2009 while planning another route to Accra, Ghana in 2010. Emirates now has 18 destinations in Africa, including Ivory Coast, Ghana, Sudan, Tanzania, Angola, Mauritius, Morocco, and Egypt.

OTHER CHANGES IN THE AFRICAN CAPITAL MARKETS (Release Date: 11 January 2010)

There are new stock exchanges expected to open in 2010. Another key development will be more exchanges operating electronically. “When Kenya’s stock exchange runs electronically, it will help liquidity,” shared Priess.

In closing, Preiss highlighted the role capital markets can have in developing national economies, including those in post-conflict states. Our strategist, Lauri Elliott quipped, “What a paradigm shift it would be if people give to help others by investing in companies in developing countries through their growing stock markets.” She added that if individuals and organizations invested in firms with growth potential, who also were committed to local job creation and improving local communities, this might accelerate economic and social development in parts of Africa.

To read the full information series, visit www.afribiz.info.

ABOUT AFRIBIZ
Afribiz is a “new economy” communication and community ecosystem focused on promoting increased economic opportunity and successful trade between Africa and the world, as well as between African countries. The driving factor is to support broad-based economic development through for-profit enterprise based on open, inclusive markets.

The ecosystem includes provisioning of information, intelligence, and insights about business and investments in Africa. Afribiz uses web, multimedia, print, radio and TV platforms to interact with the public and its members. It is a key brand of BizConcierge PTY LTD of South Africa.

International food group Nestle has confirmed that it is closing its operations in Zimbabwe after it refused to bow to pressure to buy its milk from a company owned by the wife of controversial president Robert Mugabe.

After being exposed in the media, Nestle withdrew its commercial relationship with Mugabe. 

The company has apparently faced pressure in Zimbabwe since October.

SAPA is reporting that Nestle then received a surprise visit from Zimbabwean government officials to its plant and forced it to take delivery of milk from a “non-contracted” supplier.

This would appear to serve as another blow to the already embattled Zimbabwean economy ahead of 2010.

The meeting is being held on 28-29 January 2010 in Paris-La Défense, France, hosted by the ISO member for the country, AFNOR, which is providing the secretariat for development of the IWA.

The workshop will address the following issues related to business districts:

• Sustainable construction throught the entire life cycle
• City planning and quality of the living and working environments
• Energy, waste and water management
• Transport, accessibility and safety.

The objective of the workshop will be to launch the development of an IWA that will include best practice, general principles and a framework for the performance appraisal of sustainable development at the district level.

To ensure the global relevance of the IWA, the workshop organizers are keen to ensure participation by representatives of stakeholder organizations worldwide including the following:

• Companies with relevant activities such as banking, construction, energy, engineering, insurance, transport, water and waste management, and security
• Municipalities and local government
• City planners
• Research centres
• Universities.

Participants in the workshop will include members of the Sustainable Network – Rethinking Business Districts. This not-for-profit association includes members from the central business districts of Beijing, Cape Town, Liverpool, Montreal, Moscow and Paris-La Défense, as well as companies such as Bouygues, Dalkia, GDF Suez, Hermitage, Oger International and Unibail Rodamco.

If you wish to participate in the ISO international workshop on sustainable business districts, please contact:

Bernard Leservoisier
AFNOR Normalisation
Tel. +33 1 41 62 82 72
E-mail bernard.leservoisier@afnor.org