Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Small scale mining, farming to drive earnings

Small scale mining, farming to drive earnings 

Financial Gazette 19/4/2018

Farai Mabeza Own Correspondent 

EQUITIES firm IH Securities has said sustained growth in small scale mining and an expected good agriculture season would continue to drive earnings. 

In its March report, IH noted that corporate earnings released during the month were broadly strong, particularly in consumer facing businesses and also notably the banking sector. 

“We are optimistic that given sus­tained growth in small scale mining and an expected robust agricultural season (albeit lower than last year) we will continue to see spend at the bottom of the pyramid driving earnings in well po­sitioned corporates,” IH said. 

“It is worth mentioning that SIM: ZH, (Simbisa Brands Limited) the country’s largest QSR (quick service restaurant) business, reported 29,7 per­cent revenue growth and 1H18 EBITDA (earnings before interest, tax, deprecia­tion and amortisation) of $15,07 million en route to exceed the $18,28 million generated for the full year in FY17,” IH added. 

However, IH said the cash crisis re­mains and continues to weigh on pro­duction in import-dependent sectors and the uncertainty of restoring liquidity would hinder investor confidence and pose potential downside risk to 2018 economic growth prospects. 

Government’s decision to open the upcoming   elections   to   international scrutiny was noted by IH as a positive move in restoring the international com­munity’s confidence in Zimbabwe. 

“Having invited international observ­ers to monitor polls, a European Union election committee visited the country to assess the feasibility, usefulness and advisability of observing Zimbabwe’s elections, a move that could potentially elicit goodwill and credibility of the new administration which we believe is a commendable step towards reforms that places the economy on a growth trajectory,” IH said. 

In March, government formally amended the indigenisation law in an announcement by Finance Minister Pat­rick Chinamasa in his budget statement for 2018. This is expected to ease the movement of international capital into Zimbabwe after years of poor invest­ment flows blamed chiefly on that law. 

“The highlight in March was the for­mal amendment of the Indigenisation and Economic Empowerment Act, effectively ending the blanket application of the 51/49 (percent) local to foreign shareholding requirement. 

“This now only remains in place specifically in platinum and diamond mining. We are, however, confident that even in these sectors, amendments or at least exceptions will soon be made. In our view this ‘repeal’ is a positive development which will improve the country’s access to foreign capital and stimulate potential economic growth going forward,” IH said.

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