Business news (30-08-07)

g price of Z$595000, that stake is worth approximately Z$9,7trillion.
Old Mutual Zimbabwe had 84 473 136 shares in issue at the end of December worth about R2bn. These accounted for just over 1% of the group’s total issued share capital.
Old Mutual started operations in Zimbabwe in 1927 and is a dominant player in the country’s investment arena.
MD for Africa Johannes Gawaxab said yesterday the company, which runs the largest insurance firms in Zimbabwe and SA, would comply with the empowerment law that is expected to take effect next month.
Old Mutual was still deciding how to deal with the remaining stake to bring it in line with the 51% requirement, and which would make Old Mutual Zimbabwe one of the first foreign companies to comply.
Old Mutual’s plans come a week after Standard Bank CE Jacko Maree warned that the group would take a decision on its investments in Zimbabwe once the empowerment legislation comes into effect.
Gawaxab said: “We are engaged with a number of important stakeholders and also assessing the impact of (the empowerment law) on the business.”
But Old Mutual SA MD Paul Hanratty said: “It is too early to tell exactly what the requirements of the bill will be but we will deal with the law and comply as with any other law. In preparation for potential implications of the bill we have looked at how to construct a deal using staff and management as we have done in SA and Namibia. Any deal will need not only to comply with the law in Zimbabwe but also to create value for shareholders and stability for clients.”
The South African insurer is among a number of foreign companies operating in Zimbabwe, spanning financial services, mining and retail.
Large foreign companies operating in Zimbabwe include British banks Standard Chartered and Barclays , Stanbic Bank owned by Africa’s largest lender, South African-based Standard Impala Platinum and Shoprite.
Standard Bank, which owns 100% of Stanbic Bank Zimbabwe, said last week it was working hard to maintain the profitability of its Zimbabwean operations and to keep its 600 staff employed.
“Our focus is on ensuring that Stanbic continues to operate profitably in Zimbabwean dollar terms and keeping our people employed. But when the empowerment bill is passed we will have to deal with it… as we are majority shareholders in the banks that we operate,” Maree said.
Gawaxab said Old Mutual had been working on the plan to transfer part of its stake in Old Mutual Zimbabwe to its 1500 staff in that country, mostly black, for more than a year.
“Old Mutual plc shareholders have approved that we sell 20% of Old Mutual Zimbabwe to staff to align their interests and retain skills in Zimbabwe. We are working on the modalities of implementing the scheme,” he said last night.
Gawaxab and Old Mutual Zimbabwe CEO Luke Ngwerume addressed workers in Harare yesterday.
Gawaxab said Old Mutual had already transferred 95-million shares of Old Mutual plc worth R400m to Zimbabweans when it demutualised in 1999.
Old Mutual has a primary listing on the London Stock Exchange and secondary listings on the JSE, and on the Zimbabwe, Malawi and Namibia stock exchanges.
It provides insurance services as well as unit trusts. The Zimbabwean legislature is debating a draft empowerment law aimed at forcing foreign-owned companies to sell 51% of their stakes to black Zimbabweans.
The draft is expected to be promulgated into law next month.
Indigenisation and Empowerment Minister Paul Mangwana told parliament the bill would create an environment that would increase the “participation of indigenous people in the Zimbabwean economy”.
The draft was passed to a parliamentary legal committee shortly after it was introduced last Thursday and is likely to sail through.
Old Mutual last year unveiled a black economic empowerment transaction in Namibia which resulted in a broad range of black stakeholders acquiring 15%of the Old Mutual Group’s Namibian businesses.
 
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EVERY other day the money market in Zimbabwe is always swinging into surplus, and huge volumes of Treasury Bills (TBs) continue to be taken up by banks at the Central Bank. With the TB yield having been at 340% for a long time now, the rate of return on the money market worsens every day as inflation continuously rises.
Just in June, the month on month inflation was at 86%, whilst the corresponding monthly rate of return on the money market was around 11%. In July, the month on month had a significant drop to 31.6%, and actually the money market rates had worsened and the corresponding return was around 7%.
The month of July was characterised by very low interest rates, with 30-day investment rates at times touching as low as 50% per annum.
Compounding these returns in the highly volatile money market will give an investor a sad understanding of how much the money market is donating real value to inflation.
The stock market, although after taking a slowdown on the back of price controls, has done much better, and will even out to do much better at the end of the year than the money market.
Even the worst counter on the Zimbabwe Stock Exchange (ZSE) in terms of price gain, Truworths, has done much better after the price gained 1600% since January. And by year end, even the new-comers on the ZSE, Pearl and ZPI, are likely to have gone past 340%.