2010 will best be remembered as a year of great expectations, with much of the hope springing up from the presumed “rich pickings” of the Soccer World Cup held in Africa for the first time in 70 years.
By today, however, very few of these expectations were still range-bound.
In fact, as early as the second quarter, the gospel changed from confidence and progressive recovery to “moving on”.
From the start, the battle for every business this year was finding the most optimum way to stability and growth, while individuals and households looked in a hurry to making the most of the benefits of dollarisation while it lasted.
The biggest drag came from the political front as parties to the inclusive government spent the greater part of the year brooding over and plotting a way out of the “trap”.
But on the whole, the year was quite eventful and left many things for the archive, from the indigenisation controversy and the contested Chiadzwa diamonds certification, to the SMM ownership saga, which appears to have carried on from the Meikles Limited shareholder dispute.
Ordinarily, many would have liked to shift their bet to 2011, but worries over potentially-disruptive elections are a bad omen.
It’s perhaps the most woeful issue of the year, particularly because it reincarnated uncertainty and escalated political risk, which hurt business confidence and set investors and capital in flight.
It will be remembered for the Zimbabwe Stock Exchange crash that hit the bourse from February to June, draining nearly 16% of its value.
The Indigenisation and Economic Empowerment Act, dormant since its promulgation in 2008 until government passed ministerial regulations in January this year, proscribes Zimbabwe-registered, foreign-owned companies from holding and controlling more than 49% of the companies.
Although the nobleness of the legislation is less contested, the biggest contention lies in the implementation of its provisions.
In particular, the subsidiary legislation laying out the implementation modialities – the Indigenisation and Economic Empowerment (General) regulations – is still fluid and inconclusive on a number of issues, notably the determination of the ratio between equity and equity-equivalent empowerment credits across sectors.
The National Indigenisation and Economic
Empowerment Board has missed its deadline for producing the various sector-specific indigenisation equity thresholds, hurting confidence and heightening uncertainty.
Equally woeful were developments in the country’s alluvial diamond sector. The euphoria brought about by the certification of diamonds produced in Chaiadzwa, Marange, in the eastern part of the country by the Kimberley Process (KP) in August was short-lived.
Six top Zimbabwe Mining Development Corporation and Canadile Miners – key operations in the alluvial diamond-rich area — officials were arrested on allegations of fraudulently obtaining government permission to mine diamonds in Chiadzwa.
Mines and Mining minister Obert Mpofu is alleged to have demanded a $10 million bribe from Core Mining director Lovemore Kurotwi for the facilitation of smooth operations in Chiadzwa.
Finance minister Tendai Biti reported in a Budget review statement in July that at least $30 million in recent diamond sales had gone missing without trace.
The KP is still reluctant to clear the diamonds for export.
RBZ and Banks
Finance Minister Tendai Biti announced the appointment of a new board for the Reserve Bank of Zimbabwe, chaired by Gideon Gono, to steer the restructuring and downsizing of the central bank.
Other board members include Charles Kuwaza (deputy and chairman of the audit committee), lawyer Mordecai Mahlangu, Daniel Ndlela, Godfrey Kanyenze, Nyasha Zhou and retired High court judge, George Smith.
The RBZ also resumed its core roles, which had been discontinued by dollarisation.
These include the restoration of the national payments system (RTGs, cheques and ZimSwitch) and the lender of last resort function.
The restructuring and downsizing will get rid of least 2 600 employees.
The banking industry supervisor in September also re-registered Trust, Royal and Barbican banks, which were merged into the Zimbabwe Allied Banking Group in 2005 following financial problems.
During the year, government de-specified South Africa-based Zimbabwean business magnate Mutumwa Mawere, James Makamba and John Thomas Moxon who faced allegations of violating the Exchange Control Act and other offences.
Mawere’s de-specification has opened a new chapter in the SMM Holdings Limited saga after it emerged that Justice and Legal Affairs minister Patrick Chinamasa may have overstepped the bounds of law to annex the businesses.
The former attorney-general is now at sixes and sevens in terms of justifying the “state-indebtedness” of SMM Holdings’ local subsidiary, the reason he gave for passing the Reconstruction of State-indebted and Insolvent Companies Act in 2004.
He is also suspected of hiding critical information from President Robert Mugabe, Cabinet and Parliament about the true shareholding structure of SMM Holdings. Parliament has summoned him four times to explain the irregularities, but he is yet to make an appearance.
Nigel Chanakira, the founder of Kingdom Financial Holdings Limited (KFHL), regained control of the financial services group, ending a protracted fight with Meikles Limited and its majority shareholder John Moxon.
It was easy after enlisting support from President Robert Mugabe, RBZ governor Gono and Finance Minister Tendai Biti.
IPOs, reverse listings, rights issues
2010 was also a quiet year for the ZSE, which popped the champagne bottle to only one listing – the initial public offering by Padenga Holdings, which was unbundled from Innscor Africa.
TN Holdings also acquired Tedco Limited and listed by reverse takeover. Interfin Holdings also replaced CFX Financial Services Limited on the local bourse the same way.
Equity issues offered during the year saw significant dilutions in African Sun, NMB Holdings, OK Zimbabwe, Starafricacorporation. The latter bought out minorities from Red Star, leading to its reverse takeover.
One-stop Investment Shop Centre
Just over a year after launching Africa’s first one-stop border post at Chirundu, Zimbabwe chalked up yet another reform: the country’s one-stop investment shop launched this month.
The institution re-profiled Zimbabwe’s business competitiveness and offloading several bureaucratic burdens from potential investors previously exposed to protracted and disjointed regulatory rituals, a big step towards a more respectable place in the global league of economies.