• Tue. Nov 29th, 2022

Mnangagwa says economy is growing faster than power supply

ByEconomic Times

Nov 24, 2022

equities in 2-day consecutive rally

By ETimes

Zimbabwe Stock Exchange closed higher on Wednesday for the second consecutive day ahead of the 2022 National Budget today.

Investor focus will be on tomorrow’s budget presentation from the Finance Minister. However, the major risks facing the economy are exchange rate risks, inflationary pressures, weak aggregate demand emanating from high interest rates, redollarization pressures, and power outages.

The treasury chief is poised to announce incentives for issuers on the ZSE, preventing their migration to the US dollar denominated exchange – the Victoria Falls Stock Exchange.

At the close of trades, the ZSE All Share Index was up 2.38% to 14,099.90 points. The Top 10 Index gained the most, up 3.51% to close at 8,083.30 points.

Simbisa, which will be delisted from the ZSE on 28 November 2022 and relisted on the Victoria Falls Stock Exchange on 2 December 2022, gained 11.72% to $234.97. Beverage maker Delta climbed by 6.55% to $214.47.

The Medium Cap Index recovered 0.22% to 32,925.09 points. However, it was property firm Mash Holdings that led the risers, gaining 14.70% to $10.32. Banking counter NMB added 4.0% to finish at $25.00.

On the flipside, Afdis, OK Zimbabwe and ART fell 0.65%, 2.40% and 0.65%, respectively, to end at $15.40, $30.51 and $15.40.

The Small Cap Index garnered 0.72% to close at 508,380.48 points following Truworth’s 11.31% gain to $2.44. On the other hand, clothing retailer Edgars led the loser’s chart by 5.56% to $9.00.

Market capitalization was up $37.82 billion to $1.69 trillion. Market turnover declined 90% to $132.71 million.

Datvest ETF added $0.0137 to $1.7437. Morgan & Co Multi Sector ETF, Cass Saddle Agriculture ETF and Morgan & Co Made in Zimbabwe ETF remained at $21.2500, $1.8747 and $1.0600, respectively, whilst Old Mutual ZSE Top 10 shed $0.0741 to $5.4258.

Meanwhile, President Emmerson Mnangagwa delivered his State of the Nation Address at Mt. Hampden’s state-of-the-art and majestic new parliament building, and says economic stabilization measures have been effective.

This is in response to the need to encourage economic investment by lowering interest rates.

“Tight monetary and fiscal policy measures to stabilise the economy, and curtail speculative borrowing and other rent-seeking behaviour, are bearing fruit,” he said.

The Reserve Bank of Zimbabwe decided to hold its key policy rate at a record high of 200% during a meeting held in September of 2022 to ensure the current disinflation trend is sustained in both the short and long term, that is, until monthly inflation attains desired levels of less than 5%.

Former Finance Minister Tendai Biti recently stated at the CEO Africa Roundtable annual conference that interest rates must be reduced while remaining close to the rate of inflation.

President Mnangagwa said the government is working to address the power challenges. Power challenges have devastated the country, with the industry now relying on diesel power generators to avoid interruptions of operations. Players in the mining sector are losing up to 20% of their production potential owing to power shortages, according to the latest State of the Mining Industry report released by the Chamber of Mines of Zimbabwe.

“The economy is growing faster than the power supply,” he said.

Hwange Unit 7 is expected to be commissioned by year’s end. A further 300 MW from Unit 8 is expected to come on stream by the second quarter of 2023.

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“Efforts are on-going to expand the country’s energy mix, with focus on renewable energy.”

Zimbabwe’s installed electricity generating capacity is about 2 210 MW, of which 1 050 MW is from the Kariba South hydro power station and the balance is derived from several coal-fired power stations, the largest of which is Hwange, with an installed capacity of 920 MW.

In recent years, Zimbabwe’s actual generating capacity has been lower than the installed capacity due to low water levels at Kariba and lack of maintenance at the power stations.

The government’s initiative to revive idle mines also increased demand for electricity from the mining sector. Despite the use of imported power, the availability of electricity in Zimbabwe has been subject to load-shedding – Harare

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