Zimbabwe | ZSE

The Central Bank continues to maintain a hawkish approach towards money supply as evidenced by the introduction of Zero Percent Non-Negotiable Certificates of Deposit (CDs) in a bid to wipe out excess liquidity in the economy. This comes after month-on-month inflation inched up 0.9% from 1.6% in April to 2.5% in May, followed by another uptick to 3.9% in June. In pursuit of the same goal of reducing money supply, the Monetary Policy Committee reviewed reserve money growth target from 22.5% per quarter to 20% per quarter. The Reserve Bank of Zimbabwe also introduced new ZWL$50 notes to help easy trade among consumers and businesses. This was however viewed as self-contradicting by the general public although the Central Bank emphasizes broad money supply multiplier effect is insignificant.

Looking at the crocodile business; the global high-end leather goods market was not spared from COVID-induced depression in sales volumes for 1H20; albeit a strong recovery in sales in 2H20 driven by Asia as lockdown restrictions eased in that area. Despite achieving good quality (82% of Padenga’s crocodile skins achieved 1st Grade; 2019 82%); increased relative demand from Asia contributed to a shift in consumer dynamics in favour of smaller handbags and therefore smaller skins; an average crocodile skin size of 33.8cm was consistent with customer requirements. Crocodile skins 40cm/+ size were rejected regardless of quality and were/will be sold at reduced prices negatively impacting Padenga. Despite this, crocodile sales volumes ...

The Victoria Falls Stock Exchange (VFEX) was established in 2020 and is a subsidiary of the Zimbabwe Stock Exchange (“ZSE”). It was established to kick start the Offshore Financial Services Centre (OFSC) earmarked for the special economic zone in Victoria Falls. It has 17 member firms and 1 listed security as of the 31st of December 2020. The VFEX operates according to the Securities Act (Chapter 24:25). The VFEX aims to cater to fungibility of dual listed shares.

Looking at the crocodile business; the global high-end leather goods market was not spared from COVID-induced depression in sales volumes for 1H20; albeit a strong recovery in sales in 2H20 driven by Asia as lockdown restrictions eased in that area. Despite achieving good quality (82% of Padenga’s crocodile skins achieved 1st Grade; 2019 82%); increased relative demand from Asia contributed to a shift in consumer dynamics in favour of smaller handbags and therefore smaller skins; an average crocodile skin size of 33.8cm was consistent with customer requirements.

OK Zimbabwe posted a mixed performance to FY21 weighed down by inflationary pressures and the Covid-19 pandemic. Volumes eased 13% y/y on weakened aggregate demand but showed signs of recovery from the decline of 27% witnessed at 1H21 as lockdowns briefly lifted.

The Group’s financial performance was defensive despite a challenging operating environment characterized by hyperinflation and the unprecedented COVID-19 pandemic. The Dutch foreign currency exchange auction system which was introduced by the government ameliorated the trading environment as this resulted in price and exchange rate stability as well as reduction in parallel market rate premium...