News Update as @ 1530 hours, Tuesday 7 October 2014

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By Rumbidzayi Zinyuke

The Deposit Protection Corporation (DPC) is not able to compensate depositors of closed banks significant amounts as struggling banks are failing to pay their premiums, an official said.

The DPC’s primary function is to com-pensate depositors in full or in part for losses incurred in the event of insol-vency of a contributory institution. It was created as a government policy in response to a growing need to moder-ate instability in the banking sector, as well as to protect the public against the worst consequences of bank failure.

DPC chief executive John Chikura told bankers at a workshop on the deposit protection scheme 11 out of the 22 banks in the country are on the DPC watch list. Six of the 11 institutions on the watch list are in a distressed finan-

cial condition.

“Financially distressed banks are not paying the DPC premiums. This is a challenge because we need to build the fund and we need to increase the cover level from $500 to $1000 per individual

per bank, and without the availability of funds we cannot do that,” he said.

As at 30 June 2014, the fund had about $14 million in its coffers. Chikura said the optimal size of the fund should be $76 million, which is 2 percent of total deposits in the banking sector. He said the deposit insurance cover is currently pegged at $500 per depositor per bank which means 87 percent or about 1,3 out of 1,5 million depositors are cov-ered in full.

“A cover level of about $1000 would ensure that at least 91.1 percent of depositors are covered in full and com-ply with the public policy objectives full coverage benchmark of at least 90 per-cent of depositors.

“The global financial crisis has prompted an increase in cover, the EU coverage currently stands at 100 000

euro per individual per bank while in the United States they are covering $250 000 per individual per bank. We hope that our coverage level will also increase in tandem with the economic recovery as we go forward,” he said.

Chikura the time taken for the final liquidation to be granted by the courts from the date of application for liquida-tion in Zimbabwe is longer than in most countries meaning that it takes longer to compensate depositors in the coun-try than anywhere else.

He said the corporation is also not implementing the risk-based premi-ums used in other countries where banks with a higher risk pay more to the deposit protection fund.

“Risk based premium regimes fos-ter discipline among institutions.We are currently using a flat rate but the

Struggling banks weigh down Deposit Protection Scheme

By Lynn Murahwa

Alpha Asset Management (Pvt) Limited has announced $2 million worth of asset backed bonds that can be utilised by microfinance institutions (MFIs) to boost credit mainly to small-to-medium enter-prises.

In a statement, Alpha announced that investors may access the opportunity by subscribing for asset backed bonds offered by its investment vehicle Dolinate Investments (Pvt) Ltd.

The issuing of the bonds intends to raise $2 million before providing fund-ing to specified MFIs in order to sup-port their growth strategies. The Alpha group believes that increased access to micro-finance by the individuals, micro and small to medium enterprises will

accelerate financial inclusion and support economic encouragement.

The proposed issue is the first tranche, being the first number of related securi-ties offered as part of the same transac-tion, of $10 million medium term assets backed programme. The microfinance sector continues to play a critical role in the provision of finance to households and Micro, Small and Medium Enter-prises

(MSMEs) in Zimbabwe as part of the broader perspective of building inclusive financial systems.

According to the Reserve Bank of Zim-babwe quarterly microfinance industry report as at 30 June 2014,

total loans from MFIs increased by 83,24 percent from $97,01 million as at 30

June 2013 to $177,76 million as at 30 June 2014. The bond issue by Dolinate will certainly go some way in increasing MFIs' capacity to extend further loans to the SMEs sector.

The issuer of the bond may from time to time issue bonds on terms and con-ditions contained in the Programme Information Memorandum (PMI) that is modified through a pricing supple-ment pursuant to each tranche of bonds offered thereof.

The proceeds of the proposed bond issue will be used to discount a select of qual-ity loan receivables from MFIs, thereby assisting them increase credit to individ-uals and institutions involved in micro and small to medium enterprises.

The benefits of the bonds include offering

investors an opportunity to improve the performance of their investment portfolio by including this asset with high return to their portfolio, without assuming pri-mary risk.

The bond is expected to re-direct capital to individuals and institutions constrained by limited access to financial services yet they are an integral and significant part of the economy, especially those involved in productive activities.

The bond is an alternative asset class and its issue expands the investible mar-ket to invest operating in a market with limited financial assets.

All bonds due for redemption will be paid using funds held in an escrow account into which funds from trading will be deposited ahead of maturities. •

2 NEWS

Alpha announces $2 million credit bonds to fund MFIs

players in the market have said the flat rate disadvantages them. Some of these ailing banks who are supposed to be paying a higher premium under the risk-based premium are the very same who have been precipitating

the situation we have. We have not implemented the risk based premiums because of the current liquidity situa-tion but we have made recommenda-tions to the central bank,” Chikura said.

He also said the DPC has compensated

11 percent of Trust bank depositors from its own coffers despite the fact that the liquidation of the bank was set aside. The corporation will eventually recover the money the bank.

In his 2014 national budget, Finance

minister Patrick Chinamasa reduced the levy from 0,3 percent to 0,2 per-cent of total deposits without fixing a cap, but excluding government depos-its and foreign lines of credit. •

3 NEWS

AdM-DI156506-

4 NEWS

By Tawanda Musarurwa

Zimbabwe and Zambia are some of Japan used cars exporter BE FOR-WARD Co Ltd's key growth areas as the company announced improved yearly earnings and yearly vehicle sales for the 2013 financial year.

BE FORWARD's yearly earnings rose by an astronomical 190,8 percent increase from 2012 fiscal year figures to 35 billion JPY (approximately $357 million).

The company's yearly vehicle sales also rose significantly by 175,3 percent to 126 483 units of vehicle.

The used car exporter attributed the improved performance to sales growth in the African markets, specifically mentioning Southern Africa northern neighbours Zimbabwe and Zambia.

"The rises were due to the vast export growth in African countries, which takes up approximately 80 percent of BE FORWARD’s global market share: business alliance with Zambia Postal Services Corporation (state-owned Postal Office organisation) to act as BE FORWARD’s agent as of March 25, 2014, constant export growth in Zim-

babwean market, just to name a few," said the firm.

BE FORWARD also said Asian and Pacific markets, such as Mongolian People’s Republic, Republic of the Union of Myanmar, Republic of Georgia, Republic of Armenia and New Zealand, had substantial contribution in terms of year-on-year sales growth.

According to figures from the Zimba-bwe National Statistical Agency, Zim-babweans last year imported 206 519 used vehicles worth over $606 million between January and November last year.

It is however important to note that the country's source markets for sec-ond-hand vehicles extend beyond BE FORWARD.

Finance and Economic Development Minister Patrick Chinamasa has since expressed discontent at the unreg-ulated importation of second-hand vehicles, given that Zimbabwe is losing much needed foreign currency.

This is despite the fact that the $606 million worth of used car purchases also translated to around $250 million in import duty accruing to the State.

Although policymakers and other observers believe that it would be an ideal situation to regulate used car importation, it has also been noted that these imports have bridged a gap cre-ated by inefficiencies and constrained capacity of Zimbabwe's two car assem-blers, Quest Motors and Willowvale Mazda Motor Industries (WMMI). •

Zimbabwe, Zambia drive BE FORWARD earnings

5 NEWS

Govt lacks political will to improve business environment

The Government knows what needs to be done to improve the environ-ment for doing business in the coun-try as well as attracting foreign direct investment but lacks the political will to take the necessary action, experts said recently.

The Ministry of Industry and Com-merce in June this year set up two committees composed of individuals from the private sector to look at ways that the Government could improve

the doing business environment and on addressing the question of imports.

The two committees presented their findings to Industry Minister, Mike Bimha on Friday.

Chairperson of the Doing Business committee, lawyer Maureen Chiwete said the Government was aware of what should be done as various com-mittees had been established before, to look at the issues.

“Our view is that without political will, we will continue to set up ad hoc com-mittees that will evaluate the work of sub committees that were set up to research on committees which were defined by committees that needed advise from a committee whose man-date was based on the recommenda-tions of an ad hoc committee.”

Chiwete said her committee had found a host of issues that the Government should address to improve the ability of the country to attract new businesses and investors in the economy.

“Political will is critical after all is said and done. There is no need to keep forming ad hoc committees on this. It is time to roll up our sleeves and get things done,” she said.

Zimbabwe was this year ranked 170 dropping from 168 last year in the World Doing Business Report, which looks at the countries with the most ideal environment to attract invest-ment.

Chiwete said there was not only lack of information on the doing business environment in Zimbabwe, but also too much red tape involved in the process.

“The doing business environment in Zimbabwe is characterized by regu-latory systems and institutions which make it extremely difficult to attract foreign investors and also make it dif-ficult for local investors to invest in their own country,” she said.

She said use of online systems, cre-ation of an effective one stop shop, streamlining of procedures and adop-tion of current systems were critical in

cutting red tape.

Investors had a negative perception about the country as a result of the hostile doing business environment, she said.

Acting chairperson of the committee on imports, Masimba Marangwanda said imports through legal means as well as smuggling were hitting hard on the local industry.

“We believe that as a country we can save up to $2 billion through import substitution. Capacity utilisation can go up in certain sectors of our industry if imports are reduced,” he said.

The committee recommended that the Government should focus on selected sectors that have ability to recover faster on the back of import restric-tions among them dairy, milling and cooking oil in the short term, then focus on the others in the long term.

Bimha said the Government would do its best to allow the local industry to recover. — New Ziana •

Minister Bimha

NEWS6

Less than a fifth of Zim companies have OSH policyBH24 Reporter

* . . . as Zimplats scoops NSSA top safety award

Less than a fifth of companies oper-ating in the country have an occupa-tional safety and health (OSH policy), which increases the risk of workers getting injured, National Social Security Authority (NSSA) statistics show.

According to NSSA occupational safety and health director Rodgers Dhliwayo only 18 percent of the 2 217 estab-lishments assessed in 2013 had an occupational safety and health (OSH) policy.

While this was a 38 percent improve-ment when compared to the 13 per-cent of companies assessed the pre-vious year, it meant that less than a fifth of the companies had a safety and health policy.

At the same time, the number of estab-lishments with certified OSH systems had improved slightly from six percent to eight percent, said Dhliwayo

“Only 13 percent of organisations were running programmes to make workers

aware of the hazards at the workplace. Are we surprised we have so much car-nage at workplaces?” he asked at an NSSA event last week.

Earlier in the week Public Service Labour and Social Welfare Minister Nicholas Goche had told a SHAW Con-ference that there had been 71 deaths at work in the first eight months of this year and 3 598 serious injuries.

Meanwhile, Zimplats Selous Metallur-gical Complex came tops in NSSA's National Safety Award for 2013.

This is the second time in a row that Zimplats has won the award. Zimplats

general manager - processing, who was elated with the award said:

"We are elated that we have gone for 974 days without any lost time due to injury.”

Another miner, gold producer How Mine took second place, while Sable Chemicals came third. The top three also scooped other awards.

Zimplats also won the top provincial award for Mashonaland and the top award for Mashonaland in the manu-facturing sector.

How Mine, as well as coming second in the national awards, took top place in the provincial awards for Matebeleland and top place in Matebeleland in the mining and quarrying sector.

Sable Chemicals, in addition to com-ing third nationally, won the provincial award for the Midlands and top place in the Midlands manufacturing sector.

The top prize for safety in commerce and distribution in Mashonaland went to Total Zimbabwe, with Colsec Secu-rity coming second and Petrozim Line coming third. •

agriculturE7

Increasing armyworm outbreak threat to food security: SadcBy Elita Chikwati

SADC agricultural experts are con-cerned with the increase in the army-worm outbreaks in the region which is threatening food security at both national and regional level.

This was revealed at the Commu-nity Based Armyworm Forecasting Workshop organised by the Food and Agricultural Organisation as part of the support towards building and but-tressing resilience among smallholder farmers.

Armyworm, a transboundary pest poses danger to smallholder farmers in the region where it destroys crop and pastures, further denting hopes for food secure communities.

Participants from Zimbabwe, Bot-swana, Zambia , Malawi, Mozambique, Swaziland, South Africa, Lesotho and Namibia and international experts had the opportunity to share information on how to effectively deal with the destructive pest.

FAO regional co-ordinator, David Phiri said the SADC region was witnessing an increase in the frequency of army-worm outbreaks and this was attrib-

uted to climate change induced altera-tions of temperature and rain.

“The outbreak of armyworm together with other trans-boundary plant pest and diseases are a major threat to the livelihoods of a sizeable proportion of people who depend on agriculture for food, trade, income and employment.

“It is estimated that globally up to 70 percent of 267 million people who depend on agriculture are vulnerable to the trans-boundary plant pest and diseases,” he said.

He said FAO was supporting the control of migratory of trans-boundary pests and disease to ensure that countries and regions develop efficient systems related to surveillance and early detec-tion.

The organisation is also supporting risk analysis for action selection, early warning to trigger early reaction, con-tingency planning and effective actions and coordination.

“Destruction of crops and pastures has a massive impact on food security on millions of the poorest families.

“In most cases, subsistence farmers

most of whom are women farming on family plots, are affected by the out-break of the pest. These subsistence farmers are vulnerable to armyworm because they do not have the knowl-edge and tools to protect themselves from the losses caused by the pest,” he said.

Armyworm attacks crops such as maize, sorghum, millet, wheat, barley and pastures leaving a trail of destruc-tion.

Its sudden appearance and extensive damage caused within a short space of time as well as its rapid spread calls for efficient early warning systems as well as information sharing.

According to FAO, Zimbabwe was the third country to report an army-worm outbreak that caused extensive damage to crops and pastures from December 2013 to January 2014.

Six of the country’s eight farming prov-inces were affected by armyworm in Zimbabwe during the 2013 – 2014 outbreaks where some areas recorded a 100 percent destruction of the crop.

The Ministry of Agriculture, Mechani-sation and Irrigation Development has initiated Government led responses which include information sharing and distribution of chemicals for free to farmers in the affected areas. •

NEWS8

Reduction of work-related accidents a priority for Mimosa, says ChitandoBy Fidelis Munyoro

Mimosa Mine executive chairman Winston Chitando says the platinum mining company will strive to ensure it reduces any work-related accidents and improve the welfare of its workers.

He made the remarks during a cere-mony to honour its long-serving work-ers with awards held at the Zvishavane mine at the weekend.

The awards were given to the workers that had worked for the company for 10 and 15 years.

The company said 17 workers were celebrating 15-year anniversary while the other 258 workers were recognised for serving the company for 10 years.

Also best performers walked away with individual prizes.

“This comes at the back of exceptional performance by the entire Mimosa family over the past few years as evidenced by over three million fatal-ity clean sheets we have thus far recorded,” said Chitando.

“We have also been able to maintain a zero loss type injury year to date of

this financial year. In addition we have not experienced any accident in the last five months. Surely such a phenome-non record should not go unheralded.”

Chitando saluted the workers for their loyalty and commitment to the Mimosa cause.

“We are not only honoring you for your contributions during the years gone by but for the legacy that will continue to inspire all of us,” said Chitando.

He noted that workers were the anchor of the platinum mining company busi-ness and success hence the reason why the company takes time to cele-brate the tremendous effort that each member put in ensuring that the mine remain a great organization.

Chitando, however, reminded the workers to remain focused and uphold the impressive standards they had so far demonstrated.

The ceremony was attended by rela-tives of the workers, captains of the industry and the chiefs in the area. •

It is standard norm that any com-pany with employees who work in jobs requiring physical labour and/or in potentially hazardous conditions, should have safety programmes to communicate, train, and, in some cases, reward employees for learning about and demonstrating safe behav-iours, as well as for reducing lost-time accidents and other measureable results.

So, statistics given last week by NSSA occupational safety and health director Rodgers Dhliwayo that a mere 18 per-cent of the 2 217 establishments/firms assessed last year had an occupational safety and health (OSH) policy are shocking to say the least.

It seems Zimbabwean companies have very little appreciation of the value of having an OSH policy. Worse still, it points to management in these organi-sations that care little about the welfare of their employees.

Little wonder then, most Zimbabwean companies are not productive. And no, it's simply because of the difficult oper-ating environment.

Workers that feel that they are treated with care and respect tend to be more productive, several studies shown.

But the issue here is not just of pro-ductivity (or lack thereof), it's about the health and safety of the ordinary worker.

Official figures show that in Zimbabwe, between January and August, 71 work-ers have died at the workplace. Add to that 3 598 serious injuries.

By comparison or not, those figures are

excessive. And it's a significant matter because when health and safety issues are not incorporated into a company's system, the resultant loss of life and limb can be damaging.

Obviously, firstly to the workers them-selves, and second to the company due to the higher labour and insurance costs. Zimbabwean companies, the majority of which are struggling with issues of cost- containment cannot afford this.

It has also been noted that a high level of workplace deaths and injuries tend to result in a slump in general employee engagement, hence damag-ing productivity.

The issue of occupational health is rarely discussed in Zimbabwe except in instances where accidents happen in certain workplaces, or on certain occa-sions such as the SHAW conference and the NSSA National Safety Awards ceremony last week.

So it can only be expected that most employers in the country really do not take this problem seriously...up until it really affects them.

We believe there is need for greater and constant flow of information about the importance of OSH strategies within all companies operating in Zimbabwe.

Estimations by local human resources research firm, Industrial Psychology Consultant (Pvt) points to Zimbabwe losing out on $107 million annually in wages and productivity through mental health or stress related absence from work.

These simple improvements in OSH strategies can increase competitive-ness, profitability and the motivation of employees which will in turn boost the firm's productivity.

And it's not just about the benefits that will accrue to the company, but also those that apply to the worker.

Companies should appreciate that they are employing human beings not robots and every human being has the right to health, as enumerated in international agreements such as the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights among others. •

9 BH24 cOMMENt

Zim companies not serious about occupational safety and health

The ZSE remained in the red as more heavy weight counters traded negatively and only two counters recorded gains.

The mainstream industrial index was down 1,76 points to close at 190.82 points.

Loses were recorded in SeedCo, which dropped 10.02 cents to 79.98 cents, Colcom decreased by 3 cents to 25 cents, while Afdis and Delta each shed a cent to 33 cents and 126 cents respectively. CFI, OK Zimbabwe and ZBFH lost half a cent each to close at 2.5 cents, 17.5 cents and 7.5 cents in that order.

On the upside, National Foods added 5 cents to 315 cents and Econet gained 0.09 cents to 78.1 cents.

The mining index remained at 89.16 points for the fifth con-secutive trading day. Bindura, Falgold, Hwange and RioZim maintained previous price lev-els. ― BH24 Reporter •

10 ZSE rEViEW

Seedco, Colcom weigh down ZSE

Sub-Saharan Africa's economic growth remains strong and should accelerate to 5.8 percent in 2015 but if the Ebola outbreak in its western corner is protracted or spreads it will have "dramatic consequences" for that zone, the IMF said on Tuesday.

In its latest World Economic Outlook, the Fund said Africa should repeat 2013's growth rate of 5.1 percent this year and then accelerate in 2015 as infrastructure investments boost effi-ciency and the service sectors and agriculture flourish.

The 2015 forecast was an improve-

ment on the 5.5 percent growth for the overall region projected by the IMF in April.

"This overall positive outlook is, how-ever, overshadowed by the dire sit-uation in Guinea, Liberia, and Sierra Leone, where the current Ebola out-break is exacting a heavy human and economic toll," the report's Sub-Sa-haran Africa section said.

Since it was detected in Guinea in March, spreading to neighbouring Sierra Leone and Liberia, the Ebola epidemic has killed more than 3,400 people and is the world's worst

recorded outbreak of the deadly hem-orrhagic fever.

The epidemic has overwhelmed the health systems and battered the economies of these three small West African states, which were showing signs of recovering from a decade of interlocking civil wars in the 1990s.

Isolated travellers have also carried the disease to Nigeria, Senegal and the United States, and a Spanish nurse has become the first person to contract Ebola outside of Africa in this outbreak. — Reuters •

South Africa's business confidence index nudged up 0.2 points to 89.2 in September, cheered by a surprise jump in new car sales in the month, a survey by the South African Chamber of Com-merce and Industry (SACCI) showed on Tuesday.

However SACCI voiced concern about the still-low level of confidence in Afri-ca's most advanced economy, saying

labour disruptions in the first half of the year impacted various financial indi-cators. A five month long strike in the mining sector impacted other industries such as manufacturing and dragged South Africa's economy to a 0.6 percent contraction in the first quarter.

"Although it appears that waning busi-ness confidence has been checked, business confidence remains at an

undesirably low level," SACCI head Neren Rau said at a press conference.

Businesses are also concerned about above-inflation wage increases that are not matched by productivity levels. "Resistance to a performance-based system and compensation is concerning and government needs to take a strong stance," Rau added. — Reuters •

rEgiONal NEWS

South Africa's business confidence up at 89.2 in September

11

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Africa growth still robust but Ebola threatens western zone: IMF

12 DiarY OF EVENtS

The black arrow indicate level of load shedding across the country.

POWER GENERATION STATS

Gen Station

1 October 2014

Energy

(Megawatts)

Hwange 495 MW

Kariba 625 MW

Harare 20 MW

Munyati 26 MW

Bulawayo 18 MW

Imports 0 MW

Total 1187 MW

05 November - Sixty fourth

Annual General Meeting of Mem-

bers of African Distillers Lim-

ited, Place: Registered Office of the

Company, at Lomagundi Road, Sta-

pleford, Harare, Zimbabwe, Time:

11:00hrs...

Zimbabwe Mining and Infra-

structure Indaba 2014 Venue:

Meikles Hotel, Harare Date: 8-10

October 2014

Sanganai/Hlanganani Business

Expo Venue:

Harare Interna-

tional Conference

Centre (HICC)

Date: 16-18

October 2014

THE BH24 DIARY

13 ZSE

ZSEMOVERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

NATFOODS 1.61% 315.00 CFI -16.66% 2.50

ECONET 0.11% 78.10 NICOZDIAMOND -14.28% 1.20

SEEDCO -11.13% 79.98

COLCOM -10.71% 25.00

HUNYANI -6.25% 4.50

ZB -6.25% 7.50

AFDIS -2.94% 33.00

OK ZIM -2.77% 17.50

DELTA -0.78% 126.00

IndicesINDEx PREVIOUS TODAY MOVE CHANGE

INDUSTRIAL 192.58 190.82 -1.76 POINTS -0.91%

MINING 89.16 89.16 +0.00 POINTS +0.00%

Stocks Exchange

14 aFrica StOckS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire

258.02 +2.51 +0.98% 06Oct

Egypt 9,727.18 -18.31 -0.19% 02Oct

Ghana 2,222.53 +11.05 +0.50% 03Oct

Kenya 5,323.49 +31.07 +0.59% 06Oct

Malawi 14,041.45 +7.02 +0.05% 06Oct

Mauritius 7,018.42 +19.41 +0.28% 06Oct

Morocco 10,071.85 +25.27 +0.25% 03Oct

Nigeria 41,103.94 -31.81 -0.08% 03Oct

Rwanda 143.39 +0.20 +0.14% 02Oct

Tanzania 2,631.56 -19.66 -0.74% 06Oct

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,853.70 +9.70 +0.53% 06Oct

Zambia 6,220.90 -1.46 -0.02% 30Sep

Zimbabwe 192.58 -0.87 -0.45% 06Oct

African stock round up Commodity Prices

Name Price

Crude Oil 1,300.91 -0.21%

Spot Gold USD/oz 1,292.63 -0.26%

Spot Silver USD/oz 19.38 -0.46%

Spot Platinum USD/oz 1,421.25 -0.33%

Spot Palladium USD/oz 798.50 -0.64%

LME Copper USD/t 6,770 -0.18%

LME Aluminium USD/t 1,780 -1.17%

LME Nickel USD/t 18,230 -1.73%

LME Lead USD/t 2,095 -1.41%

Quote of the day —"One sOund idea is all that yOu need tO achieve success." — na-pOleOn hill Globalshareholder.com

15 iNtErNatiONal NEWS

Gold retreated as the dollar advanced toward a four-year high, reducing demand for an alternative invest-ment. Platinum extended its rebound from a five-year low and palladium advanced.

Gold for immediate delivery fell as much as 0.4 percent to $1,203.02 an ounce, and traded at $1,205.84 at 2:35 p.m. in Singapore, according to Bloomberg generic pricing. The metal dropped yesterday to $1,183.24, the lowest level since Dec. 31, before rebounding to end 1.3 percent higher.

The Bloomberg Dollar Spot Index rose as much as 0.3 percent today after dropping 0.9 percent yester-day. The gauge closed on Oct. 3 at the highest level since June 2010 after data showed that the U.S. job-less rate declined to a six-year low and employers hired more workers in September than economists esti-mated. The Federal Reserve is con-sidering the timing for the first rate increase since 2006 amid the recov-ery.

“A stronger U.S. economy is spur-ring gold lower on Fed expectations,” Lachlan Shaw, an analyst at Com-

monwealth Bank of Australia in Mel-bourne, wrote in an e-mail today. “For now, gold may be pricing in a lift in interest rates prematurely but it is difficult for us to see gold prices finding a sustainable support in the near term.”

Gold for December delivery lost 0.1 percent to $1,206 an ounce on the Comex in New York. Holdings in the SPDR Gold Trust, the biggest bul-lion-backed exchange-traded prod-uct, were unchanged for a second day yesterday at 767.47 metric tons, the least since December 2008.

Silver for immediate delivery added 0.3 percent to $17.397 an ounce after prices yesterday climbed 3 percent, the most since June. Plat-inum rose 0.2 percent to $1,248.38

an ounce after slumping yesterday to $1,190.25, the lowest level since 2009. Palladium advanced 0.3 per-

cent to $770 an ounce after dropping to $737.75 yesterday, the lowest since February. — Bloomberg •

Gold drops toward $1,200 on dollar as platinum extends rebound

16 aNalYSiS

Africa needs innovative finance to bridge its infrastructure gaps

Power outages and the lack of roads, railways, and ports have long been a frustrating feature of business in Africa, hindering home grown entrepreneur and foreign investor alike.

To become more competitive globally, Africa must close these infrastructure gaps to unlock quality growth for the continent, enabling Africa’s smallholder farmers and rural communities to enjoy the benefits of more equitable economic

growth.

As the Financial Times, Ernst and Young, OECD, World Bank and IMF discuss eco-nomic and financial issues related to Africa this week in London, Johannes-burg, Paris, and Washington, the Africa Progress Panel urges innovative solu-tions to finance infrastructure for Africa.

Fixing the continent’s infrastructure gaps will cost Africa US$48 billion per

year for a decade, according to an esti-mate in 2009. Economic growth and urbanisation since then mean this gap will almost certainly have widened. As an approximation, Africa must double infrastructure investment.

Africa has already begun to tap into global financial markets, as this year’s Africa Progress Report – Grain, Fish, Money - describes. Domestic tax and savings also offer solutions.

By extending their tax reforms to Afri-can countries, G20 and OECD countries can support a clampdown on tax avoid-ance and evasion, which cost Africa bil-lions of dollars each year.

African governments can boost availa-ble infrastructure funds both by reform-ing their domestic tax systems and by making their banking systems more competitive. In East Asia’s high growth developing countries, higher savings helped finance investment. But with some of the highest spreads in the world, Africa’s interest rates deter both savings and investment.

Outside of Africa, the world has been

awash with liquidity since 2008. But in a globally competitive market, Africa must tackle the frequent perceptions that its infrastructure projects are high risk.

The development of insurance markets could help in this respect through the accurate measurement of risk. Mean-while, the global community can help by scaling up operations of the Multi-lateral Investment Guarantee Agency, and by using the International Devel-opment Association to cover the costs of insurance premiums on infrastructure projects.

Improved regional cooperation also offers solutions through economies of scale for infrastructure. Africa may also wish to tap into its combined foreign exchange reserves – around US$450 billion in 2012 – to finance infrastructure bonds.

Innovation will be key to closing the continent’s infrastructure gap, and Africa has plenty of that. — Africa Pro-gress Panel. •