RioZim questions interest rate charges

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Riozim Limited has decided not to honour an ostensible $4.5 million debt owed to AfrAsia Bank, which is presently in liquidation, after it emerged the financial institution could have unfairly bloated interest and bank charges on the debt. The miner recently engaged the Interest Research Bureau (IRB) – an independent and privately-owned firm that helps companies to re-compute borrowed loans – to audit the debt due to AfrAsia Bank (formerly Kingdom Bank).High Court judge Justice Lavender Makoni recently nullified the deed of settlement entered between the bank and the gold miner. Justice Makoni ruled that RioZim was not aware at the time the company concluded the deed that it had been overcharged on interest. Afrasia Bank was ordered to pay the cost of suit. The matter only spilled into the courts after AfrAsia sought to enforce payment of the contract. The court heard that in 2012 after RioZim refused to honour its obligation citing unjust enrichment on the part of Afrasia, the latter subsequently instituted a $8.6 million (plus interest) claim against the resources firm, which was strenuously resisted. The two parties then agreed to enter into a deed of settlement in August 2013 through which RioZim agreed to pay $4.6 million through instalments. – The Herald, 12 July 2017

Zimbabwe’s informal sector could be the sixth largest in the Sub-Saharan region, contributing between 40 percent and 50 percent to economic growth an estimated $7 billion  especially for the four-year period between 2010 and 2014, according to the latest International Monetary Fund (IMF) working paper. The country’s gross domestic product (GDP), which measures the amount of annual economic output, is estimated at $16,3 billion. However, the working paper compiled by Leandro Medina, Andrew Jonelis and Mehmet Cangul does not reflect the official views of the multilateral international financier. At $7 billion, the projected value of informal sector made in the new survey tallies with a study made by FinScope in 2012.  Though the new IMF working study concludes that the size of the informal sector in the region is perhaps the largest in the world, there are distinct differences among countries, with percentages ranging from as low as 20 percent to 25 percent in South Africa to as high as 50 percent to 65 percent in countries such as Benin, Tanzania and South Africa. – The Herald, 12 July 2017

The Cotton Company of Zimbabwe witnessed a massive jump in cotton deliveries last week following interventions by the Agriculture and Marketing Authority to curb rampant side marketing, raising hopes that Government would recoup its investment. Government this season invested over $42 million in cotton production through Cottco, but side marketing, largely resulting from inadequate regulatory controls had put the investment at risk. The marketing season, which opened two months ago had been characterised by serious levels of side marketing. Cottco managing director Mr Pious Manamike said deliveries significantly improved in the past week following some “interventions” by AMA. Since last week, AMA started enforcing quotas for merchants to ensure they do not exceed the threshold of the funded crop. In Sanyati – one of the major cotton producing areas in the Mashonaland West Province, farmers contracted by Cottco had to re-pack the crop intended to be sold to private players into the Cottco marked wool packs. – The Herald, 12 July 2017

Listed Turnall Holdings Limited is yet to secure an investor to give a lifeline to its operations, with revelations the firm’s debt restructuring exercise will be completed by the end of August. The company announced in April that it was engaged in discussions relating to the restructuring of its balance sheet. The company was restructuring its balance sheet by engaging its creditors for a possible debt-to-equity swap to ward off creditors jostling for its assets. The company’s acting finance director, Samson Mavende on Monday, said the debt restructuring exercise was still work in progress. – NewsDay, 12 July 2017

Second-hand clothing continues to flood the Zimbabwean market, taking a significant share of the clothing market and leaving local manufacturers teetering on the brink of collapse, an industry official has said. Zimbabwe Clothing Manufacturers’ Association chairperson, Jeremy Youmans said that second-hand clothing has continued to enter the market and now chews a huge chunk of the clothing market. Youmans said they have made submissions to the Industry ministry requesting further interventions in the mid-term budget to save the clothing industry from collapse. – NewsDay, 12 July 2017

By |July 12th, 2017|Categories: Headlines|

About the Author:

Kudzanai’s background in financial journalism with ZFN, combined with a continuing education in financial management, provide a solid grounding for his work in the research department.