FOREIGN PRIVATE CAPITAL SURVEY REPORT 2013

FOREIGN PRIVATE CAPITAL SURVEY REPORT 2013 P.O. Box CY342, Causeway, Harare Tel: (263-04) 706681/8 or (263-04) 703971/7 Fax: (263-04) 762494 E-mail: trade@zimstat.co.zw Website: www.zimstat.co.zw Published: May, 2016

Foreword The 2013 Foreign Private Capital survey was a major breakthrough in the Zimbabwe National Statistical System. For many years, data on foreign private capital was estimated using the reported implementation rates on investment approvals. In 2015, ZIMSTAT received financial support from the African Development Bank (AfDB) to conduct the first ever foreign private capital survey for Zimbabwe. Given the timing of the funding window, it was necessary to focus on the years 2013 and 2012 because of the availability of data as opposed to 2014 which would have been a more recent year but with very little data available from the enterprises. This report serves to disseminate the findings of the survey and focusses mostly on foreign direct investment, portfolio investment, debt and trade in services. The data presented here shows the stocks as at the end of the reference periods 2012 and 2013 as well as the net flows of foreign private capital between the two years. The report is particularly timely as the demand for data on foreign private capital especially foreign direct investment is at an all-time high given the current efforts to turn around the economic fortunes of Zimbabwe. One of the overall assumptions of the country s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) is an increase in foreign direct investment. The foreign private capital survey provides a good platform to determine the stocks and flows of foreign direct investment, as well as other types of foreign private capital, in Zimbabwe. The blueprint covers the 2013 to 2018 five year period. By reporting on 2013, the foreign private capital survey provides an essential and well-timed monitoring tool for the volume of foreign direct investment (FDI) and other types of foreign private capital coming into the country. The 2013 foreign private capital survey was conducted with financial support from the AfDB. The survey was implemented by the Balance of Payments (BoP) and External Trade Branch of ZIMSTAT which falls under the Income Analysis Division. ZIMSTAT acknowledges the invaluable technical collaboration on this project with the Zimbabwe Investment Authority 1

(ZIA), Ministry of Macroeconomic Planning and Investment Promotion and the Reserve Bank of Zimbabwe. Macroeconomic and Financial Management Institute for Southern and Eastern Africa (MEFMI) and the Common Market for Eastern and Southern Africa (COMESA). 2

Table of contents Table of contents... 3 Abbreviations... 4 Executive Summary... 5 Chapter 1 Introduction... 7 1.1 Background... 7 1.2 Methodology... 7 Chapter 2: Employment... 9 Chapter 3: Foreign Direct Investment... 12 4.1 Portfolio Investment Liabilities by Country... 26 4.2 Portfolio Investment Liabilities by Component... 28 4.3 Portfolio Investment Liabilities by Industry... 30 Chapter 5: Private Sector External Debt... 33 5.1 External debt liabilities by country... 33 5.2 External Debt liability by Component... 36 5.3 External Debt Liabilities by Industry... 38 5.4 External Debt Assets by Country... 40 5.5 External Debt Assets by Component... 43 External Debt Assets by Industry... 45 Chapter 6: International Trade in Services... 48 3

Abbreviations AFDB BoP CBR COMESA FDI FPC MEFMI MMEPIP NTWG PI RBZ UNCTAD ZIMASSET ZIA ZIMSTAT African Development Bank Balance of Payments Central Business Register Common Market for Eastern and Southern Africa Foreign Direct Investment Foreign Private Capital Macroeconomic and Financial Management Institute for Southern and Eastern Africa Ministry of Macroeconomic Planning and Investment Promotion National Technical Working Group Portfolio Investment Reserve Bank of Zimbabwe United Nations Conference on Trade and Development Zimbabwe Agenda for Sustainable Socio-Economic Transformation Zimbabwe Investment Authority Zimbabwe National Statistics Agency 4

Executive Summary The 2013 Foreign Private Capital survey was the first of its kind in Zimbabwe. It covered 130 enterprises across the country and had a response rate of 88%. The stock of foreign direct investment (FDI) liabilities in 2012 was US$3.75 billion. It fell by over US$700 million to US$3 billion in 2013. Leading FDI sources in 2012 were South Africa (59%), UK (13%), Australia (13%) and Mauritius (7%). In 2013 the leading sources were South Africa (59%), United Kingdom (20%) and Mauritius (11%). The main components were share premium (48%) and accumulated earnings (39%) in 2012 while in 2013 they were accumulated earnings (58%) and share premium (14%). A greater share of the investment was in mining (59%), manufacturing (19%) and finance (10%) in 2012. In the following year, most of the investment remained in mining (44%) and manufacturing (22%) and finance 16%. Foreign direct investment asset stocks were in Zambia (38%) and Uganda (62%) and were made by enterprises in the finance and insurance industry. The foreign direct investment asset stocks were US$ 5.9 m in 2012 and US$ 6.6 m in 2013. The major component of asset stocks was accumulated earnings which accounted for 57% in 2012 and 62% in 2013 The stock of Portfolio Investment liabilities in 2012 was US$87.4m and in 2013, it increased to US$94.2m. The main holders of that equity were from Mauritius (24%), UK (19%), USA (16%), South Africa (15%) and Malaysia (11%) in 2012. Mauritius and South Africa held the largest stake of the stock of portfolio investment in Zimbabwe in 2013 with 24% each. Accumulated earnings were the main component accounting for 36% in 2012 and 42% in 2013. Larger shares of the investment were made in finance (50%) and manufacturing (38%) in 2012. However, larger investments in 2013 were in finance (37%) and manufacturing (46%). There were no portfolio investments assets reported during the survey. In 2012, the total stock of external debt liabilities was US$1.82 billion and in 2013, it decreased to US$1.81 billion, showing a total net reduction of US$16.3 million. China was the major creditor with 30 % of the total stock of debt liabilities, followed by South Africa (20%) and Afrexim Bank (19%) in 2012. In 2013, China remained the major creditor with 5

24%, followed by Afrexim Bank with 23% and South Africa with 21%. Loans made up 96% of the total stock of private sector debt for the two years under review. The biggest borrowers were manufacturing (40%) and finance (23%) in 2012. In 2013, manufacturing owed 43% of total debt while the finance industry owed 23% of the total private sector external debt. Zimbabwe s external debt assets amounted to US$29.3 million in 2012 and decreased to US$13.3 million in 2013. This was a net decrease of US$16.1 million. In 2012, France was the major debtor with 33% while in 2013, South Africa was the major debtor with 39% of total debt assets. Accounts receivable made up 69% of private sector external debt assets in 2012 and 95% in 2013. In 2012, the agriculture industry was the major lender to nonresidents with 36% of the total stock of external debt assets. In 2013, manufacturing became the major lender to non-residents accounting for 72% of total debt assets In 2012, exports of services amounted to US$39.8 million while imports amounted to US$72 million. Imports of services exceeded exports by US$32.2 million. The services that were exported the most were manufacturing services (93%). Services that were mostly imported were professional services (28%), maintenance services (23%), computer services (21%) and manufacturing services (21%). In 2013, exports of services amounted to US$24 million against imports worth US$72 million. Exports of services in 2013 were dominated by manufacturing services (89%). The types of services mostly imported were professional services (27%), computer services (23%), manufacturing services (21%) and maintenance services (19%). 6

Chapter 1 Introduction 1.1 Background Table 1.1: Macroeconomic developments 2012 2013 GDP at current prices US$ 12 392 715 462 13 490 227 135 GDP at constant prices US$ 11 240 753 890 11 744 788 884 Annual inflation rate % 3.7 1.6 BOP US$ million 250.7-366.4 Total imports 7 462 913 437 7 704 061 789 Total exports 3 882 286 228 3 507 191 284 Bank deposit rate % per annum, 12 11.5 end of, 90 day, average of range Lending rate % per annum, weighted, end of, corporates 10.4 9.35 During the period under review, the GDP at current prices rose from US$12.4 billion in 2012 to US$13.5 billion in 2013. At constant 2009 prices, the GDP still rose from US$11.2 billion in 2012 to US$11.7 billion in 2013. This shows an increased gross value added between the two years. The annual inflation rate which was 3.7% in 2012 declined to 1.6% in 2013. The overall balance in the BoP was US$250.7 million in 2012 but fell drastically to US$-366.4 million in 2013. On the current account, total exports fell to US$3.5 billion from US$3.9 billion while total imports increased from US$7.5 billion to US$7.7 billion. The interest rates that are given in the table are average rates at the end of the year. The bank deposit rate for 90 day fixed deposits declined slightly from 12% per annum to 11.5 percent per annum. The lending rate that was applied to corporates declined to 9.35% from 10.4% in 2012. 1.2 Methodology In preparation for the survey, a training of trainers workshop was conducted where participants were trained based on the Balance of Payments Manual Sixth Edition (BPM6) guidelines relevant to the Foreign Private Capital (FPC) survey and the survey instruments. This was followed by a Training of Enumerators workshop where the data collectors were trained on survey techniques in addition to the survey instruments and BPM6 guidelines. 7

During the training sessions, pre tests were conducted. The training workshops brought together officers from the Zimbabwe National Statistics Agency (ZIMSTAT), Zimbabwe Investment Authority (ZIA) and Reserve Bank of Zimbabwe (RBZ). The sample that was used for the survey was drawn from three main sources. The RBZ provided a list of enterprises based on the exchange control register. The ZIA provided a list based on the approvals made in the targeted years. These two lists were harmonised with the ZIMSTAT Central Business Register (CBR) and the ZSE list to come up with a list of enterprises that satisfy the Pareto Principle s 80/20 rule. In general, the rule assumes that 80% of output comes from 20% of inputs. Specifically for this survey, the rule was applied to identify the enterprises that account for about 80% of the value of the economy. The result was a list of 130 enterprises. The questionnaire was jointly designed by ZIMSTAT, ZIA, and RBZ with technical assistance from MEFMI in line with the BPM6 recommendations. It included the following main sections: shareholder breakdown, employment, foreign direct investment, portfolio investment, non-equity, and trade in services between residents and non-residents. The data collection used a dispatch and recovery approach. The enterprises were first visited to dispatch the questionnaires and then visited to recover the completed questionnaires. In most cases, follow ups were made before the completed questionnaires were recovered. A total of 110 enterprises responded which is a response rate of 84.6%. The questionnaires were edited for completeness and consistency. Economic activity of the enterprises was coded using the ISIC Rev 4 codes. Information on the questionnaires was validated using financial statements whenever they were available. The data was captured using software called Census and Survey Processing System (CSPro) and processed using the Statistical Analysis System (SAS). Double entry was used to ensure the accuracy of the data that was captured. The survey data was boosted for non-response and then boosted to the population to come up with the national estimates. 8

Chapter 2: Employment The chapter focusses on compensation of employees of enterprises that have foreign assets and liabilities. It draws specific attention on compensation to non-resident employees. Table 2.1: Compensation of employees to residents by type in US$ Type of compensation/year 2012 2013 Salaries and wages 1,372,410,953 1,467,661,701 Fringe benefits 107,136,981 138,227,122 Medical Aid 23,617,981 27,920,378 Pension (inc. NSSA) 118,139,110 130,077,266 Directors fees 39,300,764 44,615,075 Other 68,110,834 54,559,488 Total 1,728,716,624 1,863,061,029 Table 2.2: Compensation of non-resident employees by type in US$ Type of compensation/year 2012 2013 Salaries and wages 2,816,089 1,777,010 Pension (inc. NSSA) 58,621 56,034 Total 2,874,709 1,833,044 Compensation to non-resident employees was very small in comparison to that made to resident employees. In 2012, compensation to non-resident employees was US$2.9 million against US$1.7 billion made to resident employees. In 2013, non-resident employees were compensated a total of US$1.8 million against US$1.9 billion made to resident employees. 9

Fig. 2.1: Compensation of non-resident employees by type in US$ Salaries and wages to non-resident employees declined from US$2.9 million in 2012 to US$1.8 million in 2013. Fig. 2.2: Distribution of Compensation of Non-Resident Employees by Type in 2012 10

In 2012, salaries and wages accounted for 98% of the total compensation to non-resident employees. The remaining 2% was allocated towards pensions. Fig. 2.2: Distribution of Compensation of Non-Resident Employees by Type in 2013 In 2013, the structure of compensation to non-resident employees remained almost the same with salaries and wages accounting for 97% while pensions took up 3%. 11

Chapter 3: Foreign Direct Investment In this chapter, attention is drawn to the stocks of assets and liabilities of foreign direct investment as at the end of 2012 and 2013 as well as the net flows between the two periods. The variables are presented here by the three main dimensions of country, industry and component. Table 3.1: Foreign Direct Investment Liability Stocks by Country in US$ COUNTRY 2012 NET 2013 Australia 481 843 480-496 345 931-14 502 451 Botswana 56 153 078 11 820 260 67 973 338 British Virgin Island 847 025 92 353 939 378 Canada - 2 136 347-7 721 369-9 857 716 Channel Islands 6 599 664 2 503 714 9 103 378 China 58 056 117 7 401 350 65 457 467 Germany 32 586 170 6 490 854 39 077 024 Hong Kong 4 833 526 38 121 4 871 647 Iceland 30 318 098-1 830 473 28 487 625 Libya 13 542 443 700 834 14 243 277 Mauritius 257 086 449 82 184 144 339 270 593 Netherlands 5 754 393 1 862 936 7 617 329 Portugal - 1 822 080-4 393 249-6 215 329 South Africa 2 239 067 508-444 432 596 1 794 634 912 South Korea 6 490 276 338 077 6 828 353 Sweden 3 515 679-691 955 2 823 724 United States of America 77 110 063 13 249 691 90 359 754 United Kingdom 482 648 695 117 732 579 600 381 274 Total 3 752 494 238-711 000 662 3 041 493 576 The stock of foreign direct investment liabilities in 2012 was US$ 3.75 billion. In 2013, it decreased to US$3.04 billion. There was a net outflow of about US$ 711 million. 12

Fig. 3.1: Foreign Direct Investment Liability Stocks by Country in US$, 2012 and 2013. Fig. 3.1 shows that the stock of foreign direct investment liability to Australia was US$481.8 million in 2012. This figure went down to zero in 2013 showing the possibility of total disinvestment by the Australian investors. Zimbabwe s stock of foreign direct investment liability to South Africa stood at US$2.2 billion in 2012 whilst in 2013 it decreased to US$1.8 billion. The United Kingdom held US$482.7 million in 2012 which increased to US$600.4 million in 2013. 13

Fig. 3.2: Distribution of Foreign Direct Investment (FDI) liability Stocks by Country in 2012 The pie chart shows that South Africa was the major investor in 2012 with 59% of Zimbabwe s foreign direct investment liability stock. It was followed by the United Kingdom and Australia both with 13% and Mauritius which constituted 7%. 14

Fig. 3.3: Distribution of Foreign Direct Investment (FDI) liability Stocks by Country in 2013 In 2013, South Africa remained the major investor with 59%, followed by the United Kingdom (20%) and Mauritius (11%). Table 3.2: Foreign Direct Investment Liability Stocks by Component in US$, 2012 and 2013 Components (in Book Value)/ 2012 Net 2013 Year Paid-up share capital 129 286 926-58 796 867 70 490 059 Share premium 1 816 275 589-1 397 015 690 419 259 900 Accumulated earnings 1 457 331 578 302 197 845 1 759 529 423 Revaluation 174 166 516 10 650 679 184 817 195 Others 175 433 630 431 963 370 607 396 999 Total equity 3 752 494 238-711 000 662 3 041 493 576 15

Fig 3.4: Foreign Direct Investment Liability Stocks by Component in US$, 2012 and 2013 Share premium declined from US$1.8 billion in 2012 to US$419.3 million in 2013 while accumulated earnings increased from US$1.5 billion in 2012 to US$1.8 billion in 2013. The category other had a total of US$175.4 million in 2012 which increased to US$607.4 million in 2013. 16

Fig 3.5: Distribution of Foreign Direct Investment Liability Stocks by Component in 2012 In 2012, share premium was the major component with 48%, followed by accumulated earnings with 39%, revaluation (5%) and others (5%). (See fig. 3.5) 17

Fig 3.6: Distribution of Foreign Direct Investment Liability Stocks by Component in 2013 In 2013, accumulated earnings became the major component with 58%, followed by the other category which had 20% and share premium with 14% as shown in fig. 3.6. 18

Table 3.3: Foreign Direct Investment Liability Stocks by Industry in US$, 2012 and 2013 Industry / Year 2012 NET 2013 Agriculture, forestry and Fishing 42 760 306 11 698 372 54 458 678 Mining and quarrying 2 215 511 756-880 469 901 1 335 041 855 Manufacturing 710 970 669-50 412 863 660 557 806 Electricity, Gas, Steam and Air 44 138 596 1 043 386 45 181 982 conditioning Wholesale and Retail Trade 105 821 147 20 913 156 126 734 303 Transportation and Storage 9 888 259-4 549 163 5 339 096 Accommodation and Food Services 2 953 251-2 243 973 709 278 Activities Information and Communication 225 838 284 65 062 176 290 900 460 Financial and Insurance Activities 371 206 383 127 327 370 498 533 753 Real Estate Activities 23 405 587 630 777 24 036 364 Total 3 752 494 238-711 000 662 3 041 493 576 Fig. 3.7: Foreign Direct Investment Liability Stocks by Industry in US$, 2012 and 2013 19

The stock of foreign direct investment liabilities in mining and quarrying fell from US$2.2 billion in 2012 to US$1.3 billion in 2013. During the same period, foreign direct investment in manufacturing declined from US$711 million to US$660.6 million. The finance and insurance industry however recorded a net inflow of US$127.3 million rising from US$371.2 million in 2012 to US$498.5 million in 2013. Fig. 3.8: Distribution of Foreign Direct Investment Liability Stocks by Industry in 2012 Mining and quarrying was the major holder of foreign direct investment liability stock in 2012 with 59%, followed by manufacturing which had 19%, finance and insurance activities with 10% and information and communication with 6%. 20

Fig. 3.9: Distribution of Foreign Direct Investment Liability Stocks by Industry in 2013 In 2013, Most of the foreign direct investment liability stock was invested in mining and quarrying (44%), followed by manufacturing (22%), finance and insurance activities (16%) and information and communication with 10%. Table 3.3: Foreign Direct Investment Asset Stocks by Country in US$, 2012 and 2013 Country / Year 2012 NET 2013 Uganda 3 606 660 475 123 4 081 783 Zambia 2 252 883 295 203 2 548 086 Total 5 859 542 770 327 6 629 869 Total FDI asset stocks were US$5.9 million in 2012 followed by an increase to US$6.6 million in 2013. The investments were held in Uganda and Zambia. There was a total net increase of assets amounting to US$770 327. 21

Fig. 3.10: Foreign Direct Investment Asset Stocks by Country in US$, 2012 and 2013 The bar graph shows that FDI asset stocks in Uganda increased from US$3.6 million in 2012 to US$4.1 million in 2013 whilst the assets stocks in Zambia increased from US$2.3 million in 2012 to US$ 2.6 million. Fig. 3.11: Distribution of Foreign Direct Investment Asset Stocks by Country in 2012 22

Fig. 3.12: Distribution of Foreign Direct Investment Asset Stocks by Country in 2013 From the above pie charts it shows that, Zambia and Uganda were the only destination of Zimbabwe s direct investment in both 2012 and 2013. Uganda was our major foreign direct investment destination in both 2012 and 2013 with 62% and Zambia 38%. Table 3.4: Foreign Direct Investment Asset Stocks by Industry in US$, 2012 and 2013 Industry/ Year 2012 NET 2013 Financial and Insurance Activities 5,859,542 770,327 6,629,869 Total 5,859,542 770,327 6,629,869 The foreign direct investment asset stocks were in one industry which is finance and insurance activities. 23

Table 3.5: Foreign Direct Investment Asset Stocks by Component in US$, 2012 and 2013 Components (in Book Value)/ Year 2012 NET 2013 Paid-up share capital 1 162 894 1 864 1 164 757 Share premium 1 347 789 3 453 1 351 241 Accumulated earnings 3 348 860 765 011 4 113 870 Total 5 859 542 770 327 6 629 869 Fig. 3.13: Foreign Direct Investment Asset Stocks by Component in US$, in 2012 and 2013 Accumulated earnings in 2012 amounted to US$3.5 million and increased to US$4.1 million in 2013. Share premium in 2012 amounted to US$1 347 789 and slightly increased to US$1 351 241 in 2013. Paid-up share capital in 2012 was US$1 162 894 and it increased to US$1 164 757 in 2013. Generally, there were very small changes in paid up share capital and share premium between the two years. 24

Fig. 3.14: Distribution of Foreign Direct Investment Asset Stocks by Component in 2012 In 2012, accumulated earnings were the major component with 57% followed by share premium (23%) and paid-up share capital (20%). Fig. 3.15: Distribution of Foreign Direct Investment Asset Stocks by Component in 2013 Accumulated earnings remained the major component in 2013 with 62% followed by share premium (20%) and paid-up share capital (18%). 25

Chapter 4: Portfolio Investment The findings presented in this chapter are on stocks and flows of portfolio investment for the years 2012 and 2013. The stock figures are reported as at the end of the specified year while the flows are shown by the net figures in the tables. 4.1 Portfolio Investment Liabilities by Country Table 4.1: Portfolio Investment Liability Stock by Country in US$, in 2012 and 2013 2012 Net 2013 Mauritius 20,762,724 1,638,850 22,401,574 South Africa 12,948,530 9,681,649 22,630,179 United Kingdom 16,865,921 (2,626,509) 14,239,412 U.S.A. 14,000,872 456,838 14,457,710 Malaysia 9,589,359 496,258 10,085,617 Australia 4,938,540 726,273 5,664,813 Unspecified 3,626,710 (1,702,869) 1,923,841 Zambia 856,013 125,888 981,901 New Zealand 1,598,181 (1,598,181) - Kenya 1,118,957 (753,261) 365,696 Other 1,091,805 326,807 1,418,612 Total 87,399,624 6,771,744 94,171,368 The stock of Portfolio investment liabilities for 2012 was US$87.4 million and increased to US$94.2 million in 2013. There was a net inflow of portfolio investment amounting to US$6.8 million. The category unspecified arises from instances where either respondents did not specify the country or data was extracted from financial statements which did not specify the country. 26

Fig. 4.1: Portfolio Investment Liability Stocks by Country in US$, 2012 and 2013 The stock of portfolio investment from Mauritius rose from US$20.8 million in 2012 to US$22.4 million in 2013. South African investment showed a similar upward trend increasing from US$13 million in 2012 to US$22.6 million in 2013. However, portfolio investment liability to the United Kingdom decreased from US$16.9 million in 2012 to US$14.2 million in 2013. Fig. 4.2: Distribution of Portfolio Investment Liability Stocks by Country in 2012 27

In 2012, Mauritius held most of the portfolio investment in Zimbabwe with 24% of all stocks. It was followed by the United Kingdom (19%), United States of America (16%), South Africa (15%) and Malaysia (11%) Fig. 4.3: Distribution of Portfolio Investment Liability Stocks by Country in 2013 Mauritius and South Africa held the largest stake of the stock of portfolio investment in Zimbabwe in 2013 with 24% each. They were followed by the United Kingdom and United States of America both with 15%, Malaysia (11%) and Australia (6%). 4.2 Portfolio Investment Liabilities by Component Table 4.2: Portfolio Investment Liability Stock by Component in US$, 2012 and 2013 Components (in Book Value) YEAR 2012 2013 Paid-up share capital 5 020 971 4 774 571 Share premium 19 603 788 15 843 442 Accumulated earnings 31 509 115 39 666 637 Revaluation 6 819 925 6 316 359 Others 24 443 813 27 568 345 Total 87 397 612 94 169 355 28

Fig. 4.4: Portfolio Investment Liability Stock by Component in US$, in 2012 and 2013 The increase in total equity was driven by increases in accumulated earnings and other types of equity. Accumulated earnings rose from US$31.5 million to US$39.7 million while other types of equity increased from US$24.4 million to US$27.6 million. Fig. 4.5: Distribution of Portfolio Investment Liability Stocks by Component in 2012 29

The major component of equity in 2012 was accumulated earnings (36%), followed by other types of investments (28%) and share premium (22%). Fig. 4.6: Distribution of Portfolio Investment Liability Stocks by Component in 2013 Paid-up share capital 5% Others 29% Share premium 17% Revaluation 7% Accumulated earnings 42% In 2013, accumulated earnings remained the major component with 42% followed by other investments (29%) and share premium (17%). 4.3 Portfolio Investment Liabilities by Industry Table 4.3: Portfolio Investment Liabilities by Industry Industry 2012 2013 Agriculture, Forestry and Fishing 0 12362410 Mining and Quarrying 2107355 2267321 Manufacturing 33213881 42823974 Wholesale and Retail Trade 5297376 238095 Accommodation and Food Service Activities 2903297 1752874 Finance and Insurance Activities 43875702 34724681 All 87397612 94169355 30

Fig. 4.7: Portfolio Investment Liability Stock by Industry in US$, 2012 and 2013 In 2012, there were no portfolio investors in the agriculture industry. However in 2013, the industry attracted portfolio investment worth US$12.4 million. Portfolio investment in the manufacturing industry increased from US$33.2 million to US$42.8 million between the two years. The finance an insurance industry experienced a net outflow as the stock of portfolio investment decreased from US$43.9 million in 2012 to US$34.7 million in 2013. Fig. 4.8: Distribution of Portfolio Investment Liability Stocks by Industry in 2012 31

In 2012, half of all the portfolio investment stock of liabilities was in the finance and insurance industries, followed by manufacturing (38%) and wholesale and retail trade (6%). Fig. 4.9: Distribution of Portfolio Investment Liability Stocks by Industry in 2013 In 2013, the manufacturing industry had most of the stock of PI liabilities (46%), followed by the finance and insurance industry (37%) and agriculture (13%). There was no portfolio investment assets reported during the survey. 32

Chapter 5: Private Sector External Debt The focus of this chapter is on private sector external debt. These are the different types on non-equity assets and liabilities that were held between residents of Zimbabwe and the rest of the world during the period under review. 5.1 External debt liabilities by country Table 5.1: External Debt Liability Stock by Country in US$, in 2012 and 2013 Country 2012 Net 2013 China 592 552 779-159 992 327 432 560 452 Afrexim Bank 343 739 812 71 102 160 414 841 972 South Africa 365 818 921 6 125 671 371 944 592 Germany 258 377 122 36 005 342 294 382 463 PTA 95 054 033 38 565 593 133 619 626 Mauritius 31 198 955-4 245 834 26 953 121 United Kingdom 27 498 226-7 776 148 19 722 078 United Arab emirates 8 576 506 11 091 942 19 668 448 Shelter Afrique 17 959 750 718 390 18 678 140 France 12 143 604 4 709 365 16 852 970 Other 70 748 672-12 604 176 58 144 497 Total 1 823 668 380-16 300 021 1 807 368 359 In 2012 the total stock of external debt liabilities was US$1.82 billion and in 2013 it decreased to US$1.81 billion, showing a total net reduction of US$16.3 million. 33

Fig. 5.1: External Debt Liability Stock by Country in US$, in 2012 and 2013 The bar graph shows that Zimbabwe owed China a total of US$592.6 million in 2012, which decreased to US$432.6 million in 2013. Debt obligations to South Africa amounted to US$365.8 million in 2012 and there was a slight increase in 2013 of US$6.1 million to close at US$371.9 million. The country owed Afrexim Bank US$343.8 million in 2012 which increased to US$414.8 million in 2013. In 2012, debt obligations to Germany stood at US$258.4 which increased in 2013 to US$294.4 million. 34

Fig.5.2: Distribution of External Debt Liability Stock in 2012 Fig 5.2 shows that China was the major contributor with 30 % of the total stock of debt liabilities, followed by South Africa (20%) and Afrexim Bank (19%) in 2012. Fig.5.3: Distribution of External Debt Liability Stock in 2013 35

In 2013, China remained the major creditor with 24%, followed by Afrexim Bank with 23% and South Africa with 21%. 5.2 External Debt liability by Component Table 5.2: External Debt liability Stock by Component in US$, 2012 and 2013 Component 2012 Net 2013 Trade Credits 72 100 217 8 259 709 80 359 926 Loans 1 751 387 213-25 066 092 1 726 321 121 Other 180 951 506 361 687 312 Total 1 823 668 380-16 300 020 1 807 368 360 Fig. 5.4: External Debt liability Stock by Component in US$, 2012 and 2013 36

In 2013, trade credits increased to US$ 80.4 million from US$ 72.1 million the previous year. Loans decreased from US$ 1.75 billion in 2012 to US$ 1.73 billion in 2013. Fig. 5.5: Distribution of External Debt liability Stock by Component in 2012 Fig. 5.6: Distribution of External Debt liability Stock by Component in 2013 37

In both 2012 and 2013, loans contributed a dominant 96% while trade credits contributed almost 4% of external debt liabilities whilst the minute remainder was made up of other types of external debt components. 5.3 External Debt Liabilities by Industry Table 5.3: External Debt Liabilities by Industry in US$, 2012 and 2013 Industry 2012 Net 2013 Agriculture, Forestry and Fishing 16 664 757 8 298 912 24 963 669 Mining and Quarrying 309 607 228 55 807 981 365 415 209 Manufacturing 722 957 031 51 250 873 774 207 904 Wholesale and Retail Trade 55 445 110-10 525 813 44 919 297 Transportation and Storage 457 044-108 394 348 650 Accommodation and Food Services Activities 23 859 577-7 866 586 15 992 991 Information and Communication 212 404 486-212 404 486 - Finance and Insurance Activities 429 681 236 115 280 003 544 961 239 Professional, Scientific and Technical 1 508 619-1 329 965 178 654 Activities Administrative and Support Services 51 083 292-14 702 544 36 380 748 Total 1 823 668 380-16 300 020 1 807 368 360 Fig. 5.7: External Debt liability Stock by Industry in US$, 2012 and 2013 38

There were notable increases of stock of external debt in mining and quarrying from US$310 million to US$365 million, manufacturing from US$723 million to US$774 million, and finance and insurance from US$430 million to US$545 million. On the other hand, the information and communication industry cleared its obligations from US$212 million in 2012 to zero in 2013. Fig. 5.8: Distribution of External Debt liability Stock by Industry in 2012 Most of the stock of external debt in 2012 was owed by the manufacturing industry (40%), followed by the finance industry (23%), mining and quarrying (17%) and information and communication (12%). 39

Fig. 5.9: Distribution of External Debt liability Stock by Industry in 2013 In 2013, the major contractors of debt were manufacturing (43%), finance and insurance (30%), and mining (20%). 5.4 External Debt Assets by Country Table 5.4: External Debt Assets by Country in US$, in 2012 and 2013 Country 2012 Net 2013 South Africa 6 163 811-999 732 5 164 079 France 9 736 508-8 540 879 1 195 629 Netherlands 631 096 239 389 870 485 United Nations 1 579 906-842 849 737 057 Mozambique 558 907 152 707 711 614 United Kingdom 432 219 432 219 Zambia 162 468 159 684 322 152 Thailand 134 957 76 178 211 135 PTA 1 981 618-1 777 072 204 546 Singapore 626 018-493 655 132 363 Other 7 745 525-4 477 390 3 268 135 Total 29 320 814-16 071 400 13 249 414 40

Table 5.4 shows that Zimbabwe s external debt assets amounted to US$29.3 million in 2012 and decreased to US$13.3 million in 2013. This was a net decrease of US$16.1 million. Fig. 5.10: External Debt Liability Stock by Country in US$, in 2012 and 2013 As shown fig. 5.10, France owed Zimbabwe US$9.7 million in 2012 which decreased to US$1.2 million in 2013. Other countries combined owed Zimbabwe US$7.8 million in 2012 which decreased by US$4.5 million to US$3.3 million in 2013. Debt assets against South Africa were US$6 163 811 in 2012 which then decreased to US$5.2 million in 2013. 41

Fig. 5.11: Distribution of External Debt Asset Stock by Country in 2012 In 2012 France was the major debtor with 33%, followed by Mauritius which has 25% and South Africa with 21% as shown in fig. 5.11. Fig. 5.12: Distribution of External Debt Asset Stock by Country in 2013 42

Fig. 5.12 shows that in 2013, South Africa was the major debtor with 39%, followed by other countries combined with 25% and France with 9% in 2013. 5.5 External Debt Assets by Component Table 5.5: External Debt Assets by Component in US$, in 2012 and 2013 Component 2012 Net 2013 Accounts Receivable 20 155 296-7 542 647 12 612 649 Loans 9 165 518-8 528 753 636 765 Total 29 320 814-16 071 400 13 249 414 Fig. 5.13: External Debt Assets by Component in US$, in 2012 and 2013 Accounts receivable declined from US 20.2 million in 2012 to US 12.6 million in 2013. During the same period, loans owed to Zimbabwe were reduced from US$9.2 million to US$636 765. 43

Fig. 5.14: Distribution External Debt Assets by Component in 2012 Accounts receivable made up 69% of private sector external debt assets in 2012 while loans accounted for the remaining 31%. Fig. 5.15: Distribution of External Debt Assets by Component in 2013 In 2013, the contribution of loans declined sharply to 5% from 31% in 2012, while that of accounts receivable increased to 95% from 69% in the previous year. This was because of a 44

sharp fall in absolute terms of the loans component in contrast to that of the accounts receivable. External Debt Assets by Industry Table 5.6: External Debt Assets by Industry in US$, in 2012 and 2013 Industry / Year 2012 Net 2013 Agriculture, Forestry and Fishing 10 497 482-8 958 354 1 539 128 Manufacturing 10 432 889-839 999 9 592 890 Wholesale and Retail Trade 7 525 806-6 858 458 667 348 Transportation and Storage 631 096 239 389 870 485 Finance and Insurance Activities 233 540 346 024 579 564 Total 29 320 814-16 071 400 13 249 414 Fig. 5.16: External Debt Assets by Industry in US$, 2012 and 2013 Lenders to non-residents were found to be from the agriculture, transport, manufacturing, finance, wholesale and retail trade industries. The stock of external debt assets held by the agriculture industry decreased from US$10.5 million to US$1.5 million. Wholesale and retail trade also registered a big decrease with its stock of external debts assets falling from US$7.5 million in 2012 to US$667 348 in 2013. 45

Fig. 5.17: Distribution of External Debt Assets by Industry of Creditor in 2012 In 2012, the agriculture industry was the major lender to non-residents with 36% of the total stock of external debt assets, followed by manufacturing with 35% and wholesale and retail trade which contributed 26%. 46

Fig. 5.18: Distribution of External Debt Assets by Industry of Creditor in 2013 Fig. 5.18 shows that in 2013 manufacturing became the major lender to non-residents accounting for 72% of total debt assets, followed by agriculture (12%) and transport (7%). 47

Chapter 6: International Trade in Services The supply of services is covered under two main frameworks namely the Foreign Affiliates Statistics (FATS) framework and the Balance of Payments framework (BoP). The findings in this chapter pertain to the supply of services under the BoP framework which focusses on trade in services between residents and non-residents. Table 6.1: Imports and Exports of Services in US$ in 2012 Category Exports Imports Net Manufacturing 37 027 816 15 196 519 21 831 297 Maintenance 1 876 16 311 192-16 309 316 Computer Services - 15 461 665-15 461 665 Information - 1 193 098-1 193 098 Insurance Premiums - 1 957 288-1 957 288 Commission fees - 270 054-270 054 Charges 342 764 1 174 796-832 032 Professional Services 2 378 206 20 458 336-18 080 130 Total 39 750 662 72 022 949-32 272 287 Fig. 6.1: Imports and Exports of Services in US$ in 2012 48

In 2012, exports of services amounted to US$39.8 million while imports amounted to US$72 million. Imports of services exceeded exports by US$32.2 million. However, manufacturing services had net inflows of US$21.8 million implying that the country exported more manufacturing services than it imported. Fig. 6.2: Distribution of Exports of Services in 2012 In 2012, the services that were exported the most were manufacturing services (93%). Fig. 6.3: Distribution of Imports of Services in 2012 49

Zimbabwean residents imported mostly professional services (28%), maintenance services (23%), computer services (21%) and manufacturing services (21%) in 2012. See fig. 6.3. Table 6.2: Imports and Exports of Services in US$, 2013 Category Exports Imports Net Manufacturing 21 250 225 15 445 765 5 804 460 Maintenance - 13 586 957-13 586 957 Computer Services - 16 930 221-16 930 221 Information - 3 226 216-3 226 216 Insurance Premiums - 1 769 554-1 769 554 Commission fees 161 484-161 484 Charges 237 051 1 887 811-1 650 760 Professional Services 2 404 148 19 226 835-16 822 687 Total 23 891 424 72 234 844-48 343 420 Fig. 6.4: Imports and Exports of Services in US$, 2013 Table 6.2 shows that trade in services remained in favour of non-residents with exports of services amounting to US$24 million against imports worth US$72 million. There were net outflows of US$48.3 million. The country exported more manufacturing services than it imported with exports valued at US$21.3 million against imports valued at US$15.5 million. 50

Fig. 6.5: Distribution of Exports of Services in 2013 Exports of services in 2013 were dominated by manufacturing services (89%) while their percentage for professional services was 10%. Fig. 6.6: Distribution of Imports of Services in 2013 Imports of services displayed a wider spread across different types of services in 2013. The types of services mostly imported were professional services (27%), computer services (23%), manufacturing services (21%) and maintenance services (19%). 51

Table 6.3: Net International Trade in Services in US$, in 2012 and 2013 Category 2012 2013 Manufacturing 21 831 297 5 804 460 Maintenance - 16 309 316-13 586 957 Computer Services - 15 461 665-16 930 221 Information - 1 193 098-3 226 216 Insurance Premiums - 1 957 288-1 769 554 Commission fees - 270 054-161 484 Charges - 832 032-1 650 760 Professional Services - 18 080 130-16 822 687 Total - 32 272 287-48 343 420 Overall, imports of services exceeded exports of services in both 2012 and 2013. In 2012, there were net outflows of US$32.3 million which increased to US$48.3 million. 52