Business

New acquisitions drive Zimre quarterly revenue – The Herald

Nelson Gahadza

Business Reporter

ZIMRE Holdings says its reinsurance and reassurance cluster posted impressive growth in insurance contract revenue during the quarter ended September 30, 2023, after 129 percent to $61,4 billion driven by new business acquisitions through various developmental projects in the local market.

Ruvimbo Chidora, the group company secretary, said the regional operations’ strategy to participate in targeted external markets and big accounts paid off, contributing to this jump in insurance contract revenue for the period.

“The hybrid business model employed by the short-term insurance cluster has begun to register an increase in direct business composition from 33 percent to 58 percent as of September 30, 2023.

“This increased the underwriting capacity of the operation and expedited the insurance contract revenue growth by 72 percent from $1,8 billion to $3,1 billion in the current period in inflation-adjusted terms,” she said.

She noted that the historical cost of insurance contract revenue grew by 590 percent to $2,1 billion from $303.0 million in the same period prior year.

During the quarter under review, the retention ratio also improved to 71 percent against the prior period ratio of 51 percent.

Ms Chidora said the group’s property market continued to be the most sought-after investment option due to its value preservation qualities as a good hedge against inflation. She said this saw the property cluster posting 493 percent growth in rental income in inflation-adjusted terms to $8,9 billion from $1,5 billion compared to the same period the prior year, and in historical terms, an 846 percent growth from $433,2 million to $4,1 billion recorded in the current period.

“Notwithstanding the difficult operating environment, monthly collections for the portfolio for the period under review averaged 90 percent, with an average portfolio yield of 7 percent,” she said.

She added that despite the prevalence of workspace rationalisation and optimisation by a significant number of office tenants, portfolio voids averaged 23 percent compared to 22 percent in the same period prior year.

The group’s insurance broking business continues to be a trusted business partner, recording a 509 percent growth in brokerage income in inflation-adjusted terms from $755,3 million to $4,6 billion in the current period, driven by an increased business renewal rate.

Ms Chidora said to ensure its progress is continuous, the company is restructuring and building capacity for organic growth through the introduction of new businesses such as employee benefits, healthcare, and diversifying its agricultural offerings.

The Life and Pensions insurance contract revenue grew by 212 percent in inflation-adjusted terms from $2,5 billion to $7,8 billion in the current period, and the growth was on the back of increased uptake of the company’s insurance products by the market.

She said the Vaka Yako product was the major contributor to Individual Life Premium at 83 percent, the product is one of the best-performing products in the cluster, and the unit has more innovative and customer-centric products in the pipeline.

Ms Chidora said the Wealth Management cluster remained resilient in the wake of the turbulent operating environment, and as part of a broad strategy to hedge against inflation, one of the units has diversified into the region with the aim of widening its revenue streams.

The group’s funds under management increased by 32 percent compared to the prior year to $547,8 billion.

Looking ahead, Ms Chidora said Eastern and Southern Africa were projected by the World Bank to experience 3,9 percent gross domestic product (GDP) growth next year, and in line with this projection, the ZHL Group intends to solidify its regional investments and improve underwriting capacity.

She said that through the operationalisation of Emeritus International, the group will be pursuing new markets within the region, further hedging Zimbabwe’s country risk.

Ms Chidora noted that the group is progressing its infrastructure and landmark development drive with projects that will introduce innovative green practices to the country while creating sustainable value for both shareholders and communities.

“In 2024, the Group looks forward to proactively pursuing its growth triangle of cash, change, and customer on the back of its recently adopted Eagle Culture,” she said.

Business

Mthuli squeezes consumers, businesses – NewsDay

In his 2024 national budget presentation in Parliament, Finance minister Mthuli Ncube increased taxes to raise an additional ZWL$10 trillion to meet the new revenue targets.

GOVERNMENT yesterday announced a cocktail of tax increases, pushing up the cost of living and ease of doing business after reviewing its 2024 revenue projection upwards by 22,22% to ZWL$53,9 trillion.

In his 2024 national budget presentation in Parliament, Finance minister Mthuli Ncube increased taxes to raise an additional ZWL$10 trillion to meet the new revenue targets.

Treasury initially projected revenue collections to total ZWL$44,1 trillion for the 2024 fiscal year.

“Mr Speaker Sir, in line with the projected economic growth of 3,5%, total revenue collections in 2024 are estimated at ZWL$53,9 trillion, (18,3% of GDP), broken down as ZWL$51,2 trillion tax revenue and ZWL$2,7 trillion non-tax revenue,” Ncube said.

“Guided by the expected revenue envelope and the desired fiscal path, expenditures in 2024 are projected at ZWL$58,2 trillion (19,8% of GDP).”

Ncube announced an upward review on the Strategic Reserve Levy by US$0,03 and US$0,05 per litre of diesel and petrol, respectively, with effect from January 1, 2024, pushing up the cost of fuel.

Ncube also raised tollgate and passport fees beginning next year.

“I, therefore, propose an upward review of toll fees on premium roads, that is, Harare-Beitbridge and Plumtree-Mutare and other roads, with effect from January 1, 2024. Revenue derived from the increased fees will be remitted to the Consolidated Revenue Fund,” Ncube said.

“I, further, propose that passport and selected fees charged by the Central Vehicle Registry be increased, with effect from January 1, 2024. Additional revenue generated from the above measures will be ring-fenced towards road infrastructure development.”

Ncube also introduced a US$0,02 levy per gramme of sugar contained in beverages, a development that will push up the prices of beverages.

He said the move was in response to growing concerns on the adverse effects of the consumption of sugar contained in beverages. Tax on beverages has also been implemented in a number of countries, including in the Southern African Development Community.

Ncube also introduced a new wealth tax to ensure that high-income earners pay taxes.

“In order to ensure that every person contributes to the fiscus in line with their levels of income. I propose to introduce a wealth tax levied at a rate of 1% of market values of residential properties with a minimum value of US$100 000,” he said.

“Resources derived from the levy will be ring-fenced towards urban infrastructure development, in particular roads, water, sewer and community health centres. Principal private residential properties owned by elderly persons above 70 years will, however, be exempt from the tax.”

While the minister reviewed the tax-free threshold on incomes to ZWL$750 000, from the previous ZWL$500 000, inflation has rendered the move mute because of the rising cost of living.

Ncube also targeted foreign companies by introducing the domestic minimum top-up tax (DMTT).

The tax ensures that qualifying entities located in Zimbabwe with an aggregate effective tax rate below 15% be charged a top-up amount, raising the cost of doing business.

“Under the GloBE Tax Rules, where a tax incentive results in an effective rate of less than 15%, the tax jurisdiction where the multinational is headquartered collects the difference between the effective tax under the tax incentive and the minimum effective rate of 15% (the top-up tax),” Ncube said.

“The DMTT allows the country where the low tax profits arise from the tax incentive to collect the top-up tax rather than ceding taxing rights to the headquarter jurisdiction.”

He said the calculation of the DMTT would be based on the effective tax rate charged on the jurisdictional profits, not the jurisdictions’ statutory corporate income tax.

“I, therefore, propose to enact DMTT rules to guard against ceding taxing rights to foreign jurisdictions on top-up tax arising from tax incentives that are provided to those investments,” Ncube said. The corporate tax rate was also reviewed upwards to 25% from 24%.

Ncube, however, reduced the mandatory value added tax (Vat) registration threshold to US$25 000 from US$40 000, starting next year.

Operators with a minimum annual turnover of US$25 000, or local currency equivalent thereof, are now required to register for Vat.

Failure to register will see applicable penalties invoked, Ncube said.

He said traders registered for Vat purposes and in possession of valid tax clearance certificates would be eligible to procure goods from manufacturers.

“The tax deferred will, however, be fixed at the foreign currency amount payable at the time of importation, albeit, payable in local currency at the prevailing exchange rate at the time of importation, albeit, payable in local currency at the prevailing exchange rate at the time of payment.”

Business

Mthuli squeezes consumers, businesses – NewsDay