Lack of statistics affect informed decision – Mushosho

Source: Lack of statistics affect informed decision – Mushosho | The Financial Gazette August 18, 2016

THE absence of up-to-date statistics and information is making it difficult for government and companies to make informed decisions that could help speed up economic recovery, Old Mutual Zimbabwe chief executive officer Jonas Mushosho said.

He was responding to a question on the extent of government’s indebtedness and the level of Treasury Bills (TBs) on the market, during the group’s analyst briefing last Friday.

Old Mutual is an integrated financial services group whose activities include life assurance, short-term insurance, property investment, asset management and banking activities through the Central African Building Society.

Readily-available public information enables decision-makers and corporates to react intelligently, make informed decisions and policies.

Unfortunately, it is not possible to get latest figures or statistics in a number of areas in Zimbabwe.
“On the extent of government indebtedness or level of treasury bills on the market, I think if it was made publicly, it will calm the market. But in the absence of public information, the market will be nervous,” said Mushosho who last week was appointed Old Mutual Emerging Markets regional chief executive officer for southern and east Africa with effect from October 1.

“But our own view and position (is) we do support economic activities we believe that economic transformation is not going to happen on its own, it should be driven by initiatives that are carried by the corporate sector, all of us as a country and off course government has a role to play, particularly to ensure that the necessary information and reforms that are required to ensure (that) there is an uptake on our economy are carried out,” he said.

Figures relating to inflation and the consumer basket are some of the few statistics  produced timeously. In other sectors no data is available for any variables or indicators. In some instances data is available, but inaccurate, incomplete or out-dated.

It is therefore not surprising that some of the decisions taken by government and industry players are questionable because they would be premised on inaccurate data.
Institutions, be they government or private, use statistics to plan for the future and to assess how well they have fared and where they may be missing the mark.

For example, keeping track of the Gross Domestic Product (GDP) enables governments to determine whether expenditures in business and various industries are increasing or decreasing per given period and to direct policy interventions in areas that would improve GDP.

Government issued US$1,2 billion worth of TBs between 2012 and April this year, with some observers warning that government backed paper was not only a form of cash printing that fuels inflation, but a source of the country’s liquidity crisis.

Government, which has been starved of funding to meet its commitments, including a US$10 billion national debt, returned to the TBs market in 2012.

The commercial paper is now among the biggest vehicles for State fundraising.

TBs hold the confidence of the markets in stable economies because of their backing by government.

This means they would be risk free, but Zimbabwe has been struggling with its finances, which makes the risk of buying its paper high.

Researchers at Exotix Partners said there had seen a strong co-relation between the time government started injecting TBs in 2012 and the depletion of the stock of hard cash in the market.

They rebutted arguments that cash printing ended in 2008 when the country switched to a multi-currency system.

Old Mutual registered an 11 percent jump in total revenue to US$139,7 million in the six months to June 30, driven by a 60 percent surge in non-life sales.

Gross Premiums Written for the General Insurance unit were up seven percent to US$21 million, while profit before tax at US$3,2 million was up 11 percent.

Non-life sales were up 60 percent from US$92,9 million to US$148,7 million.

Operating profit was flat at US$33,1 million, while profit after tax declined four percent to US$12,5 million.

Old Mutual Zimbabwe is a 75 percent owned subsidiary of London-listed Old Mutual Plc.

Loans and advances at US$532,9 million were up eight percent, while deposits were also up by seven percent to US$768 million.

The banking unit’s ratio of bad loans rose from six percent last year to 10 percent in the half year under review.
The investment services unit registered a 17 percent decline in profit before tax to US$2,1 million, weighed down by a decline in property values and equity investments. Investment property value fell to US$397,8 million from US$408 million.
Funds under management went down from US$1, 6 billion to US$1,5 billion