HARARE - Zimbabwe Stock Exchange-listed companies are scrambling to declare dividends despite the worsening economic and liquidity situation in the country.
Economic experts say the listed counters — from financial services to property developers — are rushing to declare dividends as a way to appease shareholders who have shown faith in them during the difficult times.
Innscor Africa (Innscor) declared a final dividend of $0,30 per share in the full year to December 2015 as subsidiary National Foods declared a $4,83 per share while another unit, Colcom announced a $0,56 per share dividend.
The country’s largest financial services group by assets, CBZ Holdings (CBZ) also declared an annual dividend of $2,9 million —10 percent up from prior dividend — for the year ended December 31, 2015.
The bank’s financials for the period show that the board declared a final gross dividend of $1,4 million, after having declared a $1,4 million half-year cash dividend of $0,183 per share on its common stock with a $0,212 full year declaration.
Another financial services group, FBC Holdings declared a dividend of $0,149 per share
after its profit for the year surged 269 percent to $18,1 million from $4,9 million on the back of growth in net interest income and insurance premium..
However, analysts have raised alarm over the declarations as some of the companies in question recorded losses for the period.
The issue was raised at an analysts briefing of First Mutual Holdings subsidiary Pearl Properties, where the developer’s revenue dropped 3,5 percent in the year as a $481 336 loss was recorded from a profit position of $3,5 million, but the group went ahead and announced a final dividend of $0,05 per share.
But group managing director Francis Nyambiri defended the position saying the company could afford to declare the dividend.
Other companies that recently declared dividends include British American Tobacco Company, Old Mutual, Nicoz Diamond and TSL among others.
Market watchers say companies may be forced by the major shareholder to declare dividends, while others may declare dividend as a way of managing perception because the public will rate highly a company that pays dividends in such an
environment irrespective of their cash flows.
Most companies operating in Zimbabwe have not been declaring dividends since dollarisation in 2009 in an attempt to sustain their business operations, as the liquidity crunch continues to bite.
An analyst with a local bank said many companies were trying to increase their capacity in order to accrue economies of scale.
“However, accessing concessionary loans for these projects is the major challenge. The loans currently offered by local banks are short-term, due to the transitory deposits coming through,” she said, adding that bank deposits are also very low, with the loan-to-deposit ratio already high.
“Due to Zimbabwe’s bad credit rating and our high national debt, it is impossible to access concessionary loans outside the country,” she added.
Other analyst have even begun calling on companies to avail their dividend policies in respect of poor performing companies announcing shareholder payouts.