The World Bank and IMF have endorsed Zimbabwe’s plan to clear more than $2 billion in foreign arrears, the finance minister said, adding that the lenders had also backed his two-year economic recovery programme.
President Emmerson Mnangagwa has promised to revive the struggling economy, pay foreign debts that the country has defaulted on since 1999 and end Zimbabwe’s international pariah status gained under Robert Mugabe’s near four-decade rule.
Finance Minister Mthuli Ncube, who is attending the International Monetary Fund (IMF) and World Bank meetings in Bali, Indonesia, said in a statement his plans to clear the arrears to the World Bank, African Development Bank and European Investment Bank had been accepted.
“All the cooperating partners and creditors present uniformly expressed their support for Zimbabwe and its arrears clearance Road Map,” Ncube said. He did not give details and none of the creditors had an immediate comment.
The lenders and Western donors urged Ncube to “judiciously” implement his two-year economic recovery programme announced last Friday, the statement said.
Ncube’s plan will see cuts in government spending and its wage bill, and privatisation of loss-making state-owned firms.
Zimbabwe, which adopted the U.S. dollar after hyperinflation left its own currency worthless in 2009, is gripped by acute shortages of cash dollars. Prices of basic goods and medicines have risen in the last few days.
At the heart of its economic problems is a $17 billion domestic and foreign debt, a $1.8 billion trade deficit that has worsened dollar shortages and lack of confidence in the ruling party by citizens still traumatised by hyperinflation.
Prices of basic goods, medicines and drugs, building materials and public taxis have risen by at least 50 percent in the last week.
The economic crunch is increasing political tension after a July vote that was supposed to lay the foundation for Zimbabwe’s recovery was instead followed by turmoil that left six people dead after an army crackdown.
The latest crisis was triggered by fiscal and monetary changes announced on Oct. 1, including a 2 percent tax on money transfers and separation of cash dollars and foreign inflows from bond notes and electronic dollars, that caused the collapse of the surrogate currency on the black market.
When the changes were announced, $100 in bond notes was worth $49 cash dollars but was worth only $26 on Wednesday.
In a separate statement, Ncube said the bond note and electronic dollars would remain officially pegged at 1:1 to the U.S. dollar as the government seeks to protect people’s savings.
He said the government would also gazette rules protecting foreign dollar inflows to ensure the money was not taken by the central bank or government, good news for mines outraged by the U.S. dollar shortages.
On Wednesday, some shops and restaurants, including the local franchise of fast-food chain KFC had closed their outlets because some suppliers of goods and medicines were demanding cash dollars. – Reuters
Finance minister Mthuli Ncube says the government is committed to preserving the value of electronic balances at the current rate of exchange of 1 to 1, in order “to protect people’s savings.”
“Government recognise concerns surrounding RTGS deposits, and we commit to preserve the value of these balances on the current rate of exchange of 1 to 1, in order to protect people’s savings,” Ncube said in a statement on Wednesday after some business started demanding payment in US dollars only while some retailers have suspended sales as the value of the electronic dollars and the surrogate bond note currency have plunged on the black market.
Zimbabwe abandoned its hyperinflation ravaged currency in 2009 and adopted a basket of multi-currencies anchored on the US dollar, but gripped by acute shortages of cash dollars since 2016.
Last week, the central bank brought back foreign currency accounts (FCAs) to separate local electronic transfers and foreign inflows and US dollars, leading to a panic in the market.
Ncube said there was a “need for an orderly currency reform programme that will be followed when the economic fundamentals” and that the multi-currency system will continue.
“This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system as is per the current policy of foreign exchange management system. In parallel, the Reserve Bank shall continue to maintain adequate resources for the import of essential commodities,” he said.
He said apart from the $500 million Nostro Deposit Protection Guarantee from Afreximbank, he was also “reinforcing Nostro foreign currency accounts with a statutory instrument to guarantee that these are private deposits, and neither the Reserve Bank nor government has any access to them.”
- The Source
United Arab Emirates-based global satellite operator, Yahsat on Monday launched its flagship satellite broadband service YahClick in partnership local ISP, Dandemutande in a move that could lower prices of data by as much as 70 percent.
The cost of data is an emotive issue in the region, notably in Zimbabwe and South Africa where it sparked off the #DataMustFall.
A recent report by Ecobank showed that Zimbabwe has the second most expensive mobile data in sub-Saharan Africa after Equatorial Guinea at $25 for one gigabyte
Yahsat is a subsidiary of Mubadala, the investment vehicle of the United Arab Emirates government and already operates in most African countries, including Nigeria, South Africa, Angola and Zambia.
Kevin Viret, Yasat’s director business development for Africa said, with internet penetration still at 52 percent, Zimbabwe had potential for growth
“We have 50 percent more power than the traditional satellite. The African continent doesn’t suffer from the lack of broadband or internet connectivity but it suffers from lack of a quality service that’s reliable and cost effective,” he said.
YahClick uses the Ka-band powered by high throughput satellite spot beam technology on which Yahsat rides on to provide high performance broadband.
Viret said the company’s technologies will allow the country to enjoy fast internet at affordable rates.
Dandemutande chief executive, Never Ncube said the cheapest package has been pegged at $33 for 5 gig of data.
- The Source
The toxic presidency of Mugabe may be over, but the new Zimbabwean government of Emmerson Mnangagwa must quickly make some hard foreign policy decisions if it is to change the country’s fortunes.
For so far no major foreign power has undertaken to relieve in any significant way the country’s economic distress. Although election observer reports have been guardedly and conditionally – almost grudgingly – accepting of the election results, the question marks raised and, particularly, the totally unnecessary violence unleashed against protesters in the wake of the election have made all governments shy of offering full endorsement of the regime.
What this has meant is that foreign investor confidence, while not discouraged entirely, is very slow to assume the kind of mass and speed of movement the economy needs. The IMF has spoken of some negotiated relief, but only under a “reform package”. The Chinese also feel that they do not want to put good money after bad. Previous loans have not been repaid and, although rumours of seizing Zimbabwean institutional assets as collateral have been swiftly denied, it is no secret that the Chinese are not best pleased with Zimbabwe’s approach to fiscal responsibility.
The Zimbabweans seem not to have noticed that, increasingly, Chinese liquidity is made available through Chinese banks. They may or may not be state-owned – but it is not the state that makes a benefaction; it is a bank that makes a loan. And banks stay in business by realising the returns from a loan. As it is, liquidity has been either misused, misappropriated, or used simply to balance books that otherwise would be parlously unbalanced.
Although the Americans have lowered the tone of their criticisms of the government, the softly-softly approach cannot hide the strict conditionality they seek. This resides in guarantees of future electoral conduct, but also essentially the desecuritisation of the ZANU-PF machine. In a word, the problem is Constantino Chiwenga, the former defence forces chief, now vice-president, who has a strong influence within the military – but, no matter what the Americans want, he is going nowhere fast, and he will not sacrifice his deep influence within the military.
The Europeans have lifted the huge majority of their sanctions, but the outgoing European representative has been critical of both the election and the violence that followed. This leaves the British as a key player.
Catriona Laing, the British ambassador to Zimbabwe, is being promoted to the High Commissionership in Nigeria, and it is no secret she laid much of her prestige and credibility on the line in seeking to persuade Whitehall that Mnangagwa was a credible figure. This of course should be seen in the context that Grace Mugabe certainly was not. But it signals nevertheless that the days of British antipathy towards a ZANU-PF government have gone.
Laing’s successor as the new British ambassador will be, not a diplomatic figure with foreign office experience, but someone with huge experience in development assistance. Melanie Robinson will not be in the mould of Laing, nor of her predecessors, Deborah Bronnert and Mark Canning. She will need to be dealt with differently by the Zimbabwean government and the ZANU-PF apparatus. Whereas her predecessors were often perceived as political actors, Robinson is purely a development technocrat.
But, despite the obviously signalled change in emphasis, the British now have no money left to give. Brexit will compound that. All the British can do is throw their weight behind the IMF and encourage corporations to invest in Zimbabwe – but the British weight cannot, in itself, counteract US and EU reluctance to give a full green light to investment in Zimbabwe.
Russia would like to make some inroads in Zimbabwe, but has earmarked no sizeable funds for doing so.
All eyes on reform
In short, almost everyone is looking towards reform. What happens domestically will impact the success or otherwise of foreign policy. As for foreign policy pure and proper, Zimbabwe has not been properly represented by top-flight ambassadors for some time. There had been only an acting Zimbabwean ambassador in the UK for almost three years, from 2015-18, and agreement to appoint a substantive ambassador was long delayed because the nominee, Ray Nahulukula, had received land seized from a white farmer. The finally agreed ambassador is Christian Katsande. The minister of lands, Perence Shiri, has now begun talking of some kind of compensation for white farmers who had lands seized, but no plans can be laid because there are no funds for compensation of any sort.
So it all comes down to money. The Mugabe years from 1997, when the economy began to tank, a process that was hurled into accelerated overdrive with the farm seizures in 2000, were years of mismanagement and accumulation without the reinvestment and circulation of capital. It was the era of the oligarchs. A lot of the funds that wound up at their disposal was used for consumption. If now these “fat cats” are somehow involved in foreign policy negotiations, particularly to do with economic and financial diplomacy, there will be no credibility on the Zimbabwean side.
I conclude with a story of one of my visits to Beijing some years ago. Chinese officials showed me their figures on the Zimbabwean economy. I looked at them and said, “So you know it’s a basket case?” “Yes,” was the reply. “But we continue to show solidarity.” But it is clear those days have now faded into memory. Fine words will now not be enough for diplomacy. Everyone wants actions.
A 49-year-old German woman was trampled to death by an elephant in a popular game reserve in northern Zimbabwe as she tried to photograph it, a wildlife official said Thursday.
The attack happened on Wednesday at the Mana Pools game reserve after the woman apparently left the protection of the vehicle she had been travelling in.
“The information we have is that the tourists encountered a herd of elephants when they were entering the park and they started taking pictures,” said Tinashe Farawo, spokesperson of the Zimbabwe Parks and Wildlife Management Authority.
“We do not know what irritated the animals which resulted in the woman being attacked.
“She passed on last night (Wednesday) from injuries.”
The woman was not named by officials.
Attacks by elephants are common in Zimbabwe which has a population of around 84 000 pachyderms.
Last year a trained elephant trampled a tour guide in Victoria Falls, a tourist resort in the country’s west. Another local man was also killed in a separate incident last year after he had tried to drive elephants into the open to take pictures.
Ten days ago, Zimbabwe’s new Finance Minister Mthuli Ncube was talking of abolishing bond notes and launching currency reforms before the end of the year. But on Tuesday, President Emmerson Mnangagwa ruled out any such reforms.
In his address at the opening of Parliament, President Mnangagwa reaffirmed the government’s commitment to the so-called multi-currency system or dollarization “until the current negative economic fundamentals have been addressed to give credence to the introduction of the local currency”.
The economic fundamentals he listed are the familiar ones set out repeatedly in recent years by government ministers and the central bank – a” sustainable” fiscal position, foreign currency reserves equivalent to 3 to 6 months import cover ($1.4 to $2.7 billion) and “sustainable consumer and business confidence”.
As the President spoke the premium on US dollars relative to RTGS balances or electronic money stuck in the banks, hovered close to 100% while that between Zimbabwe’s ersatz currency (bond notes) and the US dollar was 88%.
The President announced that Zimbabwe has taken on another $500 million in foreign loans to bolster the balance-of-payments, seemingly confident that a country, already in what the IMF calls “debt distress” with a debt-to-GDP ratio exceeding 100%, can weather the storm.
But the track record of emerging market governments who take on the foreign currency markets is littered with failures and it is not easy to see why Zimbabwe should be any different.
The record of macroeconomic mismanagement, including under the New Dispensation since the military coup last November, is stark. Domestic debt has escalated alarmingly; the balance-of-payments gap is widening; more and more is being borrowed offshore by private as well as official entities
In the 2018 budget presented nine months ago, the former finance minister, Patrick Chinamasa, promised to cut the budget deficit from $2.5 billion, which was hugely understated at the time to $671 million this year.
But just before he left office after losing his seat in the July 31 election, Chinamasa’s ministry revealed that government spending, far from being cut, had jumped 57% in the first half of the year. The deficit for the 6 months was $1.4 billion and forecasters expect it to top 3 billion – more than 16% of GDP – in 2018, especially when the extra $300 million for the 17.5% pay rise for civil servants and the 20% hike for the military and police, is taken into account.
Such profligacy hardly inspires confidence in the fiscal consolidation promised by the president and his new cabinet.
Policymakers believe that they can maintain the fiction that the local currency – electronic balances and bond notes – really does trade at par with the US dollar. In the parallel market however, the over-valued local unit is worth less than 40 cents.
The official position, set out by Mr Mnangagwa, is that this situation can be maintained until the budget deficit has been cut and foreign reserves accumulated. But given that the country is staring down the barrel at a trade deficit of well over $2.5 billion this year – it was $1.7 billion in the first 7 months of 2018 – it is going to take a long time to build up reserves of $2 billion or more.
This is the catch-22 position in which Zimbabwe finds itself. Can it wait 2 years or more to meet President Mnangagwa’s economic fundamentals before abandoning the unsustainable dollar parity, or are the fundamentals unreachable without a competitive exchange rate?
- The Source
Zimbabwe’s new Finance Minister Mthuli Ncube may scrap the quasi currency bond note and liberalize exchange controls as part of reforms he plans to implement by end of this year, a state-owned weekly newspaper reported on Sunday.
The southern African nation, which dumped its currency in favor of the U.S. dollar in 2009 following years of hyperinflation, introduced bond notes in November 2016 in a bid to ease acute shortages of cash. The shortages have, however worsened while a black market continues to thrive.
The notes are backed by U.S. dollars loaned to the government by the African Export and Import Bank, and can be used like cash.
Officially, they are pegged to the dollar at a rate of 1:1, but on the street $1 fetches up to 1.50 in bond notes.
“I am very clear that there have to be currency reforms and the current currency approach is not working,” Ncube told the government-owned Sunday Mail.
He said he would explore three options: either Zimbabwe joins the South African rand union; uses only the U.S. dollar while removing bond notes from circulation, or reintroduces the Zimbabwean dollar.
Ncube however said a local currency would only be introduced when the country has enough foreign reserves and achieves macro-economic stability. Zimbabwe currently has two weeks import cover, according to central bank data.
Ncube, a former senior executive with the African Development Bank, was appointed by President Emmerson Mnangagwa on Friday and is expected to lead Zimbabwe’s economic recovery program.
He was not immediately available to comment when Reuters tried to contact him.
A dwindling supply of cash dollars has led to banks limiting daily withdrawals to as little as $30 in bond notes. Companies are struggling to pay for imports and foreign investors cannot repatriate dividends or profits.
There are $350 million worth of bond notes in circulation, according to latest central bank figures.
Zimbabwe's newly-inaugurated President Emmerson Mnangagwa on Friday named respected economist Mthuli Ncube as finance minister to revive the country's battered economy in the first cabinet since his election in a disputed vote.
Ncube, an Oxford University professor who is a former vice president of the African Development Bank, has the tough task of reviving an economy wrecked under Robert Mugabe, who was ousted last year.
The country is battling an economic crisis that includes cash shortages, rising prices of basic commodities, mass unemployment, lack of investment and a shattered infrastructure.
Mnangagwa, who has vowed fixing the economy as his priority, announced sweeping changes to his cabinet after his victory in the July 30 election.
"We want to grow, modernise, mechanise our economy," he said.
"In the next five years, we should uplift quite a number of our people who are in the marginalised category, (and) uplift them into middle class."
Mnangagwa's line up has widely been welcomed by crises-weary Zimbabweans.
"Those are good choices," said John Robertson, an independent economist.
"It does seem to be a good start, (but) it depends on how much authority he (Mnangagwa) will give his ministers."
Mnangagwa dropped several faces that had dominated government over four decades of Mugabe's rule and made changes in the ministries of defence and home affairs, but left untouched the key posts of foreign affairs and lands, held by retired army chiefs.
The new defence minister is Oppah Muchinguri-Kashiri, a former liberation fighter who had held various posts, including that of environment, under Mugabe.
"He has been bold enough to discard people who were known for corruption," said Godfrey Kanyenze, of the Harare-based Labour and Economic Development Research Institute think-tank.
Former Olympic swimmer Kirsty Coventry, 34, was named sports minister. Mnangagwa, 75, said he believed the new cabinet trimmed from 33 to 20 was "ideal for our current challenges".
The Mugabe-era stalwarts dropped include former finance minister Patrick Chinamasa, former information communication technology minister Supa Mandiwanzira and former home affairs minister Obert Mpofu.
Emmerson Dambudzo Mnangagwa’s inauguration as Zimbabwe’s second president and commander-in-chief consummated power for the main beneficiary of the November 2017 coup that forced Robert Mugabe’s long delayed retirement.
Zimbabwean scholar and activist Brian Raftopoulos’ remarks during a public meeting at the University of Cape Town five years ago come to mind. As all were wondering what would happen in the weeks before the much-marred 2013 Zimbabwean election, Raftopoulos argued that
Zimbabwe’s military-economic élite – a new capitalist class at an early stage – will not be removed just with elections.
Mnangagwa’s next five years may see this prediction reach its endpoint. His billboards said he would deliver the new country Zimbabweans want: the promise remains poised on tenterhooks. The classic dynamic in politics everywhere – the interplay between militarisation and democratisation – looms large.
Raftopoulos’ proviso that a “partnership to prevent militaristic moves” was necessary in 2013 may be more apposite (and trickier) now than ever. The prospects for the next elections in 2023 (barring constitutional changes – possible because Zanu-PF MPs make up more than the two-thirds in Parliament needed to change that hard-won document) could take stark contours.
The contest is, and will be, far beyond a battle of two parties and their main protagonists. It will be between increasing democratic participation – starting with the classic precepts of free and fair elections – or a securitisation process much less stealthy than before.
This is the most important point to consider about Zimbabwe’s medium-term prospects. The others are moves within Zanu-PF itself, dynamics within the MDC-Alliance and what happens to the economy.
After the Constitutional Court’s ruling confirming Mnangagwa as the “duly” elected president, MDC-Alliance leader Nelson Chamisa suggested that he and Mnangagwa needed a serious discussion that would lead to the breaking of Zimbabwe’s legacy of violent and jimmied elections.
It’s still an open question whether such a discussion would lead to a coalition government, or the space for the faction-ridden MDC-Alliance to flex the muscles of a loyal opposition and to rebuild. Its bad experience during the 2009-2013 “government of national unity” might militate against a repeat. But the wider need to cushion the new régime from militarisation is worth considering.
The cautionary note to the MDC-Alliance about any such new dispensation might be: don’t neglect your badly fractured party and its allies needing to be in the fold; and don’t sideline your enemies within precipitously.
Meanwhile, many among the MDC-Alliance and its supporters fear the Zanu-PF machine is poised to wipe them out permanently.
Much related to the above and perhaps the key, is Zanu-PF itself. The battle between Mnangagwa and Vice-President Constantino Chiwenga could be overdrawn, but the tragic killings of August 1 have thrown it into stark relief.
Can no one in power know who shot the demonstrators and innocent bystanders? Could Chiwenga really say that news of the shootings was “fake” and aver the MDC-Alliance deployed cadres to do the shooting to discredit Zanu-PF?
In any case, a military unit came in, because - so says “the state” - the police could not contain the violence. On site observers, however, attest that the police and the demonstrators were enjoying a friendly encounter, including selfies and dancing. Then the soldiers arrived.
The journalists who were there say the men with guns were the Presidential Guard, under Chiwenga’s control: after they arrived and started killing, the violence and car burning ensued.
One analysis says this tragedy has exposed Zimbabwe’s parallel states. Furthermore, the senior soldiers have just had their retirements deferred. Perhaps Mnangagwa’s inaugural Freudian slip – when he failed to acknowledge his vice- presidents – revealed his inner desire to be rid of Chiwenga.
One can only hope that the promised commission of inquiry will unearth what happened, and deal with it summarily.
The Patriot, one of the fractured ruling party’s media mouthpieces, reveals some party propagandists’ thinking about democracy and human rights. ‘Unmasking CSU’ (Counselling Services Unit, a long-serving source of succour for wounded democracy activists, as well as an advocacy NGO) paints the CSU and other human rights organisations writing “fake reports” to fan “tribalism and violence to achieve regime change”. Only words? If they turn into bullets Zimbabwe will have stepped down the ladder a long, long way.
Ticking like a time bomb is the ruined economy. No real money and a gargantuan number of unemployed embedded in the precarious “informal sector”, if they’re not eking out a penurious peasant’s existence. Their situation is so miserable that they are easily bribed – with flour and subsidised prices for their maize backed by intimidation from the chiefs – to vote.
Help from elsewhere might not be forthcoming either, or not helpful if it is. The rulers’ faux pas against the demonstrators has worried even its dedicated supporters in the wider world, imperilling even the demanding strictures of the International Monetary Fund and World Bank re-engagement. The “West” dangled the slightly less rigorous chalice of Heavily Indebted Poor Country status in front of Mnangagwa’s finance bureaucrats before the elections. Even though Zimbabwe is considered “too rich” for the easier debt-relief packages that comes with the status, broad hints were made. It’s doubtful if those whispers will get louder now.
In any case, as civil society activist Takura Zhangazha has written, IMF and World Bank policies are woefully inadequate for Zimbabwe’s problems: it is highly unlikely that its poor majority will be lifted to a decent life under their aegis.
As for private investment: Zimbabwe will again be fair game for the cowboys - from the east as well as the west these days.
Zimbabwe is in a precarious position. Its immediate future rests under the sword of Damocles. The threads of democracy have to be thickened. One hopes the chronicle of its demise cannot be foretold.