Connect with us

Current Affairs

Why Zimbabwe Is Not There Yet




Despite the ample investment opportunities in Zimbabwe, post-election setbacks challenge its economic recovery

Zimbabwe’s long-delayed economic turnaround may have been further pushed out after the army violently crushed protests following the country’s first elections without Robert Mugabe’s name on the ballot box.

Investors sitting on the fence before the polls will most likely walk away while others may postpone any commitments until the resolution of the legal challenges launched by the opposition Movement for Democratic Change (MDC) Alliance, or take cue from international lenders, analysts say.

“It’s going to take years and not the months that we anticipated for the economic recovery,’’ says John Robertson, a Harare-based independent economist who has analyzed Zimbabwe’s economy since independence in 1980 when Mugabe first took power.

“It’s going to be very difficult to win any credibility after last week’s activities.’’

Zimbabwe’s first elections without Mugabe had raised hopes the country was on the verge of rebirth after the least violent campaigning in almost two decades. But those hopes were dashed days after the polls as Nelson Chamisa, leader of the MDC alleged “overwhelming’’ evidence of vote-rigging, and the military killed six people amid beatings in the MDC’s urban strongholds.

The Zimbabwe Electoral Commission said incumbent Emmerson Mnangagwa won 50.8% of the vote and more than three quarters of parliamentary seats while Chamisa received 44% support, a number the MDC has dismissed, and challenged at the Constitutional Court. The case, which delayed Mnangagwa’s inauguration, was still pending at the time of going to press.

Mnangagwa, who had vowed a free and credible poll, had hoped to use its outcome to campaign for international support to rescue an economy that has more than halved in the last two decades, leaving more than 90% of workers unemployed.

READ MORE: Who Will Zimbabwe Vote For?

“In the short-term, sentiment will be determined by the outcome of the MDC’s challenge of the election results,’’ says Neville Mandimika, an economist at Rand Merchant Bank in Johannesburg.

“If their application is backed by solid evidence of blatant rigging, then it is likely that regional partners and sources of capital will hold back capital while the stalemate gets resolved.’’

International acceptance is key to the country’s hopes of winning debt forgiveness or restructuring an external debt of $11.3 billion at the end of last year, more than 80% of the country’s GDP. Combined with the domestic debt, the country is in debt distress and the situation is unsustainable, according to the International Monetary Fund (IMF).

Support from the IMF and other donors is critical for any government to solve one of the country’s most immediate and intractable challenges; a liquidity shortage that has constrained economic activity and forces Zimbabweans to queue for hours for the few available US dollars. The country adopted the US currency in 2009 after its own dollar collapsed as hyperinflation reached a record 79.6 billion percent in November 2008.

“The proper reintroduction of the Zimbabwean dollar is on the agenda of the current government, but it recognizes that there are certain conditions that must be in place for this to happen,’’ Mandimika says.

“Chief among these is ensuring that there are sufficient FX reserves which would allow for the central bank to manage the volatility of the currency, which is to be expected upon the reintroduction of the Zimbabwe dollar.’’

Cognizant of this, Mnangagwa, a long-time ally of Mugabe has tried to distance himself from his former boss’s disastrous economic and political policies, promising economic reforms and reversing some of Mugabe’s key policies such as on black economic empowerment, foreign direct investment and property rights. After the elections and violence, he took to Twitter to call for calm, calling the violence “regrettable & tragic’’.

He will need to do more than that, and in particular, put together a credible cabinet and also clearly define the role of the military, according to Dianna Games, an independent analyst.

“Investors will more closely be watching the economic policies put and interventions put forward by the new government than who is actually in State House,’’ says Games.

“The choice of the cabinet will be watched closely by investors, particularly given the volatility in the past of Zanu-PF actions in sweeping aside investor agreements in the name of political expedience, particularly with regard to agriculture. A strong military presence in the executive may be a red flag.’’

The country has so much goodwill and potential to tap that a recovery is almost a matter of time, analysts say.

“Overall, I think there is little doubt that, despite an election tainted once again by allegations of rigging and violence, Zimbabwe is poised for some sort of economic recovery,’’ says Games. “There are many investment opportunities, the economy is resilient, there are many skills that could be brought back into the formal sector, there is experienced management in the private sector and Zimbabweans have proved to be innovative even in the hardest of times. These all bode well for a recovery although it may not be as swift as people hope for given the current challenges in the economy.’

– By Godfrey Mutizwa

Current Affairs

Coca Cola South Africa Improves SME Role In Value Chain



Coca Cola Beverages South Africa (CCBSA) launches an R20 million fund for small supplier development and procurement, annually, for the next five years.

This was announced by the Financial Director, Walter Leonhardt at Gallagher Convention Centre at the third annual Supplier Development Conference.

CCBS is the South African-based subsidiary of Coca-Cola Beverages Africa (CCBA).

Leonhardt said the purpose of this fund is to assist young upcoming black entrepreneurs in the Coca-Cola value chain.

“We are, today, launching the CCBSA supplier fund of access to funding. To address the issue of access to funding which most SMEs experience,” said Leonhardt.

This will enable the entrepreneurs’ procurement process to be easier.

“It is to help them buy equipment, fund working capital and to help them overcome something we have identified as a challenge for upcoming businesses, which is access to capital on quit lenient terms,” said Leonhardt.

Budding entrepreneurs can visit their website to find out how they can access the funds.

There were over 120 suppliers of CCBSA in attendance.

Managing director of CCBSA Velaphi Ratshefola said they spent R2.35 billion last year, supporting 567 black-owned suppliers, of whom, 265 were black female owned suppliers.  

“So for me, it is clear that this is working. We have helped create a very inclusive economy. We need to play our part and we need to ensure that only through an inclusive growing economy we can create a stable environment where businesses can flourish.

“If we do not have a stable environment, a stable economy, we will have a lot of disturbances which are never good for business,” said Ratshefola.                      

“So for all of us, we should not do it just for social reasons, we must do it for the success of businesses and imperative,” said Ratshefola. 

Continue Reading

Current Affairs

Zimbabwe Central Bank Borrows $985 Million From African Banks




Zimbabwe’s Reserve Bank has borrowed $985 million from African banks to purchase fuel and other critical imports with current reserves covering imports for just four weeks, underscoring the severity of dollar shortages, governor John Mangudya said.

The southern African nation last month ditched a discredited 1:1 dollar peg for its surrogate bond notes and electronic dollars, merging them into a lower-value transitional currency called the RTGS dollar.

Mangudya said the central bank borrowed $641 million from the African Export and Import Bank, $152 million from Eastern and Southern African Trade and Development Bank, and $25 million from Mozambique’s central bank, among others.

The loans, which would be repaid from future gold earnings, have a tenure of between three and five years and attract an interest of up to 6 percent above the Libor rate, Mangudya said.

Gold is Zimbabwe’s single biggest mineral export earner, accounting for a third of its $4.2 billion earnings last year after a record output, central bank data shows.

“These loans are well structured facilities contracted last year. They will be paid from future (gold) export receivables,” Mangudya told a parliamentary committee.

The central bank takes 45 percent of dollar sales from gold producers and half from other miners to fund imports like fuel and power and repay foreign loans.

But the miners only have 30 days to keep their dollar balances in local foreign currency accounts, after which they must sell them. The companies have asked the central bank to extend the period they may keep their dollars to 90 days, according to mining executives.


Unable to get funding from foreign lenders like the International Monetary Fund and World Bank due to arrears of more than $2.4 billion, Zimbabwe has looked to financiers from the continent and local banks to shore up its budget.

The central bank chief said Zimbabwe had just $500 million in reserves, enough to purchase four weeks’ worth of imports.

Mangudya said government borrowing from the central bank reached $2.99 billion in December, about three times its permissible overdraft limit.

President Emmerson Mnangagwa’s government has promised to curb borrowing in 2019 under reforms to revive the southern African economy, after the budget deficit soared last year following a spike in spending ahead of elections.

Finance Minister Mthuli Ncube said last week that the local RTGS dollar, Zimbabwe’s new de facto currency, will be backed up with fiscal discipline and the government would allow it to fluctuate but would manage excessive volatility.

On the interbank forex market on Monday, one U.S. dollar fetched 2.5 RTGS dollars, the same rate as on Feb. 22 when the central bank sold some dollars to banks. That compares to a rate of 3.5 RTGS dollars per U.S. dollar on the black market. -Reuters

-MacDonald Dzirutwe

Continue Reading

Current Affairs

Volvo To Limit Car Speeds In Bid For Zero Deaths




Volvo Cars said on Monday it will introduce a 180 km per hour (112 mph) speed limiter on all new vehicles as the Swedish automaker seeks to burnish its safety credentials and meet a pledge to eliminate passenger fatalities by 2020.

While Volvo, whose XC90 flagship SUV currently has a top speed of 212 km/h, has made progress on its so-called “Vision 2020” target of zero deaths or serious injuries, Chief Executive Hakan Samuelsson said it is unlikely to meet the goal without additional measures to address driver behavior.

“We’ve realized that to close the gap we have to focus more on the human factors,” Samuelsson said. Volvo did not elaborate on the data but said its passenger fatalities were already well below the industry average before the goal was announced in 2007.

READ MORE |Bet Everything on Electric: Inside Volkswagen’s Radical Strategy Shift

In addition to the speed cap, Volvo plans to deploy technology using cameras that monitor the driver’s state and attentiveness to prevent people driving while distracted or intoxicated, two other big factors in accidents, Samuelsson said.

The company is also looking at lower geo-fenced speed limits to slow cars around sensitive pedestrian areas such as schools, while seeking to “start a conversation” among automakers and regulators about how technology can be used to improve safety.

Volvo, which is owned by China’s Geely, announced the new speed limitation policy on the eve of the Geneva auto show, where its new Polestar performance electric-car brand is showcasing its second model, the Polestar 2.

READ MORE |Not So Fast: Can Elon Musk Really Open Tesla’s China Gigafactory This Year?

While Volvo buyers often choose the brand for its safety, Samuelsson conceded that the speed cap could be a turn-off for a few in markets such as Germany, where drivers routinely travel at 200 km/h or more on unrestricted autobahns.

“We cannot please everybody, but we think we will attract new customers,” the CEO said, recalling that the roll-out of three-point seat belts pioneered by Volvo in 1959 had initially been criticized by some as intrusive.

“I think Volvo customers in Germany will appreciate that we’re doing something about safety,” he said. -Reuters

– Laurence Frost; additional reporting by Esha Vaish

Continue Reading