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Explainer: The Cash Crunch Behind Zimbabwe’s Violent Protests

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Zimbabwe’s President Emmerson Mnangagwa has promised action in response to a crackdown by security forces on anti-government protesters following a hike in the price of fuel.

Lawyers and activists say police and soldiers have killed at least a dozen people, wounded scores and arrested hundreds over the demonstrations. Zimbabwe’s Human Rights Commission (ZHRC) accused security forces of systematic torture.

READ MORE | 150 percent price rise fails to fill Zimbabwe’s fuel pumps

Critics say the country is reverting to the authoritarian rule that characterized the 37-year regime of former leader Robert Mugabe, who was forced from power after a coup in November 2017.

The crisis will not be easy to fix. There is a severe shortage of dollars, fuel and medicines, while inflation hit 42 percent in December, the highest in a decade. Foreign investors are, by and large, staying away.

WHAT SPARKED THE LATEST CLASHES?

Everyday life has been getting harder as the price of basic goods spirals. In the past two months, the country has suffered acute shortages of imported goods, including medicines, food and fuel.

Motorists can wait for hours to fill up at fuel stations, where soldiers are often deployed to break up fights over who is next in line.

On Jan. 12, Mnangagwa announced to reporters that the price of petrol had increased to $3.31 per liter from $1.32 from midnight, but there would be no increase for foreign embassies and tourists paying in cash U.S. dollars.

It was the final straw for some Zimbabweans, and violent protests broke out two days after his announcement.

Some residents say that while calm has returned, soldiers have continued to beat up civilians.

Many people blame Mnangagwa for failing to fulfill his pre-election promises to kick-start economic growth and make a clean break with the strong-arm rule of his predecessor.

GENESIS OF CASH SHORTAGES

The country abandoned the Zimbabwe dollar in 2009 after inflation reached 500 billion percent the year before. In its place, the government adopted the U.S. dollar and other currencies including sterling and the South African rand.

People hoped the move would spell the end of spiraling prices and rampant money printing that made much of their earnings and savings virtually worthless.

But over time, supply of the U.S. and South African currencies dried up, so in November 2016 authorities in Harare launched a surrogate currency – paper ‘bond notes’ designed to ease acute hard currency shortages.

The notes, which now have a total face value of $400 million, are backed by a $500 million loan from the African Export and Import Bank, the central bank has said. They are used like cash.

Officially pegged to the dollar at a rate of 1:1, on the street $1 fetches up to 3 bond notes, reflecting the ongoing shortage of U.S. dollars and people’s desire to trade out of cheapening bond notes and into more reliable currency.

A dwindling supply of bond notes and coins 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.

“ZOLLARS”

When the bond note was introduced, dollar deposits in the electronic banking system started losing their value.

Government borrowing via Treasury Bills meant authorities were creating money without the backing of sufficient currency reserves or gold.

It is these electronic dollars, theoretically worth $10 billion and nicknamed “zollars” by economists, that are raising fears that Zimbabwe might be heading for its second financial collapse in a decade.

Zimbabweans can do little but watch as the money in their bank accounts loses value compared with cash, prompting demands from businesses and civil servants for hard currency which can be deposited and used to make payments.

Zollars remain officially pegged at 1:1 to the U.S. dollar, but on the black market $1 is now worth $4 zollars. That has led some businesses to offer discounts on dollar payments.

Zimbabwe’s foreign reserves now provide less than two weeks’ cover for imports, central bank data show.

The government has said it would only consider launching a new currency if it had at least six months of reserves. But Finance Minister Mthuli Ncube said Zimbabwe planned to introduce a new currency in the next 12 months.

HOW ARE BUSINESSES AFFECTED?

Companies are struggling to import raw materials and equipment, forcing them to buy dollars on the black market.

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Civil servants are paid in zollars like many other workers across the country. Only a small minority of employees working for foreign embassies, charities, or large international corporations are paid in U.S. dollars.

Last October, the central bank ordered banks to create separate U.S. dollar accounts for clients who are paid from overseas, which analysts said was a tacit admission by authorities that the greenback was not equal to the zollar.

The Confederation of Zimbabwe Industries has warned that some of its members could stop operating by the end of the month due to the dollar crunch. The group said its members had a backlog of $480 million in unpaid payments to foreign suppliers.

Cooking oil and soap maker Olivine Industries said on Saturday it had suspended production and put workers on indefinite leave because it owed foreign suppliers $11 million.

Zimbabwe’s largest brewing company Delta Beverages, part-owned by Anheuser-Busch Inbev, said it had abandoned a plan to only accept hard currency payments rather than zollars for its beer and soft drinks after the government intervened.

WHAT’S NEXT?

Mnangagwa, a former spy chief installed after Mugabe’s removal in a coup in November 2017, was elected in July amid hopes that he would help secure an economic turnaround for Zimbabwe, and has said his nation is “open for business”.

But critics say the man nicknamed “The Crocodile” is moving too slowly on economic and political reforms, including repealing Mugabe-era laws that restrict the media.

Mnangagwa has also called for the lifting of U.S. sanctions against officials from the ZANU-PF ruling party, top military figures and some government-owned firms, which were imposed during Mugabe’s rule for what Washington called violations of human rights and democracy.

The IMF has said it would be difficult for the fund to support the country’s reform program unless its $2 billion arrears with the World Bank, African Development Bank and European Investment Bank are paid.

Harare says that should be done in the next 12 months and plans a program allowing the IMF to monitor its economic reforms, although it does not entail funding from the lender.

Analysts said the ongoing security crackdown could quell the protests for now, but more clashes were expected unless Mnangagwa’s administration could find a solution to the cash shortages. -Reuters

James Macharia

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Roadmap For African Startups

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Francois Bonnici, Head of the Schwab Foundation for Social Entrepreneurship, explains how African impact entrepreneurs will continue to rise.


Does impact investment favor expats over African entrepreneurs? If so, how can it be fixed?

There is a growing recognition all over the world that investment is not a fully objective process, and is biased by the homogeneity of investors, networks and distant locations.

A Village Capital Report cited that 90% of investment in digital financial services and financial inclusion in East Africa in 2015-2016 went to a small group of expatriate-founded businesses, with 80% of disclosed funds emanating from foreign investors.

READ MORE | It’s Time For Africa’s Gazelles To Shine

In a similar trend recognized in the US over the last decade, reports that only 3% of startup capital went to minority and women entrepreneurs has triggered the rise of new funds focused on gender and minority-lensed investing.

There has been an explosion of African startups all over the continent, and investors are missing out by looking for the same business models that work in Silicon Valley being run by people who can speak and act like them.

In South Africa, empowerment funds and alternative debt fund structures are dedicated to investing in African businesses, but local capital in other African countries may not also be labelled or considered impact investing, but they do still invest in job creation and provision of vital services.

There is still, however, a several billion-dollar financing gap of risk capital in particular, which local capital needs to play a significant part in filling. And of course, African impact entrepreneurs will continue to rise and engage investors convincingly of the growing and unique opportunities on the continent.

READ MORE | The World’s Most Generous Billionaires Outside Of The US

What are the most exciting areas for impact investing and social entrepreneurship today?

After several decades of emergence, the most exciting areas are the explosion of new products, vehicles and structures along with the mainstreaming of impact investment into traditional entities like banks, asset managers and pension funds who are using the impact lens and, more importantly, starting to measure the impact.

At the same time, we’re seeing an emergence of partnership models, policies and an ecosystem of support for the work of social entrepreneurs, who’ve been operating with insufficient capital and blockages in regulation for decades.

Francois Bonnici, Head of the Schwab Foundation for Social Entrepreneurship. Picture: Supplied

The 2019 OECD report on Social Impact Investment  mapped the presence of 590 social impact investment policies in 45 countries over the last decade, but also raises the concern of the risk of ‘impact washing’ without clear definitions, data and impact measurement practices. 

In Africa, we are also seeing National Advisory Boards for Impact Investing emerge in South Africa and social economy policies white papers being developed; all good news for social entrepreneurs.

READ MORE | Naomi Campbell: Africa Is One Of The Leading Continents In The World

What role does technology play in enabling impact investing and social entrepreneurship?

The role of technologies from the mobile phone to cloud services, blockchain, and artificial intelligence is vast in their application to enhancing social impact, improving the efficiency, transparency and trust as we leapfrog old infrastructures and create digital systems that people in underserved communities can now access and control.

From Sproxil (addressing pirated medicines and goods), to Zipline (drones delivering life-saving donor blood to remote areas of Rwanda) to Silulo Ulutho Technologies (digitally empowering women and youth), exciting new ways of addressing inclusion, education and health are possible, and applications are being used in many other areas such as land rights, financial literacy etc.

While we have seen a great mobile penetration, much of Africa still suffers from high data costs, and insufficient investment in education and capacity to lead in areas of the fourth industrial revolution, with the risk that these technologies could negatively impact communities and further drive inequality.

READ MORE | Why Now Is The Time To Invest In African E-commerce

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Businesses At The Heart Of A Greener Future

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With every day that passes by it becomes more apparent that the Earth is deteriorating and time is running out to save it. Scientists have estimated that we have less than a decade to save the planet before it is irreversibly damaged, mainly due to climate change.

Businesses claim the largest percentage of global emissions (at approximately 70% since 1988, according to The Guardian) which is an alarming statistic, especially in a time when the planet’s well-being is being compromised.

Many large business corporations are hastily coming on board with operating sustainably by transforming their practices and placing business ethics at the forefront of their priorities.

READ MORE | The Most Sustainable Companies In 2019

Last week, a round table discussion was held at the Fairlawns Boutique Hotel, Sandton hosted by Environmental Resources Management (ERM) – the world’s largest sustainability consulting firm. Their aim was to discuss how imperative it is for African businesses to get on board with sustainability.

“We have been talking about how to be sustainable for a long time but now it is time for us to do sustainability,” says Thapelo Letete, Technical Director of ERM.

An engaging and thought-provoking panel discussion ensued with representatives from ERM and mining companies, Anglo American and Gold Fields. They emphasized the importance of sustainability being recognized by investors, especially in mining and oil companies that rely solely on Earth’s natural resources.

Civil society has a colossal role to play in ensuring the sustainability of businesses. Due to the law of supply and demand in production, consumers are being urged to be mindful of their buying habits and to make sustainable decisions. These are as simple as minimizing the utilization of plastic straws by replacing them with metal or paper straws and reusable shopping bags and by recycling selected items.

READ MORE | Challenging The Gender Divide

“Research suggests that socially and environmentally responsible practices have the potential to garner more positive consumer perceptions of (businesses), as well as increases in profitability,” according to an entry in Sage Journals published in May.

The advancement of science, artificial intelligence and the rapid growth of the technological industry make it an undeniable fact that the Fourth Industrial Revolution is underway. Many businesses across the globe seem to be well prepared for this change. However, businesses in Africa seem to be vulnerable. 

“It is difficult to say that all businesses in Africa are prepared for it. It is not a country specific thing but it does vary across corporations. There will be businesses that are well prepared and businesses that are not so well prepared,” says Keryn James, CEO of ERM.

A large part of sustainability also relies on empowerment and equality. Sub-Saharan Africa has the highest number of female-owned businesses who contribute a large amount of money towards their respective countries’ GDPs. However, most of these businesses struggle with the issue of scaling.

“Women sometimes underestimate their ability and they don’t necessarily  have the confidence that they should have about the value that their businesses present. Women often take less risks than men,” says James.

“The issue of scaling is one that we see globally. One of the issues are access to funding to support in the investment and growth of their businesses.”

READ MORE | Mastercard: Diligent About Digital In Africa

Going forward, the availability of mentorship programmes and skills development opportunities for women, especially black women in business should be encouraged.

According to a study done by the UN Women’s organization, an average of 3 out of 7 women score higher in performance when they are placed in senior managerial positions. Additionally, if more women work, the more countries can exponentially maximise their economic growth.

Women will be empowered when given the correct skills and opportunities to be able to run their own businesses independently which would ultimately lead to the scaling of female-owned businesses in Africa and sustainable development.

The Nedbank Capital Sustainable Business Awards aim to recognize the efforts of businesses that operate sustainably and to encourage other corporations who intend to adopt more sustainable strategies into their practices. Initiatives such as these prove that business value also depends on how sustainable they are.

It is clear that the prioritization of sustainability and accountability in businesses is the only way forward in the midst of this global crisis. With a combination of will and the rigorous work that African businesses have put into sustainability initiatives and strategies, it is easier to be optimistic about our planet’s wellbeing.

-Buhle Ntusi

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Ex-Google Staffer Says After Split With Chief Legal Officer David Drummond: ‘Hell Does Not Begin To Capture My Life’

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Former Google employee Jennifer Blakely has written a scathing blog post with allegations about how her affair with chief legal officer David Drummond unfolded.


A former member of Google’s legal team who says she had a child with the company’s chief legal officer, David Drummond, has written a scathing blog post about the way that their relationship unfolded within the search engine giant, including that he issued “terrifying threats” to take custody of their child after initially refusing to pay child support.

In a Medium post, Jennifer Blakely says that she was inspired to detail her experience after an explosive New York Times story last fall put a spotlight on how the company shielded top executives from harassment claims and sparked massive employee protests.

“Looking back, I see how standards that I was willing to indulge early on became institutionalized behavior as Google’s world prominence grew and its executives grew more powerful,” Blakely writes.

READ MORE | Google, Facebook, Twitter Fail To Live Up To Fake News Pledge

“Women that I worked with at Google who have spoken to me since the New York Times article have told me how offended they were by the blatant womanizing and philandering that became common practice among some (but certainly not all) executives, starting at the very top.” 

While her relationship with the married Drummond was included in the Times story and first reported byThe Information in November 2017, this is the first time Blakely has written about the experience herself.

Drummond is one of several current and former Google executives who has reportedly had relationships with employees or extramarital affairs, including Eric Schmidt, Sergey Brin, and Andy Rubin.

READ MORE | Calling Out Sexual Harassment

Blakely alleges that after their relationship ended, Drummond had another relationship with a subordinate, which is against Google’s workplace policy. He is still employed by Google and made more than $47 million last year. 

Blakely says that she started working in Google’s legal department under Drummond in 2001 and that after he told her that he was estranged from his wife, they began a relationship in 2004. She says the two had a child together in 2007 and that Google’s human resources department then told her that one of them had to leave the department.

She moved to sales, an area where she had no experience, and subsequently struggled with her work. Blakely alleges that after she ultimately left the company at Drummond’s urging in 2008, but that while they were living together in Palo Alto, he broke off their relationship via text message.

“‘Hell’ does not begin to capture my life since that day,” she writes. “I’ve spent the last 11 years taking on one of the most powerful, ruthless lawyers in the world. From that fateful night forward, David did things exclusively on his terms.” 

She alleges that Drummond initially refused to see their son or pay child support, and then fought against her in a custody battle. While she says they ultimately reached a settlement and he began paying child support, she writes that “months or years” would go by when he wouldn’t see their son. In 2014, Drummond allegedly showed her an article about Eric Schmidt’s reported history of extramarital affairs during an argument, implying that the executive’s position granted him impunity.

READ MORE | Young women in Soweto, South Africa, say healthy living is hard. Here’s why

“His ‘personal life’ (which apparently didn’t include his son) was off limits and since I was no longer his ‘personal life’ it was time for me to shut up, fall in line and stop bothering him with the nuisances or demands of raising a child,” Blakely writes.

Blakely’s story is the latest in a string of public posts from former Google employees highlighting issues with the company’s culture and policies (or their lack of enforcement).

One of the women who helped organize last fall’s protests, Claire Stapelton, recently wrote about her experience with retaliation, another employee detailed the disappointing way the company’s human resources department dealt with her harassment reports, and former senior engineer Liz Fong-Jones posted about “grave concerns” with the company’s decision making in general.

The outspokenness of Google employees exemplifies — and has helped spur — a broader activism in the tech sector that has seen workers speaking out against their employer’s internal policies and business decisions.

Blakely’s post also taps into the larger #MeToo movement which has drawn attention to sexual harassment and abuse in the workplace across industries.

“Until truth is willing to speak to power and is heard, there’s not going to be the sea change necessary to bring equality to the workplace,” she writes.

Neither Google nor Drummond immediately responded to a request for comment. 

This story is developing.

-Jillian D’Onfro; Forbes

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