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Zimbabwe Drip-Feeds Dollars To Tackle Cash Crunch

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Zimbabwe’s central bank drip-fed dollars on Monday to a handful of commercial banks to allocate to large businesses, part of currency reforms authorities hope will ease a cash crunch that has starved the economy of many basic goods.

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

Economists welcomed the move but doubt it will prompt a swift turnaround in the southern African nation, which has grown used to currency turbulence since excessive money-printing under former leader Robert Mugabe triggered hyperinflation.

READ MORE | Zimbabwe: The State Of Crisis

Ordinary Zimbabweans are not yet able to use the RTGS dollars in their bank accounts to buy dollars from banks, and the bond notes – which many businesses are reluctant to accept – are still in circulation.

“The devaluation was long overdue. The economy has been in limbo and the RTGS can now play a role in boosting competitiveness,” Anthony Mandiwanza, chief executive of Zimbabwean food and dairy firm Dairibord, told Reuters.

“What is critical is that the government lives within its means and narrows and eliminates the fiscal deficit.”

DOLLAR NOT WEAK ENOUGH?

The last time Zimbabwe had its own currency, a decade ago, Mugabe’s government turned on the printing presses to fund higher salaries for government workers and curry favor with the military – with disastrous economic results.

Mugabe’s successor Emmerson Mnangagwa has promised a break with the past, but many Zimbabweans are wary after his government ramped up borrowing in the lead-up to a national election last July and inflation rose to a 10-year high in January.

The central bank started selling U.S. dollars to banks at 2.5 RTGS dollars on Friday.

READ MORE | Explainer: The Cash Crunch Behind Zimbabwe’s Violent Protests

Mandiwanza said banks had told Dairibord the same day that it could submit requests for dollars at around 2.5 RTGS each and that it would receive an unspecified amount on Monday or Tuesday.

A dealer at a large bank in Harare whose firm operates on the interbank market said launching the RTGS at 3 to the dollar or higher would have been better to encourage U.S. dollar sellers.

“There are a lot of (dollar) buyers … but no sellers because the rate is not high enough. What we are basically doing is allocating foreign currency to corporates but no trading is taking place,” the dealer said.

MANAGED FLOAT

Mnangagwa, who replaced Mugabe after an army coup in November 2017, hopes to steer the economy back to credibility and lure back foreign investors, who have also been deterred by violent security crackdowns on post-election protests last year and demonstrations last month against a steep fuel price hike.

The central bank has said it will let the RTGS dollar trade in a “managed float”.

But it has not explained how it would control the currency’s movements given it does not have significant foreign exchange reserves.

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

The currency dealer said the central bank was only selling dollars to banks that had lined up customers who had agreed to buy them.

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“We have seen this before in the past and it went nowhere, the interbank system will ultimately become redundant if the Reserve Bank doesn’t allow the currency to freely trade,” the dealer said.

There are also indications that the central bank is not selling many dollars. Only around $5 million changed hands on Friday, a senior central bank official told The Standard newspaper in an article published at the weekend.

A Standard Chartered bank teller in Harare said her branch was not selling dollars to individuals yet, and downtown bank queues were no longer than normal.

On Monday, one U.S. dollar was being sold on the black market for four electronic dollars – those locked in individuals’ accounts for months due to the chronic cash shortages – compared to 4.2 on Friday, informal currency traders said.

“The big players are holding onto their money, that is what is holding rates at the moment,” one currency trader at Harare’s Eastgate shopping center said. -Reuters

-Alexander Winning, MacDonald Dzirutwe and Alfonce Mbizwo

Current Affairs

The Rage And Tears That Tore A Nation

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Snapshots of the outrage against foreign nationals and protests against sexual offenders in South Africa in recent weeks, captured by FORBES AFRICA photojournalist Motlabana Monnakgotla.


As the continent’s second-biggest economy, South Africa attracts migrants from the rest of Africa. But mired in its own problems of unemployment and political instability, September saw a serious outbreak of attacks by South Africans on foreign nationals and foreign-owned businesses. And they have been ugly.    

The spark that fueled the raging fire was in Pretoria, the country’s capital, when a taxi driver was shot dead by a foreign national who was selling drugs to a youngster in the central business district (CBD).

The altercation caused a riot and the taxi industry brought the CBD to a standstill, blocking intersections. It did not stop there; a week later, about 60 kilometers from the capital in Malvern, a suburb east of the Johannesburg CBD, a hijacked building caught fire, leaving three dead. As emergency services were putting out the fire, the residents took advantage and looted foreign-owned shops and burned car dealerships overnight on Jules Street.

The lootings extended to the CBD and other parts of Johannesburg.

To capture this embarrassing moment in South African history, I visited Katlehong, a township 35 kilometers east of Johannesburg, where the residents blocked roads leading to Sontonga Mall on a mission to loot the mall and the foreign-owned shops therein overnight.

Shop-owners and workers were shocked to wake up to no business.

Mfundo Maljingolo, a worker at Fish And Chips, was among the distressed.

“This thing started last night, people started looting and broke into the mall and did what they wanted to do. I couldn’t go to work today because there’s nothing to do; now, we are not going to get paid. The shop will be losing close to R10,000 ($677) today. It’s messed up,” said Maljingolo.

But South African businesses were affected too.

Among the shops at the mall is Webbers, a clothing and footwear store. Looters could not enter the shop and it was one of the few that escaped the vandalism.

Dineo Nyembe, the store’s manager, said she was in disbelief when she saw people could not enter the mall.

“We got here this morning and the ceiling was wrecked but there was no sign that the shop was entered, everything was just as we left it. Now, we are packing stock back to the warehouse, because we don’t know if they are coming back tonight,” lamented Nyembe, unsure if they would make their daily target or if they would be trading again.

 Across the now-wrecked mall are small businesses that were not as fortunate as Webbers, and it was not only the shop-owners that were affected. 

Emmanuel Nhlane’s home was robbed even as attackers were looting the shop outside.

“They broke into my house, I was threatened with a petrol bomb and I had to stand outside to give them a chance; they took my fridge, bed, cash and my VHS,” said Nhlane.

Nhlane had rented out his yard to foreign nationals to operate a shop. He does not comprehend why his belongings were taken because he doesn’t own a shop. Now, it means that the unemployed Nhlane will not be getting his monthly rental fee of R3,700 ($250).

Far away, the coastal KwaZulu-Natal province of South Africa, was also affected as trucks burned and a driver was killed because of his nationality. This was part of a logistics and transport industry national strike.

Back in Johannesburg, I visited the car dealerships that were a part of the burning spree on Jules Street.

The streets were still ashy and the air still smoky, two days after the unfortunate turn of events.

Muhamed Haffejee, one of the distraught businessmen there, said: “Currently, we are still not trading.” 

Cape Town, in the Western Cape province of South Africa, which hosted the World Economic Forum (WEF) on Africa from September 4 to 6, was also witness to protests by women and girls from all walks of life outside the Cape Town International Convention Centre, demanding that the leadership take action to end the spate of gender-based violence (GBV) in the country.

There were protests also outside Parliament. What set off the nationwide outcry was the shocking rape and murder of Uyinene Mrwetyana, a 19-year-old film and media student at the University of Cape Town, inside a post office by a 42-year-old employee at the post office.

There was anger against the ghastly crimes and wave of GBV in the country that continues unabated. According to Stats SA, there has been a drastic increase of women-based violence in South Africa; sexual offences are up by 4.6%, from 50,108 in 2018 to 52,420 in 2019.

A week later, on a Friday, Sandton, Africa’s richest square mile and one of the biggest economic hubs, was shut down by hundreds of angry women and members of advocacy groups from across Johannesburg. They congregated by the Johannesburg Stock Exchange (JSE), the cynosure of business, singing and chanting, to demand “a 2% levy on profits of all listed entities to help fund the fight against GBV and femicide”.   

Among the protesters was Cebi Ngqinanbi, holding a placard that read: “I’m not your punching bag.”

“We came here to disrupt Sandton as the heart of Johannesburg’s economic hub. We want to make everyone aware that women and children are being killed every day in South Africa and they [Sandton] continue with business as usual, sitting in their offices with air-conditioners and the stock exchange whilst people on the ground making them rich are dying. That is why we are here, to speak to those that have economic power,” said Ngqinanbi.

She added that if women can be given economic power, they will be able to fend for themselves and won’t fall prey to abusive men, since most women stay in abusive relationships because men are more financially stable.

Amid the chanting and singing of struggle songs, Nobuhle Ajiti addressed the crowd and shared her own haunting experience as a migrant in South Africa and survivor of GBV. She spoke in isiZulu, a South African language.

“I survived a gang rape; I was thrown out of a moving car and stabbed several times. I survived it, but am I going to survive xenophobia that is looming around in South Africa? Will I able to share my xenophobia story like I can share my GBV story?” questioned Ajiti.

She said as migrants, they did not wake up in the morning and decide to come to South Africa, but because of the hardships faced in their home countries, they were forced to come to what they perceived as the city of opportunities. And as a foreign national, she had to deal with both xenophobia and GBV.

“We experience institutionalized xenophobia in hospitals; we are forced to pay huge amounts for consultation. I am raped and I need medical attention and I am told I need to pay R5,000 ($250).

“As a mere migrant, where am I going to get R5,000? I get abused at home and the police officer would ask me where I’m from because of my accent, I sound Zimbabwean. What does my nationality have to do with my husband beating me at home or with the man that just raped me?” she asked.

Women stop traffic while they hold up placards stating their grievences against GBV. Picture: Motlabana Monnakgotla

Addressing the resolute women outside was the JSE CEO Nicky Newton-King who received the memorandum demanding business take their plight seriously, from a civil society group representing over 70 civil society organizations and individuals.

The list of demands include that at all JSE-listed companies contribute to a fund to resource the National Strategy Plan on GBV and femicide, to be launched in November; transport for employees who work night shifts or work after hours; establish workplace mechanisms to provide support to GBV survivors as part of employee wellness, and prevention programs that help make workplaces safe spaces for all women.

Newton-King assured the protestors she would address their demands in seven days. But a lot can happen in seven days. Will there be more crimes in the meantime? How many more will be raped and killed in South Africa by then?

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Quality Higher Education Means More Than Learning How To Work

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When people talk about quality education, they’re often referring to the kind of education that gives students the knowledge and skills they need for the job market. But there’s a view that quality education has wider benefits: it develops individuals in ways that help develop society more broadly.

In Zimbabwe, for example, the higher education policy emphasises student employability and the alleviation of labour shortages. But, as my research found, this isn’t happening in practice.

University education needs to do more than produce a graduate who can get a job. It should also give graduates a sense of right and wrong. And it should instil graduates with an appreciation for other people’s development.

Tertiary education should also give students opportunities, choices and a voice when it comes to work safety, job satisfaction, security, growth and dignity. Higher education is a space where they can learn to be critical. It must prepare them for participating in the economy and broader society.

This isn’t happening in Zimbabwe. Graduate unemployment is high and employers and policy makers are blaming this largely on the mismatch between graduate skills and market requirements.

Investigating Zimbabwe’s universities
My research sought to examine how a human development lens could add to what was valued as higher education, and the kind of graduate outcomes produced in Zimbabwe. I investigated 10 of the universities in Zimbabwe (there were 15 at the time of the research). Four were private and six public.

I reviewed policy documents, interviewed representatives of institutions and held discussions with students. Members of Zimbabwe’s higher education quality assurance body and university teaching staff were also included.

I found that in practice, higher education in Zimbabwe was influenced by the country’s socio-political and economic climate. Decisions and appointments of key university administrators in public universities and the minister of higher education were largely political.

In addition, resources were limited and staff turnover was high. Universities just couldn’t finance themselves through tuition fees.

Different players in the higher education system – employers, the government, academics, students and their families – have different ideas about what “quality” means in higher education. The Zimbabwe Council for Higher Education understands quality as meeting set standards and benchmarks that emphasise the graduates’ knowledge and skills.

To some extent, academics and university administrators see quality as teaching and learning that gives students a mixture of skills and values such as social responsibility.

But lecturers must comply with the largely top-down approach to quality. They tend to do whatever will enhance students’ prospects of getting employment in a particular market.

The educators and students I interviewed acknowledged that developing the ability to work and to think critically were both central to higher education. But they admitted that these goals were hard to attain. This was because of the country’s constrained socio-political and economic environment. Academics and students felt that they couldn’t express themselves freely and critical thinking was suppressed.

Stuck on a road to nowhere
The study illustrates how an over-emphasis on creating human capital – skilled and knowledgeable graduates – limits higher education’s potential to foster broader human and social development.

University education should do more, especially in developing countries such as Zimbabwe that face not just economic, but also socio-political challenges. Before building more universities and enrolling more students, authorities and citizens should consider what quality education means in relation to the kind of society they want.

It’s possible to take a broader view of development, quality and the role of higher education. This broader approach – one that appreciates social justice – can equip graduates to address the country’s problems.

The road ahead
Universities can’t change a society on their own. But their teaching and learning practices can make an important difference.

Because quality teaching and learning means different things to different people, people need to talk about it democratically. Institutional and national policies must be informed by broad consultations to identify the knowledge, skills and values they want graduates to have.

University teaching and learning should emphasise freedom of expression and participation so that students can think and act critically beyond university.

Also, academics don’t automatically know how to teach just because they have a PhD. Universities should therefore ensure that academics learn how to teach and communicate their knowledge. Curriculum design, student assessment and feedback, as well as training of lecturers should all support this goal of human development.

When universities see quality in terms of human development, their role becomes more than production of workers in an economy. It gives them a mandate to nurture ethically responsible graduates. These more rounded graduates are better equipped to imagine an alternative future in pursuit of a better society, economically, politically and socially.

Patience Mukwambo: Researcher, University of the Free State

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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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