Zimbabwe’s central bank chief, John Mangudya, said he would introduce a new currency in the next two weeks to address biting liquidity shortages in the economy and regain monetary policy control after years of dollarisation.
Mangudya told journalists in the capital on Tuesday that the as-of-yet-unnamed currency will have denominations of coins and notes with a maximum value of five Zimbabwe dollars (US$0.25).
“We are going to be releasing money into circulation. To be precise, within the next two weeks, we will have the new currency,” Mangudya said.
He said the new currency would trade along with the bond notes and the coins and would have the same value as these surrogate currencies.
Mangudya defended the bank’s decision to have a note worth only five Zimbabwe dollars as the highest denomination in a hyperinflationary environment, saying he wanted uniformity with the denominations that were already in the market.
Mangudya said that in line with the law, Zimbabwe’s President Emmerson Mnangagwa must agree to the creation of a new monetary unit. After he assents, the minister of finance will then issue a decree, paving the way for the printing of the currency.
Zimbabwe ‘s inflation was last measured at 350% after Finance Minister Mthuli Ncube ordered the country’s statistical department to stop publishing annual inflation numbers until February of next year.
Back in 2009, soaring inflation prompted Zimbabwe to ditch its failing sovereign currency in favour of a basket of foreign currencies led by the United States dollar. But “dollarising” the economy hit a major bump in 2015 when greenbacks started vanishing from the formal banking system.
In a bid to end the US dollar shortage, Zimbabwe’s central bank introduced bond notes – a form of surrogate currency – that was backed by a US$200 million bond facility from the Africa Export-Import Bank. But black market speculation quickly eroded the bond note value, triggering a shortage that the central bank tried to offset by creating electronic notes.
Then this past February, bond notes – both physical and electronic – were merged into the Real Time Gross Settlement (RTGS) dollar.
In June, the government moved to defend the Zimdollar against speculators by banning all foreign currencies in local transactions. But the effort has largely failed after the Zimdollar quickly fell prey to black market speculation that sent its value plummeting.
“There is a misconception that once you introduce a currency, then inflation is going to increase. We are simply giving people a chance to choose between electronic balances and cash,” said central bank chief Mangudya.
Economists are not holding out hope for the new currency.
“The only worry about a local currency is excessive money printing by the central bank, which makes multiple currencies dearer options when forced to choose,” Victor Bhoroma, a Harare-based independent economist, told Al Jazeera.
“The solution for Zimbabwe does not lie in any new currencies [whether Zimbabwean dollars or foreign currencies].”
The solution, according to Bhoroma, is instituting key reforms in governance, reining in expenditures in government, creating supply-side interventions to boost production, engaging in confidence-building, and strengthening institutions – such as the rule of law, property rights, and policy consistency.
Gift Mugano, an economics professor at Zimbabwe Ezekiel Guti University, told Al Jazeera that the introduction of the currency will accelerate its own value decline.
The new currency will have the same value as the bond note and RTGS dollars circulating in the economy.
“This is a continuation of a process that started on 24 June when the central bank outlawed the use of the US dollar and introduced a new currency,” Mugano said.
“What is important to note is that they did this when economic fundamentals were very weak. The fundamentals have not improved as we speak.
“The central bank doesn’t have the reserves to back the value of the currency and has only a month’s import cover at best. It’s going to be difficult to maintain the value of the currency.”
Mugano said the bond note and the RTGS dollar, the Zimbabwe dollar’s predecessor, had failed to act as a store of value, forcing ordinary Zimbabweans and companies to buy US dollars to preserve value.
He sees companies using the new currency to acquire US dollars.
“What will happen is very simple: companies will get cash to buy US dollars and then the rate will go higher as more cash chases the few US dollars in the market,” Mugano said. “The pressure on the exchange rate will be higher.”
The RTGS dollar and Zimbabwe’s surrogate currency, the bond note, have both struggled to hold value against the US dollar as demand outstrips supply.
Once valued at 1:1 with the greenback, the currency is now trading at 1:20 against the US dollar on the black market.
“It is obvious the Zimbabwean dollar will not hold any value because of negative fundamentals in the economy which include key among them confidence deficit and high demand for foreign currency to import commodities [current account deficit],” Bhoroma said.
“It is also inevitable that the central bank will continue to grow money supply in the economy to fund runaway government expenditure. This will further weaken the local currency.”
This year alone, the economy in Zimbabwe is contracting by more than 6.5%.
South Africa’s approach to managing its fishing industry is supposed to include all interested parties. Fishers and government should work together to make decisions. But this has proven to be easier said than done.
The country adopted the ecosystem approach to fisheries management at the World Summit on Sustainable Development in 2002. This approach aims to keep the marine ecosystem healthy while allowing people to make a sustainable living from it. Later, the country adopted a small-scale fisheries policy that follows the same bottom-up management principles.
Putting it into practice requires systems thinking – looking at how the parts of a system relate to each other and how the system functions over time. This is where South Africa has fallen short of its policy goals. The government’s fisheries management still works from the top down, leaving very little room for anyone else, such as small-scale fishers, to contribute. And it doesn’t build their capacity to get involved in governing fisheries.
If government is to implement the ecosystem approach, it has to create space for participation – from making policy and decisions to managing activities.
A study I undertook in a fishing community showed one way of creating this space and capacity. It could result in a better flow of information within the fisheries system and better decisions at all levels.
Developing a scenario-based approach
Not all South African fishers have the capacity to participate in bottom-up management approaches. It’s not easy, either, for government to change its traditional top-down way of running things.
Looking for a solution, I developed and tested a scenario-based approach to change. One of the aims was to build adaptive capacity at the smallest scale of the fishery. I worked with fishers in the country’s southern Cape linefishery. This is a small-scale, boat-based operation mainly targeting silver kob (Argyrosomus inodorus) and, in its absence, sharks (Chondrichthyes spp) and carpenter (Argyrozona argyrozona).
Many of the fishers who act as crew on the small-scale commercial linefish boats are members of families who have been fishing there for generations. They have long been marginalised in terms of access to fishing rights and the financial capital required to use these rights, but they will be the main beneficiaries of South Africa’s small-scale fisheries policy.
I used causal maps, Bayesian networks (a form of graphical model for computing probabilities) and scenario narratives to develop a deeper understanding of the system and to reframe the problem. In this case the problem refers to drivers of change in the southern Cape linefishery. Working with the fishers, I also created a vision of the future for the town of Melkhoutfontein, where they are based.
This futuristic vision was created using a causal map, Bayesian network outputs, the fishers’ inputs and research knowledge on climate change and linefish resources. Scenarios, or stories, were constructed around two main driving forces – access to money and access to marine resources.
Taking part in a process like this helps to create and share knowledge. This can make it easier for fishers and fisheries to prepare for change. The fishers learned more about the fishery system and how it responds to various factors. These include the effect of changing weather patterns on safety and ultimately their choice of fishing boat size and type.
Understanding complex systems
Thinking about the future fishers want can help them to make better decisions in the present. They can capture important local ecological knowledge to integrate into formal decision-making processes.
The scenario approach is a practical way for information to be exchanged between various levels of management structures. It can improve management in complex systems such as fisheries.
Importantly, this research showed that marginalised fishers, with little formal education, can use tools which they do not normally use in their day-to-day lives. It paves the way for them to participate in the ecosystem approach to fisheries management.
The small-scale fisheries policy makes explicit provision for co-management of resources. But this is not the case for other fishing sectors, where top-down management structures are still in place. My approach identifies a method that can get information to flow in all directions and involve all role-players.
Trans-disciplinary approaches, of which this scenario-planning process is an example, need to be embedded at all levels of the structures that govern fisheries. For this to happen government must be willing to try new things.
Ultimately, better decision-making throughout the system promotes not only social justice for the fishers, but also ecosystem justice, both of which are crucial to sustain natural resources and livelihoods.
In their annual meeting at the United Nations in 2005, world leaders agreed on a common economic agenda. This was to halve – between 1990 and 2015 – the proportion of the world’s population living on less than one dollar a day. It’s been nearly 15 years since this resolution.
The world has certainly seen economic progress but it is not even. And countries in Africa lag behind the global average.
Global wealth has more than doubled from US$170 trillion in 2000 to $360 trillion in 2019. Global wealth per adult is at a record high of $70,850.
Mean wealth per adult in Africa is $6,488. In Mozambique it is as low as $352.
The proportion of the world’s people living on less than two dollars a day (an updated measure of extreme poverty) has more than halved from 35.9% in 1990 to 10% in 2015. But in sub-Saharan Africa the figure still stands at 41%, according to the World Bank. The bank estimates that 87% of the world’s poorest people will live in the region by 2030 if the trends continue.
Life expectancy has been growing by 16 weeks a year so that those born today are likely to live 20 years longer than a child born in 1960. In Africa, average life expectancy remained at a level that the rest of the world passed in 1974 and is rising at a snail’s pace.
The continent still pays up to 30 times more than the rest of the world for generic medicine, despite a world-wide decline in drug prices. And energy prices in Africa are more than three times higher than in the United States.
African countries have missed important opportunities in the past two decades that could have ensured these graphs looked different.
Interlocking problems: debt and aid
In 2004 UK Prime Minister Tony Blair initiated the Commission for Africa, to “carefully study all the evidence available to find out what is working and what is not.”
The Commission’s main findings were:
The problems… are interlocking. They are vicious circles which reinforce one another. …Africa will never break out of the deadlock with piecemeal solutions and policy incoherence. They must be tackled together. To do that Africa requires a comprehensive ‘big push’ on many fronts at once; which requires a partnership between Africa and the developed world…. Africa is very unlikely to achieve the rapid growth in finance and human development necessary to halt or reverse its relative decline without a strong expansion in aid.
Blair then called for two simultaneous actions: forgiving the continent’s debt, and doubling development assistance. This call was partly heeded.
Fourteen African countries benefited from the 2005 multilateral debt relief initiative. That relief saved Nigeria – the region’s largest economy – $31 billion. A host of other countries benefited too, ranging from Benin ($690 million) to Ghana ($2.938 billion).
But these countries didn’t make the most of the relief they’d been given. Debt in many African countries is on the rise again. What’s more concerning is that debt isn’t being incurred for useful purposes, such as plugging the infrastructure gap. Instead, according to an IMF report, the rise is being driven by corruption and mismanagement.
As for aid, since 2005 the flow to Africa has risen by 50%, reaching $49.27 billion in 2017. African countries received more than half a trillion dollars ($0.62 trillion) in aid in the decade and a half after Blair’s appeal.
However, the continent now gets less donor aid per recipient than most regions in the world: an average of 14 cents per person per day. This is because its rapidly rising population size in recent decades is not being matched by the size of aid inflows.
Added to this is the fact that many African countries have failed to stem the flow of illicit money from the continent. An estimated $30.4 billion was transferred from African countries between 2000 to 2009.
Such outflows strip countries of desperately needed financial resources for investment in hospitals, schools and roads.
To stop this trend, Africa needs the help of advanced countries, because some of these countries have been and still serve as havens for illicit funds originating from repressive African regimes and despots.
In “Overcoming the Shadow Economy,” Joseph Stiglitz and Mark Pieth forcefully argue:
In a globalised world, if there is any pocket of secrecy, funds will flow through that pocket. That is why the system of transparency has to be global. The US and EU are key in tipping the balance toward transparency, but this will only be the starting point: each country must play its role as a global citizen in order to shut down the shadow economy—and it is especially important that there emerge from the current secrecy havens some leaders to demonstrate that there are alternative models for growth and development.
Zimbabwe's national airline has resumed flights to South Africa, the company said on Monday, after a halt last week when South Africa's state-run airports management firm barred the airline from using the country's airports over unpaid fees.
Air Zimbabwe's sole aircraft in operation was grounded last week by Airports Company South Africa (Acsa), which said the airline had failed to pay landing and parking fees, passenger service charges and an undisclosed amount towards clearing its arrears.
"There were negotiations that were held, and we were given clearance to take off and land on Friday. It (Air Zimbabwe's plane) did take off for South Africa today as scheduled," Air Zimbabwe spokesman Tafadzwa Mazonde told Reuters.
He declined to say whether Air Zimbabwe had cleared its debt or come to another arrangement, such as a part payment.
An Acsa spokeswoman was not available for comment.
Air Zimbabwe owes foreign and domestic creditors more than $300 million. The Zimbabwe government put the airline under administration last year and later invited bids from potential investors as it seeks to privatise it.
South African President Cyril Ramaphosa on Monday refuted allegations that a number of countries in Africa are being led into a debt trap as they take up loans to fund a number of projects.
Ramaphosa said in his weekly address from the Desk of the President in Cape Town, after returning from the Russia-Africa Summit held in Sochi last week.
“One need only look at initiatives such as the Forum on China-Africa Cooperation, which was last held in Beijing in 2018, to see that the focus is now on partnership for mutual benefit, on development, trade and investment cooperation and integration,” Ramaphosa said.
He lambasted remarks which label initiatives like the recent Russia-Africa Summit as an attempt by world powers to expand their geopolitical influence.
African countries had taken part in the summit to discuss ways of how to increase trade and cooperation between Russia and Africa.
He said the summit was a sign of the growing economic importance of Africa on the world stage.
“What we are witnessing is a dramatic rebalancing of the relationship between the world’s advanced economies and the African continent,” he said.
African countries have consistently affirmed that Africa no longer wants to be passive recipients of foreign aid, said Ramaphosa.
The president said African countries are developing and their economies are increasingly in need of foreign direct investment.
“We are ever mindful of our colonial history, where the economies of Europe were able to industrialise and develop by extracting resources from Africa, all the while leaving the colonies underdeveloped,” said Ramaphosa.
Even now, African countries are still trying to stop the extraction of its resources, this time in the form of illicit financial flows through commercial transactions, tax evasion, transfer pricing and illegal activities that cost the continent more than 50 billion dollars a year, according to Ramaphosa.
The age where “development” was imposed from outside without taking into account the material conditions and respective requirements of our countries is now past, the president said.
“China, Russia, Organisation for Economic Cooperation and Development (OECD) countries and other large economies are eager to forge greater economic ties with African countries.
“This is because they want to harness the current climate of reform, the deepening of good governance, macro-economic stability and the opening up of economies across the continent for mutual benefit,” the president said.
With the International Monetary Fund 2019 World Economic Outlook placing six of the fastest-growing economies in Africa.
These advanced economies want to take advantage of the many investment opportunities on offer, be they in infrastructure, energy, natural resource extraction, manufacturing or agriculture, and agribusiness, according to Ramaphosa.
The Central Bank of Nigeria (CBN) has given a tier 1 lender, Access Bank a “No Objection” approval for its proposed acquisition of controlling equity interest in Transnational Bank of Kenya (TNB) Plc.
This is coming barely seven months after its merger with Diamond Bank that saw its operations spanning three continents, 12 countries and 29 million customers. The bank is hoping to take over 93.57 percent of Transnational Bank equity interest.
Transnational Bank is a medium-sized commercial bank in Kenya with a focus on the country’s agricultural sector.
However, the transaction is still awaiting the Kenyan regulatory authorities and COMESA Competition Commission’s approval.
When this transaction is completed, Access Bank will join UBA and GTBank as the only Nigerian banks with operation in Kenya.
Access Bank is currently the biggest bank in Nigeria by assets. Its Q3 2019 financial statement showed that the bank’s asset now stands at N6.6 trillion from N4.95 trillion in 2018 before the merger with Diamond Bank.
Mozambique’s incumbent President Filipe Nyusi has won a landslide victory in an election it was hoped would calm tensions in a nation soon to become a top global gas exporter, but has instead stoked divisions as opposition parties cry foul.
Nyusi secured 73% of the vote in the presidential race, the National Election Commission (CNE) said on Sunday, while his party, the ruling Frelimo, also won big in the legislative and provincial contests.
His main rival Ossufo Momade, of former guerrilla movement turned main opposition party Renamo, trailed behind with 21.88% of the vote, CNE Chairman Abdul Carimo told a news conference.
During his second five-year term, Nyusi will be responsible for overseeing a gas boom led by oil giants such as Exxon Mobil Corp and Total, battling a festering Islamist insurgency and delivering on a peace deal signed two months ago.
It was hoped the Oct. 15 poll could set the seal on the fragile pact, designed to put a definitive end to four decades of violence between Frelimo and Renamo. The two fought a 16-year civil war that ended in a truce in 1992 but have clashed sporadically since.
Instead the deal is at risk of falling apart as opposition parties reject the results, claiming they were tarnished by fraud, violence and irregularities from the outset. Frelimo says the elections were free and fair.
Analysts say a return to all-out conflict is highly unlikely even if the deal collapses, but low-level violence, including from an armed group of breakaway former Renamo fighters, could worsen. That could suck the government’s focus and resources away from the insurgency in the gas-rich north.
Eight members of the CNE, which is made up of Frelimo and opposition party representatives, voted against accepting the results earlier this week, verses nine in favour.
Speaking after the conference, Fernando Mazanga, a Renamo member of the CNE, said they distanced themselves from the results because of irregularities.
“It is shameful and a disgrace what we are witnessing here,” he said.
Daviz Simango, of the third largest party the Mozambique Democratic Movement (MDM), secured just over 4% of the presidential vote
Earlier on Sunday, he said MDM saw the election outcome as “null and void”. Renamo has also already rejected the results, and a number of observer groups have raised concerns.
Frelimo won 184 out of 250 seats in parliament, verses 60 for Renamo and 6 for MDM, Carimo said.
Frelimo also won a majority in all 10 of Mozambique’s provinces in the provincial poll - a contest seen as central to the survival of the peace pact.
For the first time, provincial governors will be appointed by the majority party in each province rather than the government - a key demand of Renamo during peace talks.
The party had wanted to win control of a number of provinces in Mozambique’s centre and north to achieve this long-thwarted ambition for influence, but has instead come away empty handed.