BUSINESS
Old Mutual’s Share Price Is Focus in Zimbabwe’s Currency War
Published
3 years agoon

The share price of one of Africa’s oldest insurers is taking centre stage in Zimbabwe’s battle to bring order to its chaotic foreign-exchange system.
In the latest in a series of attempts to stabilize its currency, the government wants to eradicate the Old Mutual Implied Rate.
The gauge, used by domestic companies to determine the future cost of goods and services, calculates a potential forward rate for the Zimbabwe dollar by measuring the difference between Old Mutual Ltd.’s share prices in Johannesburg, London and Harare.
The indicator is among many “contrived phantom exchange rates” in use that “conspire to defeat fiscal policy,” the government said in a June 26 edict that halted trading on the Zimbabwe Stock Exchange and stopped most mobile-banking transactions.
The OMIR is one of the multiple exchange rates Zimbabweans use daily to navigate the nation’s myriad economic challenges, including annual inflation of almost 800%.
A perennial shortage of cash means anyone who has physical banknotes is able to negotiate exchange rates with brokers who pay the funds onto mobile-money platforms. The brokers can then sell the hard cash at an even higher rate.
That’s resulted in a widening gap between the official rate of 63.7 per U.S. dollar, and the amount at which it trades on the streets of Harare, which is now at 100.
“People have relied on making money from buying and selling Zimbabwe dollars, and not from any real production,” said John Robertson, an independent economist based in Harare. “It’s what has created these distortions.”
The OMIR also feeds into the black-market Zimbabwe dollar rate, which the nation’s bourse uses, along with the official rate, to determine the value of stock prices.
Old Mutual, founded in Cape Town in 1845, is not involved in determining the rate. Market participants take the company’s share prices in South Africa, the U.K. and Zimbabwe, convert each of them into the U.S. dollar, which should typically trade near par.
The finance minister, however, in March restricted trading in the shares of Old Mutual and two other companies by making the stocks no longer fungible or regarded as being equal in value to those traded on other exchanges, in a bid to prevent outflows caused by the dual listings.
Despite the move, investors poured into Old Mutual, using it as a proxy to the U.S. dollar because of its offshore listings, pushing the Zimbabwe-listed stock up 90% since the beginning of May. The shares in Johannesburg and London were little changed, resulting in the implied rate doubling to 122 as the gap between the securities widened.
Zimbabwe’s benchmark industrial index has risen more than sevenfold this year, reaching a record on June 24, and giving the overall bourse a market value of about 229 billion Zimbabwean dollars ($3.6 billion). None of the stocks in the 57-member index has declined this year as Zimbabweans seek a haven from runaway price increases and the weaker currency, which has slumped to 63.7442 per U.S. dollar after a 25:1 peg put in place since March was abandoned.
Suspend Listing
Authorities now want to eliminate the OMIR before allowing any trading to resume on the Zimbabwe Stock Exchange, people familiar with the matter said, asking not to be identified because the talks are private. The OMIR was the focus of various meetings on Monday between members of Zimbabwe’s stockbrokers’ association, the stock exchange, the Securities and Exchange Commission and the Treasury, the people said.
Measures being considered to include suspending Old Mutual’s shares from the Harare-based bourse, having the securities traded only in dollars, or moving the listing to the Victoria Falls Stock Exchange, a market that will only trade in foreign currency once it opens later this year, the people said.
Nick Mangwana, the government’s spokesman, referred queries to the finance ministry. Several calls and text messages sent to Finance Minister Mthuli Ncube and central bank Governor John Mangudya seeking comment weren’t answered.
“There has not been any official communication from authorities in Zimbabwe to Old Mutual,” the Johannesburg-based company said in an email “We have asked our local subsidiary to reach out to our stakeholders in Zimbabwe to try and understand the circumstances around ZSE closure and other related matters.”
Discussions over the halting of trade on the stock exchange are ongoing and the outcome is still uncertain, SEC Chief Executive Officer Tafadzawa Chinamo said by phone. Zimbabwe Stock Exchange CEO Justin Bgoni said on Sunday that the bourse would wait for guidance from regulators.
In comments at a briefing after a cabinet meeting on Tuesday, the finance minister said that stockbrokers should assure their clients that their investments in the stock market are safe and that the bourse will reopen once investigations are complete. Bloomberg
INTERNATIONAL
African Union’s Inclusion in G20: A Significant Acknowledgment of a Continent with 1 Billion Inhabitants
Published
3 months agoon
11/09/2023
The world’s most powerful economies, the G20, have welcomed the African Union (AU) as a permanent member, recognising Africa’s more than 50 countries as important players on the global stage. US President Joe Biden and Indian Prime Minister Narendra Modi both expressed support for the AU’s permanent membership.
The AU has advocated for full membership for seven years and, until now, South Africa was the only African country in the G20. The AU represents a continent with a young population of 1.3 billion, which is set to double by 2050 and make up a quarter of the world’s population.
Africa’s 55 member states have long pushed for meaningful roles in global bodies, including the United Nations Security Council, and want reforms to the global financial system. The continent is increasingly attracting investment and political interest from global powers like China, Russia, Gulf nations, Turkey, Israel, and Iran. African leaders are challenging the framing of the continent as passive victim and want to be brokers instead.
They seek fairer treatment by financial institutions, delivery of rich countries’ long-promised $100 billion a year in climate financing for developing nations, and a global tax on fossil fuels. The AU’s full G20 membership will enable it to represent a continent that’s home to the world’s largest free trade area and abundant resources needed to combat climate change. The African continent has 60% of the world’s renewable energy assets and over 30% of the minerals key to renewable and low-carbon technologies.
African leaders want more industrial development closer to home to benefit their economies. Finding a common position among the AU’s member states, from economic powers to some of the world’s poorest nations, can be challenging, but Africa will need to speak with one voice to influence G20 decision-making. African leaders have shown their willingness to take collective action, as seen during the COVID-19 pandemic. As a high-profile G20 member, Africa’s demands will be harder to ignore.
BUSINESS
Forging Strong Bonds: Iran and Zimbabwe Deepen Economic Ties in Raisi’s Africa Tour
Published
5 months agoon
13/07/2023
On Thursday, Zimbabwe and Iran signed 12 memorandums of understanding to strengthen their bilateral ties during Iranian President Ebrahim Raisi’s visit to Africa. Raisi had previously visited Kenya and Uganda before meeting with Zimbabwean President Emmerson Mnangagwa in Harare. Among the 12 MOUs is a plan to establish a tractor manufacturing plant in Zimbabwe with the help of an Iranian company and a local partner. The two countries also signed agreements for cooperation in energy, agriculture, pharmaceuticals, and telecommunications, as well as research, science, and technology projects.
Mnangagwa expressed his appreciation for investments in several sectors of Zimbabwe’s economy to reporters after the signing ceremony. However, he did not disclose the amount of investment Zimbabwe is expecting from Iran. Raisi mentioned the economic challenges facing Iran and Zimbabwe due to U.S. sanctions but emphasised his country’s efforts to build closer economic ties.
According to Iran’s foreign ministry, trade with Africa is expected to exceed $2 billion this year, but there was no comparison to the previous year’s figures. This African visit is the first by an Iranian leader since 2013, following a visit to three Latin American countries in June, all of which are also affected by U.S. sanctions.
BUSINESS
Breaking News: E-Creator Fraud Ring Leader Apprehended by Police
Published
5 months agoon
13/07/2023
The Zimbabwe Republic Police is requesting that individuals who have been deceived by E-Creator, Zhao Jiaotong come forward and report to the nearest police station.
According to police spokesperson Assistant Commissioner Paul Nyathi, the kingpin of the E-Creator Ponzi scheme has been arrested on charges of fraud. The suspect is identified as Chinese national Zhao Jiaotong, who is said to be the founder of the notorious platform that has scammed people out of thousands of dollars.
Nyathi stated, “The Zimbabwe Republic Police confirms the arrest of Zhao Jiaotong, 39, in connection with a case of fraud in which unsuspecting members of the public were duped through the E-Creator Ponzi scheme.”
The police are urging anyone who may have fallen victim to E-Creator to report to their nearest police station. Additionally, the public is encouraged to exercise caution and perform thorough research before investing in any Ponzi or pyramid schemes that promise quick returns.

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