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The Fear Gap’s Back as Dollar Pinch Worsens After Zimbabwe Vote

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Zimbabwe forex shortage

Zimbabwe’s so-called fear gap has returned as the southern African nation’s currency crisis shows little sign of abating six weeks on from disputed elections.

Stocks in Harare, the capital, have long traded above their fundamental value. Zimbabweans are rushing into the market to buy shares as a hedge against inflation, which is accelerating as the government prints a form of money called bond notes in response to a cash shortage.

One of the main ways investors measure how out of whack Zimbabwean equities are is by taking the difference between the London and Harare share price for Old Mutual Ltd, Africa’s largest insurer.

Stock listed in Harare is now more than three times the price of the U.K. shares when converted to dollars. It was less than double the price back in February when confidence was high following the ouster a few months earlier of President Robert Mugabe, who presided over the economy’s collapse.

The surge in demand has driven the main equity index up 26 per cent this year, the second-biggest increase globally. That contrasts with the sell-off afflicting emerging markets from China to South Africa and Brazil.

The government had hoped that July elections — won by President Emmerson Mnangagwa — would mark a turning point for Zimbabwe and lead to much-needed foreign investment.

That’s not happening yet, and the cash shortage continues to cause havoc. Banks limit daily withdrawals to as little as $30 and wheat supplies are running low because the central bank can’t provide millers with enough foreign exchange for imports.

And dollars are becoming dearer. While bond notes are meant to be just as valuable, they trade at 1.75 per greenback on the streets, compared with 1.55 at the beginning of the month, according to the Zim Dollar Index, a local website.

Mthuli Ncube, a former chief economist at the African Development Bank who Mnangagwa picked as finance minister last week, said he will accelerate plans to settle Zimbabwe’s arrears on about $1.8 billion of external debt and build foreign reserves in a bid to end the currency squeeze.

Bloomberg

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African Union’s Inclusion in G20: A Significant Acknowledgment of a Continent with 1 Billion Inhabitants

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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.

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Forging Strong Bonds: Iran and Zimbabwe Deepen Economic Ties in Raisi’s Africa Tour

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Zimbabwe and Iran

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.

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Breaking News: E-Creator Fraud Ring Leader Apprehended by Police

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Zhao Jiaotong

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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