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Zimbabwe seeks $500m from Afreximbank

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John Mangudya

The Reserve Bank of Zimbabwe (RBZ) is negotiating a $500 million funding package with the African Export and Import Bank (Afreximbank), as part of efforts to resolve the foreign currency shortages blighting the economy.

Afreximbank has been Zimbabwe’s biggest benefactor since the turn of the century, at a time when most global lenders had stopped extending fresh lines of credit to the southern African nation, either at the behest of Western countries that were livid over the country’s land redistribution programme or over defaulting on earlier loans.

RBZ governor Dr John Mangudya told The Herald in an interview last week that the central bank was currently in the market, scouting for fresh lines of credit, and this included discussions already underway with Afreximbank for a $500 million kitty.

The funding is required to meet critical obligations such as external payments for raw materials or key industrial equipment and machinery, as well as fuel and medicines among others.

At one point, September 2017 specifically, the country’s external payments backlog stood at nearly $600 million, as the central bank struggled to cover all external payment demands.

Demand for foreign currency continues to exceed inflows, even as exports grew by 36 per cent last year to 3,8 billion, given that the country’s import bill, at $5,5 billion, remains too high.

Apart from interventions towards alleviating Zimbabwe’s private sector funding challenges, which is being done by institutions such as AfDB, the RBZ is also in the market either scouting for lines of credit or already negotiating fresh support from institutions that have previously bailed out the country, especially, the Afreximbank.

This comes after a high-powered delegation from the AfDB, which has extensive expertise in the areas of industrial manufacturing, agriculture, energy and financial services, visited the country last week to explore private sector’s funding needs.

The bank last year said it would mobilise $8 billion to fund the needs of Africa’s private firms.AfDB is one of the multilateral institutions, including International Monetary Fund (IMF) and World Bank Group, which have not been lending to Zimbabwe over “arrears”.

“We are also in the market, as you are aware; to continuously look for lines of credit to supplement our export (receipts) from gold, tobacco or from wherever so that at the end of the day the economy can continue to function,” Dr Mangudya said.

“And three, we are also promoting diaspora remittances so that they continue bringing in money.“Of course, we are also making sure that we continue to export and that is why we continue to give incentives (to exporters),” Dr Mangudya said.

“We are finalising our loans commitments; Afreximbank has said they will give us $500 million, which we are still working on. We are also still working on other facilities, the PTA Bank is also assisting us,” Dr Mangudya said. Afreximbank, which has stood by Zimbabwe in the greatest period of need, last year gave the country $1,5 billion.

Of that amount, $500 million was meant to stabilise the country’s depleted nostro balances, to enable Zimbabwean companies to meet their external payments obligations while the balance was to ring-fence foreign investments. Most facilities extended by Afreximbank, where Dr Mangudya once worked, are given at concessionary rates.

The $1 billion from Afreximbank was a guarantee meant to ring-fence foreign portfolio investments, as President Mnangagwa’s administration, since taking over in November last year, has prioritised luring back foreign direct investment to rebuild the economy and make up for nearly four decades of economic instability and meltdown.

Dr Mangudya said that there was a growing mismatch between the demand for foreign currency by the private sector and the number of resources available on the domestic market. The RBZ chief said this was a sign of a growing economy.

“What is the reason for foreign currency shortages? The rate at which this economy is expanding is faster than the rate at which we are creating foreign currency to meet that demand. I give an example of packaging industry; go to Nampak, right now they are producing at 100 per cent of capacity.

“Check financials coming from all those who have published; you saw Delta, OK Zimbabwe, Proplastics, what were they saying; they are saying their bottom lines have improved.

“Why? This is because aggregate demand has improved.”Increased activity in the economy on the back of increasing aggregate demand, Dr Mangudya said, was stemming from increased Government expenditure and loans banks that were issuing. Hitherto, the RBZ governor has said earnings from tobacco have improved disposable incomes in the country.

Dr Mangudya said improved activity in the economy had given rise to a higher demand for other commodities such as fuel, where consumption of the commodity went up by 25 per cent, which has spawned serious congestion on the country’s roads.

The Herald

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BUSINESS

African leaders boycott WEF Africa over xenophobic attacks in SA

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World Economic Forum on Africa

The presidents of Rwanda, Democratic Republic of Congo and Malawi have decided not to attend the World Economic Forum on Africa hosted by South Africa in the face of ongoing looting and burning of small businesses in that country, owned largely by African immigrants, local media reported on Wednesday.

The chairman of the African Union Commission Moussa Faki Mahamat has condemned the attacks, which have seen scores of people arrested in Johannesburg and the capital Pretoria.

Reports said Zambia had also cancelled a friendly football match with South Africa’s national men’s team Bafana Bafana scheduled for March.

Nigerian President Muhammadu Buhari instructed his foreign affairs minister to summon South Africa’s high commissioner to Nigeria over the violence.

Some South Africans say they are retaliating against crime committed by foreigners and the sale of illicit goods by foreign shop owners, but political analysts say African immigrants have become scapegoats for rising anger over joblessness and general economic woes.

In a statement on Tuesday, the African Union Commission’s Faki called for “immediate steps to protect the lives of people and their property, ensure that all perpetrators are brought to account for their acts and that justice is done to those who suffered economic and other losses.”

“The chairperson reiterates the African Union’s Commission continued commitment to support the South African government in addressing the root causes that led to these despicable acts, in order to promote peace and stability, within the framework of the African Union’s longstanding principles of continental solidarity,” his spokeswoman Ebba Kalondo said. African News Agency

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Econet goes into forex exchange. Launches bureau de change

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Ecocash Zimbabwe

ECOCASH has launched a digital mobile phone-based bureau de change in a move set to increase competition in the foreign currency exchange business.

The innovative facility, a first by a mobile money service provider, will likely revolutionise the business by providing the much-needed convenience to the platform’s 10 million registered customers.

According to the company, the new service will allow EcoCash customers to sell foreign currency in real-time and instantly have the local currency converted and credited to their wallets.

The move follows the granting of an operating licence to EcoCash by the Reserve Bank of Zimbabwe, which has an effect of increasing access to specialised digital financial services to millions of Zimbabweans.

Speaking at the launch of the service in Harare yesterday, EcoCash chief executive officer, Ms Natalie Jabangwe, explained how the service would work.

“Before performing a currency conversion transaction, one needs to fund their EcoCash wallet,” she said, adding that a wallet could be funded in a number of ways.

“You fund your wallet by doing a cash-in of physical US dollars (or forex) into the wallet. Or you fund your wallet over the counter, at any Econet Shop. You can also fund your wallet through a direct in-wallet receipt of remittances from the diaspora into your EcoCash wallet. This could be through existing EcoCash remittance partners, which include Cassava Remit, World Remit, Mukuru, Western Union, Money Gram, Orange Botswana and MTN.”
Ms Jabangwe said an EcoCash customer could also fund their wallet via a Nostro bank-to-wallet transfer on their phone, from their respective FCA bank account linked to the EcoCash FCA wallet. She said once the wallet was funded, a customer could then proceed to dial a dedicated EcoCash Bureau de Change menu on the access code *150# to carry out their transaction.

“Customers will be able to check the rate of the day, get a quote for the amount to be sold and receive instant ‘confirmation of sale’ of foreign currency and the ZW$ conversation amount – all this happening via their mobile phone,” Ms Jabangwe said.

Cassava Smartech CEO, Mr Eddie Chibi, the parent company of EcoCash, said: “We are excited to be the first and only mobile financial service provider in Africa to offer this innovative service to our customers, empowering them with a simple, convenient, fast and real-time Bureau de Change service that they can access and use to transact anywhere, anytime.”

He said the service will help customers access competitive exchange rates quickly, convert or change their money in real-time, and transact on a secure platform that they have come to trust.

Ms Jabangwe said EcoCash Zimbabwe continued to leverage on the dynamic innovation capabilities that technology gives by building new products and services that go beyond the early services of financial inclusion.

“The advantage of having a scaled transaction platform is that you can build new services in line with a changing market environment. Accessibility of these services on the mobile phone enables us to travel the journey with our customers towards more complex but necessary financial services in the future,” she said. The Chronicle

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BUSINESS

Eskom Begins 400MW Power Supply to Zimbabwe

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Fortune Chasi

ZESA Holdings has reportedly started receiving 400 Megawatts of electricity from South Africa power utility, ESKOM.

This comes after the latter accepted Zimbabwe’s payment plan which involves payment of US$890,000 per week to settle its long-standing debt with ESKOM.

Zimbabwe is currently generating about 692 megawatts against a daily peak demand of about 1 600MW to 2000MW in winter.
All sectors were projecting fewer revenues this year as a result of the crippling load-shedding which ZESA had implemented due to the power deficit in the country.

Some companies were contemplating closing some of their branches with OK Zimbabwe, one of the biggest retailers in the country, having already closed one of its shops in Rusape.

The main power generator in the country, Kariba South Hydropower plant, has reportedly been immensely affected by the shrinking water levels at the dam whilst Hwange thermal power is underperforming due to ageing equipment.

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