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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

INTERNATIONAL

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

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african-union-g20

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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BUSINESS

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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BUSINESS

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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