Africa: For Once, Things Looking Positive in Zimbabwe

Prof. Mthuli Ncube

(Bloomberg) Has Zimbabwe turned a corner? Businessmen think so. That’s after the political instability, economic stagnation and two bouts of spiraling prices over the past two decades.

By Antony Sguazzin

Now inflation is slowing rapidly  albeit it’s still 322%  and the government expects the economy to expand 7.4% this year, rebounding from a 4.1% contraction. The country also got a step up on its African peers by starting a Covid-19 vaccination program in mid-February.

Day Two Of The 28th World Economic Forum on Africa
Zimbabwean Finance Minister Mthuli Ncube. Photographer: Waldo Swiegers/Bloomberg

Much of the improvement has been due to nature and the global economy.

Heavy rains are expected to result in the biggest corn crop since 1984 and have filled the world’s largest man-made reservoir, allowing more electricity to be generated from the Kariba South hydropower plant. Gold and platinum prices have risen over the past year, boosting mining income.

Still, Finance Minister Mthuli Ncube took the tough steps of devaluing the local currency and enforcing discipline in government spending. There’s been some investment in energy projects and in reviving horticulture, once one of the country’s export mainstays, while Afreximbank offered respite on debt by agreeing to reorganize its $1.4 billion the nation owes it.

The “green shoots” that business leaders are speaking of are hard to discern on the streets of Harare, however.

With a weakened currency and most goods imported, the few Zimbabweans lucky enough to have jobs have seen their spending power slashed. The government, which still owes almost $7 billion in other external debt, has to repair its relations with international lenders and sanctions imposed on its leaders by western nations because of political repression remain in place.

But for the first time in a long time, there’s hope.

News & Opinion

Amnesty Insurgency | Insurgents, security forces and a private military company contracted by Mozambique have killed hundreds of civilians in its northern Cabo Delgado province, according to Amnesty International. It accused the insurgents of brutal violence, including beheadings, and Mozambique’s armed forces of extra-judicial killings. The stakes are high for the country, with the conflict putting tens of billions of dollars in natural-gas investments at risk. Ethiopia criticized a separate Amnesty report that claimed Eritrean troops massacred hundreds of unarmed civilians in a northern Ethiopian town in November.

MOZAMBIQUE LNG GEM
Total’s gas project construction site in northern Mozambique.

Power Loans | Ghana plans to invest $1 billion this year to refinance loans contracted by private power producers as it seeks to cut costs and curb ballooning debt in its energy sector. The West African nation and some of the contractors agreed on the plan during the renegotiation of deals that began in November 2019. Ghana has excess electricity and the government effectively pays the suppliers for energy it doesn’t consume.

Reserve Minister | South African President Cyril Ramaphosa abandoned a search for a back-up option in case Tito Mboweni decides to leave his post as finance minister. While some of the nation’s most-prominent policymakers and business executives were informally canvassed as potential replacements, the two most favored candidates didn’t want the job. Keeping Mboweni has always been the first option, but the finance chief has frequently expressed reluctance to remain in the post for long, both publicly and privately.

Online Expansion | Jumia is expanding into online food delivery as the pioneering Africa e-commerce business looks to grow beyond its main market of trading phones and electronics. The global trend for delivered food and groceries has been slower to take off in Africa, where internet connections remain sluggish and unaffordable for large parts of the population. Expanding into food fits with Jumia’s strategy of bringing e-commerce to countries where global giants such as Amazon.com and Alibaba have yet to make major inroads.

NIGERIA-ECONOMY-INTERNET-AFRICA
A Jumia scooterman in Lagos.
Photographer: PIUS UTOMI EKPEI/AFP

Telecom Bids | Ethiopia could halt plans to part-privatize its telecommunications industry if bidders don’t meet the target value it has put on two new licenses to compete with state monopoly, Ethio Telecom. The comment by the minister in charge of the process marks the first time an Ethiopian politician has publicly cast doubt over the much-anticipated liberalization of the sector. It may also jeopardize a broader privatization plan announced by Prime Minister Abiy Ahmed in mid-2018.

Past & Prologue 

Data Watch

  • Nigeria’s naira remained near a record low, after declining more than 7% against the dollar last week.
  • Eskom’s risk premium over South African sovereign debt narrowed to a 19-month low last week and remained near that level even amid global bond turmoil. Yields suggest bondholders feel their money is safe amid the latest round of rescue talks for the struggling state electricity company.
Eskom risk premium narrows as investors buy into South Africa's rescue plan

Coming Up

  • March 8 Tanzania inflation
  • March 9 South African fourth-quarter GDP data, Ghana President Nana Akufo-Addo gives state-of-the-nation speech
  • March 10 Ghana and Rwanda inflation for February, South African first-quarter business confidence survey
  • March 11 South Africa fourth-quarter current-account data, South Africa mining & manufacturing data for January, Standard Bank results
  • March 12 Ghana annual budget

Last Word

Markus Jooste, the former chief executive officer of Steinhoff International, is said to be among four people charged in Germany for accounting crimes. The indictment against three ex-executives and a manager comes more than three years after the scandal brought the once rapidly expanding South African furniture group to the brink of collapse. Bogus transactions were allegedly used to manipulate balance sheets by more than $1.8 billion. Fake proceeds from phony transactions were booked at some of the group’s units and deals made it seem that assets were sold to third parties while they were in fact bought by other companies close to the group, according to prosecutors. Deloitte’s refusal to sign off on the company’s financial statements in late 2017, triggered a dramatic share-price collapse. Jooste resigned the same day. His lawyer called the allegations inaccurate.

With assistance by Ray Ndlovu