Thursday 18 June, 2020
Zim currency woes a result of non-monetary factors - RBZ HARARE - The Reserve Bank of Zimbabwe (RBZ) has blamed the country’s currency tumble on non-monetary factors despite statistics revealing that reserve money grew by as much as 307 percent year-on-year. The RBZ on Monday released monetary statistics showing that reserve money had grown to Z$13.4 billion by the second week of June 2020, a 300 percent growth from just above Z$3 billion in June 2019. Between February and March, reserve money grew by as much as 24 percent and this coincided with a currency tumble, with the Zimbabwe dollar depreciating to 70:1 to the US dollar from 23:1 in January. Despite the evident money supply growth against limited foreign currency supplies, the RBZ has blamed the Zimbabwe dollar’s loss of value on “non-monetary factors such as negative perceptions, adverse expectations, and speculative tendencies of economic
Ready to roll HARARE - A newly established Zimbabwean company has started making cigars for export, aiming to take on established players while developing a culture of cigar smoking at home. Mosi-Oa-Tunya, the local name for Victoria Falls which means “the smoke that thunders,” is the first firm to make cigars in Zimbabwe whose economic troubles have been compounded by the new coronavius pandemic. After living and working in the United States for 15 years, Shep Mafundikwa returned home last year to set up MosiOa-Tunya. Since March, an all-women staff has been undergoing on-the-job training in the art of rolling cigars by hand, with each worker producing 256 cigars a day. “We have solid interest right now from Romania and from Vietnam and we have inquiries from Dubai,” Mafundikwa said at the company’s factory in Harare. “We have people waiting,
agents.” The depreciation was divorced from economic fundamentals, it said. The central bank said price determination in the economy is being established on the basis of expectations about the depreciation of the exchange rate and prices that will exist in the future. “This forward pricing system or practice of frontloading anticipated exchange rates in the current prices based on fear factor, is detrimental to the economy, as it leads to self-fulfilling depreciation in the exchange rate, with negative knock-on effects on prices,” reads part of the statement. Meanwhile the Financial Intelligence Unit, housed under the central bank said on Monday, it will cause the arrest of any person or mobile phone used to advertise illegal foreign currency activities. “The FIU, in collaboration with the police, banks, mobile money / mobile phone service providers and relevant regulatory agencies, has embarked on an exercise to identify and take action against individuals who create, advertise on or participate (actively or passively) in WhatsApp groups or other platforms for illegal foreign currency trading.” – FIN24.
customers waiting to have the cigars in hand,” he said, adding that exports would start once restrictions caused by the coronavirus outbreak are eased. Zimbabwe is famed for its tobacco, which is exported mainly to China and Europe and is used as a flavouring by global cigarette makers. For Mafundikwa, that was the starting point. “You know Zimbabwe is well known for its high quality tobacco, so that gave me an idea to manufacture cigars.” Motsi-Oa-Tunya will have to compete against another new southern African manufacturer, Bongani Cigars, which launched last year seeking to crack the luxury cigar market. Mafundikwa has recruited Elias Lopez as head of production and training. The 52-yearold from Dominican Republic has worked for cigar makers Arturo Fuente and Davidoff. In between puffing on a cigar, Lopez expertly rolls tobacco leaves into cigars that he says will compete with the best in the world, like Habanos and Montecristo that are made in Cuba. – REUTERS.
R10BN RESCUE …SAA rescue plan to cost state more than R10 billion
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OHANNESBURG - The long-awaited business rescue plan for South African Airways shows the
government will have to raise more than R10 billion, which covers creditors who have funded the airline since it went into business rescue in December, as well as employee severance packages. The R10 billion extra proposed by the practitioners excludes about R16.4bn in historic government-guaranteed debt Peter Attard Montalto already allocated “It still shows them barely breaking in previous budeven in the medium run, even with substantially reduced headcount gets, says the resand further bailouts and it is not cue plan unveiled clear at this stage if there is any late on Tuesday. commitment from National Treasury on funding this, which could leave Affected parties will this dead in the water - we will have vote on the plan at a date to watch next week’s emergency budget closely,” that still has to be set.
In the view of economist Peter Attard Montalto, the rescue plan proposes a broadly similar airline in terms of routes to the current embattled one, with government having to "backstop" the "new" airline with new money if no equity partner can be found before July 15. "It still shows them barely breaking even in the medium run, even with substantially reduced headcount and further bailouts and it is not clear at this stage if there is any commitment from National Treasury on funding this, which could leave this dead in the water - we will have to watch next week's emergency budget closely," said Montalto. The business rescue practitioners, Les Matuson and Siviwe Dongwana, together with their advisors have been trying to obtain strategic equity partners for the flag carrier without success, due to poor market conditions in the
global airline industry which has been devastated by the impact of the Covid-19 pandemic. The proposed restructure envisages an airline that commences with flights "in the near future" as the Covid-19 lockdown eases and domestic air travel restarts. It is envisaged under the restructure that full domestic services will recommence in January 2021, and will be operated by the restructured national airline. Regional schedules will be introduced as the market and passenger demand follows. International routes and schedules is envisaged to follow thereafter, depending on global market and passenger demand. The practitioners were meant to publish their rescue plan at the end of February, but were granted repeated extensions after arguing they needed more time to engage with stakeholders and get to grips with the complex enterprise. – FIN24.
World Bank nods $1bn for Congo KINSHASA - The World Bank said on Tuesday it had approved $1 billion in funding for Democratic Republic of Congo’s education and health systems that have been weakened by years of under-funding, conflict and mismanagement. The financing comprises $800 million to support free primary school education and $200 million to improve
maternal and child health. “This funding is all the more important because it will help alleviate the economic and social consequences of the coronavirus affecting the poorest,” said Jean-Christophe Carret, World Bank country director. The funding includes $435m in grants and $565m in credit. Congo has had 4, 974 confirmed cases of the novel
PLANE SPEAKING: IEA says aviation to hold back oil recovery PARIS - Demand for petrol and diesel is set to heal by the end of the year but the coronavirus crisis is likely to leave scars on the airline industry and the oil market, the International Energy Agency said on Tuesday. The IEA continued to upgrade its forecasts for the oil market in its latest monthly report as more countries ease
lockdown measures that have pushed the world economy into its greatest crisis since the Great Depression. It now expects 2020 oil demand to come in at 91.7 million barrels per day, a drop of 8.1 mbd from last year. That is an improvement on its May estimate an 8.6 mbd reduction and the April estimate of a 9.3 mbd drop.
Jean-Christophe Carret “This funding is all the more important because it will help alleviate the economic and social consequences of the coronavirus affecting the poorest,”
The IEA noted that yearon-year consumption figures have been rising steadily since "Black April" when the lockdown measures were at their peak. The 21.8 mbd drop in April was pared to an estimated 18.6 mbd reduction in May. The drop is expected to narrow to 12.9 mbd in June and 7.4 mbd in July. The Parisbased IEA pointed to a number of encouraging signs of a recovery. "For demand, increased mobility indicators in the MarchMay period provided support: in particular, China's strong exit from lockdown measures has seen demand in April almost back to year-ago levels," it said.
coronavirus and 112 deaths and the outbreak has added to the strain on the country’s fragile health and education systems. After taking office in January 2019, President Felix Tshisekedi had vowed to make universal free education one of his priorities, but development agencies say there has been little sign of progress. – REUTERS.
It also noted a strong rebound in India in May, although demand was still well below last year's level. "In the second half of the year the easing of lockdown measures in many countries should provide a boost," it said. The IEA released its first forecasts for 2021, when it sees demand rising by 5.7 mbd "as activity begins to return to normal across vast swathes of the economy." That will bring global oil demand backup to 97.4 mbd, which it noted will still be 2.4 mbd below the 2019 level, which it said "is largely explained by the dire situation of the aviation sector." – FIN24.
