Tough times never last, but tough people do; the late American televangelist and motivational author, Robert Schuller once said. This is an apt description of Zimbabweans that continue to hop from one crisis to another.
BY NDAMU SANDU
From cash shortages, indigenisation hullaballoo to the revelations of the missing $15 billion diamond money — 2016 was annus horribilis. Standardbusiness gives the good, the bad and the ugly of 2016.
When cash is king
Sometime in the month of March, the nation woke up to long cash queues at banks as depositors struggled to get their money. Monetary authorities blamed the cash shortage to low exports as if the economy has had a trade balance since the introduction of the multi-currency regime in 2009. They also said the hoarding of cash was fuelling the crisis. Banks responded by putting maximum withdrawal limits but the queues refused to die. An aggressive push for the use of plastic money could still not cure the ailment. Unscrupulous traders saw an opportunity and began selling cash at 10% more. The rate now stands at 20%.
Expanding the bond family
The Reserve Bank of Zimbabwe (RBZ) last month introduced bond notes which are an addition to the bond coin family as part of measures to stem the cash shortages. The notes are being introduced under a $200 million export incentive facility guaranteed by the African Export-Import Bank.
Exporters will get an additional 5% export incentive paid in bond notes while money sent to relatives from the diaspora also gets a 5% bonus in the same currency. Plans to introduce bond notes were met with resistance from the public who saw the surrogate currency as an attempt to retrieve from the recycled bin, the Zimbabwean dollar which was decommissioned last year. The bond notes have been widely received by the market which has been starved of cash and to date, $29 million worth of the currency has been released. The notes join the bond coins which were introduced in 2014 to help with change.
Import priority list
In May, RBZ came up with a four-tier import priority list for the efficient use of foreign exchange resources, with a bias towards supporting the productive sectors of the economy and reducing the import bill. In coming up with the import priority list, RBZ said it wanted to promote efficient utilisation of foreign exchange and to re-orient import demand towards productive uses. However, RBZ is failing to adhere to the list, with companies facing delays in making foreign payments. This has affected production evidenced in last month’s shortage of cooking oil on the market.
Business as usual after $15 billion vanishes from Marange
In February, President Robert Mugabe announced that Zimbabwe could have lost at least $15 billion in Marange due to lack of transparency in the transaction of diamond proceeds. This came after government had refused to renew the licences of the diamond producers as a way to stampede its plans to set up one diamond producer in which government would have 50% shareholding. Despite the revelations, nothing has been done to bring the perpetrators to book, poking holes into government’s anti-graft crusade.
Mugabe was forced to intervene after a clash between Chinamasa and Indigenisation minister Patrick Zhuwao over the implementation of the empowerment legislation. Zhuwao had given foreign companies an April Fools’ deadline to comply with the legislation or face closure. Chinamasa told foreign banks to ignore the directive. A tussle between the two ministers ensued, exposing the fights within Mugabe’s administration. Despite the clarification, the indigenisation legislation has not been amended
In July, government promulgated Statutory Instrument (SI) 64 to restrict the importation of products that have local equivalents. The move created friction between Zimbabwe and South Africa resulting in a meeting of ministers of Trade. It also affected cross-border trading, which provides the bulk of employment to locals after the closure of companies.
Coca-Cola terminates Delta deal
In October, The Coca-Cola Company announced plans to terminate its bottling deal with Delta Corporation and Schweppes Zimbabwe Limited. This followed the tie up between AB InBev and one of Delta’s shareholders, SABMiller. Delta is now an associate of AB InBev. Last month, Coca-Cola said it was in talks in with a potential new partner and expressed its long-term commitment to the Zimbabwean market. Elsewhere, Ravi Jaipuria’s $30 million Pepsi bottling plant is failing to take off. At a ground-breaking ceremony in 2015, the project promoters said it would take less than a year to commission the plant. A year later, no progress has been made amid claims the promoters of the project were being frustrated by government’s bureaucratic delays.
Perhaps the biggest shock of the year was the appointment of Mugabe’s son-in-law Simba Chikore as chief operating officer at Air Zimbabwe. The appointment drew a butt of joke on social media with some referring to the airline to “Air Simbabwe”. Transport and Infrastructure Development minister Joram Gumbo, however, said Chikore was even over-qualified for the post, but he could not release the former’s resume to prove his claim. Earlier, the airline had appointed aviation expert Ripton Muzenda, son of the late vice president Simon, as substantive CEO of the airline, ending five years of acting CEOs.
Biting the hand the feeds you
In September, Mugabe repeated his favourite pastime — threatening to lead Africa’s pull-out from the UN due to the slow pace of reforms in the Security Council. The threat came some months after the African Union had endorsed Tourism minister Walter Mzembi as its sole candidate for the secretary general’s post of the United Nations World Tourism Organisation. The elections will be held next year to replace Jordanian Taleb Rifai who is leaving the UN tourism body.
Chinamasa turns right, Mugabe turns left
In September, government threw out proposals by Finance minister Patrick Chinamasa to cut salaries for the civil servants and forgo bonuses on the grounds that Treasury had not been given the go ahead by Cabinet to do so.
IMF removes stringent measures on Zim
The International Monetary Fund last month removed remedial measures on Zimbabwe following the country’s settlement of its overdue obligations last month. Zimbabwe used its special drawing rights holdings with the Fund to clear the $107,9 million overdue obligations to the Poverty Reduction and Growth Trust (PRGT). The remedial measures that have been removed include declaration of non-cooperation with the fund, suspension of technical assistance (which had already been partially lifted) and the removal of Zimbabwe from the list of PRGT-eligible countries.
Broadening of capital markets
In September, the Securities Exchange Commission of Zimbabwe licensed Financial Securities Exchange (Pvt) Limited (Finsec) to operate the first alternative trading platform, a move set to diversify stock market’s trading platforms, with Old Mutual becoming the first company to join the platform. On the Zimbabwe Stock Exchange, deposit-taking microfinancier debuted on the bourse in January. Axia joined in May following its demerger from Innscor Africa Limited. In July, Nicholas Vingirai’s Transnational Holdings Limited got 26% in ZB Financial Holdings as compensation for the loss of his Intermarket Holdings Limited 10 years ago. Vingirai, Michael Mahachi and Zororo Muranda later joined the ZB Financial Holdings board. The deal ended years of bickering which had sometimes spilled into the courts.
Sanctions reprieve for IDC, ZB
In October, the US Foreign Assets Control (Ofac) removed from the sanctions list, ZB Financial Holdings Limited, Industrial Development Corporation of Zimbabwe (IDC), Scotfin Limited, Intermarket Holdings Limited, Chemplex Corporation Limited and Zimbabwe Fertiliser Company. These firms had been barred from doing business with American companies.