Thursday, November 28, 2013

Just a month before Christmas Zimbabweans are standing in long winding queues to withdraw cash from banks, amid reports of a fresh liquidity crunch.

Monday, November 25, 2013

Zimbabwe warns foreign firms of January 2014 arrest

Zimbabwe warns foreign firms of January 2014 arrest

Updated Saturday, November 23rd 2013 at 12:57 GMT +3
ZIMBABWE: The owners of foreign firms operating in certain sectors in Zimbabwe after 1 January 2014 will be arrested, a senior official has warned.
Economic Empowerment Secretary George Magosvongwe issued the warning in parliament, state media reports.
"Indigenisation" of the economy was one of President Robert Mugabe's main campaign themes in the March election.
Farming, hairdressing and baking are among the sectors now reserved for "indigenous", or black, Zimbabweans.
"1 January is a month to come and we are putting in place measures for enforcement in the event that they do not comply," the state-owned Herald newspaper quotes Mr Magosvongwe as saying.
He said that Zimbabweans were being identified to take over businesses to prevent shortages of goods.
According to the Herald the "reserved sectors of the economy" include: Retail and wholesale business, hairdressers, beauty salons, bakers, employment agencies, agriculture, transport, estate agencies and advertising agencies.
It said that foreign-owned restaurants which did not serve local food would not be affected.
Owners of businesses without indigenisation compliance certificates face a fine or imprisonment if they are still operating, the Herald reports.
It says these certificates are only given to local people.
The BBC's Brian Hungwe in Harare says that there has been growing concern in Zimbabwe over an influx of traders from Nigeria and China who sell all sorts of goods in local markets, undercutting local retailers.
Mr Mugabe says his policies are needed because under colonial rule, many economic sectors were reserved for white people.

Zimbabwe: Liquidity Crunch

Zimbabwe: Liquidity Crunch - Zimbabwe Banks Limit Withdrawals

LIQUIDITY conditions have worsened in the last two weeks with more banks limiting cash withdrawals in recent days amid fears the financial services sector is headed for troubled times.
Information gathered by the Zimbabwe Independent shows some banks, particularly indigenous ones, have resorted to withdrawal limits for their clients due to liquidity constraints. Civil servants, some of whom are set to receive annual bonuses this month, may not get their money.
The banking sector, reeling from the liquidity crunch and systemic vulnerabilities, needs a massive cash injection, together with the rest of the economy to avoid a full-blown crisis.
Zimbabwe's liquidity crunch has been worsened by its negative balance of payment position, with the country importing more than it is exporting. After a prolonged economic and political crisis, Zimbabwe's economic recovery began with the end of hyperinflation in 2009, supported by the inclusive government, a favourable external environment, multicurrency regime and cash budgeting, but the situation is now deteriorating as shown by company closures.
One banker said yesterday: "The problem now is liquidity is being funneled out just as fast as it comes through the import bill. Unless we get some kind of cash injection via an FDI (foreign direct investment), loans or grants, the situation will get worse."
Another banking executive said the situation was critical. "There is no stability in the economy and markets because most deposits are transitory deposits; they are funds held in bank accounts from which they can be withdrawn at any time without any advance notice," the executive said.
The Bankers Association of Zimbabwe says 83% of total deposits are transitory.
Growth in exports has remained low, averaging less than 1% monthly against a background of rising imports and low production. An expansion in imports against static exports means the current account deficit continues to worsen while the economy haemorrhages.
While the central bank maintains broad money supply, which in September stood at US3,9 billion up from US$3,7 billion in August, improved marginally, the liquidity situation on the ground is suffocating.
"Annual broad money growth declined from 5,77% in August 2013 to 4,89% in September 2013," said the RBZ bulletin. "On a month-on-month basis, money supply recorded an increase of 3,01% to US$3,910 billion in September 2013, from US$3,796 billion in August. The month-on-month increase in broad money was largely due to inflows of US$87,83 million at commercial banks."
Annual growth in credit to the private sector declined by 1,88 percentage points, from 12,84% in August to 10,96% in September.
However, on a month-on-month basis, credit to the private sector grew by 0,64% in September 2013, from US$3,694 billion in August 2013 to US$3,717 billion. As a result, the loan-to-deposit ratio declined to 95,07% in September 2013, compared to 97,32% in August 2013.
Commercial bank deposits amounted to US$3,3 billion in September, the central bank said.

Tuesday, November 12, 2013

Duel currency

THE government is likely to adopt a dual currency system that could bring
back the Zim dollar alongside the United States currency if the government
fails to resolve the liquidity crisis and to convince multilateral
institutions to lend money, an analyst has said.

Zimbabwe ditched its local currency after being rendered worthless by
hyper-inflation which topped 500 billion percent and adopted the
multi-currency system dominated by the US dollar in February 2009.

It has enjoyed an economic growth rate averaging seven percent since then
and inflation fell to 0.86 percent in September but GDP growth is seen
slowing to three percent this year after President Robert Mugabe's Zanu PF
party claimed a decisive victory in the July 31 elections disputed by the

Finance minister Patrick Chinamasa has said the regime will continue
indefinitely but Tony Hawkins, the head of the University of
Zimbabwe's Graduate School of Management said the tightening liquidity in
the economy could force a rethink and that there was always the risk that
politicians would seek a "superficially attractive" way out to finance
campaign promises.

"I suspect - perhaps fear - that the government will opt for some dual
currency option," said Hawkins in a presentation of the 2014 economic
outlook on Wednesday.

An International Monetary Fund (IMF) delegation is in the country to
assess progress made in implementing the Staff Monitored Programme (SMP),
which if successful, could help it clear $10 billion in external debts and
give it access to new credit from international lenders although that is
unlikely to happen soon.

"Given the IMF forecast of a sluggish global economy and the third
successive year (in 2014) of decline in non-fuel commodity prices,
Zimbabwe can expect little in terms of an external stimulus to growth," he

"This means growth must be domestically-driven in an economy where the
government budget is under enormous pressure and there is no scope for a
fiscal stimulus."

Information minister Jonathan Moyo recently said the Zanu PF party
election manifesto left the door open for the return of the local currency
to circulate along with the multiple-currency, although not in the
foreseeable future.

The government has adopted a new economic blue print, Zimbabwe Agenda for
Sustainable Socio-Economic Transformation (ZimAsset) which projects a GDP
growth of 6.1 percent in 2014 and 9.9 percent by 2018 but Hawkins said the
plan failed to explain where the investment would come from.


President Mugabe told a party meeting on Friday that government expects
more money from diamond sales after the European Union removed sanctions
on the state-owned Zimbabwe Mining Development Corporation.