Zimbabwe’s scaled-back Christmas celebrations

Africa, economy, Politics
Box of Christmas crackers

Most Zimbabweans have been unable to afford Christmas treats because of soaring inflation, writes the BBC’s Shingai Nyoka from the capital, Harare.

Two women with large trolleys had come prepared to stock up for the holiday season, but they looked at each other in dismay.

“What kind of a party are we going to have?” one asked the other.

They were staring at a notice taped to the supermarket fridge door which said: “2 units per customer”.

This was the drinks section of a shop in the centre of Harare, and the units referred to were the 300 millilitre bottles of soft drinks and beer.

The Christmas and New Year’s holidays are usually a time for Zimbabweans to loosen their belts for feasts and celebrations.

Notice saying "2 units per customer
The rationing of drinks has affected people’s ability to hold parties

During the break the whole country shuts down. Factories close for the month, and the rains herald the start of the agricultural season.

Many Zimbabweans travel to their rural homes to see their extended family and to plant maize, to provide a year-long supply of the staple food.

On Christmas Day most people attend church, while throughout the season family gatherings are at the centre of the holidays.

Avoiding Christmas trimmings

This year, however, things are different, and belt-tightening is the order of the day.

The country is in the middle of an economic crisis.

People queuing outside a bank
At times, there have been long bank queues of people hoping to get hold of much-needed cash

According to the latest inflation figures, prices rose overall by 30% in the last year and each month that figure seems to be going up.

Supermarket shelves may be abundant with goodies but shoppers’ trolleys are uncharacteristically sparse as they face the consequences of rising prices.

The chicken that just over a year ago cost $3.50 (£2.76) is now priced at $7.19, while the price of 400g of muesli has risen from $5 to $12 and a pack of nine rolls of toilet paper has gone up from $8 to $19.

Salaries, however, have not kept up with inflation. In fact, the average wage of $300 a month is the same as it was a year ago.

A man wearing a hat decorated with worthless note bearers' cheques during a protest against government plans to introduce bond notes
Zimbabweans have held a series of protests to show their money has become worthless

Given that, the trimmings that can give a meal an extra sparkle might be avoided.

For example, an ordinary pack of 12 Christmas crackers with a joke, a hat and a small gift is selling at $40, compared to less than $15 last year.

Parties cancelled

It explains perhaps why some party invitations have been withdrawn and planned celebrations have been scaled back.

One businessman told me that he had to cancel his usual holiday party and turn it into a more abstemious lunch, thereby removing the burden of having to buy lots of drinks.

Back at the supermarket, a man was standing in an aisle next to shelves of rice, carefully comparing prices and products.

His eye rested on an unfamiliar product, Broken Rice.

Bags of broken rice
Image captionBroken Rice is made up of pieces of rejected rice

The 2kg package was priced $4.69 and was the cheapest brand available.

“Broken” is a euphemism for tiny imperfect pieces of rejected rice.

It had been packaged in time for the festive season, where no meal is complete without chicken and rice, an imported luxury.

‘More suffering in post-Mugabe era’

In a way the broken rice is a metaphor for the season, which feels imperfect.

“I started seeing it in the shops about a month ago,” the man, who introduced himself as Shupi, told me.

“We are used to having rice at Christmas. It is supposed to be a treat but it has become so expensive.

“Initially, people had shunned this rice because it is in small pieces and in different sizes. Some complain it doesn’t cook evenly, but at least it is affordable.”

A protester with a fuel container, due to the continuing fuel crisis,as Movement For Democratic Change (MDC) Alliance party members gather in the Africa Unity Square, in Harare, Zimbabwe, 29 November 2018, to protest against the current economic situation facing the country.
Discontent with President Emmerson Mnangagwa’s government is growing

Many, like Shupi, remember the promises made when President Emmerson Mnangagwa swept to power in November 2017 after Robert Mugabe was ousted.

“He promised us better years ahead and blamed our suffering on years of being under Robert Mugabe.

“But he has been in power for more than a year and the crisis has gotten worse,” Shupi added.

Runaway inflation

Zimbabweans have endured much over the last decade.

Ten years ago, supermarket shelves were mostly empty and record-breaking inflation was estimated to have topped 79 billion %.

It meant that prices for basic commodities would double or triple in a day, and bank balances for ordinary people could range from trillions of Zimbabwean dollars to octillions, that is a one followed by 48 zeros.

In 2009 the government scrapped the local currency and adopted the US dollar.

Emmerson Mnangagwa delivers a speech during a "Thank You" rally on November 24, 2018, in Murombedzi, Zvimba, Mashonaland West, Zimbabwe
President Emmerson Mnangagwa took power in November 2017
with a promise to improve the economy

Then, in 2016, in order to get over a shortage of physical cash, the authorities introduced a surrogate note, known as a bond note, that was supposed to have the same value as the US dollar.

In other words, a two-dollar bond note was supposed to be worth $2.

But the bond notes, or “bollars”, have lost value because of a lack of foreign currency backing the note. They are now worth 30 US cents each on the black market.

Zimbabwean companies are not producing enough to satisfy local demand or to earn foreign currency by exporting goods. Instead, the country is importing more, and struggling to pay.

In the six months from February to July this year, the country brought in goods and services worth $3.43bn, a 26% rise for the same period in 2017.

Driving the imports are the demand for fuel, electricity, soya beans, rice and wheat.

Businesses that want to import goods have been forced to buy US dollars on the black market at a premium price. This in turn pushes up the prices in the shops.

In order to increase its stock of hard currency, the country’s largest fast food franchise, Simbisa Brands, announced last Thursday that it had introduced a two-tier pricing model, offering discounts to customers who pay in US dollar notes.

‘Give us your cash’

“We need something like $1.2m in hard currency every month, but on average we are only managing to get about $100,000, so we need the foreign currency to meet our obligations.

“We are simply asking our clients to be able to support to get the forex we need,” chief executive Warren Meares told local daily paper Newsday.

But not everyone is complaining.

Man loading goods into a minibus
Image captionPeople transporting goods across the border are doing a roaring trade

The Beitbridge border post which connects Zimbabwe to South Africa is the busiest in the region, and Christmas is the busiest period of them all.

Cars, pick-up trucks, lorries and buses are laden with groceries from South Africa ready to be delivered to Zimbabwean homes.

The cross-border traders known as Malayitshas – meaning “one who carries goods” in the Ndebele language – have been among the biggest beneficiaries of the crisis.

They offer a courier service for those with foreign currency. They buy goods – anything from soft drinks to building materials – across the border and deliver them for a fee of 30% of the value.

‘Austerity for prosperity’

In Musina, on the South African side of the border, business is picking up and small Indian and Chinese-owned shops are coming back to life.

Many had closed in 2009 when the economy began to improve, but they have recently reopened as the prices have spiked in Zimbabwe.

Solomon Chakauya, waits for customers in his grocery store, in Chinamhora district north-east of Zimbabwe's capital Harare on December 10, 2018.
Image captionMany shopkeepers say business has been bad this Christmas

Despite the Christmas woes Finance Minister Mthuli Ncube has expressed confidence in the future of the economy.

He says it is “just a matter of time” before the country is “restored to its glory days”.

Zimbabwe was once the breadbasket of southern Africa feeding its neighbours and providing economic refuge and jobs in times of crises.

The government has now introduced what it calls “austerity for prosperity” measures. These include lowering government expenditure while increasing duty on items such as cars to reduce imports.

The optimism is not shared by those whose Christmas meal will consist of reject rice and miniscule portions of chicken washed down with small amounts of drink.

Source: BBC News

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Huawei CFO arrested: Why Meng Wanzhou’s detention on U.S. extradition charges is a big deal

Business, international News, News, Tech


Along with Huawei’s success has come suspicion about the company’s ties to China’s government, its willingness to overlook U.S. sanctions and the security of its systems.

By Jason Abbruzzese 

The arrest of a Chinese tech executive in Canada on Saturday was the most recent and public chapter of an ongoing battle between the U.S. government and one of the world’s biggest tech companies — Huawei.

The arrest, which came on U.S. extradition charges, featured a heightened level of intrigue due to the profile of the person arrested: Meng Wanzhou, Huawei’s chief financial officer and daughter of Huawei’s secretive founder, Ren Zhengfei, who is one of the most powerful businessmen in China. The arrest came amid reports that Huawei had been sending U.S. technology to Iran in violation of U.S. sanctions against the country.

Huawei is not a household name in the U.S., but the company has emerged as one of the largest tech firms in the world in the past decade thanks to its success in producing telecommunications equipment including cell towers and equipment for next-generation 5G wireless networks. Huawei is also second in the global smartphone market, having surpassed Apple earlier in 2018.

But along with its success has come suspicion about the company’s ties to China’s government, its willingness to overlook U.S. sanctions and the security of its systems.

“Huawei is effectively an arm of the Chinese government, and it’s more than capable of stealing information from U.S. officials by hacking its devices,” Sen. Tom Cotton, R-Ark., said in February when he introduced legislation to block the U.S. government from buying telecom equipment from Huawei or ZTE, another Chinese hardware maker. President Donald Trump signed the the bill in August.

The arrest of the Huawei executive is a BIG deal in China and is probably being underplayed in the US news cycle. Equivalent of an Apple or Facebook exec being arrested in China. https://www.scmp.com/tech/article/2176655/detained-huawei-cfo-sabrina-meng-wanzhou-told-staff-one-may-accept-risk …

310 people are talking about thisTwitter Ads info and privacy

Ren, a former Chinese army engineer, started Huawei in 1987 and found initial success making telephone equipment. Huawei’s expansion into telecommunications technology in the 1990s would fuel the company’s international expansion — and put it on the radar of U.S. security experts. Meng has been seen as the successor to Huawei.

In 2017, Fortune magazine ranked Huawei as the seventh-biggest tech company in the world by revenue, with more than $89 billion. The company has more than 180,000 employees.

Despite its size and global reach, only 38 percent of Americans said they had heard of Huawei, according to the survey company Morning Consult. The company’s name has also been something of a mystery for some in the West who wonder how to pronounce it. The company even made a humorous video for the U.K. about how to pronounce Huawei.

China’s rise as a global power has coincided with the emergence of the internet as a major av

Iran’s economy since the nuclear accord came into effect

Middle East, News, Politics

— China, South Korea and Turkey remain Iran’s top three trading partners                        — Ordinary Iranians got almost no benefit from nuclear deal

 

The 2015 nuclear deal between Iran and six world powers – the US, Russia, China, the UK, France and Germany – lifted international sanctions on Iran’s economy, including those on oil, trade and banking sectors.

BBC News

By Amir Paivar

A shopper passes a food stall in Tehran's Grand Bazaar.AFP

The 2015 nuclear deal between Iran and six world powers – the US, Russia, China, the UK, France and Germany – lifted international sanctions on Iran’s economy, including those on oil, trade and banking sectors.

In exchange, Iran agreed to limit its nuclear activities.

US President Donald Trump has repeatedly threatened to abandon the agreement and will make a decision on 12 May about whether to reintroduce sanctions from his country.

So, as that deadline draws nearer, Reality Check examines how Iran’s economy has fared since the nuclear accord came into effect.

Shoppers and carpet sellers stand next to carpets in Tehran's Grand Bazaar in Iran.Image copyrightAFP
Image captionCarpets for sale in Tehran’s Grand Bazaar.

How much have oil exports boosted Iran’s economy?

Iran’s economy was in a deep recession in the years before the nuclear agreement. But the International Monetary Fund reported that the real GDP of Iran grew 12.5% in the first year following the implementation of the deal.

Chart showing fluctuating economic growth in Iran

Growth has fallen since then, and the IMF estimates the economy will grow at 4% this year, which is healthy but below the 8% target Iran had for the five years following the deal.

That initial boost was almost all thanks to the hike in oil exports.

Sanctions on Iran’s energy sector halved the country’s oil exports, to around 1.1 million barrels per day in 2013. Now Iran exports almost 2.5 million barrels daily.

Close-up of a handful of pistachio nuts taken in Tehran in 2006.AFP

What about other famous Iranian exports, like pistachio nuts?

Iran’s non-oil exports in the year to March 2018 reached $47bn (£34.5bn) which is almost $5bn more than the year before the nuclear agreement.

According to Iran’s ministry of agriculture, the export of “signature items” such as pistachio nuts stood at $1.1bn in the same period, slightly lower than the previous year.

But Iran’s agricultural exports, including pistachios and saffron, are more affected by the country’s drought, rather than sanctions or trade relations.

Following the nuclear agreement, the US lifted a ban on Iranian luxury items such as carpets and caviar. Sanctions cut exports of Iranian carpets to the US – its biggest market – by 30% .

Iran’s trade with the European Union has increased significantly thanks to the lifting of sanctions but China, South Korea and Turkey remain Iran’s top three trading partners.

US Secretary of State John Kerry and Iranian Foreign Minister Javad Zarif, with other US and Iranian officials, meeting in Austria on 16 January 2016. The day the International Economic Energy Agency verified whether Iran had met all conditions under the nuclear deal.Image copyrightAFP
Image captionUS Secretary of State John Kerry and Iranian Foreign Minister Javad Zarif in Austria on the day international sanctions on Iran were lifted.

Did the nuclear deal stabilise Iran’s falling currency?

In 2012, the rial lost almost two-thirds of its value against the dollar because of sanctions and domestic mismanagement of the currency market. The sanctions limited Iran’s oil revenues and its access to the global banking system.

Iranian President Hassan Rouhani promised the nation that following the nuclear deal “you will not see the exchange rate go up every hour”.

Mr Rouhani managed to deliver on that promise by keeping the Iranian currency stable for almost four years. But in late 2017, when President Trump refused to certify the nuclear deal to Congress, the rial started to fall again.

The rial has lost almost half of its value against the dollar since last September. Many Iranians have been buying hard foreign currency to hedge against the possible future collapse of the nuclear deal, the return of sanctions and a fresh currency crash.

It was reported that some $30bn of capital left Iran in the first quarter of 2018, mostly to neighbouring countries and the Caucasus.

The Iranian government has since launched a crackdown on the foreign exchange market, banning exchange offices from selling hard currency and introducing limits (at $12,000) on cash possession – all in a bid to rescue the rial.

Household budgets in Iran since 2005

Are ordinary Iranians richer because of the nuclear deal?

Analysis by BBC Persian of figures from the Central Bank of Iran shows that household budgets (the value of all the goods and services used by a household) have fallen in real terms from $14,800 in 2007-08 to $12,515 in 2016-17.

Household budgets declined steadily for seven years until 2014-15 when the nuclear deal was struck and increased slightly the following year.

The analysis also shows that Iran’s middle class has been hit the hardest in the past decade. While the average household budget has fallen 15%, the figure is 20% for middle-class families.

Experts blame a combination of domestic mismanagement of the economy and international sanctions for the fall in household budgets.

Most of the post-nuclear deal boom came from increased oil revenues that go directly into the government coffers and that takes time to trickle down into people’s pockets.

http://www.bbc.com/news/world-middle-east-43975498

Can Africa be the big Brexit winner?

Africa, Business, economy, International Finance, Politics
Starting at next week’s Commonwealth summit, smart moves from both sides could benefit the UK and Africa.

Following the 2016 Brexit referendum, Britain needs to forge new and strong strategic alliances and trade relationships. Where and how does Africa feature in this equation?

Despite significant challenges, both Britain and Africa could emerge as winners from a rapidly shifting and uncertain global landscape. Smart policies and diplomacy could allow Britain to capitalise on the indifferent economic attitude the rest of the Western world has towards Africa. And African countries with strategic clout and collective bargaining acumen could broker favourable trade and investment deals rather than have terms dictated to them, as has been in the past.

First, to offset the detrimental effect of a split from Europe, Britain needs to look to alternative trading partners to catalyse its economy. Using foreign policy as an economic stimulus is vital in achieving this, and Africa is appealing in this regard. For British businesses, Africa’s high growth rates, urbanising population and growing consumer market provide a marketplace for British goods and services.

For Africa, the nature and scale of its development challenges, combined with its commodity export dependence, means that improved partnerships and increased demand for goods and services are welcome. Through trade, investment and donor support, there is huge scope for UK Inc to grow a more prosperous Africa while boosting its own economy.

Second, the ‘pivot to Commonwealth’ is a strategy that has long been flaunted as a positive spin-off from Brexit. Indeed, many advocates of Brexit had argued that once the UK was freed from the chains of the European Union (EU), it could pursue a buccaneering future as ‘Global Britain’.

Given the cultural affinity with its former colonies, the linguistic, legal and educational symmetry, and sizeable diaspora in the UK, Britain has an advantage over other countries regarding Africa. Its deep historical (albeit controversial) relationships with regional powerhouses like South Africa, Kenya and Nigeria could help secure trade and investment deals.

This year’s Commonwealth Heads of Government Meeting in London from 16-20 April is a clear attempt to both solidify and expand the UK’s network of influence with historical allies in a post-Brexit world.

Third, British rapprochement with Africa is likely to be well received in terms of trade policy. Africa’s relationship with the EU has often been tense, largely on account of the protectionist and distortionary polices Europe employs in the agricultural sector through the Common Agricultural Policy.

The UK has long been a proponent of freer and more equitable trade and would probably generate better opportunities for African markets to export their produce. This could be positive news for countries like Ghana (cocoa), Kenya (flowers and tea) and Ethiopia (coffee) in particular, who will benefit from fairer deals and better market access.

Thus disaffected countries may now see scope for more beneficial bilateral deals with the UK. Sensing this opportunity, Tanzania in 2016 refused to ratify the Economic Partnership Agreement with the EU, holding out for a more favourable deal with the UK. This could well be a sign of positive things to come – for both the UK and Africa.

But there are challenges.

Given the tight timelines for renegotiating trade deals with the World Trade Organisation, African countries’ placing on the list of priorities is unclear. African countries will likely fall behind larger trading partners like China, India and Brazil in the pecking order of who would offer more immediate and scalable benefits. Europe alone – with at least 759 treaties to be renegotiated – will probably receive most of the time and attention of British policymakers.

There is thus a risk that Africa’s status will be relegated to a ‘nice-to-have’ rather than a ‘must-have’ – especially given its low levels of integration into the global economy in terms of global trade (2% according to the World Economic Forum).

Success will also depend on the institutional bandwidth of the British government to execute ambitious plans. The country’s bureaucracy is already stretched and suffers from a lack of co-ordination, according to Nick Oliver, an infrastructure financier with NMS International Group.

If a new relationship with Africa is going to thrive, it also needs to be ‘business unusual’ for the UK. Given the country’s colonial past, any new relationship must be a strategic partnership of equals. Any attempt to re-engineer ‘Empire 2.0’ will fail.

Further, the UK will be negotiating from a position of weakness rather than strength. Europe remains Africa’s largest trading bloc and the multiple market access offered is still attractive to African countries. Britain will need to offer a compelling value proposition to counter the surety and scale that the EU offers.

Success in Africa for the UK will require not only cultural sensitivity, but also an appreciation of what African states actually want from a trade and investment perspective. This is an unenviable task on a continent with 54 vastly different counties, each with different priorities and preferences.

Symbolically, too, Britain needs to show Africa that it matters. The last UK head of state to visit Africa was Tony Blair in 2007. Emmanuel Macron’s first overseas trip, just a week after his inauguration as French president, was to Mali in 2017, while German Chancellor Angela Merkel visited Africa in 2016. Both leaders knew that these visits were important in shaping their strategic interest amid changing geo-political and economic influences in Africa. Britain is at a disadvantage here and needs build trust among African policymakers.

But African leaders must also play their part in getting this arrangement to work effectively. African states must use their negotiating power to their advantage. With other global powers jockeying for influence in Africa, both commercially and otherwise, competition is intense. But a strong and engaged Western partner to the continent is currently lacking, and this is where Britain could act as a counterweight to China’s muscular approach and increased interest from India and Japan.

To take advantage says Rohitesh Dhawan, director of strategy at Eurasia, African countries must be aware of the negotiating tactics used by countries such as Australia, New Zealand and India who have built fertile ground for detailed trade talks. ‘Keeping abreast of the acts of other countries can also help African nations know which issues the UK is more able to make concessions over (and is less hamstrung for negotiating space) than others, and where they should place their bets.’

Tactics, pragmatism and scalability are key – especially in light of the muscle that Africa could wield through the newContinental Free Trade Area agreement. By using its collective power, and prioritising agriculture, the continent’s leadership could broker a potentially game-changing deal that could reshape the nature of UK-Africa relations.

With Brexit negotiations at a critical juncture, it is still unclear whether the UK will emerge as ‘Great Britain’ or ‘Little England’. But the deadline is fast approaching and Britain would do well not to ignore Africa as it charts forward. With some out-of-the-box thinking, there are compelling reasons why the continent may yet emerge as a huge ally to the UK.

Ronak Gopaldas, ISS Consultant and Director at Signal Ris

Inflation declines; the biggest drop in 11 months

2019 Elections, Africa, economy, International Finance, local news

Organic-ProduceData made available by the National Bureau of Statistics (NBS) shows that inflation has again slowed; this time by 0.99 percent points which is the biggest drop in 11 months.

In the Consumer Price Index and Inflation Report for March 2018, the NBS said inflation rate has dropped in 13.34 percent from 14.33 percent in February.

This is the 14th consecutive month of disinflation since February 2017 when inflation first slowed.

The highest increases were recorded in fruits and vegetables, fish, coffee, eggs and cereals.

“On a month-on-month basis, the headline index increased by 0.84 percent in March 2018, up by 0.05 percent points from the rate recorded in February,” the report read.

“The composite food index rose by 16.08 percent (year on year) in March 2018, down from the rate recorded in February (17.59 percent).

“The urban inflation rate eased by 13.75 percent (year-on-year) in March 2018 from 14.76 percent recorded in February, while the rural inflation rate also eased by 12.99 percent in March 2018 from 13.96 percent in February.

“In March 2018, all items inflation on a year on year basis was highest in Bauchi (16.38%), Kebbi (16.36%) and Nasarawa (16.33%), while Kwara (10.30%), Kogi (10.87%) and Delta (11.17%) recorded the slowest rise in headline year on year inflation.

“In March 2018, food inflation on a year on year basis was highest in Nasarawa (20.83%), Bayelsa (19.03%)and Yobe (18.93%), while Kogi (11.99%), Bauchi (12.60%) and Benue (13.07%) recorded the slowest rise in food inflation.”

Inflation had doubled in January 2017 after the economy slipped into a recession in 2016. With consistent disinflation, the economy exited recession mid-2017.

NBS