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Zimbabwe blames energy and export companies for inflationary actions

Anger over fuel and medicine shortages triggered violent street protests in January

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Zimbabwe blames energy and export companies for inflationary actions
Finance Minister of Zimbabwe Mthuli Ncube, gestures during an interview at the World Economic Forum (WEF) annual meeting in Davos, eastern Switzerland. (Photo by Fabrice COFFRINI / AFP)

Zimbabwe has released figures which blame exporters for exacerbating a dollar shortage, warning the power utility against fuelling inflation as the state grapples with a mounting economic crisis. 

The country is gripped by a severe dollar crunch, a tumbling local currency and mounting inflation, which hit 75.86% in April. 

Anger over fuel and medicine shortages triggered violent street protests in January and has piled pressure onto the government of President Emmerson Mnangagwa who had promised to revive the economy after the fall of Robert Mugabe. 

Treasury official, George Guvamatanga pointed the finger at exporters, accusing them of keeping $900 million of their earnings in offshore banks – money that he said should be repatriated to ease the dollar shortages and help stabilize the exchange rate. 

At the same parliamentary hearing, Finance Minister Mthuli Ncube warned state power utility, ZESA Holdings against hiking rates, saying it would add to inflation and hit customers already angered by an increase in outages. 

The crisis and worries of further unrest have undermined Mnangagwa’s efforts to win back foreign investors who left under Mugabe -whose 37-year rule ended in a coup in November 2017. 

On Monday, the local RTGS dollar was trading at 5 to the U.S. dollar compared to 5.5 on Friday. On the black market, the unit was weaker at 7.50 versus 7 on Friday, traders said. 

The new currency has lost 50 per cent of its value on the interbank market since it started trading on Feb. 22. 

Guvamatanga, permanent secretary for ministry of finance says $500 million out of last year’s $4.3 billion export earnings is still being kept offshore.

“There is $1.7 billion that should be available in this economy to pay for the pharmaceuticals, to pay for the fuel and all the requirements we need as an economy”, he adds. 

Exporters have 90 days to repatriate earnings to the country, but some of them take longer. 

Zimbabwe, last week, hiked fuel prices by around half, the second sharp rise in four months, a day after the central bank effectively removed a subsidy by ending oil importers’ access to U.S. dollars at a favorable rate. 

State power utility, ZESA said last month, it had applied to the energy regulator to raise its tariff by 30 per cent for maintenance of its grid and after the price of diesel and other inputs went up. 

Ncube told the parliamentary committee although electricity was still cheaper compared to regional peers, at 2.5 U.S. cents per kilowatt hour, any further tariff increase would hit consumers hard. 

“Any ill-advised sharp tariff rate increase combined with the power outages will be most unpopular and unwelcome and will certainly trigger another round of price increases and inflation,” Ncube said. 

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Zimbabwe’s business community calls for economic reform

The Movement for Democratic Change (MDC) had initiated a massive protest against worsening economic conditions

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Zimbabwe’s business community calls for economic reform
Zimbabwe President Emmerson Mnangagwa. (Photo by Jekesai NJIKIZANA / AFP)

The Zimbabwe business community has called on its government to urgently address ordinary people’s concerns in order to avoid continuous loss of production time through protest shutdowns.

The Movement for Democratic Change (MDC) had initiated a massive protest in central Harare to express growing impatience with the government’s failure to remedy a deepening economic crisis that has pushed many to the edge.

The government, however, insists that the pain caused by its tough policy measures was necessary for an economy which is reeling from decades of mismanagement under former President, Robert Mugabe.

Police moved on Thursday to impose an unpopular ban on the demonstration, setting the stage for ugly clashes with MDC followers.

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Nigeria’s state oil firm awards crude oil swap deals to 15 firms

The awarded oil firms include Vitol, Trafigura, oil major, BP and local downstream companies

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Nigeria's state oil firm awards crude oil swap deals to 15 firms
NNPC Towers, headquarters of Nigeria's state oil firm in Abuja, Nigeria. (File photo)

Nigerian state oil company, NNPC, has announced that 15 companies have won the right to swap the country’s crude oil for fuels, following a tender for the deals.

About 132 companies made a bid for the deals. The tender for the one-year contracts effective from the 1st of October and dubbed direct sale, direct-purchase (DSDP), was issued in March.

Nigeria is almost entirely reliant on imported fuel due to years of neglect at its own refineries.

It has leaned heavily on the swap arrangements to get fuel, particularly gasoline, as other would-be importers struggle to make money due to price caps.

The Nigerian National Petroleum Corporation says the companies that won the bids are made up of a consortium of 15 companies including Vitol, Trafigura, oil major, BP and local downstream companies.

Since the scheme’s inception in 2016, replacing a program that paid subsidies to importers, the NNPC has said it had saved the country $2.2 billion and supplied some 90 per cent of its import requirements.

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Zambia rejects donor aid amid its worst drought

The government says it has enough corn, the country’s staple food, to last until the next season and won’t need to import

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Zambia declines donor aid amid its worst drought
(File photo)

Zambia is experiencing its worst drought since 1981, but its government insists that a state of national emergency will not be declared.

Neither will donor assistance be accepted. A Southern Africa Development Community report last month, forecast 2.3 million Zambians will be food-insecure by March after large parts of the southern and western areas of the country received the lowest rainfall since 1981.

Over the same period, the report forecast Zambia will experience an 888,000-ton cereal deficit.

The Zambian government says it has enough corn, the country’s staple food, to last until the next season and won’t need to import.

Retail prices for the cornflour that Zambians consume mostly are already the highest since at least, 2003, according to data from the national statistics agency.

In July, prices were 41 per cent higher than the same time last year, helping to push inflation to 8.8 per cent, the highest since November 2016.

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