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Debt, power and poverty – The Zimbabwe Independent

This external debt owed by African countries is equivalent to 24% of their combined Gross Domestic Product (GDP).

GOVERNMENTS and private entities borrow to finance investments, which are key for sustainable development, as well as, for covering short-term cash flow imbalances, which periodically occur as a result of mismatch between revenues and expenditures.

Africa’s debt stock owed to external creditors as at year 2021 stood at US$644,9 billion, a significant rise from US$443 billion in 2013. External debt service is projected to cost US$68,9 billion in 2023.

This external debt owed by African countries is equivalent to 24% of their combined Gross Domestic Product (GDP).

In the past, the majority of African external debt was owed to official creditors – high income countries and multilateral lenders like World Bank (WB) and International Monetary Fund (IMF).

This has now shifted, China and other private lenders make up a significant portion of the debt stock, meaning that a large portion of debt is non-concessional, potentially attracting high interest charges.

Apart from external debt, these countries have ballooning domestic debt, which is crowding out productive sector financing and resultantly inhibiting growth.

Many developing countries particularly those in the Global South are in debt stress and several other countries of the world are saddled with huge external debt exposures hampering their hopes for future development.

Many analysts, including international lending institutions have varied views when it comes to the issue of debt stress. They attribute debt stress to poor economic management, rampant corruption, weak governance systems and weak oversight institutions on the part of borrowing nations.

Can this be true? How can all these countries on the African continent and in other parts of the globe be deemed failures in terms of managing borrowed resources?

Kenyan President William Ruto is on record saying that the international financial architecture is rigged, and its rigged against the Global South. I cannot agree with him any better.

The economic policy prescriptions that are recommended for implementation in this part of the world by the International Monetary Fund (IMF) are never prescribed for the West, even during worst financial crisis in the West.

In their observations, Ismael Vaccaro, Eric Hirsch and Irene Sabaté identified debt as a governing tool, and that the lending institutions, states, financial institutions, corporations and non-governmental organisations that have jurisdiction over this debt have the power to reshape individuals, communities, societies to the extent of reshaping their civil and political status.

It means in some instances debt can be used as a technology or instrument of power. In a debt arrangement, there exists the debtor-creditor relationship.

It should be natural cause that both debtor and creditor should enter into a debt agreement with equal powers and the inherent risks to the agreement must be more or less equal.

The reality with Africa’s debts is that while debtors are struggling with economic issues at home to have their material needs satisfied, creditors are well connected to global markets with many options to diversify or minimise risks.

Given these circumstances, one wonders whether the relationships between debtors and creditors in these debt arrangements are in good faith especially when indebted subjects lack technical knowledge and when access to crucial information about the very nature of their debts and the interest charges involved is denied.

In many instances debtors are put under severe pressure to repay and they forego the provision of essential services to their citizens in order to meet this moral obligation.

These conditions are deliberately created to weaken borrowers and as a result they become perpetual beggars, and the lender assumes the position of “the Master.”

In my view, inappropriate financial structures that are created by international lending institutions together with their conditionalities are the major causes of under development in Africa.

These borrowings have subjected Africans to perpetual misery and are hampering every effort to fight poverty in the continent.

They are a “trap” and once a country enters into debt that country will not be able to come out of it.

It is a form of control mechanism, a horse and rider relationship where obviously the lender is the rider.

Countries are then forced to restructure loans after failing to pay under a new set of conditions.

And the next thing they are forced to implement austerity measures or some structural adjustment policies which by their nature are painful to citizens.

Under these austerity measures, countries will be forced to cut on welfare expenditures, reduce the public service, subjecting millions of people into unemployment and people becoming destitutes. Today an average of 18% of Africa’s population in Sub-Sahara is living in abject poverty.

I want to describe this kind of financial architecture as “inappropriate financial capitalism” because it is premised on exploitation, discrimination and financial expropriation. For the West, its imperial influence has moved from colonial control to a modern financial power.

Inappropriate financial capitalism

It is one of the primary causes of perpetual poverty in Africa. To the lenders, debt has become a governance as well as a profiteering tool.

Through this financial architecture, the multilateral lenders have created a debt society made up of indebted citizens who are increasingly the subjects to the dynamics of finance, Susanne Soederberg shared the same views.

I see debt here containing some governmental instruments. Subjects are disciplined through indebtedness and through promises and fabricated abundance; and in the event that they fail to pay, they are subjected to threats of sanctions and punishment. There is obviously some structural violence exerted on people’s lives and their livelihoods as a result of these inappropriate financial structures.

High debt levels weaken the purchasing power of a national currency and as a result prices of goods and services become unaffordable to the majority of citizens.

In some countries citizens have gone to the extent of staging demonstrations and protests due to rising cost of living. In Japan and the Asian Tigers, suicides became common during the financial crisis.

In Africa, millions of citizens have left for Europe and America to perform menial jobs for self sustenance because their home economies have failed them.

Again on the downside, Africa has become the cheap supplier of labor to the West and the North because its economies are breeding poverty and there is no hope for recovery. Meanwhile, IMF through its Staff Monitoring Programmes continues to prescribe different sets of austerity measures to countries, giving them false hope that the Fund will resume lending upon satisfaction of certain conditions.

Through inappropriate financial capitalism the West is benefiting in many ways – profiteering, continued control of debt society and cheap migrant labor.

What is the way forward?

A new form of monetary system – a Pan-African monetary system is needed.

At a collective level, Africa can build robust infrastructures – roads, railways systems and communication systems that facilitate trade and development.

And therefore a payment system that facilitates trading and that is acceptable throughout the continent must be established. A monetary fund for the African community, resourced by Africa member states and controlled by Africa will solve most of Africa’s problems.

There must be concerted effort to reduce or eliminate the current over-reliance on the American dollar for settlement of payments by African States.

We need to rethink on the role of money in shaping or destroying our African societies. There is more than just empirical evidence to show that inappropriate financial capitalism is as an instrument of power and control by some super powers and if it remains unchecked, the indebted subjects- Africans will continue to be relegated to weak elements – another form of slavery. Those who control money can pursue a policy both at home and abroad contrary to citizen expectations, (Clement Artilee, former United Kingdom Prime Minister)

  • Dr Nyashanu writes in his personal capacity. — +263772989148.

 

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Hippo Valley seeks solar energy supply from partners – NewsDay

The company revealed its plans to migrate to more eco-friendly processes in its operations in its annual report for the period ended March 31, 2023. This is part of plans to reduce its own pressure on the national grid in a country facing a deficit of over 1 000 megawatts of electricity.

HIPPO Valley Estate Limited has encouraged its partners to install solar plants to supply the sugar miller and help reduce pressure on the national grid.

The company revealed its plans to migrate to more eco-friendly processes in its operations in its annual report for the period ended March 31, 2023. This is part of plans to reduce its own pressure on the national grid in a country facing a deficit of over 1 000 megawatts of electricity.

In an interview with NewsDay Business at Hippo’s annual general meeting last Friday, the firm’s chief executive officer Aiden Mhere said the company was not going to directly procure the solar system, but rather encourage partners to lead the project.

“Well, the solar plants are not necessary for ourselves to actually spend money on them,” he said. “We are asking for other people to put up those solar plants, but we are looking at about five to 20MW of electricity for the solar system.

“So, to alleviate the electricity challenges we are looking at either, directly ourselves or indirectly, inviting other partners to produce solar. We have had prototype solar systems to power our pumps and now we are inviting those companies that are capable of providing solar energy to come and put-up solar plants and then we can buy the energy from them during the deficit periods.”

He also indicated that the firm was, however, an independent power producer which produces more than enough power through thermal station, which uses sugar cane bagasse to produce thermal energy for the sugar milling processes.

“So, when we are running the sugar mills, we actually have thermal power stations both at Hippo Valley and Triangle that produce electricity. As long as we are running, we produce electricity,” Mhere said.

“We irrigate using very good pumps in some of our operations that depend on electricity so when we have electricity challenges it becomes a problem.

“When we are running normally, we actually produce more energy than what we need. For example, at Hippo Valley we produce approximately five to 10 megawatts of electricity which we put on the national grid,” Mhere added.

National power generation challenges stem from low water levels at the country’s top electricity producing plant, the Kariba South Hydro Power Station and an overload at the Hwange Thermal Power Station.

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Hippo Valley seeks solar energy supply from partners – NewsDay

The company revealed its plans to migrate to more eco-friendly processes in its operations in its annual report for the period ended March 31, 2023. This is part of plans to reduce its own pressure on the national grid in a country facing a deficit of over 1 000 megawatts of electricity.

HIPPO Valley Estate Limited has encouraged its partners to install solar plants to supply the sugar miller and help reduce pressure on the national grid.

The company revealed its plans to migrate to more eco-friendly processes in its operations in its annual report for the period ended March 31, 2023. This is part of plans to reduce its own pressure on the national grid in a country facing a deficit of over 1 000 megawatts of electricity.

In an interview with NewsDay Business at Hippo’s annual general meeting last Friday, the firm’s chief executive officer Aiden Mhere said the company was not going to directly procure the solar system, but rather encourage partners to lead the project.

“Well, the solar plants are not necessary for ourselves to actually spend money on them,” he said. “We are asking for other people to put up those solar plants, but we are looking at about five to 20MW of electricity for the solar system.

“So, to alleviate the electricity challenges we are looking at either, directly ourselves or indirectly, inviting other partners to produce solar. We have had prototype solar systems to power our pumps and now we are inviting those companies that are capable of providing solar energy to come and put-up solar plants and then we can buy the energy from them during the deficit periods.”

He also indicated that the firm was, however, an independent power producer which produces more than enough power through thermal station, which uses sugar cane bagasse to produce thermal energy for the sugar milling processes.

“So, when we are running the sugar mills, we actually have thermal power stations both at Hippo Valley and Triangle that produce electricity. As long as we are running, we produce electricity,” Mhere said.

“We irrigate using very good pumps in some of our operations that depend on electricity so when we have electricity challenges it becomes a problem.

“When we are running normally, we actually produce more energy than what we need. For example, at Hippo Valley we produce approximately five to 10 megawatts of electricity which we put on the national grid,” Mhere added.

National power generation challenges stem from low water levels at the country’s top electricity producing plant, the Kariba South Hydro Power Station and an overload at the Hwange Thermal Power Station.

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Our meat is rotting, Cde Mnangagwa – NewsDay

Amid the pomp and fanfare, Mnangagwa proudly and confidently declared that Zimbabwe’s perennial power crisis had finally come to an end. This was after the country had endured up to 20 hours of daily power outages in some areas.

ON August 3, 2023, President Emmerson Dambudzo Mnangagwa commissioned the new Hwange Thermal Power Station Units 7 and 8.

Amid the pomp and fanfare, Mnangagwa proudly and confidently declared that Zimbabwe’s perennial power crisis had finally come to an end. This was after the country had endured up to 20 hours of daily power outages in some areas.

An excited Mnangagwa bragged that load shedding was now a thing of the past and went as far as to sarcastically challenge those whose meat was rotting in their fridges because of power cuts to come forward.

Well, almost immediately after August 23 an 24 harmonised elections, the dreaded power cuts returned with a vengeance.

It became clear that the brief lull the country went through without experiencing any load shedding in the run-up to the crucial election was nothing but a ruse. The nation is largely in darkness.

Zimbabweans were, in fact, foolhardy made to believe for a minute that the ruling Zanu PF party was sincere and had abandoned its trickery and chicanery.

It is quite possible that the government merely imported plenty of electricity from our neighbours, knowing fully well that the country was not producing sufficient energy for its domestic needs.

This whole “no more load shedding” ruse was just to get votes from an unquestioning and gullible citizenry who believe everything this government says.

Of course, some of us had always raised valid concerns over the numerous claims by the Mnangagwa administration. I remember penning a piece on March 22, 2023 titled: Is Hwange Unit 7 another big scam and con job?

As much as there are those who may view my thoughts and observations as too cynical and always negative, but decades of relentless deception authored by the Zimbabwe regime has shaped my mindset.

It should be known that people who are always sceptical and suspicious about a particular individual have good reason for doing so. If one is at the receiving end of countless lies and broken promises at the hands of someone, they end up taking whatever they are told by the perennial liar with a pinch of salt.

The persistent propensity to lie and deceive by the Mnangagwa administration troubles me.

Why do they have to mislead the nation — solely for the sake of political expediency?

As much as some may perceive this as a small insignificant thing — to be expected during the election season — however, there are always severe consequences.

For instance, having assured the corporate world that Zimbabwe’s energy crisis had finally been resolved — what is the sudden resurgence of power cuts going to do to investor confidence? Will investors, both local and foreign, be prepared to sow their hard-earned monies in a country where what the leadership pronounces is not to be trusted?

It was so heart-breaking listening to the Zimbabwe National Chamber of Commerce chief executive officer Christopher Mugaga stating last week that business is losing between US$70 and US$80 million each month due to these persistent power cuts.

In so doing, this may lead to increased prices of goods and services because these losses are simply passed on to the consumer, further worsening the already dire situation of the ordinary citizenry.

Need I remind anyone that under Mnangagwa first five-year reign, half the population have been thrown into extreme poverty, while two-thirds of the workforce earned and still earn below the poverty datum line.

All this is largely because we have a government which cannot tell the truth!

If those in power had been honest all along — that the country’s power crisis had not been averted and was far from over — this would have enabled the business community to be better prepared.

Who knows, maybe due to the false assurances that the days of load shedding were past us, some corporates decided to shelve any plans for alternative power sources — opting to invest the capital elsewhere, only to be met with a rude awakening a few days after the elections.

Government needs to show some seriousness on such critical matters as power supply.

My late father, in his profound wisdom, taught me that lies had short lifespans and the repercussions were never good for anyone. There was really no need to lie to the nation that our power challenges had been resolved.

All the Zanu PF regime had to do was tell the nation that Hwange Units 7 and 8 were complete (if that is the real truth) — and should have also emphasised that power cuts will continue reoccurring because the Units will not be able to meet the ever-increasing demand for electricity by the growing population.

This would have given both commercial and domestic consumers a clear picture so as to enable proper planning. However, by lying that there is no longer an electricity shortage in Zimbabwe, this had the potential effect of dissuading and discouraging prospective investors in the energy.

Indeed, lies have a very short lifespan and have a tendency of backfiring in a big way. All we can now do is brace ourselves for increased prices of goods and services — just because we have liars in power.

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