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Debate on the efficacy of development aid – NewsDay

Tapiwa Gomo
IT was in 2009 that Zambian-born economist and author Dambisa Moyo rocked the world with her truth-telling book titled Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. The book argued that in more than half a century, trillions of dollars have been transferred by Western countries and their donor agencies towards development aid but this assistance has failed to improve the situation in Africa. If anything, some of the recipient societies are worse off as a result of aid.

Just three years before Moyo’s book, another economist William Easterly had published a book titled The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Easterly raised similar questions before reminding the world of Robert Owens’s idealistic vision that, “through the progress of physical and mental science . . . perpetual prosperity” for all is achievable.

There are several of these critical views that emerged before and after the turn of the millennium when the world sought to rebrand the same old ideas into the 21st century campaigns.

While these arguments have continued to baffle the development sector, little or no action has been taken to shift the approach or rather dismantle the idea itself and pave way to rethink development. For starters, there is no consensus on what development means yet it is funded in trillions of dollars.

Today, major European and United States of America (USA) development agencies are grappling with the same question. This could be because they are confronted by a myriad of questions and emerging challenges which summons a moment of introspection. The world faced major global recessions between 2009 and now. The COVID-19 pandemic has dented major economies pushing most governments to prioritise response to domestic challenges thus reducing aid to African countries.

Between 2009 and now, geopolitical dynamics and power shifted. China and Russia are now economic powerhouses with a major influence on global politics.

The West and USA powers are now checked by the veto power of these two. China, Japan, India and other Asian countries combined make up the world’s biggest market. The perpetual inefficiency of official development assistance (ODA) is whittling down interest among citizens of donor countries.

Of course, development aid has historically been used to arm-twist developing countries to accept conditions to allow further exploitation of resources by donor countries or their friendly counterparts.

That is easy to deal with at political level. This is why between 1960 and 2013, OECD countries gave $3,5 trillion of ODA.

Several reasons have been offered on why development aid has not helped African countries. However, analysis has unsurprisingly tended to blame African leaders for lack of political drive to improve their own countries, stealing the aid funds via Western-linked corrupt cartels or those in power use the money to fund armed groups and overstaying in power. There is colossal evidence to give credence to those accusations against African leaders because the corruption cartels have Western links.

However, the main question should never be, why development aid is not transforming the fortunes of Africa but why are African countries not developing. The latter opens up several windows of debate, one of which is that development aid has no history of transforming societies. This is simply because it was never initiated to do so but to keep recipient countries oppressed by conditions attached to it.

If there is a question that needs to be addressed around the efficacy of development aid, it should be the extent to which it has benefited donor countries by maintaining colonial relations and oppressive conditions in Africa which have stalled the continent’s  development over the past seven decades.

There has been recent suggestions to refocus the development aid approach. Sadly, most of these are rooted in the ideology of paternalism — one that assumes that Western countries have a major role in directing African development.

They propose that development aid must focus on a capacity-centred strategy which aims to strengthen local capacity, their administrative structures and essential services.

They also accept that using aid to achieve radical political change has been futile and concede that politicising aid impedes development. It is a model that presumes that African governments need to be motivated to develop their societies and that they should refrain from abuse of power.

The desire to direct and control the affairs of African countries is insatiable and impeding these new analysts and academics’ ability to let go, let alone to see what is happening in some African countries, in Asia and some in the Middle East.

Countries that have made it in recent decades in these regional blocs did so after realising that development aid is crippling and has limited or no intentions to improve conditions but to maintain paternalistic relations.

They dumped the Western modelled development aid approach. They harnessed local capacities, converted their potential into economies, grew their economies to benefit their people with some challenging global economic powerhouses.

Some have become major global donors today and yet some analysts in Western countries are still stuck on the old and barren idea of how to improve development aid efficiency in Africa.

Tapiwa Gomo is a development consultant based in Pretoria, South Africa. He writes here in his personal capacity.

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Robbers prey on mistrust of financial system – NewsDay

ZIMBABWE’s troubled monetary system has led residents to stash cash at home. But this also makes them targets.

Tariro remembers hearing a sudden bang on her kitchen door, the kind that produces shivers. She peeked through the window and saw 10 men armed with crowbars. They wanted to enter.

The 54-year-old ran into her bedroom shouting mbavha, Shona for thieves, as the men knocked down the door.

“They tied my mouth with a top I was wearing before bathing and said that I should co-operate, or they would kill me,” says Tariro, who asked to use only her middle name out of fear of being attacked again.

They found US$700 in her church uniform, as if they knew exactly where to look. Then they left.

Tariro believes the robbers came after her because she used to work for a non-governmental organisation where she earned United States dollars. “They assumed I had a lot of money in my house,” she says, still shaking at the memory.

Her decision to hoard cash stems from Zimbabwe’s cratering economy and rapid currency changes over the past two decades that have decimated the country’s monetary system and made keeping money under the bed more palatable than putting it in the bank. Not only has such stockpiling affected Zimbabweans’ ability to grow a savings account, it also has made an increasing number of people targets for robberies.

In 2009, Zimbabwe introduced a multicurrency system that made it possible for residents to use the US dollar, the South African rand and other currencies. But the US dollar, which was the dominant currency, became scarce a decade later and government reverted to the local currency. Officials introduced a separate account to deposit foreign currency, but all bank balances that held US dollars were converted to Zimbabwean dollars. Nearly overnight, people’s money was worth much less.

Zimbabweans like Tariro stopped trusting banks. Fearing sudden changes in policy, many people started keeping foreign currency — which depreciates slower than the Zimdollar — at home.

“There is no incentive for keeping money in the bank,” says Farai Mutambanengwe, founder and executive officer of the Small and Medium Enterprises Association of Zimbabwe, a lobbying organisation that promotes access to markets.

At the onset of the COVID-19 pandemic government started allowing official transactions in foreign currency again in March 2020. But residents remain wary of unpredictable fluctuations. Even those paid through the banking system distrust it. Some prefer to buy foreign currency on the black market to preserve the value of their money.

“There is no incentive for keeping money in the bank.”

Harrison Dumba, who works as a chef at a local restaurant, says he gets paid in local money through a bank transfer but immediately buys US dollars on the black market because they don’t lose value quickly.

“I do not see the benefit of keeping my money in the bank,” says the 36-year-old. “It can lose value while you think you are saving money.”

The coronavirus has caused even further economic hardships, as lockdowns and decreased travel affect jobs. The Zimbabwe Republic Police national crime office recorded nearly 3 500 robberies last year. Between January and March of this year, police had already counted more than 2 300 burglaries.

The United States of America Department of State has pointed to money stuffed in pillows and pockets as a motivator for robberies. “Criminals have specifically targeted businesses and residences known to house or store large sums of cash,” according to an April 2020 safety report.

Zimbabwean officials acknowledge the rise in crime but play down its connection to a failing monetary system. Ruth Mavhungu-Maboyi, Home Affairs and Cultural Heritage deputy minister, attributes the surge in violence to an increasing availability of guns and a lack of police vehicles. She points to a spate of recent arrests — including those of seven suspects in recent burglaries — as signs that authorities were working to curb crime. But she also emphasises the need for residents to trust banks.

“Does keeping your money at home really bring something?” she says. “Instead, it can get stolen. Encouraging people to keep money in the banks is an issue of safety.”

The uptick in crime hasn’t had only financial consequences; it has had psychological ones too.

Since the attack, Tariro finds it hard to trust people.

“My life has not been normal since then,” she says. She is renting part of her house out to other families, so she doesn’t have to live alone.

She panics when dogs bark. And she spends money immediately after getting it because she doesn’t feel comfortable keeping it anymore. —Global Press Journal

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Cassava SmarTech Zimbabwe : Revenue Diversification Pays Off for Cassava Smartech – marketscreener.com

CASSAVA Smartech Zimbabwe Limited trading as EcoCash Holdings Zimbabwe says the group’s revenue diversification strategy is paying off, as evidenced by the exponential revenue growth in the Insurtech and the Vaya Technologies business units.

The group’s financials for the year ended February 28, 2021, shows that the overall revenue decline of 26 percent to $14,3 billion compared to $19,3 billion in the prior year was largely offset by the growth in the Insurtech business.

“Although group revenues closed the year at $14 billion compared to $19 billion in the prior year, due to the impact of regulatory changes and the Covid-19 pandemic, this was mitigated by a rigorous cost-cutting drive,” group chairperson Mrs Sherree Shereni said in a statement of the financials.

She said the foreign exchange losses decreased by 45 percent, to close the year at $4,6 billion and these mainly relate to USD denominated debenture balances.

Mrs Shereni noted that as part of its revenue growth strategy, the Group will continue its focus on revenue diversification and innovation into the future.

She said during the year, the Insurtech business contribution to overall revenue increased to 15 percent from 9 percent in the financial year ended February 29, 2020, largely attributed to the growth of the short-term non-motor insurance business.

“The Vaya Technologies business also uplifted its performance contribution from 2 percent in the financial year 2020 to 7 percent in the 2021 financial year,” she said.

EcoCash revenue contribution at 60 percent was lower than 75 percent in 2020, with the decline as a result of a revenue diversification strategy that saw growth in the Insurtech and VAYA Technologies business.

Mrs Shereni said Steward Bank’s contribution remained stable and is expected to continue on the upward trend on the back of the system upgrade completed in April 2021.

Trading in the shares of Cassava Smartech Zimbabwe on the Zimbabwe Stock Exchange (ZSE) was suspended with effect from October 1, 2021, as the company had remained in default of publishing its audited financial statements for the year ended February 28, 2021.

However, following publication of the financials the ZSE has lifted the suspension in trading of Cassava shares effective today.

The company in a statement had attributed the delay to certain technical accounting matters that took time to be resolved.

According to the financials, EBITDA margin closed the year at 15 percent lower than 26 percent in 2020.

Mrs Shereni said the focus, therefore, remains on innovatively driving growth, consolidating the gains of the cost-cutting measures, and further reducing operating costs in FY22.

During the period under review, Cassava said through its partners, it supported a low cost, low input, climate-smart conservation farming approach called “Pfumvudza” in order to complement Government efforts towards a resurgence in agriculture and food security.

“The strength and agility of our business, combined with the professionalism, resilience, and innovative foresight of our teams, are expected to carry our business into the future, resplendent with digital opportunities.

“Our technology-driven platforms and processes offer significant advantages, and we continue to drive innovations and deploy them where the need is greatest.

“Consistent with that, the Group has continued to take advantage of this accelerated digital thrust to come up with new products and services that better respond to the evolving needs of our customers, guaranteeing a strong business that is transforming and is well placed to deliver sustainable growth into the future,” Mrs Shereni said.

According to the Group’s financials, the fintech business unit which is their largest operating unit constitutes about 80 percent of the total Group revenue.

Within the fintech business unit, 80 percent of the revenue comes from the mobile money business unit, EcoCash.

The goup has $2,7 billion of related party payables which relate to debentures which were assumed pursuant to the demerger of the group from Econet Wireless Zimbabwe Limited on November 1, 2018.

A total of 1 166 906 618 unsecured redeemable debentures with an annual compounding coupon rate of 5 percent were issued at a subscription price of 4,665 US cents per debenture and these are accounted for as a long-term related party payable.

Copyright The Herald. Distributed by AllAfrica Global Media (allAfrica.com)., source News Service English

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Vic Falls targets international capital free flow – The Zimbabwe Mail




HARARE – Government is exploring ways to establish an offshore financial services centre in Victoria Falls as part of broader efforts to support the free flow of international capital into the country,  Finance and Economic Development Minister Professor Mthuli Ncube, has said.

The centre is expected to develop and deepen the financial services sector through provision of opportunities for global investment.

Prof Ncube disclosed this yesterday in Victoria Falls at a Commodity Exchange Workshop attended by captains of the mining industry, senior Government officials, mining experts, small-scale and large-scale miners, and officials from the Dubai Gold and Commodities Exchange.

The workshop is being hosted by the Victoria Falls Stock Exchange in partnership with the Dubai Gold and Commodities Exchange. 

“As you might be aware, the Government of Zimbabwe is exploring the setting up of an offshore financial services centre in Victoria Falls of which the envisaged commodities exchange will be a key component. The offshore financial services centre will help develop and deepen the financial service sector, through provision of opportunities for global investment. We can all agree that investment is essential in driving economic growth and creating an attractive investment climate is one step towards achieving that,” said Prof Ncube.

“An offshore financial services centre is in reality an attempt to create an investment environment in which international capital can flow freely. Free flow of capital requires both the supporting legislation, and the underlying products — of which the commodities exchange is part of the infrastructure that provides the investment products.” 

Turning to what a commodity exchange entailed, Prof Ncube said it encompassed both the physical spot and derivative markets. 

“The physical market is where buying, selling and subsequent delivery of commodities like oil, grain and metals takes place whilst the derivative market deals with financial securities that help participants in the physical market to hedge risk. The physical commodity markets can also be subdivided into agricultural, base metals, precious metals and energy markets. Derivative markets can be classified as Over the Counter or Exchange Traded,” he said.


Prof Ncube led a high level ministerial delegation to Dubai where Victoria Falls Commodity Exchange signed a strategic MOU with Dubai Gold Commodity Exchange and the two exchanges are already operationalising the agreement.

DGCX is a leading derivatives exchange in the Middle East and has played a pioneering role in developing the regional market for derivatives trading, clearing and settlement. 

“It is therefore prudent and opportune for VFEX to tap into their expertise in setting up a commodities exchange as. As part of the agreement, the DGCX will extend technical support, knowledge and skills to VFEX, with the ultimate aim of establishing an international commodities exchange in Zimbabwe. My Ministry has supported the VFEX since it was mooted as an idea and we are encouraged to see that such a young exchange is quickly looking to broaden its products and services,’ said Prof Ncube.

Speaking at the same occasion, Mines and Mining Development Minister Winston Chitando said the mining sector was one of the main pillars of the country’s economy, contributing over 45 000 in formal employment and at least 50 percent in export earnings annually. 

He said the Second Republic led by President Mnangagwa launched the US$12 billion Mining Industry Strategy in 2019. 

“Under this policy document, priority is given to investments in exploration, opening of new mines, beneficiation and value addition of minerals as well as expansion of projects. A commodity exchange would complement this strategy as it represents an organised market for the finished or semi processed product from the mining sector. A transparent market may help curb smuggling in the sector and also assist miners in planning,” he said.

“As the Minister of Mines and Mining Development, I have to fulfil the vision set by His Excellency, in terms of growing the sector to a US$12 billion  industry.” – Herald


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