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Govt calls for calm, assures of economic stability – Chronicle

The Chronicle

Nqobile Bhebhe, Senior Business Reporter

GOVERNMENT has called for calm in the wake of recent price increases saying the measures being implemented on the fiscal and monetary fronts will ensure economic stability and cushion citizens from the negative shocks.

In a ministerial statement presented in Parliament on Thursday in response to concerns over recent price escalation, Finance and Economic Development Minister, Professor Mthuli Ncube, said speculative expectations of higher inflation and future exchange rate depreciation were the biggest drivers of exchange rate volatility and the ultimate price increases.

This is despite the stable economic fundamentals and the economic reform milestones achieved so far, which have seen Zimbabwe scaling up its domestic production and achieving a 7,8 percent Gross Domestic Product growth last year, attracting more investment, driving more infrastructure development and increasing its export earnings. 

While acknowledging the market shocks induced mainly by the ongoing Russia operation in Ukraine, which has disrupted global supply chains, Prof Ncube said the exchange rate volatility induced by speculative behaviour by some influential economic actors, has escalated the situation.

President Mnangagwa

This has prompted the Government to take drastic measures, which were announced by President Mnangagwa last weekend, to try and restore sanity and enhance confidence in the use of the local currency.

These included temporary freezing of lending by banks to entities and individuals, liquidation of the surrender portion of export proceeds to be settled at the willing buyer willing-seller exchange rate, suspension of third-party country payment on foreign payments and fostering discipline in the stock market by prohibiting inter account transfers, among others.

“Inflation is now being driven by expectations of higher inflation and exchange rate depreciation in the future,” said Prof Ncube.

“Prices of goods and services are being quoted with a premium.

This results in a self-fulfilling upward movement in general prices of goods and services in the economy.”

He said the Government together with the central bank has adopted several policy measures to stabilise the currency and lower inflation, including among others fiscal consolidation and restraining growth in reserve money.

While the global economy is also under pressure, the Government is convinced the recent exchange rate movements were being driven by negative sentiments and indiscipline of economic agents as opposed to economic fundamentals, said the minister.

As such, he said the raft of policy measures announced by the President last Saturday will deal with the unwarranted and sustained depreciation of local currency and tame the upward inflation spiral.

Further, Prof Ncube said the measures are meant to restore macro-economic stability, boost confidence in the economy, increase the appeal of the local currency, preserve value for depositors and investors and deal with market indiscipline.

He said the economy generally remains on sound footing, with marked improvement in performance, building on the 2021 growth, which is above the 3,4 percent average growth for sub-Saharan Africa.

“This was mainly due to a favourable 2020/2021 agricultural season and higher international mineral commodity prices,” said Prof Ncube.

“A stable micro-economic environment improved access to foreign currency through the foreign currency auction system and better management of the Covid-19 pandemic.

All these factors contributed to a good performance in 2021.”

Confederation of Zimbabwe Industries (CZI)

This week, the Confederation of Zimbabwe Industries (CZI) in its 2021 manufacturing sector survey report said capacity utilisation in the manufacturing sector jumped to 56,52 percent in 2021 from 47 percent in 2020 largely driven by increased investments in the industry.

According to the survey report, 42,7 percent of the manufacturing sectors are accessing the foreign exchange auction market.

The report said that companies are obtaining 39,5 percent of their foreign currency requirement from the auction market.

Drinks, tobacco and beverages sub-sector recorded the highest level of capacity utilisation in 2021 of 79 percent.

— @nqobilebhebhe

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RBZ mops up ZW$31,6 billion in four months – New Zimbabwe.com

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By Alois Vinga


THE Reserve Bank of Zimbabwe (RBZ) managed to mop up excess liquidity amounting to ZW$31,6 billion in the last four months of 2021 as the monetary authority upped the gear towards preserving the local currency’s stability.

Excess liquidity/cash position is when the balance exceeds the actual working capital cash needed, thereby becoming excess cash, or cash that is not necessary to the firm’s financial operations unless it is reinvested for other purposes.

The monetary authorities believe that if such balances are not mopped, several companies may be tempted to invade the parallel market and destabilise exchange rates for speculative purposes.

The RBZ has been implementing the excess cash mop up exercise through the issuance of Open Market Operations (OMO) securities through Non-Negotiable-Certificates of Deposits and Savings, which offers banks the opportunity to deposit excess cash with the central bank.

“During the quarter, OMO securities issued by the RBZ rose from ZW$41, 19 billion in the third quarter to ZW$72, 82 billion in December 2021, thus mopping up excess liquidity amounting to ZW$31,63 billion from the market during the quarter under review,” latest RBZ statistics said.

The period also saw reserve money stock stood at ZW$25,5 billion in the fourth quarter of 2021, compared to the target of ZW$28,9 billion, which translated to a quarterly growth of -1.14%, against a targeted growth of 10%.

“The reserve money quarter- on quarter growth target was reduced from 20% to 10%, in the fourth quarter of 2021.The quarterly growth in reserve money was contained within target during the fourth quarter of 2021,” said RBZ.

The lower reserve money stock, in part, reflected liquidity mopping by the Central Bank through open market operations.

“Mopping was largely through issuance of securities (non-negotiable certificates of deposits and savings bonds), supported by the liquidity withdrawing impact of net Government revenue collections and net foreign exchange selling by the Reserve Bank,” the central bank said.

Economic analyst, Prosper Chitambara, said the sustained trend is a step in the right direction, but hinted that deeper reforms are still required if long term benefits are to be achieved.

“The quantum of mopped up excess cash reflects the Monetary Policy stance which the RBZ is pursuing. This will obviously reign in the parallel market exchange rate volatility.

“However, more still needs to be done as far as maintaining money supply growth at sustainable levels if long term economic stability is to be achieved,” he said.

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President to headline AfCFTA talk at Davos – The Herald

The Herald

Kudzanai Sharara in DAVOS, Switzerland

President Mnangagwa, in Davos attending the World Economic Forum, is today expected to contribute to and co-chair a breakfast discussion around Africa Continental Free Trade Area (AfCFTA).

The President will co-chair the session alongside with Botswana President Mokgweetsi Masisi, Namibia President Hage Geingob, Rwanda President Paul Kagame and Nigeria Vice President Yemi Osinbajo. 

Running under the theme “Friends of the African Continental Free Trade Area”, the breakfast meeting will explore how public-private partnerships can support the implementation of AfCFTA.

AfCFTA is comprised of 55 countries with a population of 1,3 billion and combined GDP of about US$3,4 trillion, making it the largest free trade area in the world, both by area and by the number of countries.

The World Bank estimates that, if implemented properly, by 2035 AfCFTA is set to lift 30 million Africans out of extreme poverty and 68 million from moderate poverty.

The same World Bank study finds that the AfCFTA has the potential to increase intra-African trade by 81 percent by 2035. Currently, 54 of the 55 African countries have signed the agreement, and 41 countries have ratified it.

Zimbabwe is finalising its tariff offer under AfCFTA and hopes to reap huge trade benefits under the agreement, according to Industry and Commerce Minister Dr Sekai Nzenza, in a speech last month.

President Mnangagwa interacts with Zimbabweans living in Switzerland on arrival in Zurich for the World Economic Forum (WEF) yesterday.

Mr Borge Brende, the President of the World Economic Forum, will moderate the session while closing remarks will be delivered by Ms Vera Songwe, executive secretary of the United Nations Economic Commission for Africa.

Later in the day, President Mnangagwa is expected to deliver opening remarks at a workshop themed “Unlocking New Investment and Services Markets”.

The workshop comes as vast sums of money are available for productive investments in emerging markets, but due to regulatory bottlenecks “this capital is not flowing to where it is most needed”.

The workshop will thus explore how public-private collaboration can accelerate the scale and impact of investment in emerging markets. 

Another event where President Mnangagwa will participate is a roundtable on Restoring Peace and Order amid intensifying geopolitical fractures undoing progress on key global goals.

Mid-morning, the President will attend another informal gathering of world economic leaders roundtable discussion on “Resilience for Sustainable Growth”.

The discussion, to be attended by political and economic leaders alone, without the media, will focus on the conflict in Ukraine, the Covid-19 pandemic and the effects of climate change on the “brittle nature of food systems, global supply chains and energy networks”.

Participants are expected to come up with steps necessary to build greater resilience at both the global and national levels.

Speaking ahead of tomorrow’s packed programme, Stuart Comberbach, Zimbabwe’s Ambassador and Permanent Representative to the United Nations and other international organisations in Geneva, Switzerland, said the WEF is a very important forum for Zimbabwe and the fact that Zimbabwe was invited means it is being recognised among the international community of nations.

He said the WEF is not for speeches, “which are actually actively discouraged”, but interactive discussions that proffer strategies and solutions.

The whole idea is to allow participants to be very open and honest on the challenges being faced globally and what can be done to address them, according to Ambassador Comberbach.

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No climate transition without securing land rights – NewsDay

Letters to the editor

THE 2019 landmark land tenure decision by parties to the UN Convention to Combat Desertification (UNCCD) offers a blueprint for upcoming climate negotiations in Sharm El Sheikh in November.

The recent UNCCD COP15 conference in Abidjan, Ivory Coast, took necessary next steps to guide countries on how to embed land rights within national implementation
processes.

As the first of the three Rio Conventions (addressing climate, biodiversity and desertification respectively) to explicitly refer to land tenure as a critical enabler for the transition to more sustainable pathways, results of the meeting could advance the landmark land tenure decision by proposing guidelines to safeguard legitimate land rights.

According to UNCCD’s recently published Global Land Outlook, roughly US$44 trillion of economic output is moderately or highly reliant on natural capital.

Yet this natural resource base is under intense pressure from changing land use patterns and the accelerated impacts of climate change.

This already has huge consequences for the poorest and most vulnerable communities, who depend on natural resources for their survival, and even more, people will be affected as natural capital dwindles.

Current land restoration efforts, such as the global goal of restoring one billion hectares of degraded land or achieving land degradation neutrality by 2030, are seen as offering new opportunities to tackle the impacts of climate change while addressing food security needs, creating livelihood opportunities, especially in rural areas, and countering growing land-based conflicts and migration.

But such initiatives need to account for all existing legitimate tenure rights for Indigenous people, smallholder farmers and pastoralists, women and youth, and other vulnerable groups.

Otherwise, restoration efforts and especially large-scale investments will lead to new conflicts, violating the rights of people and risking the success of the planned measure.

The UNCCD is the first of three Rio Conventions to explicitly recognise the importance of safeguarding all forms of legitimate land tenure — especially for women, youth, Indigenous communities and smallholder farmers and pastoralists — as a prerequisite for the sustainable management of land and other natural resources.

But with land governance enacted at the national and sub-national levels, how can this progressive decision at the global level translate into a governance environment that promotes good land stewardship by strengthening the land rights of vulnerable groups at the local level?Alexander Müller

Workplace 50/50 — Advancing workplace equality

THE Sexual Reproductive Health and Rights Africa Trust (SAT) is an innovative youth serving organisation that works to empower young people to claim and exercise their right to health. Key to this is gender equality.

Of particular interest is gender equality in the workplace.

Women’s leadership has gained tremendous strides over the years and a growing body of evidence demonstrates a correlation between gender diversity at the executive level and an organisation’s overall performance.

Despite the evidence demonstrating women’s value in the workplace, women continue to encounter structural barriers and experience sexual harassment.

Workplace 50/50 is a programme that seeks to contribute to increased gender equality and increased women’s empowerment in the workplace, thereby contributing to overall organisational strength.

SAT calls for organisations to register and sign up to the Workplace 50/50.

This is a platform that encourages commitment and active planning and implementation of gender equal representation on the board and management as well as matters of
remuneration.

COVID-19 has disrupted workplaces and women’s livelihoods have been disproportionately impacted.

SAT encourages organisations to review policies to embrace inclusion and in the context of crises, tackle power and privilege imbalances by committing to Workplace 50/50.

Commitments:

The Workplace 50/50 has the following commitments:

  • Commitment 1 — Making public declarations on commitment to gender equality and equity.
  • Commitment 2 — Creating equitable governance, management, staffing and remuneration decisions.
  • Commitment 3 — Making visible your commitment to gender equality in the external representation of your organisation.
  • Commitment 4 — Preventing and responding to sexual abuse, sexual violence and sexual harassment ensuring a survivor-centred approach through organisational policies and codes of conduct.
  • Commitment 5 — Addressing gender issues in employee health and wellness.
  • Commitment 6 — Supporting gender-responsive and transformative programming, and
  • Commitment 7 — Conducting regular gender equality audits and reports on progress.

Signing up to this is a commitment to the organisation’s commitment to gender equality and an affirmation of Sustainable Development Goal 5.SAT

Child labour requires urgent action

THE Global Estimate on Child Labour believes that 160 million children are child labourers worldwide — an increase of 8,4 million children in the last four years — with millions more at risk due to the impacts of COVID-19.

A report, jointly released by the International Labour Organization (ILO) and Unicef in 2021, warned that in sub-Saharan Africa, population growth, recurrent crises, extreme poverty and inadequate social protection measures have led to an additional 16,6 million children into child labour over the past four years.

One of the key findings in the report included the state of the agriculture sector, which accounts for 70% of children in child labour (112 million), followed by 20% in services (31,4 million) and 10% in industry (16,5 million).

The prevalence of child labour in rural areas (14%) is close to three times higher than in urban areas (5%).

Child labour in Africa alone is more than the rest of the world combined. While the majority are in agriculture, other areas are equally very important.

We have a big challenge at hand and Africa needs a lot of strategies to tackle it right away.

Addressing child labour is not a benevolent issue, it is the right of the people in rural communities to have their children in school.

Child labour free zones have provided solutions. For example, the government of Ghana has adopted this method — a child labour free zone and child labour free community and friendly villages.

However, this concept needs more investment to continue making improved participation of communities and structures to address the issue of child labour in the country.

The Commitment to Reducing Inequality Index report shows that the 15 Sadc member States lost about US$80 billion in 2020 due to lower-than-expected growth, which is equivalent to around US$220 for every Sadc citizen.

The analysis estimates that this economic crisis could take more than a decade to reverse, erasing all hope of countries meeting their national development plan targets to reduce poverty and inequality by 2030.

The report says many Sadc member governments are still showing considerable commitment to fighting inequality — but still, nowhere near enough to offset the huge inequality produced by the market and exacerbated by the COVID-19 pandemic.

Among the key messages in the African Economic Outlook 2021 report is that an estimated 51 million people on the continent could fall into poverty.

Today’s non-poor households, maybe tomorrow’s poor households, 50,2% of the people in Africa most vulnerable to staying in poverty live in East Africa.

There is something that we are not doing well, if the number of child labourers is so high, we must change our ways.

By working together, we have begun to see some way forward, but what we have seen is that in the allocation of resources, either not being sent to the right places or when they are not enough, that still remains a big challenge.

We are calling for huge, massive investments in the national plans of the country. We are also calling for a community-based approach — by working with Global March, agricultural unions and their grassroots organisations.

It is important to note that it is not just about the investment, but also about the allocation of the resources, enough money has been invested into fighting child labour, but where does that money go? How is it spent? These are important questions.

More money needs to go into strategies that are working and looking into community development. We have been able to develop systems and strategies. We have been able to chart and map friendly villages and labour free zone, which shows what happens when proper investment is done, it creates the potential for child labour free communities and living.Sania Farooqui

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