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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Zimbabwe struggles to clear debt to South African power utility

HARARE Zimbabwe (Xinhua) -- Zimbabwe is struggling to pay off a 44 million U.S. dollars debt to South Africa’s power utility, Eskom, due to ongoing foreign currency shortages in the country.

This has resulted in Eskom threatening to cut off supplies to Zimbabwe for the third time in three months.

The state-run Herald newspaper reported Monday that Zimbabwe’s power utility, ZESA Holdings, had breached the terms of a payment plan it agreed with Eskom in July due to foreign currency shortages.

“We entered into an agreement with Eskom where we are supposed to pay the at least 10 million dollars per week and sometimes, because of the way the foreign currency comes into the country, it is cyclical in nature, it means sometimes we are behind now and then. But we are going to catch up and there will be no switch off,” the newspaper quoted central bank governor John Mangudya as saying.

Zimbabwe imports 300 megawatts of power from Eskom and another 50 MW from Mozambique’s Hidroelectrica de Cahora Bassa (HCB).

Zimbabwe requires 1,400 MW daily but is only able to produce around 980 MW due to aged power plants. It plugs the shortfall through imports.

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EARLIER REPORTS:

Social media, rising prices fuel basic commodities shortage scare in Zimbabwe

HARARE Zimbabwe (Xinhua) -- Erratic fuel supplies, rising prices and false social media messages have fueled a frenzy of panic buying as some fear the repeat of basic commodities shortage experienced in 2008.

Saturday was the busiest day as some shoppers targeted specific commodities such as cooking oil, soaps, rice and beverages while motorists filled drums and jerry cans with petrol and diesel.

Long queues could be seen at filling stations which had fuel, but one motorist from Gweru said there was hardly any fuel in the city on Saturday.

There was less activity Sunday as the shopping frenzy stopped and filling stations stocked up amid assurances by Reserve Bank of Zimbabwe governor John Mangudya that enough foreign currency had been allocated for basic commodities.

The assurance came after social media messages spread saying that shortages of basic commodities were imminent as foreign currency shortages persisted and the surrogate bond notes had lost up to 50 percent of value to the U.S. dollar.

The bond currency was introduced into the economy between 2014 and 2016 to run at par with the U.S. dollar and plug a cash deficit but its value has continued to deteriorate with the black market charging as much as 50 percent for the U.S. dollar.

Mangudya described the social media messages as “false and malicious” while the Minister of Home Affairs Ignatius Chombo warned people against spreading false statements and also alleged that there was a political agenda behind them.

“Of grave concern to the ministry (of Home Affairs) is that these reports have all the trappings of a politically coordinated criminal agenda by some well-known renegades and malcontents who now seek to disturb the peace in the country to cause alarm and despondency in pursuit of an alleged political program,” he said Sunday night.

Some shops closed down over the weekend because the owners were not sure if they would be able to sustain their operations if they continued to sell goods at current prices yet information being passed around said prices were increasing across the board.

Harare resident John Chafa said if he had enough money he would also have rushed to stock up on basic commodities in anticipation of the envisaged shortages.

“I want to be on the safe side. I do not want what happened to me in 2008 to happen again, so if I had the money I would hoard commodities with a long shelf life so that I can at least survive while I look elsewhere for replenishment,” he said.

While some messages on social media encouraged people to stock up basic commodities, others pleaded for calm.

One post called on citizens to report those who carry out underhand dealings such as cash selling to the authorities.

“While we all think no one will act on it, ultimately such reports will fall on someone with a good ear,” it said.

Besides cash shortages, Zimbabwe has endured a foreign currency deficit as it continues to import more than it exports as low productivity engulfs the economy.

Its trade deficit in 2016 was 2.38 billion U.S. dollars after it imported goods worth 5.21 billion dollars against an export bill of 2.83 billion.

In 2015, imports stood at 6 billion dollars while exports were pegged at 2.7 billion dollars.

Power utility ZESA Holdings is currently engaged with South Africa’s Eskom in a bid to stop it from disconnecting power to Zimbabwe over a 44 million dollar debt which the Zimbabwean entity is failing to service because of foreign currency shortages.

Mangudya told the state-controlled Herald newspaper that ZESA would soon pay “a substantial amount” to Eskom to avert the power cuts.

Zimbabwe has not experienced load shedding for nearly two years now after engaging external suppliers and making optimum use of its existing power stations.

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Zimbabwe central bank allays fears of basic
commodities shortages amid forex scarcity

HARARE Zimbabwe (Xinhua) -- Zimbabwe’s central bank has dismissed social media reports claiming that there will be shortages of basic goods on the market due to foreign currency shortages.

“Peddling of such fake news is quite unfortunate. There are no shortages of basic commodities in Zimbabwe. On the contrary, foreign exchange allocation for basic and essential commodities has been increased to ensure that shortages of commodities do not occur within the economy,” John Mangudya, governor of Reserve Bank of Zimbabwe, said in a statement Sunday.

The rumors have triggered panic buying and hoarding of basic commodities by the public.

The prices of most basic goods has gone up in recent weeks, igniting fears of shortages experienced during the peak of the hyper inflationary era in 2008.

Although Zimbabwe introduced bond notes in November 2016 to tame cash shortages, the bank note shortages have intensified causing the emergence of the forex parallel market where the U.S. dollar is being sold for a premium.

Zimbabwe introduced multiple currencies in 2009 after its currency had been rendered worthless by hyperinflation. The multi-currency basket has nine currencies including the U.S. dollar, British Pound, Euro, Chinese yuan and Japanese yen.

However, the U.S. dollar is currently the main trading and circulating currency in the country.

On the parallel market, dealers are reportedly asking for at least 135 in bond notes for one to get 100 U.S. dollars.

Mangudya said the premium on the parallel market was not caused by bond notes or electronic payment systems but the mismatch between U.S. dollar bank balances and the physical foreign currency available in the economy.

Zimbabwe has for years been unable to generate enough foreign currency to meet its requirements due to low exports and absence of balance of payment support from multilateral lenders.

Mangudya said the Ministry of Finance did not and will not print excess bond notes to buy U.S. dollars from the streets as suggested in the social media reports.

“Such malicious statements are counterproductive and are meant to sabotage the economy that is on the rebound on account of the good agricultural out turn,” the central bank governor said.

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Afreximbank agrees US 600 million dollar line of credit to Zimbabwe central bank

HARARE Zimbabwe (Xinhua) -- The African Export-Import Bank (Afreximbank) has entered into a memorandum of understanding (MoU) to provide a 600-million-U.S.-dollar line of credit to the Reserve Bank of Zimbabwe (RBZ), a press statement from Afreximbank said Sunday.

The MoU was signed on Saturday by Afreximbank President Benedict Oramah and Governor of RBZ John Mangudya in Harare, the capital of Zimbabwe.

According to the the MoU, the line of credit will support RBZ in the financing of trade-related transactions and projects in Zimbabwe.

The financing would be supported by Zimbabwe’s export proceeds, including gold and other mining exports.

The MoU states that the line of credit is expected to boost trade into and out of Zimbabwe and will promote the country’s economic development. 

             

 

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