Reserve Bank Gov. Mangudya says the economy of Zimbabwe is an ‘albatross’!

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The Governor Dr. J.P. Mangudya Zimbabwean Reserve Bank writes a special piece on the Zimbabwean economy, not as bleak as the one Finance Minister P.A. Chinamasa wrote in mid-year report of 2016. The Monetary Policy Statement (MPS), of January of 2017, as still evident of the issues in the Zimbabwean economy. With the knowledge of the debt-burden that has arisen together with the suspended international loans, the state funds has funds dwindled. Also, the monetary and fiscal prudence has been weakening as told by the governor of the Reserve Bank. The Governor even called the Zimbabwean Economy an “albatross”, the rest of it says it all.

Zimbabwean economy needs to catch up:

“The positive spin-offs from the recent removal of Zimbabwe from the International Monetary Fund (IMF) remedial measures, following successful clearance of its arrears to the Fund in October 2016, are also expected to go a long way in reducing Zimbabwe’s country risk, thus attracting the much needed foreign investment. Completion of the clearance of external debt arrears to the rest of the international financial institutions – African Development Bank (AfDB), World Bank and European Investment Bank (EIB) – is expected to further reduce the country’s debt burden that continues to be an albatross on Zimbabwe’s access to foreign finance for the past 16 years now at a time when other emerging markets have been making tremendous strides in their economic transformation. As a consequence, Zimbabwe has lagged behind and needs to catch up with its peers” (Mangudya, P: 6-7, 2017).

Reactions to drought:

“In 2016, food imports (maize and wheat), however, surged owing to the El Nino induced drought that destroyed crops in the Southern African region, including Zimbabwe. Continued reliance on imports of finished goods is unsustainable as it undermines current efforts to resuscitate domestic industrial production, leading to significant trade and current account deficits” (Mangudya, P: 15, 2017).

Other key development:

“Driven by merchandise trade developments, the current account deficit is estimated to have narrowed down by about 15.5%, from a deficit of US$1,519.4 million in 2015, to a deficit of US$1,283.9 million in 2016, partly on account of the projected decline in the import bill. Remittances, which are also a major source of import financing declined by 17.9% in 2016, from US$1,917.7 million received in 2015 to US$1,574.0 million in 2016. Of the total amount received in 2016, US$779.0 million reflects remittances from the Diaspora while remittances from International Organizations (NGOs) amounted to US$795.0 million” (Mangudya, P: 16, 2017).

Problematic government loans:

“Reflecting developments on both the current and capital account, the overall balance of payments position is estimated to have deteriorated from a deficit of US$25.8 million in 2015 to a deficit of US$186.4 million in 2016. This phenomenon reflects an unsustainable economic situation of funding capital projects using loans as opposed to equity. The danger with this scenario is that debt would become unsustainable as exports are mortgaged towards debt repayments” (Mangudya, P: 19-20, 2017).

Unbalanced economy:

“The fact that the 14.4% of the country’s foreign receipts handled by RBZ for redistribution into the market seems to have more impact in the economy is a sign of market failure. The Bank shall quickly move to redress this market failure through measures that compel banks to adhere to the import priority list and to mitigate against institutional indiscipline such as the use of more foreign exchange for personal card and DSTV transactions ahead of raw materials to produce cooking oil, for example. Financial institutions should do some soul searching and rethink on how they add value to the economy under the New Normal” (Mangudya, P: 67, 2017).

Bond- Notes introduction:

“The Bank is encouraged by the manner in which the nation embraced bond notes. The Bank has to date issued $94 million of bond notes into the market against an aggregate value of the export incentive of $107 million. Whilst the circulation of the bond notes represented by levels of deposits and withdrawals is also encouraging, the Bank is putting in place a redistributable measure that mitigates against skewed concentration of bond notes within the banking sector by limiting the maximum amount of bond notes that each bank should hold at any given point in time in relation to its level and type of transactions. This measure is necessary to ensure that bonds notes are distributed proportionately according to the customer base or customer profile of each banking institution” (…) “The Bank is directing financial institutions to strictly observe the policy to deposit bond notes into the US$ accounts without requesting the banking public to differentiate between bond notes and US$ cash. This measure is essential to ensure that bond notes continue to trade at parity with the US$ and to reflect the fact that bond notes are supported by the US$200 million offshore facility to support the demand for foreign exchange attributable to bond notes” (Mangudya, P: 67-68, 2017).

When you see this numbers alone, there would be more meat in the report that says lots of the downfalls of the economy. The Governor said the fiscal issues and debt, together with the lacking of imports and exports, the short and less infused funds. With that in mind, instead of pounding on the troubled economy, we should rather enjoy a moment of explanation of why albatross is so dire:

“something or someone you want to be free from because that thing or person is causing you problems” (Cambridge Dictionary) and this one too: “a continuing problem that makes it difficult or impossible to do or achieve something” (Merriam Webster Dictionary). So the Albatross for the Zanu-PF is the economy, even as they eat of it and deplete it. However, the turbulence and insecurity isn’t over as the trust in the Bond-Notes or the other factors as the New Normal isn’t giving. Peace.

Reference:

Dr. J.P. Mangudya – ‘“Stimulating Economic Growth and Bolstering Confidence”’ – Monetary Policy Statement, Reserve Bank of Zimbabwe (RBZ)

Uganda: UPC for LC1 and LC2 Elections (15.02.2017)

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The South African Banks under review for having price-fixed their currency exchange in secret inside deals!

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In the nation under President Jacob Zuma and African National Congress (ANC) there been done some shady dealings between government and private industry, this has been happening over years. Now the Financial Market and Banks have internally been agreeing on values and exchange rates on the South African Rands (ZAR), this is a luxury where the banks have set fixed prices and values. That in the end has given profits and sold the Rand on the open market. This in mind with the fixing and securing more profits for the banks as they we’re trading the currency on the open market. Also, to foreign investors and currency traders that try to make a profit on exchange and selling currency back again at a later date.

So this sort of financial manipulation has made sure for the 17 banks that have made agreements between the banks and communication that most likely paid more for the rand or more used more dollars for getting the South African currency. As proven with the statements of the Competition Commission and the South African Reserve Bank, however, the trial and the review will continue to shed light on the possible internal-trade in the financial business of the Republic.

The opening of review of Forex exchange of the Rand:

“The Competition Commission has today referred a collusion case to the Tribunal for prosecution against Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc., Macquarie Bank Limited, ABSA Bank Limited (ABSA), Barclays Capital Inc, Barclays Bank plc (Respondents). The Commission has been investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand since April 2015. It has now referred the case to the Tribunal for prosecution. The Commission found that from at least 2007, the respondents had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar / Rand currency pair. Further, the Commission found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times. Traders of the respondents primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities. They also used Bloomberg instant messaging system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities. They assisted each other to reach the desired prices by coordinating trading times. They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency trading platform. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives” (CompCom, 2017).

South African Reserve Bank statement:

“The South African Reserve Bank (SARB) has noted today’s announcement by the Competition Commission South Africa (Competition Commission) that it has completed its investigation initiated in April 2015 and has referred to the Competition Tribunal for prosecution a case of price fixing and market allocation in the trading of foreign currency pairs involving the South African Rand (ZAR)” (…) “The rand is a globally traded currency. Some 30.0% of daily turnover in the ZAR takes place in South Africa, and turnover with non-residents accounts for 57.5% of domestic turnover. Figures published by the Bank for International Settlements indicate that for the month of April 2016, the daily average worldwide turnover in the foreign exchange market involving the ZAR was approximately USD49.0 billion. This represented 1% of total turnover in the international foreign exchange markets” (…) “The SARB sees the allegations in a serious light. The SARB will allow the legal processes now initiated to run their course, and will continue to monitor developments closely to inform any action that we may need to embark upon in accordance with our mandate and jurisdiction” (SARB, 2017).

So we can now wait and see what the efforts and effects. If this can hit the currency and its value, if this has been a fix to juice it up or even put in a bubble where the banks has earned profits on illegitimate transactions as the communications between the banks has set standards of the prices and expenses, so the costumers and businesses has overpaid for the currency in trading. This proves that the greed and coins goes together. The banks of South Africa ceased an opportunity and grasped it.

We have to see when the Competition Commission of South Africa releases their report and their conclusions as the review and the findings of colluding will be put in court. However, the world gets to see the internal trading and agreements between the banks to fix the prices of currency, especially the value of the South African Rand (ZAR). Therefore the release of information on how they fixed it and how they speculated on it, will show how banks did this. Trust this, the report and the papers on this financial transactions and agreements will be juicy and show the inner-works of the banks. That is knowledge that the Republic of South Africa deserves, as these people and professionals are the ones making sure the monies are used and taken care off. Peace.

Reference:

South African Reserve Bank – ‘SA Reserve Bank Notes Competition Commission Decision’ (15.02.2017) link: https://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/7681/SARB%20statement%20on%20Competition%20Commission%20announcement.pdf

The Competition Commission South Africa (CompCom) – ‘Breaking News: Competition Commission prosecutes banks (currency traders) for collusion’ (15.02.2017)

Kenya: “Of course the government has a huge budget for corruption” – Government spokesman Eric Kiraithe (Footage)

Burundi: Communique du Gouvernement sur le Dialogue InterBurundais prevu a Arusha du 16au18 Feverier 2017 (15.02.2017)

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Uganda: Programme for the By-election of Directly Elected Member of parliament for Aruu North county,Pader District (13.02.2017)

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EU’s own ‘Preliminary Assessment’ of the Brexit is daunting a soft break of ties!

EU UK Flags

The Brexit and the questions running on the triggering of Article 50 has been up-in-the-air since the referendum election in 2016. The sudden win in Britain and United Kingdom has not yet arrived into negotiations with the European Union, as the Tories government under Prime Minister Theresa May has tried to keep her cars at bay, while hoping for mercy from the counter-parts in Brussels. As the EU Parliament and EU MEPs might think otherwise, with the knowledge of the sleek ‘White Paper’ from the Tories Government, the legal committee of the European Union has done more preparation or delivered are more detailed document, that can tell what the British government and negotiation team has to assess. They will not have a job or getting off easy.

This document is addressing the matter with fierce tone and with clarity that hasn’t been seen from the British counter-parts. They have been more secretive or less visions on how to fix the questions of the economic and legal problems that arrives with United Kingdom leaving the EU as a Member State. That opens a lot of doors, but closes also some. The EU certainly has some bargain chips and can be it horrible for the UK government as they want to leave with something worthwhile for their electorate.

As been said in the report: “The principal of acquired rights may well apply to the continuance of specific entitlements acquired validity in the past – for example, the right to a pension or the right to be considered the owner of real property. However, the principal of acquired rights cannot logically be extended in a such way as to confer an unrestricted ongoing entitlement to specific advantages in cases where the legal framework for those advantages has fallen away, as is the case when a Member State leaves the European Union. It cannot, therefore, be considered that a person who is no longer a Union citizen will continue to have unrestricted rights such as that to live, work and study in the European Union, or to benefit from social security arrangements such as reciprocal healthcare entitlement’s unless, of course, as may be hoped, special provisions are made for the continuance of such rights. As far as the conditions under which UK nationals may reside in other Members States are concerned, it is submitted that these are matter of national laws” (EP CLA, P:2, 2017).

This specifically says if nothing special issued between the Tories and the ones in Brussels, there might be harder for UK nationals to live and work in EU Member States, which isn’t an issue today as the free movement and such has graced the opportunities for British people to reside in Spain, Italy or France for that matter instead of living in Brighton or in Swindon. This is something that will be hard question and not easy bargain for either EU or the UK government.

“The most important legislation in the area of civil justice cooperation is the Brussels I regulation (Regulation (EU) No 2012/1215) on jurisdiction, recognition and enforcement of judgements in civil and commercial matters, which would no longer apply between the UK and the Member States, meaning judgements will no longer be recognised or enforced in other jurisdictions automatically. Older bilateral agreements such as the existing between Germany and Britain may go some way to bridging the gap, but will not suffice completely. Brussel I could be replaced by the Lugano Convention (as is the case for Switzerland and others) or by ad hoc convention (as is the case for Denmark, which is excluded from civil justice cooperation). That being said, as it currently stands, the Lugano Convention was signed by the EU and not individual Member States. According to Art. 70, the United Kingdom is not one of the states entitled to join the convention” (EP CLA, P: 3, 2017).

That United Kingdom leaving the Union seems to not only have implications for the UK citizens who live and works inside the Union, but legal authorities and co-operations like the Brussels I regulation. So the civil lawsuits and the legal breaches between the nations might be altered with the restriction of UK from the Union. That will make it harder for the UK government and businesses to get legal authority or even solve legal matters on the continent, as they are not involved like they are today. So they need even to apply to Lugano Convention and follow procedures to have another way in, like the Danish government has done in the past. That means for a fixed amount of time, there will be issues between the EU Member States and UK government.

When it comes to UK businesses this is scenarios and such that will affect the state and their operations: “The Shareholder Rights Directive: The European Parliament reached an agreement with the Council on 7 December 2016 on a final text on the proposal for a Directive amending Directive 2007/36/EC as regards the encouragement of the long-term shareholder engagement. A vote in plenary is planned for March” (…) “In case of Brexit it takes effect before the time-limit for its transportation (for the most part, 2 years after publication), the UK will not be obliged to implement this directive. Even if the Brexit takes place after the date nothing guarantees that the UK will transpose it. In any case, after Brexit becomes effective, shareholders of UK companies will not enjoy rights under this directive” (EP CLA, P: 5, 2017).

This will show the aftermath of the businesses and how they will have to implement it to make sure they still are following guidelines for businesses inside the EU. That shows that even as a sovereign nation or state, they have to be parts of some long-term engagements that is evident with this one.

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As continued with: “European  Company (SE): Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European Company (SE) allows for the creation of a European public liability company, known as the Societas Europaea (‘SE’)” (…) “When Brexit becomes effective it is likely that any UK companies that have adopted SE status would lose that status. If they want to maintain it, they may need to relocate their registered office if the UK becomes a non-EEA state following a Brexit” (…) “With Brexit, this regulation will no longer apply unless the UK incorporates its contents into domestic law or makes other arrangements to maintain it. Cross-border insolvencies will become more complex as there will be jurisdictional issues to determine. Further, UK insolvency professional (notably liquidators) will not be automatically recognised as competent in other Members State” (EP CLA, P: 6, 2017).

So this is initially saying that with the loss of the EU Member State will implicate the companies’ legal status and their rights to markets that they have through the SE status in the European Union. So the UK companies have to either flee their headquarters in the United Kingdom or use time to reregister their businesses as the companies turn into new territory when their state turn into a non-EEA state, which indicates the taxation and regulatory means of their transactions and their portfolios will be changed or has to adapt to the new regime. This can be costly for the international businesses and financial markets like this can hurt the City of London.

By just these measures the UK companies and EU companies will be registered differently, if not their headquarters has to be moved to Belgium, Luxembourg or Poland to be sufficient for the regulatory bodies in the EU as their businesses will be seen as non-EEA state corporations. That affects a dozens of corporations, their employees and the financials flows in and out of the United Kingdom.

There we’re many other factors who we’re in play in the report, but they’re on the copyrights and staff regulation in the EU Organization. These are important to, but deserve to be taken on own accord and questioned by somebody who feels like it.

All the issues here brings to the clarity and must be hard read for the ones that thinks Brexit will be easy and soft for the United Kingdom when they becomes a Non-EEA State. This is a proof of the inner workings and preparations done by the diligent civil servants in the European Parliament in the Brussels. This paper sheds more light than before and also the indications of the future for political and transactions between the United Kingdom and the European Union; as the negotiation starts after the triggering of the Article 50! Peace.

Reference:

European Parliament – Committee on Legal Affairs: ‘Report on the Consequence of Brexit’ (13.01.2017)

#ThisFlag: Interview with Dr. Edgar Munatsi before their strike (Youtube-Clip)

https://www.youtube.com/watch?v=9sTVGkW_OE8

Bank of Uganda: Monetary Policy Statement for February 2017 (15.02.2016)

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Kenya: Health Care workers starts striking at the Nairobi Hospital, Gertrude’s Children’s Hospital & Nairobi Woman’s Hospital in solidarity with the #KMPDU (15.02.2017)

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Letter 2:

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Internal Memo:

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