Zimbabwean Dollar Continues to Tumble

Published on 8th January 2008

Villagers in most parts of Matabeleland are selling their livestock in South African Rand, citing the volatility of the Zimbabwean dollar whose value continues to tumble against major currencies. Cattle for slaughter were fetching anything above R3 000 or $600 million on the black market while goats were selling for R500 or $100 million during the festive season. The government already levies "luxury imports" in foreign currency but has rejected suggestions to adopt the more stable Rand to shore up the economy, in free-fall for the past 10 years. Reserve Bank of Zimbabwe (RBZ) governor, Gideon Gono, has warned against the widespread use of scarce foreign currency in the trade of local goods and services, which he says its illegal. But villagers are complaining their savings are quickly eroded by rampaging inflation, now estimated at over 15 000%. Their fears have been compounded by the month-long cash crisis during which the RBZ banned the use of $200 000 bearer cheques, which it said were being kept out of the system by the so-called cash barons. The ban was later reversed after the shortages worsened.

 

Mbeki and Zuma Hold a One on One Meeting

 

President Thabo Mbeki and African National Congress (ANC) President Jacob Zuma have had their first one-on-one meeting since Zuma beat Mbeki at the party's elective conference at Polokwane last month. The meeting comes amid deep divisions in the party after the conference. It also comes hot on the heels of the National Prosecuting Authority's (NPA's) move to prosecute Zuma again.

 

Korea Considers Free Trade Pact with SACU

 

Korea is considering a free trade pact with the Southern African Customs Union (SACU) to expand cooperative ties with resource-rich countries. The Ministry of Finance and Economy said the establishment of a Free Trade Agreement (FTA) with the five member union could promote Seoul’s efforts to participate in a greater number of resources development projects, while helping those countries build up vital social infrastructure networks. Resource-poor Korea has engaged in the so-called packaged approach, where local companies build roads, railways, power generation and petrochemical plants in exchange for a chance to take part in resource development projects. The ministry also said an FTA with South Africa, Botswana, Lesotho, Namibia and Swaziland would allow Korea to expand preferential loans and aid to African countries that can enhance the country’s positive image on the continent.  It said while soft loans and aid totaled $35 million and $26 million respectively in 2006, Seoul plans to increase the former to $700 million by 2011. Aid will be increased to 61 million by 2009.

 

Loan Agreement Signed for EASSy

 

The African Development Bank (AfDB), along with other participating Development Financial Institutions (DFIs), have signed loan agreements for the East African Submarine Cable System (EASSy). The landmark fibre-optic cable project will connect 22 coastal and landlocked African countries with each other, and with the rest of the world, with high-quality internet and international communications services. When completed, it will improve access to communications for 250 million Africans, as well as reduce costs for consumers and businesses. According to AfDB information, the project implementers will construct and operate a submarine fibre-optic cable along the east coast of Africa that will run for 10,000 Kilometres from the continent's southern tip to the Horn of Africa. AfDB's financing will be channeled through the EASSy Special Purpose Vehicle (SPV) - also known as the West Indian Ocean Cable Company (WIOCC) - "and consists of US$14.5 million senior loan."Construction began in December2007, and the system is expected to be fully operational in time for the FIFA Football World Cup Finals to be hosted by South Africa in 2010.

 

Compiled by Anne Mugoya

Anne is a Researcher at Inter Region Economic Network


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