Author: TSA Press

The southern African country is currently grappling with rocketing inflation, power cuts and shortages of everything from fuel and foreign currency to bread and medicine, prompting street protests earlier this year.

“Macro-economic changes… have resulted in erosion of disposable incomes and reduced consumer spending,” Delta, which is 40%-owned by Anheuser-Busch InBev, the world’s largest brewer, said in a trading update.

In a bid to tackle some of its economic problems, President Emmerson Mnangagwa’s government last month ended a decade of the use of the U.S. dollar and reintroduced a local currency, whose rapid loss of value pushed inflation up 175.66% in June.

In addition to the drop in lager sales, carbonated drinks revenue slid 79% in the quarter to June 30, Delta said but traditional sorghum beer sales were, however, 2% up in the quarter.

Dollar shortages have also hit the beverage maker, curbing its ability to import packaging materials and concentrates for soft drinks.

Delta reported a 92% increase in total group revenue, but only because the previous period’s reporting was valued in U.S. dollars and at the time there was still a one-to-one exchange rate between the local currency and the greenback. The company did not give a comparison in U.S. dollar terms.

Zimbabwe abandoned its currency in 2008 after hyperinflation hit 500 billion percent, wiping out pensions, savings and any vestiges of confidence in the currency.

After experimenting with a range of different currencies including the greenback and South African rand in the years since, Mnangagwa’s government surprised the market in June by bringing back a national currency. It made an interim unit the sole legal tender, renaming it the Zimbabwe dollar and banning the use of foreign currencies for local transactions.

The Zimbabwe dollar has slipped to an average of 8.9 against the U.S. dollar on the formal market since then, but black market traders said it was fetching around 10 Zimbabwe dollars on Wednesday. (Reporting by Nelson Banya; Editing by Jan Harvey and Emelia Sithole-Matarise)

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Information minister Monica Mutsvangwa told a post-cabinet briefing on Wednesday that energy minister Fortune Chasi was currently visiting South Africa for energy talks with his South African counterpart.

In the face of the power shortages, Zimbabwe has been importing power from its neighbor South Africa but supplies have been stopped due to debt.

The country recently paid 10 million U.S. dollars towards its 33 million dollars debt to South Africa’s power utility Eskom.

“On the power front, it was reported that the Minister of Energy and Power Development is currently in South Africa for electricity supply negotiations with Eskom.

“The nation will be apprised of the outcome of the negotiations at an appropriate time. In the meantime, Cabinet resolved to set up an Inter-Ministerial Committee to work closely with the Minister of Energy and Power Development in order to facilitate a collective approach in the resolution of the prevailing power and energy supply challenges,” Mutsvangwa said.

She said the committee comprises ministers of energy, information, industry and commerce, tourism, agriculture, mines, and information communication technology.

Zimbabwe’s fuel shortages are due to foreign currency shortages to import the commodity while power supplies have been severely curtailed due to low water levels in Kariba Dam that supplies water to the country’s largest hydro power plant, Kariba.

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The price of diesel rose to 7.19 Zimbabwe dollars per liter, up from 5.84 Zimbabwe dollars per liter, while that of petrol rose from 6.10 dollars per liter to 7.47 per liter. Operators did not increase fares the last time fuel prices went up on July 12.

Commuter Abednego Kamhoti, who resides in Domboshawa, about 30 km from Harare, said fares had been raised from 3.50 dollars to between 4 dollars and 5 dollars, depending on the time of day.

“Kombi drivers are now charging 4 dollars during off-peak hours and take advantage of the limited availability of transport during peak hours when they charge 5 dollars per fare,” he said.

The fare from Warren Park into the city center, which used to be 2 dollars, is now 2.50 dollars.

ZERA has been periodically hiking fuel prices to keep them in the region of the prevailing foreign currency exchange rate.

Finance and Economic Development Minister Mthuli Ncube said recently that fuel and electricity tariffs would be reviewed because the current pricing model was no longer sustainable.

Fuel prices have gone up several times in 2019, starting with a 150 percent increase in January which saw the price of petrol go up from 1.64 dollars per liter to 3.39 dollars when the local currency was still pegged at par with the U.S. dollar.

Post published in: Business

Penn Law’s Amy Wax went to a conference and declared that “our country will be better off with more whites and fewer nonwhites” because, she feels, nonwhites are loud and create garbage. It was just the latest from a law professor who’s spent the last several years spouting increasingly loony racist commentary in an effort to get noticed. After her latest lunkheaded ramblings, Penn students took the lead that the administration has consistently abdicated and organized a petition denouncing Wax’s antics. With the outpouring of opposition to Wax, Penn was finally moved to take action.

And that firm action was to let Amy Wax go on a scheduled paid vacation. Bold!

A statement from Dean Ted Ruger said, “At best, the reported remarks espouse a bigoted theory of white cultural and ethnic supremacy; at worst, they are racist.” How is that “at best”? What, exactly, is the distinction between “a bigoted theory of white cultural and ethnic supremacy” and racism? Even if we were to adopt Wax’s own hypertechnical theory that it’s not racist if it’s not biologically based, it’s all white supremacy. Dean Ruger’s literally saying “at best X, at worst also X.”

On the one hand, Ruger deserves credit for saying anything at all. On the other hand, this language is exactly the kind of mealy-mouthed malarkey that leads media outlets to write tortured copy like “some may find these comments potentially racially tinged” when reporting on a guy goose-stepping down a public street while screaming the n-word. There’s no “at best” or “at worst” here, she went to a white nationalism conference^[1] and espoused her standard litany of white supremacist stuff. Qualifiers aren’t needed.

But beyond the statement, the school appears to be doing… pretty much nothing.

Still, Wax won’t be teaching during the upcoming year, according to law school spokesman Steve Barnes. She will be taking a planned sabbatical instead. Barnes declined to comment on whether Wax will still teach once her sabbatical is over.

Of course not! So Wax gets to take a break while the heat dies down and then strolls right back to her job. As we’ve noted many times before in these pages, Wax’s continued employment is a perversion of the whole concept of tenure. Tenure protects academic freedom, but it’s not academic freedom to pop off without a shred of substantiation about every racist talking point that enters her peripheral vision. Wax isn’t using her employment protection to pursue controversial research — and don’t expect her sabbatical to produce some groundbreaking datasets either — she’s using it to be a flapping head on the right-wing media circuit, and that’s not anything the academy needs to protect.

But here we are. Wax has gotten mildly chastised and a vacation. Sadly, that’s the most many of us expected out of this.

[1] Some people have argued that her comments can’t possibly be characterized as white nationalism because she’s Jewish. There are well-known strains of white nationalism that are virulently anti-Semitic, but the universe of white nationalist thought is much broader than just these strains. When one says that the nation-state should be whiter and less nonwhite… that’s definitionally white nationalism.

Penn Law Condemns Amy Wax’s Comments as Racist and Says She’s Taking a Sabbatical [Law.com]W@w#
Statement from Penn Law Dean Ted Ruger on recently reported comments by Professor Amy Wax [UPenn]

Earlier: T14 Law Professor Goes To White Nationalism Conference And Says White Nationalist Things And Somehow Still Has A Job
Academia Means Never Having To Say, ‘I Got Fired’
T14 Law Professor Goes To White Nationalism Conference And Says White Nationalist Things And Somehow Still Has A Job
Professor Amy Wax And The Bell Curve
Law Professors Say White ’50s Culture Is Superior, Other Racist Stuff
Penn Law School Prof Amy Wax Stumbles Into A Truth… Before Delving Back Into Vile Conspiracy Theories
Amy Wax Relieved Of Her 1L Teaching Duties After Bald-Faced Lying About Black Students
Professor Declares Black Students ‘Rarely’ Graduate In The Top Half Of Law School Class
Dog Whistling ‘Bourgeois Values’ Op-Ed Gets Thorough Takedown From Other Law Professors
Law Students Seek To Ban Professor From Teaching 1Ls
Law School Professor Says Dr. Ford ‘Should Have Held Her Tongue’ In Latest Embarrassment To Her School

* Donald Trump seems particularly irritated that former special counsel Robert Mueller will be testifying today before the House Intelligence and Judiciary Committees on the “witch hunt” that’s plagued his presidency. Get ready for a tweetstravaganza! [CNN]

* Professor Amy Wax of Penn Law has been professionally scolded by the dean of the school after condemning her recent comments as racist and “repugnant,” and now comes news that she’ll soon be taking a previously scheduled — but awfully conveniently timed — sabbatical. [Law.com]

* But before you get too excited, Professor Wax says that she has “no plans” to leave Penn Law on a permanent basis. In fact, here’s what she said about the speculation that she’d be leaving for good: “The students need me. When I’m gone, the place goes full North Korea. (It’s 95% there).” [Big Law Business]

* Professor Bruce Hay of Harvard Law gets taken for the ride of his life after an alleged paternity trap left him homeless, out of work thanks to sexual harassment claims, and up to his eyeballs in litigation. [The Cut / New York Magazine]

* This personal finance website wants to know: What is Biglaw, and what kind of salary should you expect? Very cute! If you want to know the real deal, you happen to be looking at the website that most closely tracks Biglaw salaries. [Nerdwallet]

* Xi Chen, the bus driver who struck and killed Kimberly Greer, a law clerk at the Southern District of New York, took a no-jail plea deal earlier this week. He’ll lose his license for six months and must pay $1K in fines. [New York Post]

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

Econet is relying on diesel generators, and says it is becoming ‘uneconomical’ to guarantee services as power crisis looms. Picture: Philimon Bulawayo, Reuters

By Hilary Schmidt, International Banker

According to Cambria, the suspension was due to a “collective refusal to pay historical and contracted pricing to Payserv Africa in US dollars”, with the investment company alleging that Zimbabwean banks have indicated that they are now prohibited by the central bank from paying external invoices in US dollars. Although its bank clients have made prior commitments to Payserv to pay invoices in dollars, the government has introduced a new currency, which is creating a raft of problems within Zimbabwe.

It was only in February that Zimbabwe launched its new currency, having scrapped its 1:1 peg to the US dollar for bond notes and coins that had been in effect since 2016. But with the country showing little faith that such a peg could be maintained, the central bank merged the currency into the less valuable transactional exchange unit, known as the Real Time Gross Settlement (RTGS) dollar (ZWL). The reason for doing so has primarily been to end the shortage of US dollars, which have been extensively used as legal tender in Zimbabwe over the last 10 years or so, as well as end shortages of crucial imported goods such as fuel and medicine.

But during the few months following its introduction, the RTGS dollar plummeted from its initial value of ZWL2.50 to the US dollar when it was introduced to more than ZWL6.00 on the official interbank market by mid-June.

The black-market rate, meanwhile, has been trading at around ZWL9.00 per US dollar. Monetary authorities, however, are suggesting that the lack of RTGS dollars in circulation will eventually prevent the continuation of this parallel market rate. Nevertheless, for the time being, the collapse in the value of the RTGS dollar on both markets has led to massive price spikes that are now making the cost of necessary goods such as fuel much too expensive for most Zimbabweans. This has not gone unnoticed by Zimbabwe’s President Emmerson Mnangagwa. “We are seeing a lot of fluctuations in the local rate of forex. As a consequence of that, we are witnessing price increases.”

The depreciating RTGS dollar is also having a severe impact on Zimbabwe’s gold industry, which generates nearly half of the country’s mineral-export revenues and represents around one-third of all mining jobs. With the central bank paying 55 percent of miners’ earnings in foreign currency and the remainder in RTGS dollars, there is a growing dichotomy being felt by miners, with almost half of their earnings losing substantial value whilst most of their expenses are denominated and paid out in foreign currency. As such, major gold producers in the country such as Metallon Corporation have stated that they are now feeling the effects of “the delay of payments for gold deliveries, and foreign currency shortages for securing key inputs”. Indeed, it has been reported that Metallon has filed a lawsuit against the central bank for its failure to access sufficient foreign-currency earnings.

And from a macroeconomic perspective, the weakening currency is pushing the economy towards the brink of yet another bout of hyperinflation, with Zimbabwe currently experiencing the highest rate of price rises since 2008—when under former President Robert Mugabe, spiralling inflation ended up hitting a peak of 500 billion percent, completely destroying the value of the populace’s savings.

Mnangagwa has acknowledged the recent currency-fuelled issues in the country. “You sleep today with the rate at one US dollar to five… and the next morning it’s at one to six, one to seven, one to eight and so forth. And when they do that, the price of bread increases according to the exchange rate,” the president lamented.

Much of the problem seemingly lies with the activity of currency speculators. According to Eddie Cross, a Zimbabwean economist and former Member of Parliament as well as the founding member of the Movement for Democratic Change (MDC) party, speculators are manipulating the exchange rate to profit at the expense of Zimbabweans. “There is no justification for the current open market exchange rates. The economic fundamentals here are now sound, and in my view rates should not be above 4 to 1,” Cross recently told the local publication The Herald. As such, he has pressed for the government to take steps to contain the ongoing and excessive speculator-fuelled volatility.

On a positive note, however, there is evidence that some progress is being made to contain the fallout from the rapidly weakening RTGS dollar. The central bank recently struck a major deal with the International Monetary Fund (IMF) to implement economic reforms and support the Zimbabwean currency. The Staff Monitored Programme, which runs from May 15, 2019, to March 15, 2020, will “emphasise the restoration of macroeconomic and financial sector stability” as well as support the adoption of reforms “to allow the effective functioning of market-based foreign exchange and debt markets”. For instance, it will prevent the central bank from simply printing money—such a move would be “critical to support the new currency”, the IMF noted. The deal also prohibits the government from borrowing from the central bank in order to repay its obligations, as this would exacerbate the currency crisis; and it also allows the IMF to monitor the implementation of much-needed currency reforms in the country. Indeed, the multilateral institution has already acknowledged that “significant economic reforms” are underway.

Somewhat controversially, moreover, Mnangagwa recently declared that Zimbabwe will have a new national currency in place by the end of the year. This would involve getting rid of the multi-currency facility currently in place that allows Zimbabweans to use the US dollar, the South African rand and other foreign currencies as legal tender alongside the RTGS dollar. “A country cannot develop using other countries’ currencies, without its own currency,” Mnangagwa recently observed, adding that the country has already “started that journey” to have its own currency. And according to state media, the president confirmed that once the national currency is introduced, it will not be possible to use foreign currencies in Zimbabwe for domestic transactions. Mnangagwa has also reportedly blamed the recent jump in commodity prices on the lack of a local currency.

Cross has welcomed the president’s move, arguing that a national currency will strengthen the central bank and monetary policy, as well as give Zimbabwe control over its own money. Cross also believes that once introduced, the Zimbabwean currency would be “the strongest currency in the region, of that I’m absolutely certain”.

But Zimbabwean economist Clemence Machadu believes that simply introducing a new currency without addressing key underlying economic fundamentals will be effectively meaningless. “We already have a currency that is failing, that is the ZWL or RTGS, and introducing a successor currency without first addressing the underlying issues is just window-dressing,” Machadu recently asserted. Such sentiment was also echoed by Zimbabwean economist John Robertson, who warned that without sufficiently building the country’s foreign-currency reserves and boosting exports, any new currency that is introduced will not be adequately supported. “I’m suspicious that in six months we will not have the money. Maybe we will have to borrow, but it means we will fall deeper into debt,” Robertson said.

The government also appears to be facing resistance from opposition parties over the move. The current MDC leader, Nelson Chamisa, for instance, does not think Mnangagwa’s plans to introduce a new currency is the right move. “The problem that Zimbabwe faces is not currency, it’s politics. Until we fix our politics, deal with the legitimacy issues and address the fundamentals of the economy, introducing a new currency will not work; it’s about the fundamentals,” Chamisa recently remarked. And the Zimbabwe Economic Freedom Fighters (ZIM EFF) party has also expressed concern, arguing that “a clean-up of the political space, the execution of an independent and effective justice system, an independent Reserve Bank and complete eradication of corruption in Government” should first be achieved before Zimbabwe can even contemplate the introduction of a new currency.

He made the remarks on the occasion where a visiting delegation from China’s Zhejiang Province and the Zimbabwean government officials and business leaders witnessed the signing of a twinning arrangement between Zimbabwe’s Chinhoyi City and China’s Dongyang City.

He said Zimbabwe possesses vast tourism opportunities which if fully harnessed, could help the country in its quest to become an upper middle income economy by 2030.

It emerged at the meeting that Zimbabwe had set aside 1,200 hectares of prime land in the resort town of Victoria Falls for tourism development.

“I urge you, prospective investors (from China), to seize this opportunity to turn Victoria Falls into a competitive tourism hub and financial center,” Mnangagwa said.

The resort town, in Matabeleland North Province, is home to the magnificent Victoria Falls, one of the seven natural wonders of the world.

On Wednesday, officials from the two countries are set to sign twinning agreements between Zhejiang Province and Matabeleland North Province, and Jinhua City and Victoria Falls.

Mnangagwa said his government has a plan to develop a tourism corridor along the Zambezi River, covering two provinces in the north and western parts of the country.

Ge Huijun, head of the Chinese delegation and chairman of the People’s Political Consultative Conference (CPPCC) Zhejiang Provincial Committee, said China was keen to consolidate its friendly ties and cooperation with Zimbabwe, particularly in the tourism sector.

“Zimbabwe is an important partner of China in Africa. Today, we come from afar to Zimbabwe to comprehensively strengthen our exchanges and collaboration with Zimbabwe and set an example of mutually beneficial cooperation between China and Africa,” Ge said.

She said cooperation between Zhejiang and Zimbabwe continued to grow, with seven reputable companies from the province making significant investments in Zimbabwe over the past few months.

Bilateral trade between Zhejiang and Zimbabwe grew by 17.32 percent in 2018 to 180 million U.S. dollars, and there was huge potential for further growth, Ge said.

She urged Zimbabwean companies to participate in China’s business events to grow business opportunities and expand cooperation between the two countries.

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Hunger, rocketing inflation, power blackouts, fuel queues – Zimbabwe has been here before, but it’s been a decade since things were quite this bad, ever-resilient citizens in the capital, Harare, say.

The trigger for a sudden surge in prices came last month, when the US dollar was abandoned as legal tender, 10 years after Zimbabwe ditched its worthless local currency and dollarised as inflation hit 89.7-sextillion percent – that’s 20 zeroes.

The same ruling party is at the helm now as 10 years ago, noted Godfrey Kanyenze of the Labour and Economic Research Unit of Zimbabwe, a trade union-linked think tank. And that has added to the worries, he said, because few people trust it has the ability to steer the country out of the current mess – in which a third of the rural population is struggling to cover basic food needs.

Zimbabwe already faces a range of humanitarian concerns, with the UN and international aid groups filling gaps in food security, health and HIV care, water and sanitation, and social protection for vulnerable citizens.

“This is management by crisis,” Kanyenze told The New Humanitarian. The government is “pushing a mantra of ‘austerity for prosperity’, but it’s a government without a human face and it’s just knee-jerk reactions.”

The government says the decision to return to a single, Zimbabwean, currency is crucial to stabilising the economy.

John Kazingizi sells fruit and vegetables with his wife in Hatcliffe market, a high-density suburb of Harare. “What worries me most is prices keep increasing and my sales keep going down, as people are no longer buying as they used to,” he told TNH last week.

The couple struggle to find the money to buy a little fresh stock each day and meet their basic household costs – including repayments on a debt they took out to cover school fees for their five children. “We just need our economy to work again,” said Kazingizi.

The Zimbabwe Coalition on Debt and Development, a social and economic justice NGO, has argued that banning the US dollar and all foreign currencies will simply boost the black market.

“There is a need to address the root causes of the current currency crisis, which are rampant corruption, mismanagement of public finances, and impunity being enjoyed by those that are fuelling the crisis through arbitrage and resource haemorrhage,” the NGO noted in a press statement.

The central bank’s move has not put an end to strike threats, which likely helped prompt the government’s currency decision last month. The Zimbabwe Congress of Trade Unions is warning it will call a stayaway to protest the rising cost of living, although it has not yet set a date.

When the unions last led a work stoppage in January, following the sudden announcement of a fuel price increase of 150 percent, security forces shot dead 17 people and raped 17 women, according to Human Rights Watch.

Fuel prices have been hiked three-more times since January, with an average daily commute now costing as much as $20.

More of the same

President Emmerson Mnangagwa’s cash-strapped government had long insisted the Zimbabwe dollar would only be re-introduced when the economic fundamentals were right.

Yet with inflation almost hitting 175 percent for June, 18-hour power cuts, and 3.5 million people facing drought-induced hunger in the countryside, “the fundamentals are clearly out of whack,” noted Mike Chipere-Ngazimbi, economics researcher at South Africa’s University of Pretoria.

A disastrous harvest – with maize production just 45 percent of last season – has compounded the hardships. The World Food Programme aims to reach 1.2 million people with food aid, but by March next year an estimated 5.5 million will be unsure where their next meal will come from.

When Mnangagwa came to power 18 months ago after a military coup ended the 30-year reign of President Robert Mugabe, he promised reforms.

But Mnangagwa, a ruling party stalwart, has failed to deliver a programme attractive enough to investors or multilateral financial institutions, or win over a country shocked by the army’s violent enforcement of last year’s close-run election result.

The one bright spot in Zimbabwe’s recent economic history was a period of coalition government between Mugabe’s ZANU-PF and the opposition Movement for Democratic Change lasting from 2009-2013. Then, GDP growth ramped up to more than 9 percent – although overall poverty levels remained stubbornly high.

To rescue the country from hyperinflation, in which prices doubled almost daily, an early decision in 2009 did away with the Zimbabwe dollar in favour of a basket of foreign currencies. The downside was foreign currency shortages in an import-dependent economy where more dollars leave the country than arrive.

Since then, an ever-more creative series of currency policies have been put in place to address that problem.

Currency conundrums

In 2016, the government introduced bond notes and coins, supposedly worth the same as the US dollar. But they steadily lost value on the informal market – and became an immediate source of arbitrage profits for the well-connected.

The Mnangagwa government has encouraged adopting mobile money to reduce the need for physical cash. According to the reserve bank, mobile money was used for 85 percent of all retail transactions in the last quarter of 2018.

But high transaction fees and a 2 percent government tax makes mobile money expensive – further eroding people’s purchasing power. In the rural areas, where mobile money is the common payment system for livestock sales, people are turning to barter instead, according to FEWS NET, the USAID-funded early warning hunger monitor.

In February, as a step towards creating a local currency, the government introduced the Real Time Gross Settlement dollar, or RTGS – effectively a digital currency harmonising bond notes, mobile money, and debit cards tied to an official US dollar exchange rate.

Immediately, the RTGS dollar began to lose value on the parallel market.

“The economic situation makes us feel like orphans in our own country.”

Last month, the RTGS dollar was trading on the streets at about 13 to the US dollar, more than double the official interbank rate.

On 24 June, the government abruptly decreed that the country’s sole legal tender was the RTGS, renamed the Zimbabwe dollar, and abolished the use of multiple currencies. The aim was to end the informal market contributing to galloping inflation and restore government control over monetary policy.

Civil servants had been threatening to strike, demanding payment in US dollars, and there were reports the military was also unhappy with their RTGS denominated pay packets.

But the introduction of the Zimbabwe dollar has not halted its slide on the black market, and soon after the ban on the use of foreign currencies was announced, Finance Minister Mthuli Ncube said the tourist destination of Victoria Falls was exempted.

“It’s very clear the decision to move to a local currency was done in haste,” said Kanyenze of the labour think tank. “The economy was re-dollarising, and particularly the military were demanding to be paid in dollars.”

Kazingizi, the fruit and vegetable seller, said he sees little sign that things will improve any time soon. His wife gets up every day at 3 am to go to the market, he said, but the family still struggles to stay afloat.

“The economic situation makes us feel like orphans in our own country,” he told TNH.

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