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World Bank warns Zimbabwe needs predictable policy to support currency

Published

9 months ago

March 2, 2024

A senior World Bank official has revealed that Zimbabwe must increase the predictability of its monetary and fiscal policies in order to restore confidence in its declining currency value.

The World Bank’s Regional Vice President for Eastern and Southern Africa, Victoria Kwakwa, told journalists in an interview that the country may advance by straying from the central bank’s “quasi-fiscal operations.”

After ten years of dollarization, the local currency was reintroduced in 2019, but it quickly lost value, leading authorities to quickly approve the use of foreign currencies in domestic transactions. The finance ministry and central bank announced last month that they were working on ways to stabilise the value of the currency and that they were thinking of, among other things, tying the exchange rate to the price of gold.

“Policy predictability… the improvements that are being made moving away from quasi-fiscal operations, all of that will contribute to building greater confidence,” Kwakwa said.

She stated that the World Bank is “committed” to the ongoing process that has been in place since 2022 for Zimbabwe to pay off billions of dollars in arrears to the organisation and other international lenders.

Kwakwa, meantime, expressed her “delight” at the news that China and India had reached debt restructuring deals with neighbouring Zambia. The President of Zambia announced the accords last week, raising optimism that Zambia would be on the verge of exiting its more than three-year default.

“With the official creditors out of the way, the government has a chance now to focus more on getting an agreement with the commercial creditors. And we hope that that will also be in the offing soon,” she said.

The International Monetary Fund (IMF) stated last month that the central bank should cut back on its non-core operations, which have included printing money and borrowing to lend to the government, though she did not specify what those operations were.

With annual inflation at 47.6% and the Zimbabwean currency having lost over 60% of its value against the US dollar thus far this year, the nation is still reeling from the memory of hyperinflation under longstanding former leader Robert Mugabe.

“That’s at the heart of the problem—the fact that there hasn’t been confidence. And every time people get (the currency), they try to get rid of it to get something else, and so it’s constantly losing value.”

Related Topics:Featured World Bank Zambia Zimbabwe

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VenturesNow

Food prices drive second straight monthly hike in Nigeria’s inflation

Published

3 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

3 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.