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Zambia’s kwacha now Africa’s best performing currency as Rand, Naira, others struggle

Published

3 months ago

February 23, 2024

Following consistent drastic monetary policy interventions by its central bank, Zambia’s currency, the kwacha, has become Africa’s best-performing currency against the US dollar thus far this year.

However, analysts suggest the currency will only many its steady rise if the nation draws in more foreign investment.

According to data from the London Stock Exchange Group (LSEG), the kwacha has strengthened 13.8 percent to 22.8 percent versus the US dollar in 2024 as a result of the central bank’s decision to reverse a decline in the value of the currency that had increased inflation earlier this month by raising interest rates and reserve ratios for commercial banks.

Danny Greef, Co-Head of Africa at research firm ETM Analytics noted that “The kwacha’s performance this year has been remarkable.”

Zambian authorities have held foreign investment at bay, and the value of the kwacha is decreasing due to the country’s unfinished debt restructuring, which is in its fourth year. Although copper production, the country’s major foreign exchange earner, has also fallen despite government efforts to boost the sector.

“The conclusion to the external debt restructuring exercise will also be instrumental to providing clarity on the outlook for hard-currency and fiscal obligations and unlock pent-up portfolio- and fixed investment flows into the country.”

Bank of Zambia governor Denny Kalyalya told a public forum earlier this week that “The measures that we have taken… are meant to stem some of the demand, which we thought was excessive as we anticipate supply, which mainly comes from the mining sector.”

Although the value of the kwacha has somewhat declined this week from 22.5 to $1, it is still more than 20% higher than the record low of 27.23 achieved on February 6.

“What is expected is an adjustment that will stabilise around the 21-22 per dollar,” economist Munyumba Mutwale said, adding that increased foreign currency flows were required for the kwacha to make further gains.

African currencies encountered severe difficulties in 2023 as a result of the global monetary tightening cycle. The official exchange rates of the South African rand, Kenyan shilling, and Nigerian naira had significant fluctuations in December 2023, falling by an average of 27% from 25% in November.

Although the three countries’ currencies have continued to decline, as has the value of other continental economic giants like Egypt, it seems Zambia has managed to stabilise its economy in spite of its foreign debt issues.

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Nigeria: Court insists Binance executive can face trial on behalf of firm

Published

2 hours ago

May 18, 2024

Ifeoluwa Dada

In an ongoing tax evasion case, a Nigerian court decided on Friday that Binance executive, Tigran Gambaryan, may go to trial on the cryptocurrency exchange’s behalf.

Binance and executives Gambaryan, a U.S. citizen and head of financial crimes compliance, and British-Kenyan national Nadeem Anjarwalla, a regional manager for Africa, face four counts of tax evasion. They are also accused of participating in specialized financial transactions without a license and laundering more than $35 million in another case.

All of them have entered not-guilty pleas on the allegations of money laundering. Following the court hearing on Friday, Binance’s attorney chose not to comment. The attorney for Gambaryan was similarly silent.

“We are deeply disappointed that Tigran Gambaryan, who has no decision-making power in the company, continues to be detained,” a Binance spokesperson said in a statement on Friday after the court hearing.

“These charges against him are completely meritless. He should be freed while discussions continue between Binance and Nigerian government officials.”

Gambaryan is still being held while Anjarwalla left the nation in March. The office of Nigeria’s security adviser has declared that it is collaborating with Interpol to pursue Anjarwalla’s detention.

After its executives were imprisoned as part of a crackdown on cryptocurrencies in February after being invited to the African nation for talks with officials, the CEO of Binance has warned Nigeria of establishing a dangerous precedent.

Nigeria’s Federal Inland Revenue Service (FIRS) has announced that Gambaryan may face prosecution on behalf of the exchange; Binance has not been accused in the tax evasion case.

According to prior statements from Gambaryan’s attorney, Gambaryan was “neither a director, partner, nor company secretary” and did not have any formal authorization from Binance to take on the accusations on the firm’s behalf.

Judge Emeka Nwite decided on Friday that Gambaryan, who is Binance’s chief financial compliance officer and was lawfully designated to represent the company in a meeting in Nigeria, should be served with the charges against Binance.

On Wednesday, Gambaryan is scheduled to appear in court and enter a plea on Binance’s behalf. On Friday, Gambaryan’s request for bail in the money laundering case was turned down. As the nation struggled with ongoing dollar shortages, cryptocurrency websites became the go-to venues for trading the Nigerian naira. Nigeria has blamed Binance for its currency problems.

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Nigerian govt denies reports it plans to borrow pension fund for infrastructure

Published

1 day ago

May 17, 2024

Ifeoluwa Dada

The Nigerian government has denied reports that it plans to borrow the N20tn pension fund to finance infrastructural projects.

In a statement made in Abuja, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, stated that the government would abide by the laws and guidelines in place pertaining to the pension fund.

Following a two-day Federal Executive Council meeting at the Presidential Villa on Tuesday, the minister reportedly informed reporters that the government would present a plan to use local funds, including the fund, to finance infrastructure development.

Edunstated that the government does not intend to exceed these legal boundaries, emphasising that the government was committed to protecting workers’ pensions.

“It has come to my notice that stories are making the round that the Federal Government plans to illegally access the hard-earned savings and pension contributions of workers. Nothing could be farther from the truth.

“The pension industry, like most the financial industries, is highly regulated. There are rules. There are limitations about what pension money can be invested in and what it cannot be invested in.

“The Federal Government has no intention whatsoever to go beyond those limitations and go outside those bounds which are there to safeguard the pensions of workers.

“What was announced to the Federal Executive Council was that there was an ongoing initiative drawing in all the major stakeholders in the long-term saving industry, those that handle funds that are available over a long period to see how, within the regulations and the laws; these funds could be used maximally to drive investment in key growth areas,” Edun clarified.

The plan to spend the pension fund was reported and was widely criticised. The Trade Union Congress of Nigeria and the Nigeria Labour Congress had earlier on Thursday urged the government to abstain from making any changes to the pension fund.

They stated, “Nigerian workers have entrusted their hard-earned savings for retirement security, not as a means for government projects. It is imperative to halt any further plans to tap into these funds, especially given the lack of transparency and accountability in past government borrowing practices.”