Zimbabwe plans to cut 25,000 government jobs, or more than 8 percent of civil servants, to reduce a wage bill that consumes almost 97 percent of the budget.
The Finance Ministry wants to trim the number of state workers to 273,000, which will reduce the proportion of salaries to total revenue to 75 percent by December 2017, according to a budget document. While still high, it will be a “significant improvement on the current unsustainable situation,” the ministry said.
“We have started the process of auditing of civil servants so that we can identify the number of people to be retrenched,” Priscah Mupfumira, Zimbabwe’s public service minister, said by phone Friday. The government has implemented a ”freeze on all new appointments,” she said.
The latest push comes after previous attempts to trim government employees were thwarted by President Robert Mugabe’s cabinet, even as the percentage of revenue gobbled up by pay climbed from 83 percent earlier this year. Finance Minister Patrick Chinamasa told parliament on Thursday that some wages would likely go unpaid later this year because money may not be available. Civil servants and soldiers have repeatedly been paid late in recent months as the government struggled to meet scheduled paydays, sparking protests including a strike on July 6 that shut down much of Zimbabwe.
The southern African nation is experiencing its worst economic crisis since the hyper-inflationary period that peaked in 2008, when inflation soared to 500 billion percent, according to the International Monetary Fund. Now, after it switched to use of the U.S. dollar in 2009, a shortage of currency, deflation and unemployment of about 90 percent have plunged the country back into crisis.
Chinamasa didn’t immediately answer calls to his mobile phone when Bloomberg News sought comment.
President Tinubu Orders Immediate Settlement of N342m Electricity Bill for Presidential Villa
President Bola Tinubu has directed the prompt settlement of a N342 million outstanding electricity bill owed by the Presidential Villa to the Abuja Electricity Distribution Company (AEDC).
This move comes in response to the reconciliation of accounts between the State House Management and the AEDC.
The AEDC had earlier threatened to disconnect electricity services to the Presidential Villa and 86 Federal Government Ministries, Departments, and Agencies (MDAs) over a total outstanding debt of N47.20 billion as of December 2023.
Contrary to the initial claim by the AEDC that the State House owed N923 million in electricity bills, the Presidency clarified that the actual outstanding amount is N342.35 million.
This discrepancy underscores the importance of accurate accounting and reconciliation between entities.
In a statement signed by President Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, the Presidency affirmed the commitment to settle the debt promptly.
Chief of Staff Femi Gbajabiamila assured that the debt would be paid to the AEDC before the end of the week.
The directive from the Presidency extends beyond the State House, as Gbajabiamila urged other MDAs to reconcile their accounts with the AEDC and settle their outstanding electricity bills.
The AEDC, on its part, issued a 10-day notice to the affected government agencies to settle their debts or face disconnection.
This development highlights the importance of financial accountability and responsible management of public utilities.
It also underscores the necessity for government entities to fulfill their financial obligations to service providers promptly, ensuring uninterrupted services and avoiding potential disruptions.
Abuja Electricity Distribution Company Issues Ultimatum to 86 Government Agencies Over N47bn Debt
The Abuja Electricity Distribution Company (AEDC) has issued an ultimatum to 86 government agencies, including the Presidential Villa, owing a collective debt of N47 billion.
The notice comes as a response to the prolonged failure of these agencies to settle their outstanding electricity bills.
According to the public notice released by the AEDC management, some of the highest debts are attributed to prominent entities such as the National Security Adviser (owing N95.9 billion), the Chief of Defence staff barracks, and military formations (indebted to the tune of N12 billion).
Also, several ministries, including the Ministry of the Federal Capital Territory and the Ministry of Power, have sizable outstanding bills.
The AEDC has expressed its frustration over the inability of these government bodies to honor their financial obligations despite previous attempts to facilitate payment.
In response, the company has warned of imminent disconnection of services if the outstanding debts are not settled within 10 days of the notice.
The outstanding debts are attributed to various factors including the devaluation of the naira, cash scarcity resulting from demonetization programs, high inflation rates, removal of fuel subsidies, and foreign exchange challenges.
These financial burdens have adversely impacted the operations of the AEDC, contributing to a loss of N99 million in foreign exchange alone.
As the deadline for payment approaches, government agencies are under pressure to address their outstanding debts to avoid service disruptions.
The AEDC remains steadfast in its commitment to ensuring that all entities fulfill their financial obligations, underscoring the importance of prompt payment for uninterrupted electricity services.
Mali, Niger, and Burkina Faso’s Exit from ECOWAS Raises Economic Concerns
Plans by military-ruled Mali, Niger and Burkina Faso to break away from a West African bloc have the potential to backfire on their already fragile economies and exacerbate widespread food insecurity.
The trio of nations are all landlocked and among the poorest in the region, with annual per-capita gross domestic product of less than $1,000.
Exiting the Economic Community of West African States places them at risk of losing access to a $702 billion market, and exposes them to increased tariffs and restrictions on the movement of goods and financial flows.
“The military coup leaders who control Burkina Faso, Mali and Niger have managed to score the silliest own goal since the UK voted for Brexit,” Charlie Robertson, head of macro-strategy at FIM Partners, said in an emailed note. “They take out 8% of Ecowas’ GDP and lose access to markets like Nigeria and Ghana, which together have a GDP of $467 billion.”
Ecowas members benefit from the free movement of goods, capital and people within the bloc. While trade between its 15 members is dominated by Ivory Coast, Ghana and Nigeria, and remains relatively small at about $277 million — or about 15% of the total they conduct — it has the potential to grow to as much as $2 billion over the next few years, the International Trade Centre said last year.
Sub-Saharan Africa has seen nine successful military coups since 2020, and Ecowas has been pushing for a return to civilian rule among those within its ranks. It suspended Niger, Mali and Burkina Faso and imposed far-reaching economic and diplomatic sanctions on them, but the latter two nations have since been readmitted to the bloc and relations had been regularized.
Nigeria, which holds Ecowas’ rotating chairmanship and generates more than half its GDP, said it deplored the juntas’ actions, which amounted to “public posturing” and would deny their populations the right to free movement and trade, according to a statement from the Ministry of Foreign Affairs.
Mali’s Foreign Minister Abdoulaye Diop defended the decision to leave Ecowas, saying it posed a threat to his nation and that its push for elections to be held was hurting its people.
“This decision was in our best interest in order to protect our interests and work with friendly countries,” he told public broadcaster ORTM on Monday. “We’re not alone, we have Niger and Burkina Faso.”
Besides putting trade at risk, the three nations’ ability to access credit will also be impacted — they are all reliant on the regional market for financing because they can’t access international capital.
Mali and Niger defaulted on their domestic debt in 2021 and 2023 respectively after they lost access to the regional market. Burkina Faso has retained access, but if it is withdrawn its credit rating may be downgraded because of the increased risk of it being unable to refinance its commercial debt, S&P Global Ratings said in an emailed note.
“It’s a bit early to assess what the impact is going to be,” Pierre-Olivier Gourinchas, the International Monetary Fund’s chief economist, told reporters in Johannesburg on Tuesday. “In general, having an integrated economic area is something that’s going to be favorable, conducive to trade and conducive to higher growth. Moving away from this is going to have the opposite effect.”
The juntas haven’t indicated whether they intend leaving the West African Economic and Monetary Union, which seeks to promote financial integration in West Africa and regulates a regional central bank and the French-backed common West African franc that’s used by eight countries. Such a move would make it very difficult for commercial banks to continue operating.
“The impact of exiting the WAEMU – which is not Moody’s baseline expectation – would have credit-negative implications for regional banks across the monetary union,” Mik Kabeya, a Moody’s Investors Service vice president and senior analyst, said in an emailed response to questions.
On Sunday, Ecowas said it was ready to find a negotiated solution to the “political impasse.” It hasn’t followed through on previous threats to reinstate elected leaders by force.
“Putting the threat of military intervention on the table without the desire to follow through, was a show of weakness, not strength,” Joachim MacEbong, a senior governance analyst at Stears Insights, said in an emailed response to questions. “It has probably emboldened the regimes to think they can negotiate.”
Mali and Burkina Faso are scheduled to hold elections this year, according to agreements they struck with Ecowas. Niger has complicated talks with the bloc, preventing its mediators who visited the capital, Niamey, last week from leaving the airport.
The juntas “want to stay in power,” Ibrahima Kane, Executive Director of Open Society Foundations Africa, said by phone from Dakar, Senegal’s capital. “Naturally they will try to get maximum from the bargain.”
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