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Zimbabwe: African Development Bank Notes Progress on Arrears Clearance

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African Development Bank - Investors King

African Development Bank officials and representatives of the Zimbabwe government met on Wednesday to discuss the nation’s arrears clearance and ongoing partnership between the southern African nation and the development institution. They noted progress in Zimbabwe’s reform agenda.

African Development Bank Group Vice President Yacine Fal and a delegation on a tour of two southern African countries, held talks with finance minister Mthuli Ncube at the ministry offices in Harare. Ncube outlined the ongoing reforms in the wake of global headwinds such as drought, cyclones, the Covid-19 pandemic and more recently, fuel and fertilizer price hikes.

The Zimbabwe government has lowered taxes on fuel, made changes to its land policy and is implementing a range of social protection measures while tackling the Covid-19 pandemic, Ncube said. Two projects in particular are going well. The first, is an agriculture-based programme which has given relief to two million households and the second is a cash transfer programme, targeting children from poor families. Other measures included subsidized medical care for elderly people and other vulnerable population groups, and a grain distribution programme for populations in drought-hit areas.

Ncube said the government was discussing a new International Monetary Fund Staff Monitored Programme or SMP for Zimbabwe. SMPs are informal agreements between country national authorities and International Monetary Fund (IMF) staff to monitor the authorities’ economic program.

Ncube said the government had made significant efforts ahead of embarking on a new programme, including reducing inflation. He asked the African Development Bank to increase its private sector window with more capital and long-term funding and said the country would need additional bridge finance to hold interest rates steady.

Commending the achievements of Zimbabwe’s reform efforts achieved in a short period, Fal said continued coordination efforts for the reforms and dialogue with partners were crucial.

“You have a very ambitious reform programme and the challenges are many,” Fal said.

In remarks during the session, African Development Bank chief economist Kevin Urama said Zimbabwe’s reforms to its state-owned enterprises were a demonstration of its willingness to advance.  The African Development Bank’s Africa Natural Resources Centre could provide additional support and technical assistance in land policy. Its public finance management academy, which provides a framework for supporting regional member countries in their public financial and debt management efforts, specifically on training, technical assistance and policy dialogue, is another important tool which the Bank has on hand to assist, Urama said.

Director General for the Bank’s Southern Africa regional development and business delivery office Leila Mokaddem said the Bank and other development partners would discuss financial support for an SMP, which in the case of the African Development Bank, could potentially be sourced from its transitional support facility. “Without financial support an SMP cannot work,” Mokaddem said, adding that including the private sector and giving them incentives would be critical.

Following the finance ministry, the delegation continued to a meeting with Dr. M.J.M. Sibanda, Chief Secretary to the Zimbabwe president’s Cabinet. Sibanda, who chairs a tripartite committee of government, treasury and public services said despite the many challenges, the committee’s immediate priorities in the past months had been to push through reforms in governance and contracts.

He thanked the Bank for its corporate governance and procurement reform programme to Zimbabwe through capacity building, monitoring and evaluation, the health sector and $4.1 million in institutional support the African Development Bank has given for the nation’s state enterprises.

“We succeeded because of the support from the African Development Bank,” Sibanda said.

The Zimfund has been an important source of budget support for Zimbabwe in infrastructure and agriculture. African Development Bank Zimbabwe Country Manager Moono Mupotola said a 10-year programme ending in June 2022 would be replaced with a new fund, expanding to ICT and digital programmes and continued technical support.

“We would like to bring in the private sector, drawing on institutional investors in Zimbabwe such as pension funds,” Mupotola said.

Fal said a breakfast meeting organized earlier on Wednesday by the African Development Bank with ambassadors from the G7, European Union and other development partners, had been very encouraging

“We welcome this dialogue. These are baby steps, but we are getting there,” Fal said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Buhari Expresses Confidence in Banking Institutions to Tackle Economic Challenges

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President Muhammadu Buhari

President Muhammadu Buhari has expressed his confidence in the West African Banking Association (WABA) to tackle economic challenges in the West African region.

The president expressed his trust while receiving a team from WABA, led by its President, Thierno Seydou Nourou Sy, at the State House in Abuja.

The president stated that the sub-region needs to come to an agreement on low access to financial services and recovery from the COVID-19 pandemic.

According to him, the association, founded in 1981, brings together over 250 commercial banks and 15 institutions from across West Africa, and for many centuries, African countries have traded with one another without a formalized and structured system. He, however, noted that over time, global trade had become more complex and organized.

The president expressed optimism that the launch of the African Continental Free Trade Area will mark a watershed moment in the way African countries do business.

“More importantly, we will turn the page in ensuring that we deepen and expand our industrial capabilities by making sure we export less of what we have been endowed with in the primary or raw form, and convert larger portions of these resources into finished materials.

“That will allow us to benefit from the revenue earned from the added value of exporting a finished product,” he said.

“Our ability to overcome the current phase of our development lies in our resolve to work jointly via our regional and sub-regional organizations where we can all reach a common understanding to fight against a common enemy.

“This is one of the reasons I am delighted with the strides ECOWAS has been making towards unanimity and forging alliances with a goal to resolve issues that confront the sub-region.

“I believe that this is also the approach that is being followed in the West African Bankers’ Association and the West African Monetary Union,’’ he added.

While commenting on WABA’s ongoing attempts to synchronize monetary and fiscal policy, the president pushed the organization to find common ground despite the particular macroeconomic challenges that each member-state faces.

He pledged that Nigeria would always be ready to support efforts that are geared towards improving the lives of all its citizens “as long as they do not place us at a disadvantage.”

The WABA President praised Nigeria’s leadership role in the African economy, while also praising President Buhari’s leadership.

“That’s why we are here for counsel and guidance for the financial sector in West Africa,” he said. He further urged the president to be an advocate for the greater inclusion of WABA in the ECOWAS structure.

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Finance

NGX Sheds 0.13% on Monday to Extend its Decline

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Stock - Investors King

The Nigerian Exchange Limited (NGX) extended its decline on Monday as investors exchanged 263,338,835 shares worth N3.549 billion in 4,549 billion.

The market value of all listed equities decreased by N37 billion from N28.562 trillion it closed on Friday to N25.525 trillion while NGX shed 0.13% to close at 52,911.51 index points on Monday.

Jaiz Bank led the most traded stocks with 114007816 shares worth N101,752,697.03. Followed by GTCO’s 12,872,851 shares valued N302,842,620.75. See other details below.

Top Gainers 

Symbols Last Close Current Change %Change
CONOIL N 31.15 N 34.25 3.10 9.95 %
MRS N 13.60 N 14.95 1.35 9.93 %
MCNICHOLS N 2.13 N 2.34 0.21 9.86 %
ACADEMY N 1.23 N 1.35 0.12 9.76 %
NPFMCRFBK N 1.87 N 2.02 0.15 8.02 %

Top Losers 

Symbols Last Close Current Change %Change
PRESCO N 200.00 N 180.00 -20.00 -10.00 %
GSPECPLC N 3.41 N 3.07 -0.34 -9.97 %
NEIMETH N 1.76 N 1.59 -0.17 -9.66 %
UACN N 14.40 N 13.20 -1.20 -8.33 %
NEM N 4.39 N 4.05 -0.34 -7.74 %

Top Trades

Symbols Volume Value
JAIZBANK 114007816.00 101752697.03
GTCO 12872851.00 302842620.75
TRANSCORP 12806324.00 16725610.46
ACCESSCORP 11657629.00 115657901.70
ZENITHBANK 8579430.00 207021363.25

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Finance

Nigeria Raises Interest Rate by 150 Basis Points to 13%

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) led Monetary Policy Committee on Tuesday unanimously agreed to raise interest rates by 150 basis points from 11.5% to 13% to rein in escalating consumer prices.

The apex Governor, Godwin Emefiele disclosed this while speaking to the media on Tuesday, May 24th, 2022.

In 2020, the committee cut interest by 50 basis points to 11.5% in September 2020 to encourage borrowing and deepen new investment to stir growth and halt the plunge in economic productivity during the peak of COVID-19.

The nine-member committee voted unanimously to keep Monetary Policy Rate (MPR) at 13% and others as follow:

  • The asymmetric corridor of +100/-700 basis points around the MPR was retained
  • CRR was retained at 27.5%
  • While Liquidity Ratio was also kept at 30%

The increase may not be unconnected to Nigeria’s high inflation rate of 16.82% in April. The committee is now projecting an aggressive increase in the inflation rate due to the forthcoming general election.

Emefiele said the MPC is suspicious “there might be an aggressive accretion of inflation”. Therefore, to prevent the looming inflation, he said the committee had to raise the interest rate by 150 basis points.

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