Category Archives: Zimbabwe

Cashless pushes around Africa

Nigeria: The Central Bank of Nigeria set a tariff of 3% for deposits and 2% for withdrawals of  more than Naira 500,000 (equivalent to ~$1,380) from individual accounts. They also set a tariff of 5% for withdrawals from corporate accounts, and 3% for deposits, over Naira 3 Million (equivalent to ~$8,280) from corporate accounts. This is in the states of Lagos, Ogun, Kano, Abia, Anambra, and Rivers States as well as the Federal Capital Territory. This is to promote cashless transactions. (Source)

Uganda: The Bank of Uganda has banned merchants from imposing surcharges for the use of electronic card payments and also the setting of minimum and maxim amounts that can be transacted on cars. In addition, they have asked banks in Uganda to harmonize tariffs that they levy on customers of banks for when they use each other’s ATM’s.

Kenya: Today is the deadline set by Kenya’s Central Bank after which the old series of the Kshs 1,000 (~$10 notes), bearing the image of the first President of Kenya, will cease to become legal  tender for transacting in the country.

Tanzania: Mobile app lender Tala suspended issuing loans in Tanzania. The company which claims to have lent over $1 billion to 4 million individuals will continue in Kenya which they say, with 3 million customers, is a critical part of their global business, and where they are piloting new financial education services. California-headquartered Tala also has customers in The Philippines, Mexico and India, and is backed by investors like PayPal, IVP, and Revolution Growth.

Zimbabwe: The Cashless push has gone awry in Zimbabwe where the Government has now banned Ecocash agents from making cash deposits and withdrawals for customers as these are now happening at values that are at variance. This has resulted in a situation where $1 in cash is worth ~$1.50 in digital money. 

The reason for the collapse of the Zimbabwe Economy

Anonymous guest post. 

Land redistribution (or seizures) didn’t sink the Zimbabwe economy. In fact a 2011 independent study, quoted at the time in the New York Times (it’s unlikely to get more sceptical than that) declared that the redistribution programme had actually worked – that Zimbabwe was not just more productive; its food security had also rebounded to pre-redistribution levels.

But many (especially Western) analysts politicize the economic crisis without properly comprehending it. They link the collapse of the currency with the collapse of settler production, which in turn is caused by misrule. Misrule is then metaphorised as a trust problem, which is then looped back into the economic crisis, this time as its very basis.

The land redistribution-economic collapse analysis was deliberately trotted out in the early 2000’s by both the British and the white settlers. It’s a myth, as carefully and boldly planned and executed as anything Goebbels ever put out. It’s the Big Lie Theory stunningly executed. The Big Lie worked on a very plausible assumption: given that the white settler control of agro-industry was the heartbeat of the Zim economy, it followed that dismantling it would trigger the disintegration of the economy. This was only true to the extent that the land seizures disrupted productivity so severely as to halt it altogether.

Herein lies the Big Lie: it was easy to assume that a change in land ownership would mean a collapse in agricultural production. This evidently (as the statistics demonstrate) was a manifestly racist assumption. For one, it failed to account for ongoing smallholder production. More to the point, a decade after land redistribution, agricultural production was at the same levels, if not higher than what they were prior to redistribution.

So: what accounts for the collapse of the Zim dollar? The simple answer is sanctions. In 2002, and at the height of the land redistribution programme, (then President) Mugabe refused to sign onto the second phase of the IMF ESAF programme.

In response, Zimbabwe was suspended from the Fund. At the same time, and in solidarity with the white farmers, Bill Clinton (presidency ended in 2001) and the US Congress instituted sanctions against Zimbabwe. The result: Zimbabwe lost ALL its major export markets. And as a follow-on, its hard currency reserves began to tank.

Those sanctions have still not been lifted. This makes Zimbabwe, after perhaps Cuba, Iran and North Korea, the biggest pariah country on earth. Attempts to lift sanctions and the IMF suspension over the past two decades have all been unsuccessful.

One last thing, which I think is at the core of the sanctions question: why haven’t they been lifted? I was at a press briefing in 2010 or thereabouts with (then Prime Minister) Morgan Tsvangirai and his deputy, Arthur Mutambara. These were clearly individuals who had been brought into Uncle Bob’s cabinet (at the instigation of Mbeki and the grand coalition peace deal) precisely on the calculation that they were acceptable faces to the West.

And the question they were asking was: why have the sanctions not been lifted now after the peace deal? Almost a decade later, the whole determination of the Emmerson Mnangagwa government to conduct a credible poll turned on the assumption that, following such a credible poll, sanctions would be lifted.

In fact one could argue that the current design of the post-election Commission of Inquiry is itself an attempt to convince Bretton Woods and Washington that Zimbabwe now has a ‘credible govt’. But still, there are no clear indications that even if the poll had been deemed credible, that sanctions would be lifted.

So one is now driven very close to the conclusion that Zimbabwe is being turned into the new Haiti i.e. that its punishment for daring to stand up to Western capital and threaten the very idea of white supremacy is going to be punished for generations to come.

Also, read the Guide to Harare, the work of the late Professor Sam Moyo.

Guide to Harare

A guest post 

Getting There: One can fly to Zimbabwe from Nairobi with South African Airways (via Jo’burg), Ethiopian Airlines (via Addis Ababa), Emirates (via Dubai) or Kenya Airways (KQ) for approximately $850. KQ flies direct to Harare and sometimes via Lusaka and returns via Lilongwe, Gaborone or Lusaka. Kenyans do not require visas and there was no Yellow Fever certificate requirement.  If one plans on extending their stay in Zimbabwe, it’s best to write more days (than required) on the immigration form rather than the exact number in one’s current itinerary.

On arrival, you find that, what used to be Harare International Airport in the 1990’s, is now the Domestic Terminal, while the new Chinese-built airport, is modern, airy and clean. Zimbabwe has four (4) airports around the country, but no domestic flights at the moment, besides charters.

The Immigration and Visa desks at Harare International are labeled in both English and Chinese.  Visa prices vary depending on nationality and tourists needing visas can pay up to US$55 for one.

The baggage claim area at the airport is spacious and luggage carts are free.  At one end of baggage claim, there are several glass cubicles where Customs officials search people’s suitcases for items bought abroad and sometimes make one pay duty fees.

Getting Around: The taxi/cab minimum fare is US$4 for a distance of about 3KM or transport within the city. Transport outside the city varies, and one must negotiate before entering the cab. They speak English very well and Shona is widely spoken.

Harare is clean and organized with orderly driving.  The streets are Western style and organized into blocks.  If one has a driving license one can hire and drive any car so long as they have been in the country for less than 6 months and carry their passport at all times.

Harare is a nice city to drive around in. The area around Samora Machel Avenue and First Avenue has a mix of indigenous banks and international banks which have now been localized. Across from these banks is the Federal Reserve Bank of Zimbabwe.

Business and Economy: Zimbabwe is a multi-currency state. The economy was dollarized in 2009 and US Dollars, South African Rand and Euros are the most common legal tender, while Botswana Pula is also accepted. Cash is king as many places do not accept cards.

The US$ is the most preferable currency, and while you’ll find the rare $2 bills here,  US coins are not in circulation. Obtaining change is a large problem countrywide in shops/supermarkets and with vendors, so cashiers will give out candy, matches, pegs, sugar packets, bottle openers or a pen as change.

Also, US dollar notes are washed in washing machines by individuals & shopkeepers to keep them clean (delicate cycle), then hang out on clothes lines to dry. It’s the easiest way to have “crisp” notes in the absence of fresh new US dollar notes fresh from a mint.

Power blackouts are common and most Hotels and Lodges have generators. Also, while all the city roads had, street lighting, they were never on at night.

 Where to Stay:

  • Rainbow Tourism Group Hotel (Formerly Sheraton Hotel) costs US$110 per night. It is a huge hotel that is gold in color, has free Wi-Fi and is located close to the city center from where one can walk to fast food places such as Steers, Nandos, in 20 Minutes. Food at the hotel is good and ranges between $16  – 25 for the buffet dinner and the breakfast is also good in quantity and quality. 
  • House of Garrison is a lodge in the upmarket suburbs where one can get multiple supermarkets and restaurants. It costs $100 and is a bit of a ride from the city center, but the lodge has a custom breakfast and free Wi-Fi.
  • Meikles Hotel; a very nice hotel right next to Eastgate Mall, Zimbabwe Parliament and a beautiful public city park, which costs $275 per night for bed &  breakfast. The service is great and the staff attention to detail is very impressive.  The walls all over the large hotel have lovely photographs from Zimbabwe’s history. The internet here is reliable, with Wi-Fi is US$1 for one hour.

Keeping in Touch: The airport has a “Rent A Phone” shop in the Arrivals area.  For mobile communication, its better to use the local carrier services, as roaming is costly. A local SIM card is US$4 and one is required to register it with their passport, and it can take up to 48 hours to activate your number. Phone airtime/credit is sold in units of US$1, 5, and 10.  Hotels in Harare have reliable Wi-Fi which is sometimes free, while lodges outside Harare can charge up to US$5 for 30 minutes of internet.

Shopping & Sight-Seeing: To view animals, one can visit Chengata, Pamuzinda and Shumba Lodges which are about 1 ½ hours from Harare and all very close to each other. Pamuzinda has a resident giraffe named Geoffrey, while at Chengata, one can get to pet and feed a small elephant family

Taking photos in or around the airport area or any “government” area is not allowed. Cars that are parked at the drop off area get their car wheels clamped immediately the driver leaves the vehicle, even if it’s for a few minutes.

Food & Bars: Various familiar South African franchise restaurants are found in Harare such as Spur, Nandos, Steers, with meals going for less than US$8.  The Steers, Chicken Inn, Debonairs Pizza outlets in town all had the loose change dilemma, and at  Chicken Inn, they offered fried eggs, chili sauce tubs or cheese slices equivalent to one’s change!

Food in top Harare restaurants is excellent especially the steaks. We visited an Irish pub, O’Hagan’s, and a restaurant Millers Cafe, both in Harare’s The Village.  A beer was US$4 at O’Hagan’s and a ½ kilo steak meal was about US$15 at Millers Cafe.  However, a majority of the restaurants are closed on Sundays.

Odd Points:

  • You may dislike President Mugabe but refrain from political discussions in public, it can get you in trouble.  
  • Police use some Mercedes Benz as police cars, and it is claimed they often ask citizens who call for assistance, for fuel money before they to rush the crime scene. 
  •  When driving out of Harare, one gets to see the once “White Farms”, which now have large tracts of long wild grass, with small patches of maize/corn growing. 
  • A can of Coca-Cola soda at the Harare International Airport goes for US$10, but at other shops, a 300ml bottle can cost US$ 0.50.

ALN 2011 Day 3

The final day of ALN, brought calls to embrace politics, more lessons in banking & political leadership, an update on the status of the network, and appearances by 50Cent and African royal(think ‘Coming to America’)!

(Excerpts, not the full-day proceedings)

Needs and Leads (N&L): This was a mid-morning session for attendees to find tangible ways to collaborate with other ALN members. Each speaker had three minutes to talk about their work and their needs, without using slides or PowerPoint to make a connection. They included

  • Mike of Fenix International said that they (in partnership with MTN) had developed a solar power set in Uganda, which small businesses could use to charge other batteries and devices for members in a community. It retails for ~$150 and can break-even for the owner/investor in about 6 months. They hope to scale up and introduce the device to millions of others in Rwanda and South Africa and are looking for entrepreneurs to distribute the devices.
  • The second N&L speaker was from a private equity business in Johannesburg that has a team of over 400 programmers working on customer development & billing application software for the private sector, telecommunications companies, large SA banks, and the Government (SA’s revenue agency). They are seeking to grow in Kenya by finding leads into Kenyan businesses in software development, telecommunications and the government.
  • Lindsay of Sanergy talked about the slum residents in Nairobi who don’t have access to sanitation. So her company builds toilets for them, collects sewage, and converts this to fertilizer and energy – making money as an independent power and fertilizer producer. There is great potential in this and she is seeking fertilizer distributors, Kenya government officials (in sanitation & standards) and micro-finance banks and institutions.
  • Laila runs a property firm in Nairobi and is the Chairlady of the Kenya Property Developers Association, and focuses on urban development in cities. They have mobilized $25 million to develop middle-class properties, and with an IRR of 30% where they have exited – and they are seeking to mobilize $100 million as risk capital and mezzanine finance to develop low costs housing, budget hotels in East Africa, as well as senior private equity professionals, to become a partners & board members.
  • Arjuna from the Omidyar Network, lives in Silicon Valley and, is looking for people who want to change lives in Africa to bring their ideas forward.
  • Ann is working to establish meaningful social games for change and reach young people to work on projects around wealth and prosperity, and she is looking for experienced Africans in games design, and social innovation projects as well as partners, investors, and interns.
  • Andy from USAID spoke about the overlap of needs and mutual interest between Africa and America and are they are seeking young people to engage with, and help them craft meaningful, impactful programs for Africa and be sounding boards of feedback.
  • Joseph from Congo grew up in a refugee camp in Uganda with limited schooling & learning resources, and is now a graduate of the ALA. He, and other refugees, co-founded a youth organization – Coburwas which looks at the common needs of refugees which are common across and now wants to expand the education program and help kids finish school. By 2010 85 students, and 15 were completing A level, including 5 girls – the first ever to complete school from the camps. He needs mentors to advise on foundation decisions, and need $13,000 of funds to take 100 kids to high school for the next one. Within 10 minutes, another attendee (Colin Gayle of Bounce Back Media) got on the stage and told Joseph, that a benefactor (Curtis Jackson, a.k.a 50 Cent) had committed to funding the entire $13,000.
  • Debbie of Aecom/Stanford Business School focuses on entrepreneurship and innovation in emerging markets, especially at the bottom of the pyramid, helping people to deal with poverty issues that can scale. They are seeking entrepreneurs (in Africa, Asia, and Latin America) who would want assistance from Stanford and are willing to do case studies for research
  • Swaady from Cote d’Ivoire has set up a luxury tea company and is seeking customers, funders, and partners.
  • Isis from inMobi spoke of the scalable potential for mobile advertising to the 500-600 million phone users in Africa as that will be the main way people access the net. She is seeking talented women to work at the company.
  • Nuradin a former Somali refugee and now Dutch citizen is the MD of a company that distributes Massey Ferguson tractors in Africa. They plan to set up agriculture learning centers in Africa, on 100-hectare model farms to teach farmers how to use tractors and implements and he is looking for partner dealers in Africa.
  • Monica has set up an agro-processing company working on alternative foods (non-Maize) for the larger populations and is seeking people to assist in branding, supply chain & distribution strategies.
  • Nena of Blackbox noted that there is little research done on young women consumers in Nigeria, no one knows them, or how to market to them. So they want to do a study for women 0-18 what are they doing, needs, gaps in services, and data from this will be used for brands to do product development and governments to provide better service. They are seeking funding for the study, people interested in buying the study, and others who may wish to run similar studies in their own countries.
  • Oliver from LGT Capital invests $200,000 – $1 million in expansion business models in education, health, resource management. They have invested in Bridge International an institution that is growing for-profit schools (now 38) in low-cost areas in Kenya at a student cost of $4 per month. They are primary investors but are looking for capital from Africa to invest, entrepreneurs with ventures, and partners who can bring expertise to the group.
  • George of Angels Finance spoke of a project he’s developing in Uganda where people can donate a portion of their phone airtime to charities – and he is seeking mentors, a bank to be the trustee, and developers to put it on phones
  • Brian (a co-founder of Seacom who recently stepped down) has founded Black Rhino which invests in infrastructure in Africa. He notes that such developments should have social inclusion, smart financing (governments should not put crippling liabilities on their balance sheet) and smarter (transformational) technology. They are seeking people with experience in social work, and environmental work, especially French-speaking ones.
  • James of Dahlberg talked about the long history of philanthropy in Africa. They want to identify and celebrate champions of philanthropy across Africa, map out high givers of interest, create a platform for collaboration, and acknowledge their efforts.
  • Arthur, the deputy prime minister of Zimbabwe, said that despite his background (McKinsey, MIT, Rhodes) he felt lonely as there were no other political leaders present. He urged ALN members to make sacrifices and take a plunge into politics, (become political gangsters) in order to be true continental leaders.

Don’t ignore Politics: This was underscored by another speaker Tutu Agyare who lamented that while most in the room were comfortable with big positions, or making money from foreign corporations, they had to take more risk to build their countries as they could do better jobs than the minister in our countries. Also, it was important to take more risks at a young age as you don’t have to be 70 years old to run an African country.

ALN Award The inaugural ALN Award was given to James Mwangi, the CEO of Equity Bank. He talked about the large price and sacrifices you have to make – like he did in 1992 when a mutual fund (Equity Building Society) in his village was about to be closed by the Central Bank (CBK) for insolvency (no funds, no trial balance for 3 years and other governance issues) and he was approached to intervene. He did, but the CBK Governor asked him to take over the society’s management as a condition to keep it going, and he foolishly did, going from a top bank job earning Kshs 400,000 to about Kshs 50,000, and with the added danger of losing his house which he had bought through the society.

He also talked about the need to have a belief in something like the society (now bank), not just an interest, to transform it from 2,000 to 7 million customers (more than the number of people who voted in Kenya’s presidential elections). Also, while success is not always celebrated, having a belief enables you to do things like persuading villagers to convert their society savings into investments in the society and they have been paid back to a point that the village Nyagatugu may be the richest rural village per capita in Africa.

He also mentioned the need to focus on innovation and use it to develop communities & societies. Equity is edging away from branch banking to mobile phones & agency banking model to a point that 40% of their transactions are being done by shopkeepers, as well as distribution of relief food funds in Kenya and they sell more policies than all insurance companies in Kenya. Also that next week, they will launch the first free transfer from the diaspora to the continent in partnership with MasterCard.

Talk from a King: The closing Keynote was given by King Kgosi Leruo Molotlegi II of the Royal Bafokeng Nation in South Africa.

Who’s the King? He’s a taxpayer, architect, and a trained pilot who’s worked with the SA air force and reads on culture & economies which helps him run a $4.5 billion fund. He said the issues that leaders face are universal, problems are generic and that prosperity is partly about finding the right formula, but mostly it’s about having the will to act and maintain a vision.

He spoke of the people of Bafokeng who migrated to their current homeland around the year 1450. Their then king forged a friendship with colonial leaders and noted the interest in their land and decided to obtain title to the land to avoid land grabs. Bafokeng citizens went to work in the Kimberly diamond mines, and portions of the money they earned was saved – and the King got help from a missionary who they asked to buy the land in his name and hold it in trust for the Bafokeng community.

Later in 1925, platinum was discovered under the land that the Bafokeng owned, and despite clashes over land rights with mining companies and the government, courts sided with the Bafokeng as genuine owners of their land. As such, they have derived income from mineral extraction for 60 – 70 years which has funded many of their expansion plans and brought wealth to the nation.

However they are aware of the resource curse and the challenges it brings such as population influx, crime, unmet expectation, social ills, complacency and corruption – for the nation of 150,000 people (in 29 villages) are something of an island of prosperity ($300 per month average income) in a sea of rural poverty.

The Kingdom has a Plan35, a detailed blueprint for the next quarter century (to 2035) and their portfolio is now 60% in mining, and 40% in property, communication oil gas – though holding firms, enterprises, education, and sports firms that ensure sustainability.

He was asked (and answered questions) about the supreme council of elected leaders who help run the state (are elected, and are now more representative with women and youth among them), welfare programs (dependence on the state), the need to develop entrepreneurship (a big challenge as there has not been an incentive to work for 70 years and some people have the mindset since everything is given to them) and communal land tenure (which is an obstacle to enabling people to obtain development loans).

State of the network: Acha Leke and Fred Swaniker spoke about ALN whose membership is now a mix of South Africa (25%), US/UK/Europe (17%) Nigeria (17%) Kenya (11%) and other countries but weak in Arab and Francophone Africa. It is also male, 28% female, and dominated by the private sector (heavily finance & consultancy) at 89%, and non-profits are 6%, against a goal of having 30% from the public sector.

In 2012 they will grow in the above areas that are missing, as it is not meant to be a business network, but a leadership one. They will target to have two events a month across Africa – regional gatherings, from which a lot of where membership tends to spring – next in Cairo, Dakar, Abidjan, and Luanda. Also, they will take a group of ALN leaders to visit China, and, after two years in Addis, Ethiopia, will have next year’s event at a new venue in Accra, Ghana.

Dallas, Freakonomics, Zim$

Crime Freakonomics
I am now reading Freakonomics, the fascinating book about an economist interpreting everyday questions with unique perspectives. Driving home through a traffic jam yesterday got me thinking about traffic police and roadblocks in Kenya. Some Q’s to consider:

  • Do police actually help the flow of traffic? I’d argue not and that they make it worse on some routes by holding up traffic for 10 minutes on some roads while letting others pass.
  • Do roadblocks actually help reduce crime? Some do and I know people in hijacked matatus who have been rescued by police. But many more roadblocks are simply cash points that target matatus and lorries where random checks are lax and since they are usually stationed at the same points every day, crooks know to avoid them.
  • Are the man hour’s armed policemen spend at roadblocks and checkpoints better used elsewhere? They should be used in roaming patrols or undercover work and the police should hand over traffic control to another body like the National youth service (NYS).

One less bell

Kengeles Yaya is no more. There will be a new restaurant opening up there soon with new owners. Good luck buddy!

The problem with shared ATM’s

Barclays Bank ATM’s were not working for most of Saturday and Sunday, inconveniencing the weekend social activities of many of their customers. Barclays run their own network and outsiders can only use their machines with visa-branded cards. But what if the same happened to another large network like KCB, Co-op, Kenswitch or Pesa Point? I used to use a Kenswitch and if the network was down, ATM’s of all the member banks would dispense cash (if they could) based on the previous days’ account balances. Anyway, it’s important to know your bank network and have access to another system for emergencies.

Zimbabwe Goldmines

Was chatting about my SA trip and some of the recent troubles in Zimbabwe which I shared. A frequent traveller buddy then offered a tip that we should travel to Zimbabwe with US$ and buy up real estate, minerals and other commodities in Zimbabwe which are greatly under-valued owing to the currency crunch in the country. Once the political situation improves in a few years (we hope & would be taking a huge risk) the investments will give tremendous returns. Oh and suddenly everyone what to know what a blog is that can get one to South Africa gratis

Arsenal for sale

Someone is buying up shares of Arsenal FC at about ₤5,000 pounds each i.e. 700,000 shillings per share


Is someone at the Standard reading this blog? Recent speculation here about Safaricom’s next product appeared in the newspaper today.

Mimi Couch ‘Tato pia

KBC is going to show re-runs of the TV show Dallas i.e J R Ewing & co, starting tonight and on Wednesday nights. How will the show fare, how has it aged, and how much of its lustre has gone? KTN have a comedy block on Sunday that runs back-to-back episodes of Different Strokes, Sanford & Sons, and the Jeffersons. Between them, I’d say that Sanford has held up the best and is still watchable, with the Jeffersons slightly behind because it was being copied so much and no longer seems racially revolutionary, while Different Strokes has aged the worst because of what happened to the kids (in real life) when they grew up.

True or False?

In a case of extreme cost-cutting at an investment bank, employees will pay more to use the staff canteen for the convenience of being able to eat closer, the bank has installed a sprinkler system which will drench anyone smoking for more than five minutes and toilet cubicles doors will automatically open five minutes after staff have entered to do their business.