Zimbabwe begins issuing new notes to help ease cash crunch

With prices in Zimbabwe rising faster than at any point in a decade amid rapid devaluation of the local currency, cash is king. (AP)
Updated 12 November 2019

Zimbabwe begins issuing new notes to help ease cash crunch

  • New notes the latest currency reform in the troubled southern African country’s constantly changing monetary framework
  • Zimbabwe now has the world’s second highest inflation after Venezuela, according to IMF figures

HARARE, Zimbabwe: Zimbabwean banks on Tuesday began issuing new notes and coins aimed at easing severe cash shortages, but they are severely limiting the amounts that people can withdraw.
“What can I do with such a pittance?” asked Shorai Tomu after withdrawing the equivalent of about $5. “It can only buy five loaves of bread.”
The new notes are the latest currency reform in the troubled southern African country’s constantly changing, and at times confusing, monetary framework.
Zimbabwe now has the world’s second highest inflation after Venezuela, according to International Monetary Fund figures. With prices rising faster than at any point in a decade amid rapid devaluation of the local currency, cash is king.
In 2009, Zimbabwe’s government abandoned the local currency amid hyperinflation and adopted a multi-currency system dominated by the dollar. In June the government outlawed the use of foreign currencies, opting for a local currency mainly consisting of electronic and mobile money and a trickle of bank notes.
President Emmerson Mnangagwa has struggled to fulfill promises to improve the economy two years after taking office following the resignation of the late Robert Mugabe.
Many retailers and service providers now demand payments in cash only. Others, including street vendors, charge a higher price for goods paid for using mobile money or bank cards.
The Reserve Bank of Zimbabwe says it will “drip feed” ZW$1 billion in the new small notes and coins to manage the cash shortages. The highest denomination is ZW$5. The notes are strikingly similar in design to the old ones.
“It is just like the old money, and like the old money it can’t buy anything of value,” said 81-year-old Filbert Sibanda after withdrawing his monthly pension, enough to buy a kilogram of beef.
Other customers left disgruntled.
“This is not an improvement,” said Wicknell Magidha, waving a few new notes and a plastic bag filled with coins. “These coins are just too heavy.”
People trooped out of one bank carrying similar bags of coins, shaking their heads. Others in line laughed.
Magidha said the small bills and coins leave him with another headache, that of haggling with traders who usually reject them.
“The same item can have three different prices: one for cash, one for mobile money and another one for those paying using small coins,” Magidha said. “The government should just print higher denominations to match this inflation.”


Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

Updated 17 January 2020

Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

  • Leaders agree initial $6.8bn projects plan, including initiative to build a replica of Abu Dhabi grand mosque in Java

JAKARTA: Indonesia’s business community on Thursday welcomed the UAE’s pledge to pump tens of billions of dollars into a wide range of key sector projects.

President Joko Widodo and his entourage secured an overall $22.9 billion deal during an official two-day visit to Abu Dhabi earlier this week covering the fields of energy, logistics, port construction, mining, and agriculture.

It was also revealed that the delegation brokered a UAE commitment to assist in establishing an Indonesian sovereign wealth fund.

At a bilateral meeting, the Indonesian leader and the Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al-Nahyan witnessed the signing of 11 business accords between the two countries. Indonesia’s Minister for Foreign Affairs Retno Marsudi said the UAE had committed to investing $6.8 billion out of the total agreed spending package into the initiatives.

Luhut Pandjaitan, Indonesia’s chief minister for maritime affairs and investment, described the UAE’s pledges as possibly being “the biggest deals in Indonesia’s history, secured with the UAE within only six months,” referring to the crown prince’s visit to Indonesia last July.

While most lauded the deal, some Indonesian business leaders remained cautious over the long-term prospects for the projects.

Fachry Thaib, head of the Middle East Committee and OIC at the Indonesian Chamber of Commerce, said the schemes could trigger a wide-ranging domino effect through job creation and other business ventures.

“The government needs to have a strong lobbying team that can follow up these deals and push them into investment realizations. We have had such commitments from other Gulf countries, but there was no further lobbying and the pledges were hardly realized,” he told Arab News.

Zaini Alawi, a businessman who exports and imports between Indonesia and the Middle East, said: “It would set a good precedent to attract other Gulf countries to invest here if Indonesia shows it could aptly manage these investment deals.”

Director for Middle East affairs at Indonesia’s Foreign Ministry, Achmad Rizal Purnama, told Arab News that the $6.8 billion commitment from the UAE was only the first phase of a long-term program.

Widodo and the crown prince also witnessed the signing of five government cooperation agreements in health, agriculture, Islamic affairs, and counterterrorism.

Indonesian Minister of Religious Affairs Fachrul Razi said one of the main aspects of the cooperation agreement would be the promotion of religious moderation and raising awareness of the dangers of extremism.

FASTFACT

The UAE has pledged to assist in establishing an Indonesian sovereign wealth fund.

Noting that the UAE had pledged to fund the construction of a replica of the Abu Dhabi grand mosque in Solo, the president’s hometown in Java, the minister pointed out that the grant was part of a commitment by the two countries to establish a mosque that welcomed all people and served a pivotal role in promoting the middle path of Islam.

Riza Widyarsa, a Middle East expert at the University of Indonesia, told Arab News that the cooperation deal could help more Indonesians to understand that not all countries in the Middle East observed conservative Islam. “They are also very active in countering religious extremism and radicalism,” he said.

In addition to the multi-billion-dollar projects, Purnama said Indonesia had also secured the UAE’s commitment to assist in establishing an Indonesian sovereign wealth fund into which the UAE, the US International Development Finance Corporation, and Japan’s SoftBank would inject funding.

And according to Pandjaitan, the UAE had pledged to be “the biggest contributor” to the fund.

The fund would be used to finance Indonesia’s ambitious infrastructure development projects and the construction of its proposed new capital in East Kalimantan, a relocation that has been estimated to cost $33 billion and of which Indonesia could only afford 19 percent.

He said all parties involved would meet in Tokyo soon to set up the structure of the fund and to finalize the plan, which the government expected to launch by mid-2020, a year after the crown prince proposed the idea to Widodo.

“This could be the first time that big capitalists work together in a single project,” Pandjaitan added.