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Ukraine conflict raises fears of another economic crisis in Zimbabwe

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BY NOKUTHABA DLAMINI

Elina Ncube, a former housekeeper at one of the prime lodges in the northern Zimbabwean tourist gateway of Victoria Falls, now survives by scavenging for food at the municipal dumpsite.

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The 39-year-old mother of five wakes up as early as 4am to make her way to the Masuwe dumpsite because competition is tough as more and more of the city’s residents resort to scavenging due to deepening poverty.

A recent survey by the We Are Victoria Falls initiative found that 7,000 people in the resort city had lost their jobs because of the Covid-19 pandemic.

Forty six percent of workers in the tourism sector which covers leisure, hunting and tours as well as transfers were forced to work reduced hours.

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Ncube was fortunate to get a temporary reprieve when the tourism industry reopened late last year after her former employer rehired her as a gardener, but her contract was terminated when Russia invaded Ukraine in February 2022.

The faraway conflict is having ripple effects across the planet, including in Zimbabwe.

Sectors including tourism that had felt they had turned a corner in recovering from the pandemic are now reeling from the impact of Vladimir Putin’s war.

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Ncube’s employer is one of the many tourism operators who relied on Russian safari tourists in Zimbabwe, whose numbers have taken a dramatic dip since the war began.

“My husband is disabled and when I lost my job my neighbours introduced me to Masuwe dumpsite where we survive on picking up old clothes to wear, food to eat and plastic and metallic objects for resale to recyclers,” Ncube said.

“I can no longer afford to buy basic groceries such as bread and flour to feed my family and prospects of finding another job in this Covid-19 era are near impossible.

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“The war in Ukraine has made the situation even more desperate because most of the tourists that booked at our lodge were from Russia and we were told that most of them had cancelled their bookings.”

Victoria Falls is one of Zimbabwe tourism industry’s major attaractions

Clement Mukwasi, president of the Employers Association for Tours and Safari Operators, said Russia is a big source market for Zimbabwe’s hunting industry and the war had an immediate impact on the country’s tourism industry that was beginning to recover from the impact of Covid- 19 lockdowns.

“We were hoping that we would begin to see some tourist arrivals from all over the world, but we have seen that the tourists, specifically those that come from Russia have completely stopped coming to the continent of Africa,” Mukwasi said.

“Russian citizens are unable to transact on any of the monetary platforms because of the sanctions that the country has been hit with and also when there is instability, it becomes difficult for people to freely move. So what is going to continue happening is that certain sectors of tourism are going to be affected, especially the hunting sector which is mainly dominated by the Russian, Belarusian and Ukrainian tourists.”

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“Tourist arrivals from Russia’s neighbours such as Ukraine, Turkey, Poland and Germany have also dropped significantly.”

Mukwasi said the cost of travel globally was rising rapidly as a result of the war and this will negatively impact tourism.

“We are watching that closely and we hope that it will not get back to a point where we are on our knees again, but our bookings that were from these war-zone countries, their neighbours and some parts of Europe have already been cancelled,” Mukwasi added.

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O’brien Dube, a driver employed by a tours and transfers service provider in Victoria Falls, said since the Russia-Ukraine war began the number of tourists had gone down significantly.

“I earn on commission, and this means that if there are no tourists coming through, the demand for my services is low,” Dube said. “Bread now costs over US$2 in supermarkets and the price of fuel has also gone up. I am struggling to feed my children because my taxi has been parked for several weeks.”

A loaf of bread now costs US$2.21 after a series of price reviews in the last two months, which the Grain Millers Association of Zimbabwe attributes to the increasing difficulties in importing wheat from Ukraine and Russia. Zimbabwe sources nearly 60 percent of its wheat supplies from Russia and Ukraine.

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Beyond the toll on people, conservationists say a combination of Covid-19, effects of the Russia-Ukraine war and Zimbabwe’s worsening economic problems is increasing cases of poaching in communities around game reserves.

Trevor Lane, founder of Bhejane Trust in Victoria Falls, said the Covid-19 pandemic and the general economic collapse has seen both large and small wild animals being targeted by poachers.

Lane said there has also been a rise in fish poaching where poachers resort to using mosquito nets to catch larger volumes of fish

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“Covid-19 has had a massive impact across Africa, which is having devastating consequences, and we are seeing an alarming surge in wildlife and fish poaching,” Lane said.

“We find mosquito nets and cheap filament nets being used illegally with an alarming number of small fish being taken out of the waters before they reach maturity and reproductive size, and this is compromising our ecosystem,”

Ollen Dube, an environmental expert based in Victoria Falls, said there was a worrying increase in poaching activities.

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“Large mammals such as the elephants and rhinos are the prime target too and with this on-going war in Ukraine, the Covid pandemic and general levels of unemployment, we are likely to see many more of them being poached,” Dube said.

In the past few months, police have made several arrests of people found selling ivory in areas such as Victoria Falls, Hwange, Kamativi and Dete.

At least three rhinos have also been killed by poachers in game reserves in Matabeleland South and Masvingo.

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The impact of the war is also being felt through the frequent fuel price increases. Stevenson Dhlamini, an economist from the National University of Science and Technology in Bulawayo, said the Russia-Ukraine war was having a devastating impact on Zimbabwe’s already struggling economy.

“The effect is especially felt in the wheat sector, where supply chains were disrupted by the conflict and consequently created production bottlenecks,” Dhlamini said.

Finance minister Mthuli Ncube last month blamed Zimbabwe’s galloping inflation on the Russia-Ukraine war, saying it was disrupting global supply chains. – The Independent

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National

Another Zimbabwe gold coin sale registers little for most

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BY GAMUCHIRAI MASIYIWA

With the price of gold up globally, the Reserve Bank of

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Zimbabwe in April put the gold coins it stopped minting a year earlier back on the

market.

But interested investors had to act fast.

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By mid-June, the sale of coins from its accumulated stock was abruptly concluded

and another chapter of the currency chaos that has characterized the nation’s

economy for decades was in the books. This time, at least, economists say the

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experiment had little effect.

The short-lived sale is just the latest example in a long line of inconsistent policies,

says Ithiel Mavesere, a lecturer in the economics and development department at theUniversity of Zimbabwe. Storing value in a gold coin is not a viable option for the

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majority of the population, he adds.

“Ideally, what they should have done is come up with low-value coins, with

denominations as low as equivalent to US$20 for the majority of the population to

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afford,

” Mavesere says.

However, Reserve Bank of Zimbabwe Governor John Mushayavanhu says in a written

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response to Global Press Journal that the gold coins were effective as an alternative

investment instrument and there was huge demand from both corporations and

individuals. According to RBZ data, corporations bought about 79% of the gold coins

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and individuals bought about 21%.

About US$12 million’s worth sold

The lowest denomination of the coins represents a tenth of an ounce of gold,

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equivalent to 9,299.13 in Zimbabwe gold, or ZiG, the national currency, or about

US$347. The highest denomination of the coins represents one ounce of gold,

equivalent to ZiG 92,991.34 or about US$3,470.

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In all, the central bank has sold gold coins worth ZiG 343 million, or about US$12.8

million, according to Mushayavanhu, who says the recent sale happened after the

bank noted increased demand following the rise in international gold prices.

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“In this context, the Reserve Bank re-issued an accumulated parcel of gold coins from

a combination of gold coins which had been bought back from the market through

redemptions and some coins which were still being held at the Reserve Bank from

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the previously minted stock,

” the governor wrote.

A statement from the bank in mid-June announcing the halt to the sale indicated it

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had been intended to clear the stock of gold coins it had and those that had been

cashed in by their holders.

Mushayavanhu says the bank stopped minting gold coins in April 2024 to prioritize its

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gold reserve which, along with foreign currency reserves, backs the Zimbabwe gold

currency.

He says foreign reserves increased from US$270 million in April 2024 to US$731 million

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as of the end of June.

The central bank first introduced the Mosi-oa-Tunya gold coins — which share an

indigenous name for Victoria Falls — in 2022 at a time when the country was

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experiencing currency instability with high inflation and continued devaluation of

what was then the national currency, the Zimbabwe dollar.

The coins aimed to reduce dependency on the US dollar and help stabilize the

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economy. The coins helped mop up excess cash in local currency that was circulatingin the market. Coupled with other monetary measures in 2022, the monthly inflation

rate dropped from about 31% in June to about 12% in August that year.

However, the exchange rate of the Zimbabwe dollar drastically fell against the US

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dollar and the government replaced it with the new Zimbabwe gold currency in April

2024. Since its introduction, the currency’s value has been cut in half.

A ‘drop in the ocean’

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Lyle Begbie, an economist with Oxford Economics Africa, believes the sale of the gold

coins when they were introduced in 2022 was more of a revenue-generating scheme,

as it happened at a time when inflation was very high.

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He says it makes sense that the recent sale of gold coins was influenced by the

increase in gold prices on the global market. But he adds that the value of gold coins

was too little to have an impact on the economy. Begbie says the US$12.8 million in

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coins the central bank reported selling is less than 1% of Zimbabwe’s gross domestic

product — which the World Bank estimates at US$44 billion — a “drop in the ocean”

when it comes to the country’s macroeconomic picture.

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Prosper Chitambara, an economist based in Harare, agrees the impact of the recent

sale was minimal. He says gold coins don’t have a significant impact on currency

stability in an economy like Zimbabwe’s, which is highly informal and also highly

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dollarized — meaning it’s heavily reliant on the US dollar as a currency.

“Most economic agents in our economy prefer to transact using their US dollars

because it’s a highly tradable and highly liquid asset. … So there’s a huge confidence

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and trust in the USD than in the gold coins or even in the Zimbabwe gold,

Chitambara says.

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Samuel Wadzai, the executive director of Vendors Initiative for Social and Economic

Transformation, an organization in Harare that advocates for the informal business

sector, says there have been a few instances where members have tried to use gold

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coins for everyday transactions, but it hasn’t been widespread.

“Most traders still prefer cash due to the challenges of acceptance and the limited

understanding of gold coins in everyday trade,

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” he says.

Isheanesu Kwenda, 31, a Harare street vendor with a sociology degree, says the recent

sale of gold coins didn’t offer any benefit for him. Like many Zimbabweans, he has

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heard about the gold coins, but has never seen or opted to buy them. The vendor is

part of Zimbabwe’s informal economy, which sustains over 80% of Zimbabwe’s

population and contributes nearly 72% to the country’s GDP.

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“Street economics informs that you should not attempt to get something you are not

sure of or do not understand. … I prefer to sell my goods and keep my money in US

dollars because it holds value, or I can keep my money in stock,

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” Kwenda says of theclothing he sells.

Last year, Kwenda lost more than half his earnings after Zimbabwe gold was

introduced. After being paid the equivalent of US$1,000 in Zimbabwe dollars, he only

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managed to salvage US$360 and lost the rest in exchange rate losses.

For Kwenda, restoring confidence is simple: The government must stick to a plan,

without making sudden U-turns

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This story was originally published by Global Press Journal

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Seven killed, 36 injured in road accidents in Masvingo and Hwange

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BY WANDILE TSHUMA

A tragic weekend on Zimbabwe’s roads has left seven people dead and 36 others injured in two separate accidents in Masvingo and Hwange.

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The first accident occurred on Monday, at around 2:00 a.m. along the Mutare-Masvingo Road when a Toyota Quantum vehicle carrying 22 Zion Christian Church congregants veered off the road and overturned, killing six people and injuring 16 others.

In a separate incident, one person was killed, and 20 others were injured in Hwange when a Nissan NP300 vehicle overturned after its left rim broke on Sunday, at around 5:00 a.m.

The Zimbabwe Republic Police has urged motorists to exercise caution on the roads, avoiding speeding and observing all road rules and regulations to prevent such tragic accidents.

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The police are currently working to identify the victims, and the names will be released once the next of kin have been notified.

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National

United States Embassy temporarily suspends most visa processing In Zimbabwe | Report

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BY NEWZWIRE

The U.S. Embassy in Zimbabwe will temporarily suspend all routine visa services starting Thursday, according to a State Department memo.

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The suspension will impact a range of visa categories, including immigrant visas, and nonimmigrant visas for tourism, business, study, and exchange programmes. A senior State Department official said:

The Administration is always working to prevent      visa overstay and misuse.

The official cited Zimbabwe’s B1 and B2 visa overstay rate of 10.57%, equivalent to 709 individuals.

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Overstay rates among student visa holders are also a concern — particularly as Zimbabwe has not agreed to a so-called “safe third country” or “third country national” arrangement, which would allow asylum seekers to pursue their claims from a country they previously transited through, the official said.

The Trump administration has reportedly exerted pressure on African nations to accept the return of non-national migrants. To date, only Eswatini, Rwanda, and South Sudan have publicly agreed to such an arrangement.

According to the memo, the suspension will not affect visas that are already valid, and certain applications, including official and C-3 diplomatic visas, will continue to be processed.

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