Tag Archives: IMF

Chinas GDP growth were 14% a few years ago, but now the worlds second-largest economy is lowering the growth target to about 6,5% – 7% in 2016. 7% is still very good, but the economy is slowing down faster than expected.

The economic growth is slowing while China`s Central government budget deficit as a percentage of GDP is growing. The target is 3% in 2016, and China will continue to be a global economic engine. But what is the next China?

It can be Africa which is a hot commodity, but some investors are in doubt. They think it is unstable and unsafe. Some claims it is so much violence in Kenya, but the infrastructure in Kenya makes it a worthy long-term investment.

Africa is a growing economy with a huge and young population. It has so far been a daunting place to start and run a company there. Very often, it is expensive to start a new business in Africa.

Bank loans come with double-digit interest rates. The electricity grid is sub-par and diesel generators cost a fortune, but many thing are getting better according to the World Bank.

There is a lot of reform happening in Africa right now.

The World Bank publishes a parallel ranking of the countries that have pushed through the most business-friendly reforms. Five African countries are on the top-10 list, which is Kenya, Mauritania, Senegal, Benin and Uganda.

Botswana is the least corrupt country in Africa which is an important factor for entrepreneurs and their investors. This is a country that rely heavily on revenues from the diamond trade to fuel its growth.

Rwanda is an economic success story. Many years of reforms have made it much more easy to open and run a business, and it is far easier to get credit there. Only one country is better and that is Mauritius.

It has commercial links to India, China and the east coast of Africa. Mauritius is often on top of the ranking list for competitiveness and ease of doing business due to its liberal approach to regulation and taxation. What about Zimbabwe?

Zimbabwe had rough days, particularly between 2005 and 2008, were hyperinflation decimated the economy. The Central Bank issued currency with expiration dates of six months, effectively longer than the actual life of the currency.

The American dollar replaced the Zimbabwean dollar as the country`s main currency, and now Zimbabwe has started to retiring it’s almost worthless local currency in favor of the U.S dollar.

35 quadrillion Zimbabwean dollars are equal to US $1.

Monthly inflation rate hit 3,5 million percent eight years ago, and prices doubled every 25 hours. Zimbabwe has the second-worst hyperinflation in history, behind post-war Hungary.

It all started in 2000, when Mugabe changed his economic policy and implemented land reform. Mugabe granted farmland owned by white citizens to indigenous black Zimbabweans. They turned from an agriculture exporter to an importer, which resulted  in 94 percent unemployment rate and hyperinflation.

Zimbabwe is known for its mineral resources. It has the world`s second largest deposit of chrome and platinum after South Africa, and President Robert Mugabe wants to take over all diamond operations.

Zimbabwes leader since 1987, Robert Mugabe eager to nationalize Zimbabwes diamond industry, and news from Zimbabwe leaves little to be desired about the small former British colony.

He says the country`s wealth had been looted by the existing miners.

“The state will now own all the diamonds in the country. Companies that have been mining diamonds have robbed us of our wealth. That is why we have now said the state must have a monopoly,” said Mugabe in an interview with the state broadcaster earlier this month.

Foreign investor also need to hurry up and sell their shares to blacks or close before April 1^st.

Companies owned by foreigners face closure unless they sell or give up 51% of their shares to black Zimbabweans by April 1, said indigenization Minister Patrick Zhuwao.

“Comply by that date or close shop, comply by that date or face the full wrath of the law,” Bloomberg quotes Zhuwao, who is also President Robert Mugabe`s nephew.

IMF asked the Mugabe administration to clarify Zimbabwe`s policy on black empowerment. Zimbabwe has agreed to major reforms including compensation for evicted white farmers.

President Mugabe is known for evicting white farmers. In 2010, the Guardian reported that Mugabe used land reforms to reward his allies rather than ordinary black Zimbabweans. The newspaper`s sources reported Mugabe and his supporters owned about 40% of the land seized from white farmers.

The white farmers received no compensations after being evicted.

«If white settlers just took the land from us without paying for it, we can, in a similar way, just take it from them without paying for it,» said Mugabe.

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