Tag Archives: Zimbabwe

Robert Mugabe resigned as President after a military takeover and his successor will be former Vice President Emmerson Mnangagwa

Zimbabwe has been a disaster for a long time now. People are suffering and most of them want a change. I have a few friends from Zimbabwe who are born there and they have told me a lot of inside information about the country.

I also have some friends who have been running businesses over there and that has been a bad choice so far. Who is it to blame on? 93 years old President Robert Mugabe who has been ruling the country for about 37 years.

The big crisis began on November 6 when Mugabe fired Mnangagwa as Vice President in an apparent attempt to clear a path for his 52 years old wife, Grace Mugabe, to succeed him. Mugabe started to lose his grip on power.

Zimbabwe`s top generals launched what amounted to a military coup, placing the veteran leader under house arrest.

Robert Mugabe resigned as a President after a military takeover and the humiliation of impeachment. Mugabe`s successor will be former Vice President Emmerson Mnangagwa. A long-awaited change that people in Zimbabwe are celebrating at the moment.

Mnangagwa is nicknamed “the crocodile” for his political cunning and longevity. He has been accused of orchestrating a string of massacre in the early 80s to consolidate Mugabes power, when he served as the leader`s spy chief.

The violence left up 20,000 dead, mostly supporters of Mugabe`s political opponents, but Mnangagwa denies the allegations.

Many historic things are happening in the world right now and this is one of them. A historic day for Zimbabwe that began when the countrys military leaders staged an unprecedented intervention to prevent the ascent to power of Mugabes wife, Grace.

At the beginning it looked like a coup, but now it seems like a popular revolt. People in Zimbabwe has been suppressed for a long time and today is a historic day for them. A new day. Hopefully for a better future for them all.

Robert Mugabe wrote in a letter “I have resigned to allow smooth transfer of power. Kindly give public notice of my decision as soon as possible.”

Southern Rhodesia was used as a name until 18 April 1980, when the name Rebublic of Zimbabwe was formally proclaimed. The colonial history of Southern Rhodesia lasted from the British governments establishment of the government of Southern Rhodesia on 1 October 1923, to Prime Minister Ian Smiths unilateral declaration of independence in 1965.

Following the Lancaster House Agreement of 1979 there was a transition to internationally recognized majority rule in 1980; the United Kingdom ceremonially granted Zimbabwe independence on 18 April that year.

In the 2000s Zimbabwes economy began to deteriorate due to various factors, including, the imposition of sanctions, such as among others the Zimbabwe Democracy and Economy Recovery Act of 2001, following the switch from Willing Buyer, Willing Seller to Fast Track land reform and also due to intensive economic corruption.

Theresa May said Mugabe`s resignation provided the country “with an opportunity to forge a new path free of the oppression that characterized his rule.”

Mugabe came to power as a freedom fighter and people looked at him as their own Nelson Mandela, but he ended up being a despot. His hardline policies pushed Zimbabwe into poverty.

Its flourishing economy began to disintegrate after a program of land seizures from white farmers, and agricultural output plummeted and inflation soared.

I wrote about it in an article from march 29, last year. The headline was “Sell your shares in Zimbabwe before April 1.”

It all started in year 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.

Mugabe also wanted to take over all diamond operations. He eager to nationalize Zimbabwe`s diamond industry, and news from Zimbabwe leaves little to be desired about the small former British colony.

Last year Mugabe said 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,” Robert Mugabe said in an interview with the state broadcaster in February last year.

Foreign investors were warned about their investments. Sell your shares to blacks or close before April 1st, was the message.

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 last year.

Mugabe also said this last year: “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.”

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Hyper inflation of 231,150,888,87 percent in July

Janet Yellen and the FED raised the rates and its expected to see them raise the rates at least a couple of times before the end of this year. In addition; they are planning to raise the rates three times next year. Wow. What about the inflation? Let`s take a look at Japan, Venezuela and Zimbabwe.

Nikkei reach its all-time high on December 29th 1989. The stock market plummeted and did never come back. Japan started to grow after world war II and was among the first in the world to use robots in the 70s and 80s.

Japan used robots especially in the auto and techno industry. The optimism went to be a huge euphoria og Nikkei reached 38.957.44 and ended the day at 38.915.87 on December 29th 1989. As you may know; Japan started to «print» money. But what happened to the inflation?

As you can see from the chart above, Japans inflation increased the early 90s and then it started to decline again. You can see from the chart that it went up again in the late 90`s, but not for a long time. It drops every time it goes up.

Consumer prices increased 0,4 percent YoY in January this year. Transportation cost posted the first annual gain since March of 2015 and prices went up faster for clothing and footwear and recreation and culture.

Inflation rate reached an all-time high of 24,9 percent in February of 1974 and a record low of -2,5 percent in October of 2009. It`s a different and more scary story in Venezuela.

It`s not getting better in Venezuela and it goes from bad to extremely bad right now. What in the world is going on? Venezuela has the highest inflation rate in the world right now. Economic turmoil in Venezuela has made the bolivar go straight up to heaven.

Some analysts say it could reach 2000 percent in 2017. No, I`m not kidding; 2000 percent. President Nicolàs Maduro who is elected after the death of socialist firebrand Hugo Chàvez explained the shock move by accusing US-backed «mafias» of conspiring to destabilize his country’s economy by hoarding bank notes.

Take a good look at the chart above. Consumer prices in Venezuela jumped 800 percent YoY in 2016, following a 180,9 percent rise in 2015. It is the highest inflation rate on record after the slump in oil prices led to a severe recession and food shortages.

Venezuela reached an all-time high of 800 percent in December of 2016 and a record low of 3,22 percent in February of 1973. You think 800 percent is much? Take a look at Zimbabwe.

The worst of the inflation occurred in 2008, leading to the abandonment of the currency. The peak month of hyperinflation occurred in mid-November 2008 with a rate estimated at 79,600,000% per month. That is what I call hyper-inflation.

This resulted in US$1 becoming equivalent to the staggering sum of Z$2,621,228. The rate went up 585,84 percent in 2005. 1,281,11 percent in 2006 and 66,212,3 percent in 2007. And then it exploded; Up 231,150,888,87 percent in July of 2008. Wow.

Hyper-inflation like that mean that the price can jump when you are sitting on the bus. That can be problematic for some customers but also for business owners.

Any Zimbabwean dollars acquired needed to be exchanged for foreign currency on the parallel market immediately, or the holder would suffer a significant loss of value.

For example, a mini-bus driver charged riders in Zimbabwean dollars, but different rates throughout the day. The evening commute was highest-priced. He sometimes exchanged money three times a day, not in banks but in back office rooms and parking lots.

Lack of confidence in government to practice fiscal restraint feeds on itself. In Zimbabwe, neither the issuance of banknotes of higher denominations nor proclamation of new currency regimes led holders of the currency to expect that the new money would be more stable than the old.

Remedies announced by the government never included a believable basis for monetary stability. Thus, one reason the currency continued to lose value, causing hyperinflation, is that so many people expected it to.

What about a hyper-inflation in the U.S? Is it possible? What can go wrong, and what will happen? I will write more about that later on this week.

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Sell your shares in Zimbabwe before April 1

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

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

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 1st.

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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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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