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RBZ to restructure onerous Afreximbank loans

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The Reserve Bank of Zimbabwe (RBZ) is working on restructuring its debts with African Export-Import Bank (Afreximbank) amid concerns that the loans are an onerous burden to the economy.

The RBZ borrowed a total of US$1.4 billion from Afreximbank between December 2017 and December 2019 “for the purchase of strategic commodities”.

The first loan agreement of US$600 million dollars in which the Government of Zimbabwe was guarantor, was signed on December 27, 2017.  This loan was due at the end of last year but indications are that it might not have been paid back.

The second loan, amounting to US$500 million was signed on May 21, 2019, while the third loan of US$300 million was signed on Dec. 31, 2019.

Last year, as the central bank established the foreign currency auction system, it got another facility from the Afreximbank resulting in the total debt reaching US$1.7 billion.

The tenure of the loans ranged from three years to five years and carried total cost, including management fees, advisory fees, participation fees, letter of credit fees, and LIBOR plus interest of approximately 12 percent. 

The average total cost of the debts is seen by market watchers as onerous and leaves the country in a debt trap. Normally, a debt trap will result in default of payments while interest payments become an albatross to growth.

The Zimbabwe National Chamber of Commerce has on several occasions cautioned the continued accumulation of expensive loans from Afreximbank.

In its 2021 Monetary Policy analysis, ZNCC reiterated that “there is need to exit from the costly Afreximbank loans”.

Again at a recent meeting with central bank governor Dr John Mangudya, the business representative body enquired further on the Afreximbank loan facilities.

In response, Dr Mangudya reportedly dismissed ZNCC’s concerns that the loans were expensive arguing that there was no other facility to make comparisons with since traditional funders like World Bank and IMF have not been extending assistance to the country.

Dr Mangudya, however, told the ZNCC meeting that the RBZ is restructuring the US$1.7 billion facilities so that they can be spread to over seven years at an affordable interest rate. 

Dr Mangudya was, however, not picking his phone when the Business Weekly called to get further clarity on the planned restructuring.

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Wealth Management

Number of African millionaires to rise 42% over next decade, says report’

Africa as a continent has the both the youngest and fastest growing populations, which could mean endless possibilities for investors

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THE NUMBER of African millionaires is set to rise a staggering 42% in the next ten years, according to a new report,

The Africa Wealth Report which is the definitive guide of Africa’s wealth and luxury sector and is published by Henley & Partners – the global leader in residence and citizenship by investment.

This year’s report – written in partnership with New World Wealth – say Africa is set to see a substantial increase in Africa’s High-Net Worth Individual (HNWI) population over the next decade.

The report reads: “The Africa Wealth Report 2023 reveals that the growth in High-Net-Worth Individuals on the continent is expected to be 42% over the next 10 years.”

Natural and  eco-friendly businesses is a trend which is set to be popular with HNWIs and is set to influence a boom in the eco-tourism market.

However, the report noted: “Total high-net-worth individual numbers on the continent have dropped by 12% since 2012, as this report reveals, with poor growth in the three largest markets: South Africa, Egypt, and Nigeria.

“But the future looks brighter, as New World Wealth predicts Africa’s millionaire population will rise by 42% over the next decade, reaching 195,000 by 2032.”

Mauritius projected to have a growth rate of 75% in the next ten years.

But also, several other African countries are predicted to see a growth of over 60% for HNWI’s.

These countries are Rwanda, Zambia, Democratic Republic of Congo, the Seychelles and Morocco, according to the report.

Africa as a continent has the both the youngest and fastest growing populations, which could mean endless possibilities for investors.

The new report also reveals that “the ‘Big 5’ wealth markets in Africa — South Africa, Egypt, Nigeria, Kenya, and Morocco — together account for a significant 56% of Africa’s high-net-worth individuals and over 90% of the continent’s billionaires.”

But with countries like Rwanda are developing fast, which may mean a huge leap in the country’s wealth.

The report states: “Rwanda was the top performing market in Africa during the period, with millionaire growth of 72%, followed by Mauritius, the Seychelles, Uganda, and the Democratic Republic of the Congo.

“Morocco and Kenya’s high-net-worth individual populations also grew solidly.

“Ethiopia and Ghana, whose millionaire populations had been growing rapidly until 2019, have struggled over the past few years, which has pulled back their 10-year growth rates.

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Business

Financing Africa’s recovery.

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Financing Africa’s recovery: Is there an unfair risk premium on lending to the continent?

France 24’s François Picard leads a discussion in which Lionel Zinsou, former Prime Minister of Benin, and Marin Ferry, Asst. Prof. at the Université Gustave Eiffel, articulate their views on the treatment of African economies on the international bond markets and by credit rating agencies. Is there an anti-African stigma on the financial markets?

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Business

AFC – Changing the Narrative on Africa

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Africa Finance Corporation – Africa is on a major growth trajectory and the future belongs to Africa .

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