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Satchu's Rich Wrap-Up
Friday 11th of October 2019

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Macro Thoughts

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U.S. Weighing Currency Pact With China as Part of Partial Deal @economics

The White House is looking at rolling out a previously agreed currency
pact with China as part of an early harvest deal that could also see a
tariff increase next week suspended, according to people familiar with
the discussions.
The currency accord, which the U.S. said had been agreed to earlier
this year before trade talks broke down, would be part of what the
White House considers to be a first-phase agreement with Beijing.
It would be followed by more negotiations on core issues like
intellectual property and forced technology transfers, the people
The internal deliberations come as a team of Chinese negotiators, led
by Vice Premier Liu He, arrived in Washington to resume trade talks
with U.S. Trade Representative Robert Lighthizer and Treasury
Secretary Steven Mnuchin starting Thursday.
It’s the first face-to-face talks between senior officials since July.
The offshore yuan rose more than 0.3%, erasing an earlier loss. U.S.
stock futures whipsawed Thursday morning in Asia amid uncertainty
about the outcome of the negotiations.
People familiar with the Chinese delegation’s arrangements said
negotiators are currently scheduled to leave on Friday evening, though
there could be changes depending on how the talks progress.
One person said there may also be a meeting with Trump that day,
though again it would depend on how the talks go.
The signals heading into the talks have been mixed. President Donald
Trump last week approved licenses for some American companies to sell
nonsensitive goods to Huawei Technologies Co., the New York Times
reported, citing people familiar with the move.
While Trump committed to the move after meeting President Xi Jinping
in June, no licenses have been issued yet.
During a speech in Sydney on Thursday, U.S. Commerce Secretary Wilbur
Ross -- who has only played a peripheral role in negotiations -- took
shots at China.
Beijing’s trade practices have “gotten worse” and the tariffs are
“forcing China to pay attention,” Ross said in prepared remarks for a
speech in Sydney.
“It’s very hard to forecast,” Ross said when asked about the
likelihood the two sides would even reach a partial agreement. “We
would like a deal. They would like a deal. We’ll see what happens.”
The discussions around an interim deal come as the Trump
administration this week further ramped up pressure on Beijing by
blacklisting Chinese technology firms over their alleged role in
oppression in the far west region of Xinjiang, as well as placed visa
bans on officials linked to the mass detention of Muslims.
At the same time, a fight over free speech between China and the NBA,
triggered by a tweet backing Hong Kong’s protesters, has underscored
the heated tensions.
The window for such an agreement is closing before the U.S. plans to
raise duties to 30% from 25% on about $250 billion of Chinese imports
on Oct. 15. Additional duties are set to take effect Dec. 15.
A Chinese official said Wednesday the country was still open to
reaching a partial trade deal with the U.S. that may include large
purchases of American commodities, but added that success was
contingent on President Donald Trump halting further tariffs.
Showing progress with a currency pact and other matters this week
could serve as a reason to delay next week’s tariff hike. Bloomberg
News last month reported the White House was discussing plans for an
interim deal.
Still, Trump this week said he preferred a complete trade agreement
with China. “My inclination is to get a big deal. We’ve come this far.
But I think that we’ll just have to see what happens. I would much
prefer a big deal. And I think that’s what we’re shooting for,” he
A White House spokesman declined to comment. A Treasury spokesman
didn’t respond to a request for comment. China’s Ministry of Commerce
did not immediately respond to fax about the high-level talks.
No details were made public about the U.S.-China currency pact reached
in February that Mnuchin at the time called the “strongest” ever.
Broader trade negotiations between the two countries broke down in May
after the U.S. accused China of backtracking on its commitments. Then,
in August, the Trump administration formally declared China a currency
According to people familiar with the currency language, the pact
largely resembles what the U.S. agreed to in a new trade agreement
with Mexico and Canada and also incorporates transparency commitments
included in Group of 20 statements.
Still, Lighthizer cautioned earlier this year that the currency
agreement hinges on the overall enforcement of the trade deal.
“There’s no agreement on anything until there’s agreement on
everything. But the reality is we have spent a lot of time on
currency, and it’ll be enforceable,” he said in congressional
testimony on Feb. 27.
The senior negotiators from the U.S. and China are scheduled to hold
talks through Friday, people familiar with the plans said. Liu met
with a small group of business executives and separately with
International Monetary Fund officials Wednesday afternoon, people
familiar with the meetings said.

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26-AUG-2019 :: Renminbi is being used as a shock absorber and a very precise first responder to Trump.

So Xi gives up his Shock Absorber and his most precise Responder in
the ''Chickie Run'' with @realDonaldTrump? not going to happen at this
point is it?

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09-JUL-2018 :: Tariff wars, who blinks first?

James Dean was an iconic American actor, who tapped into the universal
yearning and angst of nearly every adolescent human being with a raw
connection that has surely not been surpassed since. In one of his
most consequential films, Rebel without a Cause, two players (read,
teenage boys) decide to settle a dispute (read, teenage girl) by way
of near-death experiences. Each speeds an automobile towards a cliff.
A simple rule governs the challenge: the first to jump out of his
automo- bile is the chicken and, by univer- sally accepted social
convention, concedes the object in dispute. The second to jump is
victorious, and, depending on context, becomes gang leader, prom king,
etc. Jimmie (James Dean), to settle a dispute (read, teenage girl)
with Buzz, the leader of a local gang, agrees to a “Chickie Run.” Both
race stolen cars towards the edge of a cliff. The first to eject out
of his car is branded a “chickie.” Seconds into the race, Buzz
discovers that his jacket is stuck on the door handle, making jumping
out of the car so- mewhat difficult. Jimmie jumps out an instant
before the cars reach the edge of the cliff. Buzz, still unable to
free his jacket from the door handle, fails to escape. While he won’t
be branded a “chickie,” he suffers a worse fate.

So Xi and  @POTUS are here

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Sterling jumps 2% vs dollar after Irish-UK statement on "possible pathway" to Brexit deal, its biggest rally since March. @ReutersJamie 1.2481

It has only had 3 bigger one-day gains in last 10 years, and barring a
cluster of ultra-volatile days in 2008, it is having one of its best
days in 25 years.

Home Thoughts

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Or as T.S Eliot said in The Hollow Men

Between the idea
And the reality
Between the motion
And the act
Falls the Shadow
For Thine is the Kingdom.

I am reliably informed its Rekha's birthday

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Netflix's Rhythm + Flow Hip-Hop's Answer to American Idol Is Irresistible @TheAtlantic

In the first episode of Netflix’s Rhythm + Flow, the aspiring rapper
Inglewood IV delivers a furious verse about police brutality to a
packed nightclub and a panel of superstar judges. Tears well in his
eyes. Chance the Rapper complains that his song is too “dark” and
“abrasive.” Cardi B chides that it’ll be too scary for white people.
T.I. smiles. “Boy, you gonna hate yourself for cryin’ on TV.”
T.I.’s advice comes to mind three episodes later, when the aspiring
Milwaukee rapper Kaylee Crossfire delivers a furious verse about
destroying her competition. Tears well in her eyes. Twista compliments
her for saying her name during her performance, something too many
rappers supposedly forget to do. Chance the Rapper takes issue with
her enunciation. Royce da 5’9” tells her, “It’s okay to cry. Because
that’s passion coming out.”
Which is it? Should the next great rap star cry in public, or not?
Does the answer depend on whether they’re a man or a woman? Or does
the answer depend on who’s doing the judging?
In questions like these lie the tensions that make Rhythm + Flow
irresistible, even as the rap competition recycles American Idol’s

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@UniofOxford Oxford Institute Computational Propaganda Research project
Law & Politics

Computational propaganda – the use of algorithms, automation, and big
data to shape public life – is becoming a pervasive and ubiquitous
part of everyday life.

Over the past three years, we have monitored the global organization
of social media manipulation by governments and political parties. Our
2019 report analyses the trends of computational propaganda and the
evolving tools, capacities, strategies, and resources.
1.Evidence of organized social media manipulation campaigns which have
taken place in 70 countries, up from 48 countries in 2018 and 28
countries in 2017. In each country, there is at least one political
party or government agency using social media to shape public
attitudes domestically (Figure 1).
2.Social media has become co-opted by many authoritarian regimes. In
26 countries, computational propaganda is being used as a tool of
information control in three distinct ways: to suppress fundamental
human rights, discredit political opponents, and drown out dissenting
opinions (Figure 2).
3.A handful of sophisticated state actors use computational propaganda
for foreign influence operations. Facebook and Twitter attributed
foreign influence operations to seven countries (China, India, Iran,
Pakistan, Russia, Saudi Arabia, and Venezuela) who have used these
platforms to influence global audiences (Figure 3).
4.China has become a major player in the global disinformation order.
Until the 2019 protests in Hong Kong, most evidence of Chinese
computational propaganda occurred on domestic platforms such as Weibo,
WeChat, and QQ. But China’s new-found interest in aggressively using
Facebook, Twitter, and YouTube should raise concerns for democracies
5.Despite there being more social networking platforms than ever,
Facebook remains the platform of choice for social media manipulation.
In 56 countries, we found evidence of formally organized computational
propaganda campaigns on Facebook. (Figure 4).

Around the world, government actors are using social media to
manufacture consensus, automate suppression, and undermine trust in
the liberal international order.
Cyber troops’ are defined as government or political party actors
tasked with manipulating public opinion online (Bradshaw and Howard
2017a). We comparatively examine the formal organization of cyber
troops around the world, and how these actors use computational
propaganda for political purposes. This involves building an inventory
of the evolving strategies, tools, and techniques of computational
propaganda, including the use of ‘political bots’ to amplify hate
speech or other forms of manipulated content, the illegal harvesting
of data or micro-targeting, or deploying an army of ‘trolls’ to bully
or harass political dissidents or journalists online. We also track
the capacity and resources invested into developing these techniques
to build a picture of cyber troop capabilities around the world.
As a result, we suggest that computational propaganda has become a
ubiquitous and pervasive part of the digital information ecosystem.

Until recently, we found that China rarely used social media to
manipulate public opinion in other countries. The audience for
computational propaganda has mainly focused on domestic platforms,
such as Weibo, WeChat, and QQ. However, in 2019 the Chinese government
began to employ global social media platforms to paint Hong Kong’s
democracy advocates as violent radicals with no popular appeal (Lee
Myers and Mozur 2019). Beyond domestically bound platforms, the
growing sophistication and use of global social networking
technologies demonstrates how China is also turning to these
technologies as a tool of geopolitical power and influence.

Facebook remains the dominant platform for cyber troop activity. Part
of the reason for this could be explained by its market size – as one
of the world’s largest social networking platforms – as well as the
specific affordances of the platform, such as close family and friend
communication, a source of political news and information, or the
ability to form groups and pages. Since 2018, we have collected
evidence of more cyber troop activity on image- and video-sharing
platforms such as Instagram and YouTube. We have also collected
evidence of cyber troops running campaigns on WhatsApp.

Here, we counted instances of politicians amassing fake followers,
such as Mitt Romney in the United States (Carroll 2012), Tony Abbott
in Australia (Rolfe 2013), or Geert Wilders in the Netherlands (Blood
2017). We also counted instances of parties using advertising to
target voters with manipulated media, such as in India (Gleicher
2019), or instances of illegal micro-targeting such as the use of the
firm Cambridge Analytica in the UK Brexit referendum by Vote Leave
(Cadwalladr 2017). Finally, we further counted instances of political
parties purposively spreading or amplifying disinformation on social
networks, such as the WhatsApp campaigns in Brazil (Rio 2018), India
(Dwoskin and Gowen 2018), and Nigeria (Hitchen et al. 2019).

Leaked emails also showed evidence of the Information Network Agency
in Ethiopia sending staff members to receive formal training in China
(Nunu 2018)

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26 MAR 18 :: "We just put information into the bloodstream to the internet and then watch it grow, give it a little push every now and again over time to watch it take shape"
Law & Politics

“We just put information into the bloodstream to the internet and then
watch it grow, give it a little push every now and again over time to
watch it take shape. And so this stuff infiltrates the online
community and expands but with no branding – so it’s unattributable,

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07-OCT-2019 :: "This is the legendary DF41 ICBM. Today it is displayed at Tiananmen Square I touched one about four years ago in the production plant. No need to fear it. Just respect it and respect China that owns it"
Law & Politics

Hu Xijin [President Xi’s trusted mouth-piece] described as ‘’This is
the legendary DF41 ICBM. But it is not a tale. Today it is displayed
at Tiananmen Square I touched one about four years ago in the
production plant. No need to fear it. Just respect it and respect
China that owns it’’.

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Did China Just Announce the End of U.S. Primacy in the Pacific? @amconmag Scott Ritter
Law & Politics

“This,” the Chinese believe, “is our trump card for winning a 21st
century war.”
For China, the three principle points of potential military friction
with the U.S. are Taiwan, South Korea-Japan, and the South China Sea.
Apart from South Korea and Japan, where the U.S. has significant
ground and air forces already forward deployed, the main threat to
China is maritime power projected by American aircraft carrier
battlegroups and amphibious assault ships.
The Chinese response was to develop a range of anti-access/area-denial
(A2/AD) capabilities designed to target American naval forces before
they arrived in any potential contested waters.
Traditionally, the U.S. Navy has relied on a combination of surface
warships armed with sophisticated air defense systems, submarines, and
the aircraft carrier’s considerable contingent of combat aircraft to
defend against hostile threats in time of war.
China’s response came in the form of the DF-21D medium-range missile,
dubbed the “carrier killer.” With a range of between 1,450 and 1,550
kilometers, the DF-21D employs a maneuverable warhead that can deliver
a conventional high-explosive warhead with a circular error of
probability (CEP) of 10 meters—more than enough to strike a
carrier-sized target.
To compliment the DF-21D, China has also deployed the DF-26
intermediate-range missile, which it has dubbed the “Guam killer,”
named after the American territory home to major U.S. military
Like the DF-21, the DF-26 has a conventionally armed variant, which is
intended to be used against ships. Both missiles were featured in the
2015 military parade commemorating the founding of the PRC.
The U.S. responded to the DF-21/DF-26 threat by upgrading its
anti-missile destroyers and cruisers, and forward deploying the
advanced Terminal High Altitude Area Defense (THAAD) surface-to-air
missile system to Guam.
A second THAAD system was also deployed to South Korea. From America’s
perspective, these upgrades offset the Chinese advances in ballistic
missile technology, restoring the maritime power projection capability
that has served as the backbone of the U.S. military posture in the
As capable as they were, however, the DF-21D and DF-26 were not the
shashoujian weapons envisioned by Chinese military planners,
representing as they did reciprocal capability, as opposed to a
game-changing technology.
The unveiling of the true shashoujian was reserved for last week’s
parade, and it came in the form of the DF-100 and DF-17 missiles.
The DF-100 is a vehicle-mounted supersonic cruise missile
“characterized by a long range, high precision and quick
responsiveness,” according to the Chinese press. When combined with
the DF-21/DF-26 threat, the DF-100 is intended to overwhelm any
existing U.S. missile defense capability, turning the Navy into a
virtual sitting duck.
As impressive as the DF-100 is, however, it was overshadowed by the
DF-17, a long-range cruise missile equipped with a hypersonic glide
warhead, which maneuvers at over seven times the speed of sound—faster
than any of the missiles the U.S. possesses to intercept it.
Nothing in the current U.S. arsenal can defeat the DF-17—not the
upgraded anti-missile ships, THAAD, or even the Ground Based
Interceptors (GBI) currently based in Alaska.
In short, in the event of a naval clash between China and the U.S.,
the likelihood of America’s fleet being sent to the bottom of the
Pacific Ocean is very high.
The potential loss of the Pacific Fleet cannot be taken lightly: it
could serve as a trigger for the release of nuclear weapons in
The threat of an American nuclear attack has always been the ace in
the hole for the U.S. regarding China, given that nation’s weak
strategic nuclear capability.
Since the 1980s, China has possessed a small number of obsolete
liquid-fuel intercontinental ballistic missiles as their strategic
deterrent. These missiles have a slow response time and could easily
be destroyed by any concerted pre-emptive attack.
China sought to upgrade its ICBM force in the late 1990s with a new
road-mobile solid fuel missile, the DF-31. Over the course of the next
two decades, China has upgraded the DF-31, improving its accuracy and
mobility while increasing the number of warheads it carries from one
to three.
But even with the improved DF-31, China remained at a distinct
disadvantage with the U.S. when it came to overall strategic nuclear
While the likelihood that a few DF-31 missiles could be launched and
their warheads reach their targets in the U.S., the DF-31 was not a
“nation killing” system. In short, any strategic nuclear exchange
between China and the U.S. would end with America intact and China
As such, any escalation of military force by China that could have
potentially ended in an all-out nuclear war was suicidal, in effect
nullifying any advantage China had gained by deploying the DF-100 and
DF-17 missiles.
Enter the DF-41, China’s ultimate shashoujian weapon. A three-stage,
road-mobile ICBM equipped with between six and 10 multiple
independently targetable reentry vehicle (MIRV) warheads, the DF-41
provides China with a nuclear deterrent capable of surviving an
American nuclear first strike and delivering a nation-killing blow to
the United States in retaliation.
The DF-41 is a strategic game changer, allowing China to embrace the
mutual assured destruction (MAD) nuclear deterrence posture previously
the sole purview of the United States and Russia.
In doing so, China has gained the strategic advantage over the U.S.
when it comes to competing power projection in the Pacific.
Possessing a virtually unstoppable A2/AD capability, Beijing is well
positioned to push back aggressively against U.S. maritime power
projection in the South China Sea and the Taiwan Straits.
Most who watched the Chinese military parade on October 1 saw what
looked to be some interesting missiles. For the informed observer,
however, they were witnessing the end of an era.
Previously, the United States could count on its strategic nuclear
deterrence to serve as a restraint against any decisive Chinese
reaction to aggressive American military maneuvers in the Pacific.
Thanks to the DF-41, this capability no longer exists. Now the U.S.
will be compelled to calculate how much risk it is willing to take
when it comes to enforcing its sacrosanct “freedom of navigation.”
While the U.S. commitment to Taiwan’s independence remains steadfast,
its willingness to go to war with China over the South China Sea may
not be as firm.
The bottom line is that China, with a defense budget of some $250
billion, has successfully combined “Western technology with Eastern
wisdom,” for which the U.S. has no response.

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Military vehicles carrying DF-17 ballistic missiles march during a parade at Tiananmen Square on October 1, 2019 in Beijing, China. (Photo by Sheng Jiapeng/China News Service/VCG via Getty Images)
Law & Politics

Military vehicles carrying DF-17 ballistic missiles march during a
parade to celebrate the 70th anniversary of the founding of the
People’s Republic of China at Tiananmen Square on October 1, 2019 in
Beijing, China. (Photo by Sheng Jiapeng/China News Service/VCG via
Getty Images)

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"We will open the gates and send 3.6 million refugees your way." @Channel4News
Law & Politics

Turkish President Tayyip Erdogan threatens to send millions of Syrian
refugees to Europe if the EU labels Turkey’s military incursion as an

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Turkey is attempting to repeat across northern #Syria what they accomplished in #Afrin during the Olive Branch operation. @sarahabed84
Law & Politics

They drove out the #Kurdish population and replaced them with Turkish
aligned Syrian refugees, changing the demographics.

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The Kurds: Washington's Weapon Of Mass Destabilization In The Middle East Voltaire Net's @sarahabed84
Law & Politics

Historical accounts of the Kurds have been a subject of mystery and
perplexity for years, and have been seldom discussed by major Western
media outlets until recently.
Ever since the U.S. invaded Syria, the U.S. and Israel have supported
the semi-autonomous Kurdistan, with Israel purchasing $3.84 billion
dollars worth of oil from them, a move that could have geopolitical
and economic ramifications for both parties [1].
Their estimated population is 30 million, according to most demographic sources.
Perhaps no other group of people in modern times has been as
romanticized in the Western conscience as the Kurds.
Consistently portrayed as “freedom fighters” who are eternally
struggling for a land denied to them, the Kurds have been frequently
utilized throughout history by other countries and empires as an arrow
and have never themselves been the bow.
In today’s case, the Kurds are being used by NATO and Israel to
fulfill the modern-day colonialist aim of breaking up large states
like Iraq into statelets to ensure geopolitical goals.
In 1973, President Richard Nixon and Secretary of State Henry
Kissinger had the CIA instigate a Kurdish uprising in northern Iraq
against Saddam Hussein.
The United States walked away from the rebellion when Saddam and the
Shah of Iran settled their differences, leaving the Kurds to face
their own fate.

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The Kurdish Connection: Israel, ISIS And U.S. Efforts To Destabilize Iran Voltaire Net's @sarahabed84
Law & Politics

Every major Kurdish political group in the region has longstanding
ties to Israel. It’s all linked to major ethnic violence against
Arabs, Turkmens and Assyrians.
From the PKK in Turkey to the PYD and YPG in Syria, PJAK in Iran to
the most notorious of them all, the Barzani-Talabani mafia regime
(KRG/Peshmerga) in northern Iraq.
Thus it should come as no surprise that Erbil supplied Daesh (ISIS)
with weaponry to weaken the Iraqi government in Baghdad [4].
And when it becomes understood that Erbil is merely the front for Tel
Aviv in Iraq, the scheme becomes clear.
By aligning with the Kurds, Israel gains eyes and ears in Iran, Iraq and Syria.
Drug smuggling is reported to be the main financial source of PKK
terrorism, according to the organization International Strategic
Research, whose detailed report can be seen here [14].

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1008
Dollar Index 98.666
Japan Yen 107.98
Swiss Franc 0.9964
Pound 1.2490
Aussie 0.6791
India Rupee 70.9625
South Korea Won 1189.56
Brazil Real 4.1133
Egypt Pound 16.2775
South Africa Rand 15.025

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23-SEP-2019 :: Streaming Dreams Non-Linearity Crude Oil; Netflix
World Currencies

I stuck ‘’non-linearity’’ in my headline for good reason and you will
need to indulge me. My Mind kept to an Article I read in 2012 ‘’Annals
of Technology Streaming Dreams’’ by John Seabrook January 16, 2012.
“This world of online video is the future, and for an artist you want
to be first in, to be a pioneer. With YouTube, I will have a very
small crew, and we are trying to keep focused on a single voice. There
aren’t any rules. There’s just the artist, the content, and the
“People went from broad to narrow,” he said, “and we think they will
continue to go that way—spend more and more time in the niches—
because now the distribution landscape allows for more narrowness’’.
And this brought me to Netflix. Netflix spearheaded a streaming
revolution that changed the way we watch TV and films. As cable TV
lost subscribers, Netflix gained them, putting it in a category with
Facebook, Amazon, and Google as one of the adored US tech stocks that
led a historic bull market [FT].
Netflix faces an onslaught of competition in the market it invented.
After years of false starts, Apple is planning to launch a streaming
service in November, as is Disney — with AT&T’s WarnerMedia and Com-
cast’s NBCUniversal to follow early next year. Netflix has corrected
brutally and lots of folks are bailing big time especially after
Netflix lost US subscribers in the last quarter.
Even after the loss of subscribers in the second quarter, Ben
Swinburne, head of media research at Morgan Stanley, says Netflix is
still on course for a record year of subscriber additions.
Optimists point to the group’s global reach. It is betting its future
on expansion outside the US, where it has already attracted 60m
subscribers. And this is an inflection point just like the one I am
signaling in the Oil markets. Netflix is not a US business, it is a
global business.
The Majority of Analysts are in the US and in my opinion, these same
Analysts have an international ‘’blind spot’’ Once Investors
appreciate that the Story is an international one and not a US one
anymore, we will see the price ramp to fresh all-time highs.
I, therefore, am putting out a ‘’conviction’’ Buy on Netflix at
Friday’s closing price of $270.75.


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From Zero to Hero: Pakistan Bonds Evoke Egypt's Success Tale @markets.
Emerging Markets

Global investors are piling into Pakistan’s local-currency bonds like
never before.
Attempts at economic reforms, support from the International Monetary
Fund and interest rates topping 13% make the nation’s fixed income
attractive amid a surge in the world’s pool of negative-yielding debt.
Small wonder foreigners bought $342 million of debt in the quarter
through September, compared with virtually zero inflows in the past
two years, according to central-bank data going back to 2015.
The new-found interest in Pakistani bonds reminds some fund managers
of Egypt, which in 2016 agreed to a bailout package with the IMF. That
deal proved to be a game changer as it sped up growth, cut inflation
and lured foreigners -- a lesson for the South Asian that has seen its
stock market erase 57% of its value since its entry into MSCI Inc.’s
indexes in 2017.
“People are looking at Pakistan as they see a story similar to the one
in Egypt, and people made good money there,” said Tim Ash, a
strategist at BlueBay Asset Management in London.
“The assumption is the currency adjusts, rates go higher and this
creates good valuations on bonds to put money to work.”
The comparison with the north African nation strengthened after
Pakistan appointed Reza Baqir as the central-bank governor this year.
Baqir served in senior positions at the IMF in past 18 years,
including as the fund’s resident representative in Egypt at the time
of the bailout.
Under Baqir, Pakistan is looking to stabilize its economy after
suffering from a deficit blowout with the most aggressive rate hikes
in Asia and multiple currency devaluations since November 2017.
The rupee is down almost 50% against the dollar this year, one of the
world’s worst-performing currencies, as the central bank introduced
more flexibility to the managed-float system.
“The question is whether the rupee is now at the right level and are
rates high enough to make up for forex risks,” said Ash.
“Rates in Pakistan are lower than was the case in either Egypt or
Ukraine when portfolio flows first began to come in. So, inflows in
Pakistan will be more moderate.”
Continuation of economic reforms is key to the debt inflows extending,
said Abdul Kadir Hussain, the head of fixed-income asset management at
Dubai-based Arqaam Capital.
As part of the IMF loan conditions, the government must raise revenue
by more than 40% in the year that began in July. The nation must also
lower electricity subsidies.
“The change in Pakistan is a reflection of the new finance minister
and the central-bank governor, and the government’s general positive
intent to engage with international investors,” said Andrew Brudenell,
a U.K.-based fund manager at Ashmore Group Plc.
“This bodes well, as long as the macro-economic picture can improve.”

Frontier Markets

Sub Saharan Africa

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Addis Ababa searches for adviser on sale of Ethio Telecom stake @FT @thomas_m_wilson

The privatisation of the world’s largest telecoms monopoly has moved a
step closer after Ethiopia launched a search for an adviser on the
sale of a stake in its national operator.
Ethio Telecom, whose 44m subscribers give it the biggest
single-country customer base of any operator in Africa, is the crown
jewel in a sweeping privatisation programme that will open the
nation’s market to foreign investment for the first time.
The transaction adviser, to be appointed this month, will help Addis
Ababa structure the process, determine a minimum value and select the
right partner, according to Eyob Tolina, the minister leading
Ethiopia’s economic liberalisation.
Ethio Telecom, which generated revenues last year of 36bn birr
($1.2bn), had separately appointed KPMG to assist with its own
valuation of the business, Mr Eyob said.
While the government has previously signalled only that it would sell
a minority stake of up to 49 per cent of Ethio Telecom, Mr Eyob said
it now had a specific number in mind and that the adviser would help
gauge market sentiment.
International companies including Vodafone, MTN, Orange, Etisalat and
Zain have all expressed interest in gaining access to Ethiopia’s
fast-growing market.
Telecoms monopolies were once common across the world. The UK and the
US each had one until the early 1980s, controlled respectively by
British Telecom and AT&T. But with the advent of mobile communications
in the past 30 years, most markets have invited competition.
At the same time as selling shares in Ethio Telecom, Addis Ababa plans
to issue at least two new telecoms licences to other operators as part
of a “synchronised process”.
Mr Eyob added that the government planned to appoint a different
adviser to consult on the licensing process as it wanted to create “a
Chinese wall” between the two processes. It has yet to send a request
for proposals.
He said that Ethiopia planned to announce the winning bidders in both
the share sale and the licensing process in March.
Since taking office as prime minister in 2018, Abiy Ahmed has promised
a programme of sweeping economic and political reforms, with the
liberalisation of the telecoms sector a key component. After years of
state-led double-digit growth, Ethiopia’s economic progress has
started to stall and a dynamic telecoms sector is now seen by Mr Abiy
as vital to driving future growth.
While neighbouring Kenya has built thriving digital payments and
ecommerce industries, the lack of competition and foreign expertise in
Ethiopia’s telecoms sector has held back development.
In June the government passed the legislation needed to set up a
telecoms regulator, a move Mr Eyob said had been well received by
potential investors.
“What we hear from the stakeholders is that we have put a solid
foundation for the sector,” he said. “We need to create an enabling
environment for the operators to thrive but also making sure that the
public interest — by that we mean access and affordability — is fully
Mr Eyob said the government was committed to running the process as
transparently as possible.
“The determination from the leadership, from the prime minister, is to
show the world that we can run a very transparent, competitive and
fair process and we will deliver that,” he said.

read more

Africa's Pulse, No. 20, October 2019 : An Analysis of Issues Shaping Africa's Economic Future #AfricaPulse

Regional growth is projected to rise to 2.6 percent in 2019 (0.2
percentage point lower than the April forecast) from 2.5 percent in
The recovery in Nigeria, South Africa, and Angola—the region’s three
largest economies—has remained fragile.
In Nigeria, growth in the non-oil sector has been sluggish, while in
Angola the oil sector has underperformed.  In South Africa, low
investment sentiment is weighing on economic activity.
Growth in Sub-Saharan Africa excluding Nigeria, South Africa, and
Angola is expected to remain robust although it has softened somewhat
in some countries.
The average growth among non- resource-intensive countries is
projected to edge down, reflecting the lingering effects of tropical
cyclones in Mozambique and Zimbabwe, political uncertainty in Sudan,
weaker agricultural exports in Kenya, and fiscal consolidation in
Debt vulnerabilities remain high. The share of countries in
Sub-Saharan Africa assessed in debt distress or at high risk of
external debt distress has almost doubled, though the pace of
deterioration has slowed.
The rising debt vulnerability stems from the high level of government
debt, especially non-concessional debt, which led to a substantial
rise in debt servicing costs.
Against the backdrop of vibrant economic performance in 1995–2008,
growth across countries in the region in 2015–19 has decelerated.
This is clearly reflected in the taxonomy of growth resilience: first,
there are fewer countries among the top growth performers, although
they are still growing above 5.5 percent; and, second, the borders
between the middle and bottom growth performers are becoming
increasingly porous.
Specifically, five countries in the region were downgraded to middle
or bottom growth performers, and the performance of several countries
is approaching the border of the low-growth region.
The modest growth in the region that followed the 2014–15 collapse in
commodity prices, averaging 2.5 percent between 2015–2019,

Section 1: Recent Trends and Developments SUB-SAHARAN AFRICA FACES A

Global growth has continued to soften, reflecting decelerating
economic activity in advanced economies and emerging markets and
developing economies (EMDEs). Global trade and manufacturing have
slowed down markedly (figure 1.1).
A continued deterioration in the global manufacturing Purchasing
Managers’ Index (PMI) and business confidence suggests that industrial
activity will remain subdued for the rest of 2019.
Amid rising policy uncertainty, due to the renewed intensification of
trade tensions in the world economy, global growth prospects have
weakened, commodity prices have declined, and capital flows to EMDEs
have slowed. These headwinds are expected to weigh on activity in
Sub-Saharan Africa.
The June 2019 Global Economic Prospects report forecasted that global
growth would decline to 2.6 percent in 2019, its slowest pace since
While some EMDEs have benefited from the availability of global
liquidity, others have suffered from flight-to-safety concerns about
slowing global activity.
EMDE sovereign debt issuance has slowed markedly in recent months.
This is reflected in the subdued sovereign bond- issuance activity in
Sub-Saharan Africa.
Sovereign bond issuance in the region totaled about US$5.6 billion by
the end of the third quarter, compared with more than US$17 billion in
Following a strong rebound at the start of the year, in August capital
flowed out of emerging markets at its fastest pace since 2016 (figure
These outflows have largely come from falling equity markets.

In Nigeria—the region’s largest oil exporter—real gross domestic
product (GDP) growth decelerated from 2.1 percent year-over-year (y/y)
in 2019q1 to 1.9 percent in 2019q2 (figure 1.8). While oil production
stabilized, growth faltered in key non-oil sectors, including
agriculture and manufacturing.
In South Africa, a combination of power cuts, low business confidence,
and political uncertainty prolonged the decline in investment and
dampened consumption and export growth.
Real GDP contracted at a quarter-over-quarter (q/q) seasonally
adjusted annualized rate (saar) of 3.1 percent in the first quarter
(figure 1.9). GDP rebounded to 3.1 percent (q/q saar) in 2019q2,
reversing the first quarter’s contraction, as electricity availability
improved and mining production recovered. A rise in investment and
government consumption spending contributed to the rebound from the
demand side.
Although South Africa avoided a recession, trend growth remained low,
at 0.9 percent y/y in 2019q2, up from 0 percent in 2019q1. For the
entire first half of the year, real GDP growth amounted to 0.4
The official unemployment rate rose from 27.6 percent (y/y) in 2019q1
to 29 percent (y/y) in 2019q2.
In Angola—the region’s second largest oil exporter— GDP contracted by
0.4 percent (y/y) in the first quarter, after rising at the end of
2018, due to sharp declines in oil production. Following a modest
rebound, oil production fell again in June, suggesting that growth
remained subdued in the second quarter (figure 1.10).
Economic activity in West African Economic and Monetary Union (WAEMU)
countries continued to expand at a rapid pace in the first half of
2019, buoyed by strong domestic demand. Benin and Côte d’Ivoire
registered growth of 7 percent, offsetting a slowdown in Senegal owing
to a need for tighter fiscal policy.
Growth was solid and steady among countries in the East Africa
subregion although growth eased somewhat in Ethiopia and Kenya due in
part to drought. Growth further accelerated in Rwanda due to strong
construction activities. Elsewhere, activity remained under stress in
several countries.
In Sudan, GDP contracted further, as investment sentiment deteriorated
amid heightened political uncertainty. In Mozambique and Zimbabwe,
growth remained weak, as the countries continued to deal with the
effects of tropical cyclones that hit their economies earlier in the
Despite some slowdown, GDP growth in the region’s
non-resource-intensive countries—including Côte d’Ivoire, Ethiopia,
and Rwanda—ranks among the fastest in the world (figure 1.12).

PMI data point to softening manufacturing activity in several
countries in the third quarter (figure 1.13). Firms in Kenya,
Mozambique, and Ghana experienced slower increases in output and new
orders in August.
In Zambia, business conditions deteriorated, with PMI readings well
below the neutral 50-mark, which separates expansion and contraction,
amid tightening liquidity conditions.
In South Africa, business confidence declined further (figure 1.14).
The South African Chamber of Commerce and Industry’s Business
Confidence Index dropped to a 20-year low in the third quarter. The
PMI fell from 52.1 in July to 45.7 in August and 41.6 in September,
signaling modest outcomes
in the manufacturing sector (figure 1.15). In Nigeria, delays in the
appointment of the new cabinet following the presidential election
contributed to uncertainties about the direction of public policy and
The manufacturing and non-manufacturing PMIs remained above the
50-mark but edged lower, as business activity and new orders grew at a
slower pace (figure 1.16).

In the first three quarters of 2019, African governments issued US$
5.6 billion (in US dollars and euros), a smaller amount, compared with
more than US$17 billion in 2018.
Benin, Ghana, and  Kenya were the most active bond issuers, with Kenya
raising US$2.1 billion in May and Ghana issuing a US$3 billion
Eurobond in March, which, so far, is the largest bond offering in the
region in 2019.
And in March, Benin issued a €500 million maiden bond.

Ordinarily, an expansionary policy in advanced countries would push
into emerging and frontier markets the capital flows needed for
financing current account deficits.
However, global sentiment toward the U.S. dollar has continued to
strengthen due to fears of escalating trade disputes worldwide,
slowing portfolio flows to the region.

The median annual inflation rate is projected to decline from 3.8
percent in 2018 to 3.4 percent in 2019, amid subdued domestic demand,
lower oil prices, and increased currency stability (figure 1.20).
These aggregate figures hide significant differences between
resource-intensive and non-resource-intensive countries.
Inflation has been slowing among oil exporters although it remains in
double-digits in Angola and Nigeria. Inflation in Angola increased to
17.5 percent y/y in August due to higher food prices.
Inflation eased in Nigeria to 11.0 percent (y/y) in August, helped by
a decline in nonfood prices, but remained well above the central
bank’s target range of 6 to 9 percent.
In non-resource-intensive countries, inflation is generally low and
steady. However, rising food price pressures, partly due to drought,
are contributing to higher inflation in Ethiopia, and inflation
remains considerably high in Sudan and Zimbabwe, owing to their weaker
policy and institutional frameworks.

The median government debt-to-GDP ratio is expected to stabilize at
around 55 percent in 2019, following sustained and broad-based
increases since 2013 (figure 1.22). There are still significant
differences between resource-intensive and non-resource-intensive
countries. Among resource- intensive countries, a decrease in
government debt in oil exporters was partially offset by an increase
in borrowing among metals exporters. The decrease in government debt
among oil exporters mainly reflected the strong fiscal adjustment in
CEMAC countries. In Nigeria, public debt is expected to rise by 3
percentage points of GDP, although it will remain modest at around 22
percent of GDP. In Angola, government debt remained high due to
currency depreciation.
However, government debt has risen in the countries that experienced a
deterioration in their fiscal balances (Ghana, Mozambique, and Rwanda)
as well as currency depreciations (Ghana, Mozambique, and Sudan).
The share of countries in Sub-Saharan Africa assessed in debt distress
or at high risk of external debt distress has almost doubled, though
the pace of deterioration has slowed (figure 1.23).
The rising debt vulnerability stems from the increase in government
debt levels, especially of non- concessional debt, which led to a
substantial rise in debt servicing costs. The share of foreign
currency–denominated public debt increased by 12 percentage points
from 2013, to 36 percent of GDP in 2018, partly reflecting the recent
surge in Eurobond issuance.
For the region as a whole, the average interest payments-to-revenue
ratio is expected to rise to 11 percent in 2019, from 6 percent in
2012 (figure 1.24). In Nigeria, although public debt remains modest as
a share of GDP, interest payments as a share of revenues have
increased substantially, especially at the federal government level,
where the interest payments-to-revenue ratio exceeds 60 percent.
Average growth in Sub-Saharan Africa is expected to rise modestly,
from 2.5 percent in 2018 to 2.6 percent in 2019, improving to 3.1
percent in 2020 and 3.2 percent in 2021 (figure 1.26). These forecasts
are 0.2 percentage point lower than envisaged in the April 2019 issue
of Africa’s Pulse

Per capita GDP growth for the region as a whole has remained
relatively flat, with no gain expected in 2019 (figure 1.29). Per
capita GDP growth is projected at 0.5 percent in 2020 and 0.6 percent
in 2021, well below the growth needed to improve the living standards
of the region’s population.
In Nigeria, the country with the largest number of poor people in the
region, per capita GDP growth has remained negative. Accelerated
demographic transition will have an important role to play in the
region’s economic development. However, there is significant
heterogeneity in growth prospects across countries in the region.

Excluding Nigeria, South Africa, and Angola, growth in the rest of the
region is projected at 4.0 percent in 2019 (0.4 percentage point lower
than the April forecast), 4.7 percent in 2020 and 4.8 percent in 2021,
broadly in line with the April forecasts.

The downward forecast revision for 2019 mostly reflects temporary
drags from stressed economies, including Mozambique, Sudan, and
Zimbabwe, but slowdowns are also seen in Kenya due to sluggish
agricultural exports, and in Senegal due to cuts in public

Risks Remain Tilted to the Downside
On the external side, risks to the regional outlook include the
possibilities of weaker- than-expected global growth because of
continued deterioration in investor sentiment, tightening of global
financial conditions, and higher commodity price volatility.
On the domestic front, drought, security threats, increases in the
cost of public borrowing, and slowing implementation of reforms to
boost revenues and private investment remain key risks to the outlook.

Domestic Risks
Weaker domestic reforms. Across the region, the medium-term outlook is
predicated on implementation of planned fiscal consolidation and
structural reforms to underpin private investment. In many countries,
the risk of weak reform implementation remains high, especially where
general elections are approaching
Deterioration in security conditions. In many parts of the region,
security risks—including terrorism threats—have been intensifying,
aggravated by intercommunal and religious tensions
Weather shocks. The region remains vulnerable to weather shocks,
including drought and flooding.
In 2019, the agriculture sector made a negligible contribution to
regional growth, as drought affected production in some
countries. Severer-than-expected weather conditions would further
depress the agriculture sector and reduce agricultural incomes, export
earnings, and overall growth.
The prevalence of this risk in the region further justifies the need
for effective mechanisms to build resilience to climatic changes, as
discussed in the April 2019 issue of Africa’s Pulse.
Given the severe impact of weather shocks on rural households,
efficient early warning systems and insurance mechanisms targeting
low-income farmers would be critical.

The top tercile of growth performers in the region, which includes the
improved and established countries, comprises 10 countries (Burkina
Faso, Côte d’Ivoire, Ethiopia, Ghana, Guinea, Kenya, Rwanda, Senegal,
Tanzania, and Uganda). This group houses 36 percent of Sub-Saharan
Africa’s population (375 million people in 2018) and produces 25
percent of the region’s total GDP. The middle tercile of growth
performers now includes 13 countries (Benin, Cabo Verde, Cameroon, the
Central African Republic, the Democratic Republic of Congo, The
Gambia, Guinea-Bissau, Madagascar, Mali, Mauritius, Mozambique, Niger,
and Togo). This group accounts for about 22 percent of the region’s
population (237 million people in 2018) and 10 percent of the region’s
GDP. The number of countries in the bottom tercile of growth
performers has increased to 21 (Angola, Botswana, Burundi, Chad, the
Comoros, the Republic of Congo, Equatorial Guinea, Gabon, Lesotho,
Liberia, Malawi, Mauritania, Namibia, Nigeria, São Tomé and Príncipe,
Sierra Leone, South Africa, Sudan, Eswatini, Zambia, and Zimbabwe).
This group accounts for 42 percent of the region’s population (437
million people in 2018) and produces 64 percent of the region’s total
GDP— which is more than the size of the economies in the top and
middle terciles combined.

When compared with the ratio in 2013, the number years to repay the
full debt has increased in 38 of 44 Sub-Saharan African countries in
2019. On average, the number of years to repay the full public debt
has increased by 1.5 years for these 38 countries during the period
2013-19. On the other hand, it decreased in only six countries
(namely, Botswana, the Democratic Republic of Congo, Guinea-Bissau,
Madagascar, Malawi, and the Seychelles). For instance, the debt-to-
tax revenue ratio in Botswana declined from 0.72 year in 2013 to 0.66
year in 2019. It follows that: (a) it takes less than one year for
Botswana’s tax revenues to repay the country’s debt, and (b) the
amount of time it takes has decreased over the past six years.
Therefore, there has been improvement in Botswana’s debt
sustainability. The case of The Gambia is the opposite: the number
of years it will take for the country’s tax revenues to repay the full
debt increased from 5.9 in 2013 to 7.4 in 2019. The Gambia has failed
to increase tax revenues from 2013 to 2019 to repay its general
government gross debt; consequently, the country’s debt sustainability
has deteriorated.

Africa’s total fertility rate (TFR) of 4.8 births per woman remains
high (and even higher for poor women)

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some senior state officials are profiteering by importing 17,000 tonnes of grain at double the world market price is the latest blow to the diminishing credibility of @edmnangagwa's government. .@Africa_Conf

With 8.5 million people facing serious food shortages next year, the
discovery that some senior state officials are profiteering by
importing 17,000 tonnes of grain at double the world market price is
the latest blow to the diminishing credibility of President Emmerson
Mnangagwa's government.
Africa Confidential understands that the grain was brought in from
Tanzania – Mnangagwa and President John Magufuli are allies – at a
price of US$600 a tonne; the world price is currently $240 a tonne. An
expert in the regional commodity trade said the only explanation for
the inflated price of the consignment is a 'vast corrupt rake-off'.
Now the keys question are, says the expert, who knew about the deal
and who benefited from it.  Senior officials in international
organisations have confirmed the pricing of the deal and say it helps
explain the slow response to the United Nations' call for emergency
funding to alleviate Zimbabwe's food shortfall. It comes as relations
between the government and Western states falter again, after a brief
improvement following the ousting of President Robert Mugabe in
November 2017 (AC Vol 58 No 25, A martial mind-set).  Although the
main cause of the food crisis is the drought which has hit most
countries in the region, corruption and mismanagement are making it
worse. The World Food Programme (WFP) estimates at least half
Zimbabwe's population of 16.5 million are now 'food insecure', a
staggering failure in a country that was the breadbasket of southern
Africa. Those at risk in Zimbabwe are not far short of the 9.7m
needing food aid in all the 17 countries of the Sahel and West Africa
combined.  Nor is Zimbabwe's crisis confined to the rural areas where
5.5m people are food insecure. Another 3m in towns and cities also
face chronic shortages. At the start of the crisis it was estimated
that it would cost $300-500m to feed 7m people; now another $100m will
be needed.

Grain need
Some 800,000 tonnes of wheat and maize may have to be imported to
avert disaster. This doesn't include the grain needed to keep farm
animals alive: up to half of all cattle could die in some areas. In
July, some agency estimates suggested Zimbabwe would need 1.3-1.4m
tonnes – 850,000 tonnes of white maize, 350,000 tonnes of wheat and
80,000 tonnes of soya and cooking oil. That includes animal feed.  But
trust in the government is low. A WFP 'flash appeal' has so far
secured pledges of only about $150m: $89m from the United States, €9
mn ($10m) from the European Union and £50-60m ($60-75m) from the
United Kingdom.  If money can be raised for emergency imports, there
are still big logistical challenges that increase the risk of
starvation. Zimbabwe has enough grain to support its population for
the next three months. Drought has affected the whole region, so most
imports will have to come from outside Africa.  Even if procurement
deals are reached rapidly, it may take two months to move the grain
from, say, Mexico to the main import gateway ports – Beira in
Mozambique and Durban in South Africa. Beira remains seriously damaged
by the recent cyclone, so more shipments will have to come through
Durban, which is further away.  This will impose huge pressure on the
run-down railway network and on the availability of trucks. If the
import needs are as great as 1.3 million tonnes, the railways could
probably only move about a tenth leaving the rest to be trucked, at
the rates of 4,500 tonnes a day. That would need over 1000 lorries,
operating a shuttle for several months.  The government's policy
response to food supply has been the Command Agriculture system, a
state-backed system providing seeds and fertilisers. Apart from
governance and corruption issues (see Box), the programme was
compromised from the start because so many land-holding beneficiaries
had secured the best farmland through political loyalty (AC Vol 60 No
18, Cash at the generals' command).  In many cases the loyalists
lacked the skills and personal commitment to make their farms more
productive but were favoured in the distribution of inputs under
Command Agriculture. However, tens of thousands of serious farmers did
benefit from the contested land redistribution in the 2000s and many
have rebuilt production.  But a common complaint is that farmers who
are not overtly loyal to the ruling Zimbabwe African National
Union–Patriotic Front face discrimination under the Command
Agriculture scheme. Many of those giving Mnangagwa and his allies the
benefit of the doubt two years ago now see it as both brutally
authoritarian and incompetent, having reneged on its promise to open
the economy to legitimate business.

One of the biggest shifts is the government's loss of support from
public sector workers.   Over the last five years, state sector
workers were the main beneficiaries of the state. The average civil
servant was paid Zimbabwe$ or RTGS1000 per month ($600-700) in the
past three years. They were doing better than most other workers.  Now
state workers are underpaid because inflation has massively eroded the
real value of their salaries.  The average salary of RTGS1000 is now
worth only $60-70 in market terms.
Many civil servants are the only regular wage earner in a household of
five or six. Now there are  cases of civil servants and their families
suffering from malnutrition. Beyond the human suffering, this hits
their ability to work, further undermining state administration and
public services.  This has prompted strikes such as the continuing
clashes between doctors and nurses and Mnangagwa's government. The
brutal response to these protests is triggering further dissent in the
cities where support for the opposition is already strong. Although
the opposition has failed to capitalise on this growing
anti-government sentiment, the prospects for a wider and more decisive
confrontation increase as conditions deteriorate (AC Vol 60 No 17,
Activists take on the crisis).

The Sakunda price

Investigations by Parliament's Public Accounts Committee into how the
army-backed oil importer, Sakunda Holdings, has profited from the
Command Agriculture scheme are causing international problems.  First,
is Sakunda's long association with the Amsterdam-based Trafigura oil
trading outfit. Sakunda has a stake in Trafigura Zimbabwe; Kudakwashe
Tagwirei, Sakunda's chief executive and once close to President
Emmerson Mnangagwa, was a key enabler of Trafigura's business in
Zimbabwe (AC Vol 59 No 22, Trafigura in a tug-of-war). The joint
venture company, Trafigura Zimbabwe, is accused of contributing,
directly or indirectly, to Mnangagwa's re-election campaign (AC Vol 58
No 4, ZANU-PF digs for votes). There is little transparency about
Trafigura's links to the Command Agriculture scheme before it became a
government-funded programme. The trader denies any wrongdoing in the
matter. There is no ambiguity about the role and networks of its local
partner, Sakunda.  The second risk is that Sakunda's operations are
undermining the onerous economic reform programme pushed by Finance
Minister Mthuli Ncube. So close is Sakunda to the government and the
Reserve Bank that it has benefited from preferential exchange rates
between the local Zimbabwe$ or RTGS and the US$.  The deal uncovered
by former Finance Minister Tendai Biti and the Public Accounts
Committee allowed Sakunda to receive US$366 million in government
bonds as payment for supplying inputs for Command Agriculture.  When
Sakunda redeemed some of those bonds at a preferential exchange rate
(reckoned to be US$1=new RTGS/Zim$9-10) – everyone else was being
repaid on basis of US$1- new RTGS/Zim$1). This led to an 80% surge in
money supply.  On 20 February, all contracts were converted from US$
contracts into local contracts: all assets were converted to
Zimdollars, including Treasury Bills and other government paper. There
was one exception: Sakunda which was allowed to hold onto its bonds
denominated in US$.  Sakunda started to unload these bonds in July
2019. But only one bank took the bonds. Most banks lacked the
liquidity to do so and their executives were also worried about the
legality of doing such a transaction. So Sakunda turned to the Reserve
Bank. Sakunda managed to unload $220-230m of the $366m. It retains
some $100 million on its books, while a further $20-40m is placed with
a local bank.  In the main transaction, the Reserve Bank had in effect
created a massive sum of new local dollars, about Zim$2.3 billion, a
huge increase in the reserve money. After criticism from bankers and
international agencies, the government froze the Sakunda accounts and
the company's political network appears to have been hit almost as
badly as the local currency.

read more

09-SEP-2019 :: This is an economy which was the "breadbasket" of the region.

Jonathan Moyo said. “And, meanwhile, the people forgot the vision of
the liberation struggle. The people were saying, ‘What good is
liberation without food?’

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JAN-2019 :: "money is the most universal and most efficient system of mutual trust ever devised."

“Money is accordingly a system of mutual trust, and not just any
system of mutual trust: money is the most universal and most efficient
system of mutual trust ever devised.”
“Cowry shells and dollars have value only in our common imagination.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”
The Point I am seeking to make is that There is a correlation between
high Inflation and revolutionary conditions, Zimbabwe is a classic
example where there are $9.3 billion of Zollars in banks compared to
$200 million in reserves, official data showed.
The Mind Game that ZANU-PF played on its citizens has evaporated in a
puff of smoke.
‘’The choice of that moment is the greatest riddle of history’’ and
also said “If the crowd disperses, goes home, does not reassemble, we
say the revolution is over.”
What is clear to me is that Zimbabwe is at a Tipping Point moment.

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25-FEB-2019 :: Zimbabwe finally overhauled its dysfunctional, "whack" and even Voodoo FX regime.

Tendai Biti is predicting a 6-8 range whilst the Government is looking
for it to appreciate to 2.5 which is best characterised as
''Hail-Mary'' economics. This is the right move but I would definitely
be short at 2.5, if it ever gets there which is entirely unlikely.

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Load shedding is so severe that power cuts of up to 16 hours have hit the capital, Lusaka. @Africa_conf

The official explanation is drought, causing low water levels at the
Kariba dam, a major source of the country's energy. But experts and
insiders at state power utility Zesco also blame mismanagement and

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@AlsisiOfficial [and I for one disagree with him on many things particularly with his "'incarceration" strategy] made bold moves when it came to the Economy.

Egypt devalued its currency early, took a brutal punch in the solar
plexus but is now reaping the dividend from its bolder economic policy

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Cote d'Ivoire's issuing Eurobonds today H/T @PaulWallace123 @RichFrontiers

➡️11-year euro note, yield guidance is 6.13% - 6.25%
➡️20-year euro note, yield guidance is 7.13%
CDI has the best-performing euro debt in EMs this year (thanks to high
yields and economic growth)

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China is cornering Africa's ecommerce market @FT @davidpilling

All over Africa, in its clogged cities and fast-changing towns and
villages, buildings are painted in Tecno blue and billboards offer the
allure of the Tecno brand.
From the Grand Marché in Mali’s capital, Bamako, to the business hub
of Nairobi in Kenya, where entire 20-storey towers are slathered in
the Tecno logo, aspirational Africans are being bombarded.
What is Tecno, you may ask, if you are not a frequent traveller to the
continent? Tecno is an Africa-specific brand created by Transsion, a
Shenzhen-based handset manufacturer.
Last week, the company, founded in 2006, listed on the Star Market,
Shanghai’s Nasdaq wannabe, closing up more than 60 per cent on its
first day for a market capitalisation of around $6.5bn.
The story holds lessons about Africa and its increasingly dynamic
interaction with the world.
Transsion, which last year sold more than 100m handsets, has proved
you can make money in Africa if you work out what people want and what
they can afford.
From 2008, Transsion specifically targeted the continent, skipping the
crowded Chinese market to concentrate on a new frontier where the
population is set to double over the next 30 years.
Starting with basic “feature” phones, Transsion developed its
technological offering to cater for African tastes, gleaning
intelligence from research centres established in Nigeria and Kenya.
Many Transsion phones have slots for multiple SIM cards so customers
can make cheap provider-to-provider calls and bypass lapses in
coverage. Battery life has been extended, vital for users in places
where electricity may be intermittent. Handsets are adapted to
languages including Amharic and Swahili.
As Transsion sells more smartphones, which now make up more than a
third of its offering, it puts its effort on the mid-tier market,
keeping the cost to around $100 for most handsets. Unusually, it also
offers aftersales service.
Transsion, whose sales in Africa zoomed past those of Samsung in 2017,
saw an opportunity where others did not. While the west still too
often treats the continent as a charity case, many Chinese companies
see a business opportunity.
True, most people in Africa are poor. In Kenya, a relatively
prosperous economy, gross domestic product per capita is still a lowly
$3,000, even in purchasing parity terms.
Yet the continent’s population is growing faster than any other on
earth and — in its more successful economies — income per head is
doubling every decade or so.
Chinese companies are getting in on the ground. In 2018, Tecno became
the fifth most admired brand in Africa, according to Brand Africa,
squeezed in between Coca-Cola and Puma, with Apple sixth. Itel and
Infinix, its other two brands, make 17th and 26th place.
While most companies move into Africa as an afterthought, Transsion
has done things in reverse, using Africa to innovate and to test the
robustness of its offering.
It is now selling phones in India and Latin America.
Transsion is also testing Africa as a manufacturing centre, something
that could become more feasible as the African Continental Free Trade
Area comes into effect.
It has opened two manufacturing facilities in Ethiopia, which is
pursuing an Asia-style industrial policy, in addition to factories in
China, India and Bangladesh.
Together with Huawei and ZTE, Chinese equipment makers that have wired
up the continent virtually single-handedly, Transsion has helped lead
the African telecoms revolution.
The hardware installed, China’s software developers are also coming.
Alibaba has road-tested its Alipay system in South Africa and WeChat
has a partnership with Kenya’s M-Pesa mobile money offering.
To be fair to western companies, some, including Vodafone, Orange and
Facebook, whose WhatsApp messenger service is ubiquitous, have also
seen the potential of the African consumer.
And if China has been more commercially savvy, western governments
have bankrolled humanitarian schemes that Beijing would never
There is no Chinese Pepfar, the US President’s Emergency Plan for Aids
Relief. And it was the CDC Group, part of Britain’s aid effort, that
funded the M-Pesa money-transfer system on which much of the
continent’s ecommerce ecosystem is built.
That ecosystem is extraordinarily inventive. Start-ups are offering
services from off-grid power to farming advice, and from cut-price
medicines to haulage trucks ordered up Uber-style.
Jack Ma, the founder of Alibaba, has also turned his attention to
Africa’s potential, launching a $1m Netpreneur prize.
When most people think of China in Africa they think of mining and
construction. But things are moving on. It is no longer the highways
where the main action is taking place. It is the superhighways.

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Fund on standby @IMFNews Kenya @Africa_Conf

New Principal Secretary to the Treasury Julius Muia is hoping that his
talks with the International Monetary Fund at its annual meeting on
14-20 October in Washington will result in an IMF delegation to Kenya
in November. Ministers are desperate to rebuild relations after the
collapse of talks to renew the US$1.5 billion standby credit facility,
which was agreed in 2016 but suspended in September 2018.

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So 50 percent debt to GDP ratio (NPV basis) is something Treasury has manipulated the last 7 or so years. Faked GDP growth. @WehliyeMohamed

Not many members of parliament really understand relative limits.
So 50 percent debt to GDP ratio (NPV basis) is something Treasury has
manipulated the last 7 or so years. Faked GDP growth. How can GDP be
fast growing when other indicators like revenues have been pointing


This is the Point and the sleight of Hand

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We have moved from 8 percent commercial debt position 7 years ago to 37 percent today. This has shortened the duration of the debt and caused servicing problems. @WehliyeMohamed

2. We have moved from 8 percent commercial debt position 7 years ago
to 37 percent today. This has shortened the duration of the debt and
caused servicing problems. Why surge in commercial debt? Because there
is no economic rent seeking in concessional debt. Simple! GREED.

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by Aly Khan Satchu (www.rich.co.ke)
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October 2019

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