Thursday, 06 August 2020

This music is played on loudspeakers by a group of seven members of the Tabernacles of Freedoms Ministries in Cameroon’s capital Yaounde.

The four women and three men move from house to house and street to street calling themselves end time evangelists. Thirty-two-year-old Prudence Mayah, the group leader is referred to by church members as sister.

She said last month God revealed to them through their pastor Ngoa Atangana that nations are wasting the time and resources being spent on fighting COVID-19.

"We are asking everybody to go on their knees and pray and know that there is nothing as coronavirus," Mayah said. "It is God’s punishment for wrongdoing, for the several wars people are fighting in the world. A man marries a man and a woman marries a woman, so God is very angry."

Among the 45 homes the group said it visited on Monday is that of 49-year old farmer Lionnie Fotso. Fotso said she believes in the teachings of the small church, and will follow its orders not to wear masks.

Fotso said Tabernacles of Freedoms Ministries has just confirmed her thoughts that COVID-19 is a hoax. She said no member of a group of 300 farmers where she belongs has ever attested that she saw a COVID-19 patient and none of them has been sick of the so-called coronavirus.

COVID-19 is very real, killing nearly 700,000 people worldwide since December. There have been more than 17,000 cases in Cameroon alone, and about 400 deaths in the Central African state.

But that doesn’t stop the Tabernacles church, which has about 300 followers and reaches more people with broadcasts on Yaounde radio stations.

Last week, Governor Naserie Paul Bea of Cameroon’s Center Region said three students refused to take their secondary school certificate exams because they were asked to wear masks.

When the student’s parents were asked to come to school and convince their children to wear the masks, the parents chose to take the children home. The parents said they were members of the church.

The governor said he has ordered the church to follow instructions on COVID-19 prevention or be arrested.

'We have already closed down this church for anti-government policies," Bea said. "You can imagine, some of our youths have refused vaccinations. Some of them are now refusing barrier measures (against COVID-19). Some of them refuse even to go to the hospitals, (saying) that if you die, they can pray and you come back to life."

Even with the closure of the church, members have continued organizing their daily prayers and meetings in front of the sealed building.

The church says it also sends out fifteen groups of seven on a daily basis, to preach its erroneous message about COVID-19.

 

Credit: Voice of America Logo

Published in Economy

The Zimbabwean government recently signed an agreement to pay 4,500 white farmers US$3.5 billion for infrastructure improvements on the land expropriated by the government during the chaotic land reform programme of 1997/8.

The initiative shows commitment to constitutionalism and respect for property rights and restoring the rule of law. The agreement is also a noble attempt at bringing closure to a questionable episode of the country’s land history.

But the proposal to fund the exercise by issuing a sovereign bond is highly ambitious. With an ailing economy, the country simply doesn’t have the resources to meet its commitment to white farmers. In his letter dated 2 April 2020 to the heads of the International Monetary Fund (IMF), World Bank, African Development Bank (AfDB), Paris Club and European Investment Bank, Finance Minister Mthuli Ncube clearly outlined that the country does not have the medical and financial resources to fight the COVID-19 pandemic. Although the government cleared its US$107.9 million arrears with the IMF in 2016, it is still struggling to settle its US$2.2 billion debt to other international financial institutions, including the World Bank and African Development Bank.

The government has proposed issuing a long-term sovereign bond, a process where the government sells bonds to investors on either domestic or international financial markets to raise funds. This year, only Ghana, Gabon and Egypt have managed to do so.

It has also called on international donors to help it raise the needed funding. If these options do not raise sufficient funds, another proposal is to sell municipal land around the nation’s biggest cities.

In my view issuing a sovereign bond would be ill-advised. The main reasons for this are that the economic and political conditions are not conducive to an issuance of such a bond. For a country to successfully issue a sovereign bond, it needs some basics in place. It needs an international sovereign credit rating, stable domestic economic fundamentals and investor confidence. None of these are currently present in Zimbabwe.

Why it’s a bad idea

Most of the factors relate to internal political and economic fundamentals.

Firstly, Zimbabwe does not have a sovereign credit rating from the three international credit rating agencies – Fitch, Moody’s or Standard & Poor’s. Without a rating, it is impossible to successfully issue a sovereign bond on international markets because it’s a key input in determining yield and coupon payment on a bond. The government has not yet solicited a rating from the big three rating agencies. It is among the 23 African countries that are yet to request an international sovereign rating.

Secondly, the country has no domestic debt market. If it did, it could try to mobilise local investors who understand the associated risk exposures and could perform their own due diligence. Domestic institutional investors would have to subscribe for the government’s bond issuance to be successful.

Thirdly, the country has changed its currency more than 10 times since 2000. In 2019, the Central Bank banned the use of foreign currency for trading and reintroduced the Zimbabwe dollar quasi-currency that had been abandoned in 2009. The local currency depreciated by more than 320% in less than a year. This eroded savings and pensions, and saw a further loss of confidence in the entire financial system. Strength of a country’s currency determines the attractiveness of its bond issues. A weak currency compounds the risk of default and debt sustainability as repayments will still have to be made in foreign currency.

Fourthly, the increasing economic crisis in the country has eroded the goodwill that the current government accrued post-Mugabe era. President Emmerson Mnangagwa’s actions have failed to tally with his “open for business” mantra. His trips to Davos have failed to yield any significant foreign direct investment as investors question his credibility.

The government is also in bad favour with institutions such as the IMF and World Bank. It has defaulted on IMF loans and failed to implement reforms agreed with the organisations.

Fifth, the government has been hostile to the private sector. It ordered the closure of the stock exchange on 29 June 2020 and accused businesses of fuelling currency devaluation. State security agencies attempted to stop certain business operations of Econet and Old Mutual, the two largest companies listed on the stock exchange. They were accused of fuelling hostilities against the government. It is these companies and their multinational networks that would support the bond issuance by purchasing the government bonds.

Sixth, the government’s brand has been damaged by a number of government officials being targeted for sanctions. Some are calling for stronger sanctions for human rights abuses. Investors perceive a country that does not respect its rule of law as unlikely to respect its sovereign bond covenants nor honour its obligations on time.

In addition, the government’s commitment to transparency and integrity has been called into question on the back of accusations of mass corruption. Despite promises, there has been little to no action against government officials embroiled in corruption scandals.

Seventh, Zimbabwe’s economy has failed to pick up in the post-Mugabe era. Instead, it has become worse. Food production is at its all time low, the health sector has been paralysed by constant protests and inflation has been estimated at more than 800%.

The last internal factor to consider is that the country’s central bank can no longer perform its functions as the lender of last resort and facilitating cross-border transactions, because of the lack of foreign exchange reserves. Forex access has been restricted to government agencies, departments and selected individuals. Local banks technically have the liberty to make their own forex transaction arrangements with other international corresponding banks.

There are also some external factors that make raising capital this way a bad idea right now. The international debt market has been depressed as a result of COVID-19 and is likely to remain so for the next two years as investors wait to see how countries emerge from the crisis. And the cost of issuing a bond has doubled, which has priced most African countries out of the market. Zimbabwe is no exception.

All these factors are not favourable for Zimbabwe to issue a sovereign bond.

Solutions

Zimbabwe has many pressing issues. Given that the economy is at its lowest, compensating farmers is a luxury the country cannot afford. It will not yield the implied results of increasing foreign direct investment.

Instead, Zimbabwe should focus on demonstrating the political will to restore business confidence. Evidence of this will include the removal from public office and prosecution of people involved in corruption.

It should also acknowledge the challenges it faces and commit to genuine political dialogue. International partners and investors interpret the denial of the challenges faced by the country as being dishonest and untrustworthy.

Lastly, the government should implement the economic reforms previously agreed with multilateral lenders. Under the agreement, policies should focus on eliminating the government’s double-digit fiscal deficit and adopting reforms to allow market forces to drive the functioning of foreign exchange and other financial markets. These will help stabilise the currency and monetary policy. Without fully implementing these reforms agreed with multilateral agencies, mobilising foreign direct investment will remain a dream.The Conversation

 

Misheck Mutize, Post Doctoral Researcher, Graduate School of Business (GSB), University of Cape Town

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Economy
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