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Zimbabwe Signs Currency Swap Deal With China

Zimbabwe President Emmerson Mnangagwa (R) and Chinese Foreign Affairs Minister Wang Yi (L) pose during their meeting at State House in Harare on January 13, 2020 as part of Wang Yi's visit to the country. (Photo by Jekesai NJIKIZANA / AFP)

Zimbabwe has joined Japan, South Africa and Nigeria in signing a currency swap deal with China, which it hopes will improve trade between the two countries.

Zimbabwe Finance Minister Professor Mthuli Ncube confirmed the deal in an interview with the state media on the sidelines of a meeting between Zimbabwean President Emmerson Mnangagwa and Chinese Foreign minister, Wang Yi at the State House in Harare.

The top Chinese official is on a five African nation diplomatic offensive taking him to Egypt, Djibouti, Eritrea, Burundi and Zimbabwe. Beijing says the visit marks its two decades of the Forum on China-Africa Cooperation.

Said Ncube, “We have entered into a currency swap arrangement, what this means is that there are those who would be investing in Zimbabwe from China and those who require their proceeds to be remitted back to China which is normal.”

He added, “So, the idea is those individuals will then swap (currency) so that those who are investing in Zimbabwe are able to give them a domestic currency and they use the foreign currency which they are bringing in for investment to pay those who are exiting.”

Harare, under targeted sanctions by Washington and the European Union, has increasingly turned to China for assistance. Some economists have warned that Beijing is creating debt traps for desperate African nations like Zimbabwe.

University of Zimbabwe economics Professor, Tony Hawkins, tells VOA Zimbabwe Service that the deal shows desperation on the part of Zimbabwe to revive its struggling economy.

“It’s a sign of desperation of the times really … You know the real issue for the economy is getting some kind of international agreement and all these policies that they're chasing after at the moment are all efforts to minimize the impact of not having access to IMF money, World Bank money Africa Development Bank money and so on.”

Hawkins says Harare must address its economic crisis and stop “fiddling around the edges of the problem rather than tackling the problem.”

The chief executive officer of the Zimbabwe National Chamber of Commerce, Chris Mugaga, concurs. “Knowing fully well that Zimbabwe is in a quagmire where the currency conundrum, is hitting not only business, but even the ordinary household, so, given that background, I think this current swap is an attempt to find solutions, especially to the current account deficit where China is the biggest beneficiary. As you know we continue importing more from China than what we are selling to Beijing.”

Economist Dr. Godfrey Kanyenze of the Labor and Economic Development Research Institute of Zimbabwe says the Gresham law, an economic term for filtering bad vs. good currency, will be in full swing as the strong Chinese currency is set to chase away the weak Zimbabwe currency, known as bonds.

“The problem is that the one (Chinese investor) who is coming here to Zimbabwe may have misgivings because of the context of chronic high inflation.” He adds, “The context of volatility and uncertainty, which therefore implies that they may not really want to change their money in large amounts.”

However, investment banker Gilbert Muponda says the deal is likely to benefit Harare, which has been isolated by the West.

“I think it’s a welcome development because Zimbabwe has been experiencing an acute shortage of foreign currency and this arrangement is going to reduce the demand of the US dollar, because what it entirely means is that those people who are comfortable with receiving Chinese Yuan, can match their requirements with those who have the Yuan as well.”

He continued, “the net effect is that you are going to avoid using the US dollar, which is in short supply and selling at a premium, so this is a good move by the two authorities. As you know, Zimbabwe previously used to get a lot of money in terms of balance of payment in terms of payment support, and grants and things like that and access to the IMF, which supported the currency.

“Now the lack of that support now is bringing extra pressure on the Zimbabwe dollar. Therefore, if you remove some of the people who are demanding the US dollar and they start using the Chinese Yuan, it makes a lot of sense.”

Zimbabwe is facing its worst economic crisis in decades characterized by hyperinflation, currency and fuel shortages and power outages that can go for 18 hours.

Nearly eight million people, roughly half the population, are food insecure, according to the World Food Program.

FILE: In this photo taken on Sunday, Oct. 27, 2019, a man stands on a sun baked pool that used to be a perennial water supply in Mana Pools National Park, Zimbabwe. An estimated 45 million people are threatened with hunger due to a severe drought.

Busani Bafana

BULAWAYO, Zimbabwe (Thomson Reuters Foundation) - As a child, Kenyan meteorologist Saumu Shaka helped out on her parents’ small farm growing maize and pigeon pea - and learned how the weather can hold food producers hostage.

“Looking back, the yield has declined over the years,” said Shaka, 28, who works with the Kenya Meteorological Department.

A decade ago, her parents would get 25 sacks of maize from their six hectares in Taita Taveta County, southeast of Nairobi.

Today that has dwindled to five bags at most, because of erratic rainfall that can also spur crop-destroying pests.

As climate change fuels extreme weather and threatens harvests, Africa needs more scientific expertise to help small-scale farmers adapt, especially women who tend to be hit worst, said Wanjiru Kamau-Rutenberg, director of Nairobi-based group African Women in Agricultural Research and Development (AWARD).

According to the United Nations’ Food and Agriculture Organization (FAO), women represent nearly half of farmers in Africa and produce up to 80% of basic food crops.

They are also largely responsible for preparing, storing and processing food.

But in many cases, the FAO says, they have limited rights, mobility and access to resources, information and decision-making power, making them more vulnerable and less able to adapt to climate change impacts than men.

“This means women’s continued underrepresentation in climate change research is no longer acceptable,” said Kamau-Rutenberg, noting that few have opportunities in science education.

AWARD is leading the One Planet Fellowship, a new initiative that will train 630 African and European scientists to use a gender lens to help African smallholders adapt to climate shifts, unusually offering Africans the opportunity to serve as mentors.

Under-investment in African scientific research capacity means “we still don’t even know the specific ways climate change will manifest ... in Africa,” said Kamau-Rutenberg.

In September, the three-year career development programme welcomed its first cohort of 45 fellows from Kenya, Tanzania, Nigeria, Zambia, Malawi, Benin, Ivory Coast, Senegal, Togo, Mali, Ethiopia and Burkina Faso - over half of them female.

The aim is to “set an example and dispel the myth that there are no African women scientists ready to step into leadership”, Kamau-Rutenberg added.

AWARD collaborates on the initiative, worth nearly $20 million, with the Bill & Melinda Gates Foundation, France’s BNP Paribas Foundation and Agropolis Fondation, the European Union and Canada’s International Development Research Centre.

‘FIRSTHAND EXPERIENCE’

As one of the inaugural fellows, Shaka is seeking home-grown solutions to the challenges faced by farmers like her parents, who are battling to grow enough food on a warming planet.

Her research focuses on cost-effective “climate-smart” agribusiness techniques to help young people boost jobs and food security, which she will promote on social media platforms.

African scientists “have firsthand experience and solutions that are practical and applicable to their societal set-ups within their individual countries,” she said.

Women scientists, moreover, are better able to understand the specific challenges in designing community-tailored solutions to help fellow women, said the senior meteorologist.

Droughts and floods, for example, impose a health burden on women, who have to walk long distances in search of water and stay alert to the risk of waterborne diseases, she noted.

Pamela Afokpe, 27, an AWARD fellow from Benin, said “in-continent” experts could relate to the needs of African farmers more easily.

Afokpe, a vegetable breeder with East-West Seed International, is working to get more farmers growing indigenous leafy vegetables in West and Central Africa by helping them access high-yielding varieties resistant to pests and diseases.

Up to now, a limited number of African experts have contributed to the landmark scientific assessments published by the Intergovernmental Panel on Climate Change (IPCC), which synthesises research and guides policymakers.

Out of 91 lead authors of the 2018 IPCC special report on limiting global warming to 1.5 degrees Celsius, only eight were from Africa, as were just a tenth of the 783 contributing authors.

South Africa’s Debra Roberts, co-chair of a working group for the IPCC ongoing sixth scientific assessment report and the first female co-chair from Africa, said the panel’s work showed tackling climate change required all of society to respond.

“Women have different lived experiences and views on the problems and solutions,” she said.

“We need to hear those voices if we are to be able to identify context-relevant solutions from the scientific literature. There is no one-size-fits-all,” she added.

Over the IPCC’s three decades of operation, there have only been three female co-chairs, two of them on the current report, she noted. “We have a long way to go still,” Roberts told the Thomson Reuters Foundation in a telephone interview.

ENERGY PRIORITIES

Women also need to be involved in the practical design of climate solutions, such as expanding off-grid solar power and clean cooking, which can reduce drudgery and minimise health issues linked pollution, said agricultural experts.

As forest loss and climate change make resources scarcer, women have to go longer distances to gather fuel-wood, which puts additional pressure on their time, health and personal security, said Katrin Glatzel, a research fellow at the International Food Policy Research Institute in Dakar, Senegal.

In Mali, a public-private partnership has provided 1.6 million people with more efficient stoves, reducing pollution by half compared to a traditional three-stone fire, she noted.

Glatzel said it was important to include and empower female scientists and farmers in the switch to cleaner, modern energy, so that their concerns could be addressed.

A 2019 survey by charity Practical Action in rural Togo found women prioritised energy for pumping drinking water and processing crops, while men favoured mobile-phone charging and heating water for washing, she noted.

In northern Benin, meanwhile, a solar-powered drip irrigation system means a cooperative of 45 women now fetches water one or twice a week rather than daily, she added.

Bringing women on board with technological innovation for rural energy services is key “to ensure that end products meet their needs and those of their families”, she said. (Reporting by Busani Bafana; editing by Megan Rowling and Laurie Goering)

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