Southern Africa
Zimbabwe to introduce local‘ bond’ currency
Zimbabwe will introduce bond notes, a token currency which will circulate within a basket of multiple currencies despite strong objection from the business community and the public.
Announcement of the plans to introduce the notes— described by President Robert Mugabe as a surrogate currency— were met with stiff resistance, sparking demonstrations and panic withdrawals.
Former Vice-President Joice Mujuru has even taken the government to court, arguing that it“ cannot introduce a bond note and cause it to masquerade as a form of currency. The law has only two options; either the Zimbabwean dollar or foreign currencies.” Reserve Bank of Zimbabwe governor John Mangudya insisted that the move was necessary to deal with a shortage of bank notes blamed on a widening trade gap and the smuggling out of physical US dollars, Zimbabwe’ s adopted currency since it dumped its inflation-ravaged currency in 2009.“ You do not stop a good policy because a group of people does not like them,” he said.
Mangudya said the bond notes will only be issued as an incentive to exporters. Between May and September, exporters have earned $ 56 million in incentives, which will be paid out in the form of the token currency, central bank data shows.
But analysts point out the denominations being dolled out-- $ 2 and $ 5 bond notes – means that they are meant for public use, and that for all intents and purposes, Zimbabwe has just reintroduced a much hated local currency under disguise.
Fastjet drops Airbus jets for Embraer
Africa-focused discount airline Fastjet will switch to a fleet of Embraer SA regional jets from larger Airbus Group SE planes as new Chief Executive Officer Nico Bezuidenhout seeks to stem losses by better matching capacity to demand.
The fledgling carrier also plans to move its headquarters to Johannesburg from London to pare expenses and bring the company closer to its key markets, Bezuidenhout, who took over as CEO last month, said in an interview in the South African city, the base of his former employer South African Airways.
Fastjet will have returned three leased 145-seat Airbus A319 jets by the end of September and plans to sublease two, with a sixth, which it owns, up for sale. The carrier has agreed short-term leases on three Embraer E190s with 108 seats apiece, the first of which is due in Tanzania within two weeks. Bezuidenhout took over after predecessor Ed Winter quit following clashes with investor Stelios Haji-Ioannou, the EasyJet Plc founder, who had demanded cost cuts. The move to Johannesburg will be made in stages following consultation with the workforce, starting with the commercial department by the end of 2016. It should reduce head-office expenses by as much as 35 percent.
“ Right now it’ s about stabilisation,’’ Bezuidenhout said.“ The right steps are being taken and it’ s going in the right direction.”
Based on current projections Fastjet should break even in terms of its cash flow from the fourth quarter of next year, he said. The company, which is yet to report an annual profit and lost 16.9 million pounds($ 22 million) in 2015, said in June it remained cash flow negative. It raised 15.2 million pounds in a share sale last month to cover working capital. The shares have dropped 64 percent this year in London.
The initial batch of Embraer planes will be taken on so-called wet-lease terms, including pilots, cabin crew and maintenance staff, so that they can start flying immediately. Bezuidenhout said he plans to replace them, probably with aircraft of the same type, on standard leases and manned by Fastjet employees by April.
2016 Business Times Africa 11