POWER OUTAGES COST SA’S ECONOMY US$71M A DAY
HARARE - Zimbabwe should negotiate better deals with foreign capital to curb illicit financial flows in the country, United Refineries Ltd chief executive Busisa Moyo has said.
“We have to be smart about how we structure foreign direct investment (FDI) in this country so that we don’t experience high levels of illicit flows, because that is where they start. There are some deals that are just not good for us in the long-term.
You can look at Malaysia back at 1965 and see that such investment has brought benefits.
We want those kinds of deals where partners come in with private equity fund, time horizons and decent rates,” said Mr Moyo.
He was speaking at the ongoing CEO Africa Roundtable 2019 in Victoria Falls yesterday.
“The challenge that we have got are these illicit deals that come at a cost, for instance, 36 percent in United States dollar terms, you know you are just signing your life away. And that is the real challenge in structuring these inward FDI.”
Moyo said Zimbabwe is prone to bad deals to the extent that the country is in urgent need of foreign currency and financing in general.
“The challenge is that we are welcoming strangers with lots of money, but the question is, what is it that the strangers want.”
Illicit financial flows have been on the increase in Zimbabwe over the past couple of decades.
It has been noted that illicit financial flows in Zimbabwe have been rampant in the mining, fisheries, timber and wildlife sectors.
According to a study in 2014, at least $2,85 billion may have been taken out of the country through illicit financial flows between 2009 to 2012.
The Zimbabwe Coalition for Debt and Development (ZiMCODD) is on record saying lost revenue through illicit financial flows has far reaching consequences on the fulfillment of social and economic development.
- THE HERALD
- At a "guesstimate", South Africa's gross domestic product has likely lost around R1bn (about US$71,061,000.00) per load shedding stage per day since last Sunday, according to analyst Peter Attard Montalto, head of capital markets research at Intellidex.
He told Fin24 that, although this was a rough approximation, it broadly made sense if one looked at the loss to GDP during previous periods of load shedding in the country.
Economist Mike Schüssler told Fin24 he estimated that Eskom earned about R4bn a week. Therefore, with at least 10% - and at one stage 15% - gone for much of the time, the loss to Eskom up to now is probably around
"That is more than the turnover of 95% of SA companies in a year and probably as much as 30% of the JSE-listed companies," commented Schüssler.
"The SA economy, however, would have lost about ten times that amount, so at least about R4bn. It will catch up some, but not all of what it lost, and again we will struggle to get investment as the world would have seen what happened with Eskom."
Momentum Investments economist Sanisha Packirisam referred to a graph compiled by Momentum Investments on what electricity cuts could mean for GDP, using estimates from various institutions.
She said the reason why the HSRC 2008 estimate was larger was that this time around, more businesses had invested in generators and the outages were scheduled.
The market is over-estimating the room for optimism about Tito Mboweni's upcoming National Budget, according to Montalto.
Apart from not expecting any major tax changes, he foresees the key to Budget 2019 will be the Eskom bailout.
In his view, having no policy white paper on Eskom laying out details of a turnaround strategy, makes for a huge credibility problem for National Treasury to deal with in Budget 2019.
Parliament's portfolio committee on public enterprises (DPE) heard earlier this week that Eskom is "technically insolvent", although the DPE later said they meant that it was facing "liquidity problems".
Eskom's R420bn debt burden represents 15% of the sovereign's debt.
If Eskom defaults on its debt, it will threaten the economy, the DPE highlighted in a submission to the committee.
- FIN24 CITY PRESS