Mamvura’s Market Minute
Unceremoniously and with no notice, Standard Chartered stopped foreign payments on its cards last week. As far as Mamvura is able to ascertain, Stanchart was the last bank providing its clients with card and offshore payment facilities. No doubt as the other banks cut off their clients, Stanchart saw its payments start to rise as people took advantage of the last bank standing. It has been apparent for the better part of the past two years this “privilege” could not last.
While the forex premium and Old Mutual Implied Rate has been relatively steady at between 1,4-1,6 since Christmas, the payment situation does not seem to have got any better.
This is despite nearly $1 billion having been thrown at the problem. At least $450 million has been drawn down from the Afrexim facility while the indications are that the externalisers have returned another $400 millioon or so.
This time next week we should know the names of the “looters”. Or will we?
The question is, just how big is the payment problem? It is certainly more than the couple of hundred million in dividend payments and foreign sellers exiting the market.
Fuel companies owe their parent companies hundreds of millions too. We had five years of our external position being balanced, but the wheels came off in 2015, oddly when Mauritius became our largest “trading partner”.
Now we can host all kinds of lovely conferences and declarations about how Zimbabwe is open for business and the rest of it, but no serious investor is going to come into this market if they have to pay a minimum 40 percent premium on assets to do so, but most importantly, can’t remit technical fees, royalties, profits, dividends, etc.
You sometimes wonder what kind of conversations are going on. One of the few commodities that does not reflect the 40 percent premium, is the fuel price, which was absurdly reduced in the week, providing a nice subsidy to any regional trucking company.