Browsing: Southern Africa

The shrinking economy and resulting unemployment have given birth to an informal economy that has spiralled out of control. Treasury and monetary authorities have been at pains to find ways they can tax the informal sector. The informal economy is difficult, if not impossible, to absorb into the formal economy or to include in the tax pool from which the government can draw revenue.

As the formal economy shrinks, so has Zimbabwe’s effective tax revenue stream, and this problem can only be arrested and mitigated by a growing economy.

An economy characterized by slow or negative growth makes it more difficult for the government to repair its finances. This is because there is a positive relationship between a country’s tax pool and the growth of the economy. A shrinking economy brings with it the added cost of having to provide social safety nets for the vulnerable members of its society.

If the government does not cater to these members of society during times when the economy shrinks, it will invariably experience heightened levels of poverty.

Africa’s fast population growth exacerbates the issue. According to most estimates, Africa’s population will double by 2050 and then double again by 2100, finally reaching over 4 billion by the end of the century. Feeding Africa’s rising population will need considerable breakthroughs in the continent’s food systems.

However, agricultural progress may be difficult if African farmers are subjected to more severe climatic effects. To prepare for these future difficulties, one must understand how climate change will materialize in Africa and its impact on the continent’s agricultural systems.

In 2020, total transaction values climbed by 22% to hit US$767 billion. or the first time, and in a pandemic, the industry is processing more over US$2 billion per day which has more than doubled since 2017. 
The GSMA predicts that by the end of 2022, this value will be in excess of US$3 billion every single day. Some of the innovations that will help propel this growth include APIs and regulation initiatives like tightening transaction and balance limitations which could bolster the industry’s transaction values growth.
Transaction costs remain a big concern for many with users calling for a review of this in countries like Kenya. When the pandemic was announced in Africa, Kenya and Ghana- which also happen to be the continent’s two biggest mobile money markets– were swift to scrap fees on small person-to-person transactions.

The company, given the first resources boom and the second one currently being enjoyed, should be awash with cash. Instead, the company is heavily indebted to the tune of between US$70 million and US$160 million which it attempted to expunge unsuccessfully through a rights issue in 2015.

The company has been limping along financially for years. In 2019 it was reported that its liabilities exceeded assets by US$19 million. This development made it doubtful that the company could carry on as a going concern after having been placed under judicial management.

The recent interim financial results presented by the company offer some consolation to investors who have been suffering for long.

Since then the company has pursued a highly aggressive growth strategy constituting of both organic and acquisitive growth. Sibanye in a very short space of time acquired the Cooke operations from Gold One International in 2013 and the Burnstone project from Wits Gold the following year. The aim of this aggressive growth strategy was to produce more sustainable gold operations. 

The story of growth did not stop there. 

Soon the company set its sights on the platinum sector and began to snap up various interests and operations in that space. In 2016 Sibanye acquired the Aquarius Platinum’s Rustenburg operations namely Kroondal mine as well as the Platinum Mile treatment facility in South Africa and in Zimbabwe it took over the Mimosa joint venture with Impala Platinum. Later that year the company also bought the Rustenburg operations of Anglo Platinum.