Old Mutual could become a casualty of the Zimbabwe financial crisis, with the ruling Zanu-PF announcing that it supports a decision to “eject” the South African multinational. Analysts are not clear on whether the plan is to delist Old Mutual from the Zimbabwe Stock Exchange or excise the company altogether from the financial services system. Zimbabwean Twitter is abuzz with talk about what this might mean for pensions, banks and the financial crisis. Old Mutual has been accused of playing a central role in “economic sabotage”. President Emmerson Mnangagwa and his team have failed to reverse Zimbabwe’s downward economic trajectory since they unseated Robert Mugabe in late 2017. The country’s hyperinflation is believed to have entered four-digit territory, with entry level civil servants on salaries with a purchasing power that equates to less than one US dollar a day. – Editor
Zimbabweâs ruling party appears to back expulsion of Old Mutual
By Ray Ndlovu
Zimbabweâs ruling party said it will expel Old Mutual Ltd. from its financial system, sowing confusion over the status of the insurance giant in the country and what will happen next in the governmentâs battle to fix its chaotic currency system.
The highest decision-making body of the Zimbabwe African National Union-Patriotic Front on Friday said it endorsed a decision to âeject Old Mutual from the financial systemâ and to shut down the countryâs biggest mobile-money platform, Ecocash. The institutions have caused ârunaway inflation through illegal parallel exchange-market rates,â the partyâs acting spokesman, Patrick Chinamasa, said after the meeting in Harare.
ZANUPF blamed Old Mutual for the economic mess at it politburo today.
It said Zimbabwe has the right economic fundamentals.
It also blamed foreign diplomats for its failure to fix the economy.
It blamed the opposition for Governmentâs failure to get international credit lines pic.twitter.com/RmCVXPjjGB
â Hopewell Chinâono (@daddyhope) July 10, 2020
The government wants to stop companies from using differences in the 175-year-old insurerâs share prices in London, Johannesburg and Harare to determine a potential forward rate for the currency.
Measures that were being considered included suspending Old Mutualâs shares from the local bourse, having the securities traded in dollars, or moving it to a planned foreign-exchange based market, people familiar with the matter said earlier this month.
âWhen they say it is ejected, Iâm not sure what he means,â said Lloyd Mlotshwa, the head of equities at Harare-based IH Securities.
âIâm not sure itâs a delisting yet, at this point itâs a confusing statement.â
Chinamasa didnât give further details or respond to calls and text messages from Bloomberg seeking comment.
The local stock exchange has been shut for two weeks after security forces forced the government to cease trading and halt most mobile-money transactions, people familiar with the matter said last month.
“Zimbabwe is open for business”- President Emmerson Mnangagwa, November 2017 until today.Old Mutual Zimbabwe de-listed from ZSE, ejected from financial system https://t.co/mg0XDAw06fâ Siphosami Malunga (@SiphoMalunga) July 11, 2020
Clive Mphambela, a Treasury spokesman, declined to comment. A spokesperson for Old Mutual in Johannesburg didnât respond to calls and a text message seeking comment. Nick Mangwana, a government spokesman, didnât immediately reply to a text message.
A perennial shortage of cash means anyone who has banknotes is able to negotiate exchange rates with brokers who pay the funds onto mobile-money platforms. The brokers can then sell the hard cash at an even higher rate. The Old Mutual Implied Rate values the Zimbabwean dollar at 122 against the greenback, compared with a black-market rate of about 100, and Fridayâs closing price of 65.8765. The government in June abandoned a peg of 25:1 that was put in place in March.
Old Mutual share inspections
Justin Bgoni, the chief executive officer of the stock exchange, said he is aware of the comments from the ruling party, but wasnât sure what it implied and would rather wait for official communication from authorities before commenting. Sean Gammon, managing director of Harare-based Imara Edwards Securities Pvt Ltd. said the comments by Zanu-PF were probably directed at delisting Old Mutual rather than its removal from the entire financial services sector. Old Mutual spans banking, property and insurance in the country.
The last communication received from authorities was that inspections would be conducted into stockbroker trades in the coming days, he said. Once concluded, trading should resume.
Old Mutual delisted from Zimbabwe Stock Exchange.
So whatâs going to happen to CABS? Is a bank run possible, or is it of much effect, where people donât keep their money in banks anyway? And if they do, it was going to lose its value in a few days anyway.
â Cathy (@KatharinaWacho) July 12, 2020
