Zimbabwe has abandoned its "worthless" currency in favor of other currencies such as the US dollar.
After years of trying to defend its near-worthless currency, the Zimbabwean government has abandoned foreign exchange and price controls. Zimbabweans will now be allowed to do business in other currencies. Business owners had already begun using hard currencies as the value of the Zimbabwean dollar plunged and inflation soared to 231,000,000% last year. Though the local currency will continue to be printed, prices will be posted in US dollars. The country’s $1.98 billion budget for 2009 was set in three currencies—Zimbabwean dollars, US dollars and South African rand—for the first time.
Botswana’s finance minister Baledzi Gaolathe says waning diamond prices will unleash an economic slowdown this year in the world’s largest diamond producer. The US recession is expected to prompt a 50% drop in 2009 diamond production. Diamond sales fell 17% last year, to 28.9 million carats. The government will implement deficit spending to spark growth, though capping the budget gap at 10% for the 2009-2010 and 2010-2011 fiscal years. The gap will be financed through some $9 billion in reserves.
Zambia, Africa’s largest copper producer, will nix a windfall tax on mining companies starting April 1. The government will maintain its variable-rate profit tax in order to still benefit from future windfall profits. The two taxes, introduced in 2008, had boosted the effective tax rate for mining companies from 31% to 47%. Copper accounts for 70% of export income. Zambian GDP will grow by an estimated 5% this year, down from near 6% in 2008.
South Africa’s Johannesburg Stock Exchange (JSE) has launched the Africa Board, a new trading facility that allows companies traded on other African bourses to list on the JSE. The move will help smaller exchanges tackle the problem of low liquidity. The JSE automated system is also linked to the London Stock Exchange.