👨🏿‍🚀TechCabal Daily – Zimbabwe backs its currency with $190 million

In Zero to One, Peter Thiel argues that founders should test their hypotheses in the real world. 

Mira, a Nigerian fintech which launched in 2024, aims to change how restaurants handle food orders. With Mira, users would scan a QR code, check out a list of meals, and pay through any medium of choice. Restaurants can also receive these orders on any device. 

When the product went out into the world, Mira learned that restaurants wanted a familiar system. This informed the launch of Mira Register, an all-in-one device that allows restaurants to track customer orders and manage other internal business processes.

Mira claims its unique approach to building products sets it apart from competitors. 

The startup uses a hybrid approach that allows restaurants to operate the product with minimal internet connection. The startup is benefiting from founder Ted Oladele’s experience building great startups at Flutterwave.

As founder, Ted Oladele sees Mira Register as the startup’s opportunity to enter the hospitality industry. The CEO is also optimistic about capturing a 10% market share in Nigeria’s saturated POS sector using Mira Register. Already, it has processed over $500,000 in transactions since launch and serves several well-known SMEs like Asheluxe, Grey Matter, and The Vault.

Read all about Mira’s pivot here.

Like most African countries struggling with rising import costs, declining export prices, and high inflation, Zimbabwe has taken steps to shore up foreign currency to help increase demand for its domestic currency, the ZiG. So far, the country has spent $190 million doing this. 

The Reserve Bank of Zimbabwe said it was using 50% of the foreign exchange proceeds which it collects from exporters to back its new gold-backed currency. In July, Zimbabwe pumped $50 million into the market to support the ZiG. 

“If we have forex demand that can’t be met by voluntary liquidations, the central bank must step in. It has the reserves,” Persistence Gwanyanya, a member of the Reserve Bank’s monetary policy committee said in an interview.

In July, Bloomberg reported that Zimbabwe has about $370 million in reserves. The apex bank has said interventions in the interbank market will be “a permanent feature”.

Zimbabwe is not the only African country that is aggressively buying foreign currency to support its domestic currencies. South Sudan, Mauritius, Nigeria and Zambia have together spent at least $1 billion since July to defend their currencies. Rising import costs, declining export prices, and high inflation have triggered this more-than-usual intervention by these central banks.

The Nigerian Communications Commission (NCC), the country’s telecoms watchdog has made it compulsory for telcos to pay a default fine of ₦5 million ($3,100) if they fail to meet the benchmarked Quality of Service (QoS) scores. An additional ₦500,000 ($315) will also be charged for periods of continuous downtime.

To calculate QoS, telcos are judged on three metrics. The first two are closely related: they need to ensure that at least 98% of all calls connect successfully, which means keeping failed connections to under 2%. 

The third metric focuses on their ability to handle customer needs, requiring telcos to meet both voice and data demands by customers.

However, this default fine is coming when telcos are having a hard time in Nigeria. Telcos are having to deal with high operating costs due to the ailing naira, high price of diesel, government-imposed taxes, and vandalised infrastructure which cost them ₦14.6 billion ($9.2 million) to fix in 2023. Coincidentally, these vandalisms are the major causes of the downtimes telcos face. 

These new fines may seem like even more trouble for telcos but there’s good news on the horizon. The Nigerian government is planning to issue a 10-year jail term for vandals who are nabbed in fibre optic vandalism cases.

During the Indonesia-Africa Forum currently taking place in Bali, senior diplomats from the Asian country proposed that Indonesia seek a $3.5 billion trade agreement with African countries.

Indonesia is a well-known nickel exporter. With at least 50% of its nickel being exported, it is one of the world’s largest nickel exporters. However, that also constitutes a pain it has been trying to deal with.

Nickel is key for making batteries for electric vehicles (EVs). And Indonesia, knowing fully well that it cannot make EVs itself, opted to build hubs to make car batteries using its nickel. 

Then the big EV companies came circling to invest in its smelting facilities. As at 2023, Indonesia had built 54 nickel smelting facilities, with 16 more under construction. Indonesia has since aggressively pursued its battery production goal.

This is why trade with Africa is important; it will collaborate with resource-rich African countries to import finishing minerals like lithium that, when used with nickel, can produce batteries that power EVs and other electronic devices.

Yet, there may be another reason. Most African countries are net importers of palm oil, one of Indonesia’s top exports. Due to the seasonal fluctuations, limited arable land resources, and farmers choosing to practice subsistence farming, the production of palm oil in Africa has been insufficient in the past. In 2020, African nations imported nearly 8 million tonnes of palm oil.

Prior to this agreement proposal, Indonesia did little business with Africa. However, with this development, Indonesia can export more of its top products to Africa, and import mineral resources to fuel its battery production drive. Then, it can export these finished goods back to Africa. The trade agreement in place will also secure better import duty rates for the Global South. It is yet to be seen if Indonesia has any production nous to pull this off.

Read the guide on how to build a fintech in Africa

To build a fintech in Africa, you must navigate complicated regulatory regimes, incorporate in each market, get the right licences, and use the right technology stack. Kora and Norebase put everything you need to build in this guide. Check it out.

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Source:

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* Data as of 06:30 AM WAT, September 3, 2024.