Author: Laurence Sithole

I am a financial services professional with a strong background in diverse areas of banking. My skill set includes among others International Banking, Trade Finance, Commercial Lending, Customer Service, Finance, Banking, Corporate Finance, and Investment Banking. Africa is my home and I am passionate about its development,

Tesla's gift to short sellers

Shares of Tesla the pioneer of electric vehicles fell spectacularly in 2022. This trend was the same for auto shares which list substantial amounts of value during the year. Tesla despite its anemic showing in terms of share price performance managed to deliver a record number of EVs. The EV company increased production of its products by as much as 40%. This impressive development by Tesla failed to excite the market which hammered the share price resulting in the EV company shedding 64% of its value in 2022. Notwithstanding the skepticism from the market Tesla has been making positive strides…

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The continent as always, has great promise. This was the unanimous conclusion from the just-ended World Economic Forum, which is traditionally held at the Swiss resort town of Davos every year. However, significant obstacles stand in the way of the continent reclaiming its mantle of economic growth. The World Economic Forum held in Davos every has just ended. This year’s conference ran under the theme of Collaboration in a fragmented world. Africa was on the agenda of the World Economic Forum as is frequently the case. Discussions on Africa at the conference mainly centred on how the continent can regain…

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Elon Musk, Tesla, and SpaceX command a cult following from legions of fans worldwide. Musk’s fortune tumbled by a staggering 60% in 2022 according to reports by Forbes and Guinness. Forbes magazine broke the news that Musk, the Tesla boss was no long the wealthiest person on the planet. He lost this position to Bernard Arnault of LVHM. The billionaire’s interest in electric car maker lost more than half of its value in 2022 as shares in Tesla lost over 60% according to a report by Forbes which was quickly adopted by Guinness. Amazingly, despite the substantial loss of value…

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Edwin Moyo, Zimbabwe’s horticulture industry magnate flies under the radar. He is unlike your typical successful Harare businessman. He is not bashful about his wealth or his influence and yet he is very influential. The entrepreneur made his mark in a number of ventures most notably horticulture. His success culminated in his operations at a farm in Zimbabwe’s eastern highlands called Kondozi. At its peak, Edwin Moyo’s Kondozi horticulture venture employed as many as 15,000 people and supported the local economy of Mutare. Kondozi exported fresh produce as far as Europe and Edwin Moyo managed to secure long term supply…

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Africa is host to some world class companies that investors should consider adding to their portfolio in 2023. However, the investment climate has been choppy at best and investors need to be shrewd when it comes to their portfolio investment decisions especially in 2023. The investment climate was at the beginning of the year quite optimistic with the world finally putting COVID and its pandemic behind it. Investing in African companies would have been in a no-brainer given the circumstances around the world at this time. Things started to go side ways when Russia invaded the Ukraine and set in…

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In terms of the fiscus, South Africa expects to run a deficit of -4.1 per cent in 2023, however, the deficit is expected to narrow for the next 3 years closing 2026 at -3.6 per cent. This demonstrates significant fiscal consolidation.

Over the next 3 years the South African government expects to consolidate its public finances and reduce its deficit by inter alia increasing revenues and or managing or containing costs. According to Investec, “The current fiscal year (2022/23) has seen a substantial boost to nominal (actual) GDP due to high inflation, which has eased both the fiscal debt and deficit projections as a per cent of GDP, although does not boost real GDP, which is the measure of the country’s growth and has the distorting effect of inflation removed.”

Among countries in Africa, South Africa is getting its public financial act together. The country is paying down its debts, inflation has been showing a strong downward trajectory. What remains to be seen is whether this decreasing inflation rate will continue.

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African countries looking to anchor their currencies on either gold, or a combination of gold, precious metals, and other minerals would need to start with legislation which would make it legal for the governments of those countries to redeem paper currency with either those minerals or a derivative of those minerals.

Zimbabwe in late August began an initiative where it sold actual gold coins to its citizens which had been minted by that country’s central bank. This move was initiated to halt the slide of the currency on the parallel and official markets. This county’s policy so far has been successful in slowing down the trend of inflation which had begun to run amok.

It would be remiss to attribute the slowdown inflation to the gold coins. The country dramatically tightened its monetary policy by increasing interest rates to over 200 per cent in May 2022 and temporarily banned commercial bank lending. One of the disadvantages of the gold standard is that governments struggled for decades to make the system work globally. The gold standard reached its watershed when Richard Nixon in 1971 took the United States dollar off the gold standard.

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Eritrea’s debt stands at 175 per cent of its GDP. This is very high for the agriculture-based economy. Eritrea is an outlier on the African continent. Unfortunately for the Horn of Africa country, it is not for good reasons. The nation has held on to a counterproductive form of government which has retrogressed the country economically and kept its people in poverty. The country maintains a political system which is largely autocratic in nature and is not a democracy by any stretch of the imagination. The country was at war with Ethiopia and only recently managed to broker a peace…

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Riozim Limited the Zimbabwe based, and Zimbabwe Stock Exchange-listed diversified miner, has more going wrong for it than right. For a mining company looking at news reports around it, analyst coverage and its financial reports one cannot help but wonder if all is well at one of the oldest ZSE-listed mining companies. The company has been in the news for poor labour relations with its workers and for poor operational and financial performance and it looks like there is no end in sight for the troubled miner. Investors on the ZSE and in the diversified miner got some reprieve when…

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Why is agriculture so important? The World Bank estimates that “Healthy, sustainable, and inclusive food systems are critical to achieving the world’s development goals. Agricultural development is one of the most powerful tools to end extreme poverty, boost shared prosperity, and feed a projected 9.7 billion people by 2050.

Growth in the agriculture sector is two to four times more effective in raising incomes among the poorest compared to other sectors. Agriculture is also crucial to economic growth: it accounts for 4% of global gross domestic product (GDP) and in some developing countries, it can account for more than 25% of GDP.”

Agriculture not only eliminates hunger, but its support and success will lead to the attainment of the world’s development goals, end poverty, and boost shared prosperity. CGAP, which published an article about “The Role of Financial Services in Reducing Hunger”, states that for the majority of the 1.4 billion of the world’s poor living on less than US$1.25 a day, agriculture is the main source of income and employment.

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