Africa Economy May Soon Collapse

Zimbabweans may soon be able to shop in yuan, after their government
reiterated that the country will adopt the Chinese currency, following
the cancellation of about $40 million in debt.
Since 2009, Zimbabwe has used the dollar and the rand in lieu of its
own currency, which it abandoned after hyperinflation of more than
5,000% made it essentially worthless.
This year, several key African currencies have taken a significant
hit, as economic growth slows, and falling prices for major export
commodities reduce the flow of dollars into the continent.
In Nigeria, the continent's largest economy, the Central Bank has
restricted access to dollars, in an attempt to slow the flight of hard
currency out of the country, and to prop up the local currency, the
naira.
Importing challenges
For countries like Nigeria, which import a lot of their food and
refined fuel, this has created serious challenges, as importers buy in
dollars and sell in naira, meaning they get less for their money -- or
they have to charge consumers more. The restrictions on dollars placed
on banks and traders mean that some have been unable to pay their
suppliers, leading to shipments being held up or diverted.
"I think if you ask people in trading cities like Lagos or Kano right
now, they're not happy. It's going to be a tough Christmas," Amy
Jadesimi, managing director of the LADOL industrial park in Lagos,
says.
The central bank is only "staving off devaluation" of the naira,
Jadesimi says, echoing the views of analysts and bankers. "Everybody
can see, it's standing on the edge of a cliff, we can see it's going
to fall."
Other oil exporters are struggling as well. In Angola, where oil makes
up more than 95% of foreign currency earnings, a shortage of dollars
has seriously limited the ability of traders to bring in food,
manufactured goods and construction materials.
"The market is depressed," one international trader, based in Luanda
says. "It's a bad time because we don't have access to the
currencies."
Plunging kwacha
The worst performing currency of the year worldwide, according to
Bloomberg data, has been the Zambian kwacha, which lost around 40% of
its value against the dollar as the country's exports plunged. Zambia
is heavily dependent on sales of copper, the price of which has
slumped by a quarter over the past 12 months.
Ghana's cedi lost nearly 20% over the year, while in Mozambique, the
metical has lost 36%. In the former, a combination of factors,
including falling prices for gold and oil, as well as what many see as
poor economic management, has led investors to pull out. In the
latter, the commodity rout has undermined takings from coal and iron.
Mozambique, like Nigeria, has imposed foreign exchange controls,
having already spent around $1 billion to defend the currency,
according to some analyst estimates.