A sister has inboxed ZBIN and she is selling the Famous Kilombero Rice (Malawi Rice) for the Festive Season. She has promised to share with us various Kilombero Rice Recipes on a weekly basis till Christmas Day
Contact Name: Melelyn
Contact Number :+263 739 888 270
MIKE TAYLOR
Have you ever stopped to wonder why you buy some products and leave others sitting on the shelf? How do we decide between all the options we have every single day, when the majority of the time we have little to no first-hand experience with the products we’re deciding between?
What makes you finally decide to try a new restaurant, use a new toothpaste or switch to a new piece of software? The answer lies largely in the types of words used to sell the product or service.
Maybe you’ve never realized it, but words play a huge role in helping our brains decide which products to buy. There are tons of variables, but one thing has been proven time and time again — certain words sell better. They just do.
So here you go, here are 10 words customers love to hear when making a decision:
1. Free.
If you think “free” is sleazy and overused, think again. People love free, plain and simple. You can give practically anything away for free, no matter how small, and you’ll grab people’s attention.
Gregory Ciotti of Help Scout points this out using a study where the researchers asked people to choose between a Lindt truffle for $0.15 — which is a heck of a deal — or a Hershey Kiss for $0.01. An amazing 73 percent chose the Lindt truffle.
Then they asked another group to choose between a Lindt truffle for $0.14 — again, a heck of a deal) — or a Hershey Kiss for free. This time, 69 percent wanted the Hershey Kiss. Why? Because everyone loves free stuff.
2. Exclusive.
Everyone want to be in the “in” crowd. When you make your product exclusive — only available to a select group — you make people want it even more. You can exchange the word exclusive with other words or phrases — members only, invitation only, first, insider — everyone will still want in.
3. Easy.
As sad as it is, Mayberry doesn’t exist anymore, at least in most parts of the world. Life is complicated, and we also might be just a smidgen on the lazy side. So anytime we hear that something is simple or easy to do, we’re drawn to it.
I’ve helped conduct surveys where customers were asked what their top purchase factors were in buying a piece of software, and “easy-to-use” was in the top three. When in doubt, don’t flex the complexity muscle. Features are good, but not when they sacrifice simplicity.
4. Limited.
Oh, how we hate missing out. It can be as simple as bobble heads at a local minor league baseball game, and if they say the first 100 people get one free, suddenly those bobble heads are more appealing. I mean, what are you even going to do with a bobble head? Who cares. It’s a great deal, and you have to make a decision now before it’s too late, so you’re in.
5. Get.
HubSpot cites a test conducted by Encyclopedia Brittanica where they replaced a headline that was a question with a headline that started with the word “get.” Conversions doubled.
I don’t have a research-backed explanation for this, but I would say it’s because get is an action word that psychologically puts the reader in charge and prepares them for action. Get is also typically followed by a benefit. Get a flat stomach in six weeks. Get better grades with less studying. Get the freshest, cleanest haircut in town. You get the picture.
You can also use other verbs like claim, start, try, grab or give.
6. Guaranteed.
With so much fraud in the world today, authenticity is a legitimate concern your customers have. Using the right words can give them the reassurance they need to pull the trigger.
You’ve likely seen this everywhere — because it works. The key, though, is to actually be able to back up your guarantee. If your product doesn’t have a guarantee, returns aren’t hassle-free, or your results aren’t proven, don’t say it. It may work in the short-term, but it’ll bite you down the road. That said, if you don’t offer a guarantee, maybe it’s time to do so.
Other words you can use to provide assurance are proven, results, no obligation, risk-free, hassle-free and secure.
7. You.
When you’re writing sales copy, or anything intended to persuade, use first-person language. It makes the reader’s, or listener’s, ears perk up a bit. And — on an unconscious level — it makes them feel special.
Using “you” makes your writing conversational, and it brings your voice down to a friendly level where you can actually make a connection.
8. Because.
This one’s interesting. Gregory Ciotti cites studies in the book Influence by Robert Cialdini by using interesting scenarios. One that sticks out is where different phrases were tested to see which one would make people most inclined to allow someone to break in line at the copy machine.
“Excuse me, I have 5 pages. May I use the Xerox machine?” — 60 percent allowed the person to cut in line.
“I have 5 pages. May I use the Xerox machine, because I am in a rush?” — 94 percent allowed the person to cut in line.
“Excuse me, I have 5 pages. May I use the Xerox machine because I have to make copies?” — 93 percent allowed the person to cut in line.
Notice that by simply hearing a “because,” followed by a reason, nearly everyone decided the person could get in front of them in line. The reasons given weren’t even legitimate reasons. Because I have to make copies? Everyone in line had to make copies — that’s why they were there.
The thing to remember is that human brains love explanations. We need to know why. Why do I need that feature? Because it will help me get ____.
Tie your product, features and the actions you want people to take in with a reason, and people will be more compelled to take action.
9. Best.
Which sounds better? “How to Change a Flat Tire” or “The Best Way the Change a Flat Tire.”
It’s a no-brainer, really. Think about how many times you’ve Googled something, only to get frustrated during the search, so you go back and add the word “best” in front of your search. Maybe it’s just me, but I have a feeling I’m not the only one.
It’s as if “best” is a sacred word that’s only awarded to the truly great, so you can count on anything labeled as the best. We all know that’s not true, but to call something the best implies that at some point there was a comparison, and this one came out on top.
But please, don’t be deceptive with this. If you’re not truly the best, or you can’t get people to call you the best without coercion, keep working to actually be the best at what you do. Don’t just slap that label on yourself without validation.
10. Compare.
With social media and as many review sites and blogs as there are today, practically everyone makes comparisons before making a decision.
Ford vs. Chevrolet
Pampers vs. Huggies
Charmin vs Cottonelle
Hubspot vs. Marketo
We want to know who the top players are, and then we want to see them side-by-side. Use that to your advantage by telling your readers to compare your quality, ease of use, price, etc., to your competitor’s. Even better, make it easy on them by doing the comparison yourself.
When you openly show them the difference between your product and your competitors, you take that work off of them, and they’ll be grateful for that.
Did u know that registering your business is one of the best things you can ever do as an Entrepreneur? Paying your taxes and all relevant rates is extremely important. There are a lot of advantages that come from registering your business and they include ability to access funding and access to big projects and tenders.
As ZBIN we are encouraging our members to formally register and this is good for you. On this post we discuss the process of company registration, the problems encountered by members and the proposed solutions.
Responses from ZBIN Members
Catherine Shava tru mdara kana.uine registered company mabasa hobho kunyanya.matender u bid with confidence kani
Moreblessing Tsungai at tyms we consider how small my business is the kuzoregister and taxes but it pains looking at tenders
Ad Mire Prime Makusha anyone who does company registration
Mlaleli Mcgreager Mhlanga in byo have a friend at Tradgold his terms are better
Hannah H. Tarindwa Can you register a cc in Zim?
Nyasha Nguwo so like here is my case I have an idea to start something but should I just register my company with what I want to do without having the things on the ground?
Mdala Wa Rue Anyone with figures? How much are companies charging to register?
Ishmael Sithole I would prefer registering a PBC but wont bid for public tenders
Ad Mire Prime Makusha i agree with you Ishmael a PBC is easier for the entreprenure
Mlaleli Mcgreager Mhlanga from $250 up
Brett Tamsanqa Dube whats a CC OR PBC
Ad Mire Prime Makusha Public Business Corperation
Hannah H. Tarindwa CC is Closed Corporate its very effective for starting a sme
Hannah H. Tarindwa Nyasha test run your biz before registering if possible. Some businesses that’s easy but some will need a registration esp if you are going to need clients of big companies
Praise Chabona Kungofunga registrar of companies chete unotonzwa kuneta. Wen u are still small one might think kuregister ega without using the so called consultants but ey marwadzo kwaregistar kwacho. So one will end up shelving it achiti ambotsvaga mari $350 yacho iyi
Hannah H. Tarindwa $350 yakawanda hama dzadiwa. Kuno its abour N $300 but for 6 months kana uchida 24hrs N $1000 which about Us$110
Tori Elles Mum Whatever business u want to do just register guys. The Memorandum and Articles of association covers I believe all kinds of businesses unless its a business that requires licencing like MCAZ for pharmaceutical supplies. I registered my company last year October at 250 but a shelf company is cheaper. I wouldn’t advise on a shelf company tho as I was enlightened to some aspects I overlooked in my previous company which was a shelf company. I thot having a CR 6 showing change of directors was good enough yet I didn’t know that when the company does well those former directors could come claim a certain percentage. There was need for another document which these consultants don’t mention that deals with that aspect. I’m being vague coz I can’t remember exactly wat I was told by this banker coz it didn’t affect me. My company was new.
Tori Elles Mum U can go wega kuregistrar of companies. It must be around 50bux if u are not in a hurry to have your certificate coz it takes forever.
Tori Elles Mum After registering then u go kuZimra get a bank tax clearance certificate that will help u open a company bank account then u can register for tax and get a tax clearance certificate.
Tori Elles Mum Whatever business u are into, please legitimize it. U never know wat happens tomorrow and Mdala gave a good example kuti a company registered 2013 has greater advantage over a company registered in 2015. Sedco was/is giving loans and unlike in the past where u could just go with your proposal now one of the requirements is that u have a registered company that’s also registered with ZIMRA.
Ishmael Sithole Personally I feel a lot of things in Zim are tilted in favour of urburnites especially Hararenites. Imagine a rural entrepreneur in rural Chipinge like myself having to travel multiple times to Harare to register a business entity that is yet to perform well. Since we are in the IT age I strongly feel company registration should be done at provincial or even district levels.
Rose Magorokosho Ndakambo vharwa mari yangu nevaiti vanogona kundi register. Ndikazoedza ndega zvikapedza makore zvinonetesa. Vakavimbika varipivanobatsira kuregister company
Mdala Wa Rue Register…Register n it’s for your own good..comply with all relevant laws of the country and it pays off in the long run..Wa Mdala will be registering his company for the first time and I will share my experience when done…Yeah. .registration inongonzwisa nungo..its a pity those who advertise on the forum about company registrations are not willing to share…anyway infor obtained by those who responded is still very important
Mdala Wa Rue Mukoma Ishmael..now this is inconvenient! So you cannot register your company in Chipinge?We are hoping that in future the registration will be decentralised or computerised
Tori Elles Mum Rose ini it was supposed to take 2 weeks but it took a month and one of the reasons for the delay was mazita andaiendesa for name search. The person I dealt with has a very good reputation but is not on fb. I paid 250 while others had charged me 300+. If u are interested and when u are ready let me know ndimubvunze if I can give u his number.
Ishmael Sithole @Hannah H Tarindwa, what I am saying is that we are aware of the vast benefits registering a business entity can usher one into, but the process of registering a business entity is Zimbabwe is not simple and fast. Its vailed in obscurity and unnecessarily too centralized. Since we now have computers why not decentralise it to privincial levels since we have government complexs in all provinces and some districts? That will make the process accessible to most intrested people and our government will benefit emensely from formaly operating entities through taxes and all. Personally I desire to register my business but the process is not as easy and simple as it OUGHT to be.
Judith Zimunya and the money like the one i and my frend wanted to register wanted $500 yet it might be small to some ,,bt to us haa it was a draw back
Kava Matemai Chikore It takes seven working days from name search to the final registration. Please inbox or whatsapp on 0772347279 and we will take it up from there
Kava Matemai Chikore Rodwell Maoneke first one has to come up with the main objectives of the company to be registered (meaning what the company will be doing when registered). Secondly one has to have at least six names from which the Register of Companies will approve one name for registration. After name search, at least two share holders and two directors will be required. In normal circumstances the two share holders automatical will be the directors. Then a document called memorandum and articles of association is prepared which is submitted again to the Register of Companies for final registration
Hannah H. Tarindwa Ishmael I was surprised that it’s still centralised… sorry shuwa!
Praise Chabona I read in the Sunday Mail that company registration can now be done online
Ishmael Sithole I am pleased to inform you all that I managed to register my business MacJohnson Apiaries. I registered it via the ministry of SMECD. The process took me 3 months ie August2015 to October 2015. The saame month we got incoperated ie October 2015, MacJohnson Apiaries scooped 5 awards at the Manicaland Agricultural Show and emerged as the best business in Apiculture/Beekeeping. We produce and retail the best honey, beeswax, hives, honey processing equipments etc in Manicaland(and some say the best honey in Zimbabwe comes from Manicaland). I overcame all excuses and so should you. Go ahead and register. We also offer beekeeping training and consulting services, swarm removal and relocation services. You may like our facebook MacJohnson Apiaries. We are also on linked in. We are working on our website and on how to penetrate the Harare market and supply the best honey out of Manicaland. If a rural 31 year old like myself can do it, so should you!
Tapiwa Mubonderi The PBC is the equivalent of the CC it has got the same rights as a private company and can do the same things. Its simpler to register as it has less documentation, costs less and doesn’t need annual returns. Its drawback is some bigger entities won’t want to deal with it as it seen as a one man band. Some bigger contracts or import or export trade would need a private company and its difficult to get loans. Our advice is to use for simple businesses especially trading. It can be converted to a private company, but a private company cannot be converted to a PBC.
Tapiwa Mubonderi If you are interested in business its advisable to register a company beforehand and keep it compliant in case you may wish to use.
Tapiwa Mubonderi The Company’s Office is a bit bureaucratic and delays do occur because they handle a huge volume of documents. It’s advisable to deal with a competent consultancy firm there are over 200 such firms in the market. The drafting of memos and articles are a challenge to a lot of untrained people , this may delay your registration.
Post initially appeared on the Zimbabwe Business Ideas and Network Facebook Page in May 2015. One of our main tasks in 2017 will be to encourage our members to register their businesses, our target is to help register 5,000 companies by end of 2018.
What you can learn from how Breva founder got her product on major retailers’ shelves
Beverage entrepreneur on building relationships, getting the right retailer product fit and the importance of mastering your systems and processes
By Lebohang Thulo
Breva founder, Gladys Mawoneke
When it was time to get Breva, a range of alcohol-free malt beverages, out to market in 2014, Gladys Mawoneke knew she would have to find a way to get her foot into the proverbial door.
Despite being a relative newcomer in the highly competitive drinks market she managed to do just that, and got Breva onto the shelves of some of the biggest retailers in the country.
Breva beverages can be found at Woolworths, Pick n Pay, Shoprite, and select Checkers Liquor and Spar Western Cape outlets. The brand has also made inroads in hotels. It is available in select Tsogo Sun four and five star hotels.
Before entering the drinks sector Mawoneke, a former lawyer, was in the produce sector and had prior experience supplying fruit and vegetables to some of the same major retailers.
Market and mission
Mawoneke founded Bumi Hills Group, the holding company in 2009. Breva was launched into retail three years later following years of research and development, she says.
The craft soft beverage is manufactured and bottled in the small town of Wellington, Cape Town and comes in a variety of flavours including passion fruit, apple, peach, and pineapple.
With their beverages Breva is targeting the country’s growing emerging middle class that does not drink alcohol.
“The high number of people who do not drink alcohol and yet are looking for a brand that speaks to their image,” says Mawoneke. This growing market presents growth opportunities both in South Africa and internationally, she adds.
“When systems and processes are in place an SME can enjoy the high volumes that come with selling to big retailers”
The process was not without its challenges and certainly was not overnight, says Mawoneke, but it is worth getting right, she insists.
Mawoneke shares the biggest lessons she has learnt from selling to big retailers and what other SMEs can learn about building relationships, getting the right retailer product fit and mastering their systems and processes
The Breva range of alcohol-free malt beverages.
Having a good product is non-negotiable and is very important for retailers
Retailers want a product that will sell. Equally important is the ability of the SME to support the sale of the product once it’s on the shelf. The retailers provide space and the SME must make sure that the product gets from shelf into the consumer’s basket. This is what can make or break a small business.
Breva is a great product. To get it off the shelf we conduct in-store demonstrations and tastings so that the customer interacts with the brand. We also give sample stock to our customers among others so that they can conduct promotions using the free stock.
There will be systems and processes you will have to follow
The big retailers require suppliers to follow specific systems and processes. By way of example, they prescribe the way the product must be delivered, merchandising needs, managing returns and so forth. While all these processes make the supply chain manageable, the processes come at a cost. It is therefore imperative for SMEs to fully comprehend the requirements of the big chains and be able to put in place systems and processes to support these requirements and to ensure that they have the requisite cash flow.
When these systems and processes are in place an SME can enjoy the high volumes that come with selling to big retailers.
“Rather than focusing on what the competitors are doing, we listen to consumers and we become innovative in response to their needs”
Don’t rush the process
The first client secured for Breva was Pick n Pay in 2013. The entire process from meeting with their small supplier development department to eventually signing a terms of agreement took nine months.
Similarly, although the listing at Woolworths took place in 2014, the conversations had started a year before.
Your product needs to fit into a retailer’s overall strategy
The buyers assessed the commercial viability of the brand against their strategy before listing us. They also assess the product against their beverage strategy to determine if it was a fit and assessed the quality of the product.
In all instances we had to negotiate and enter into trading agreements and receive account numbers to complete the listing process.
Getting on retail shelves is not everything
These four retailers (Woolworths, Spar, Pick n Pay, Shoprite/Checkers) do not represent all the shelf space in the country. We are not represented in hotels, restaurants and catering (HORECA) by a long shot.
We struggle to get the audience of several other retailer buyers because some of them are not familiar with the malt category and others because they prefer imported brands.
“High inflation and slow growth means that our sales are marginally suppressed so a combination of suppressed sales and low margins are real production challenges”
Focus more your consumer than your competition
Competition is good because it keeps you on your toes. While it is important for us to keep an eye on competition, it is more important to follow our consumer focused strategy and on achieving our results. Focusing too much on the competition can be distracting and paralysing.
Rather than focusing on what the competitors are doing, we listen to consumers and we become innovative in response to their needs. Our core business is coming up with innovative solutions for the non-alcoholic consumer and these solutions come from the consumer and not from the competitors.
You will have find balance
For a growing business the challenges we face relate to the delicate balance of growth and available resources. To grow our company faster we need scale, resources and efficiencies. However, our resources are often limited thus restraining our pace of growth.
You will still be vulnerable to market forces
The current weak exchange rate and slow growth make production difficult. We import some of the raw materials and the volatile exchange rate results in high production costs. Often we are not able to pass these costs to the consumers and so we absorb them and end up with low margins. High inflation and slow growth means that our sales are marginally suppressed so a combination of suppressed sales and low margins are real production challenges.
BY ANDREA WHITMER
Very important information: This is why you should have your own website.
Whether you’ve been blogging for five minutes or five years, monetizing is one of those topics that almost always comes up. Should I try to make money from blogging? Can people really make a living online? How should I try to make money from my blog?
Google AdSense is one of the most common ways to monetize, though I’ll warn you now: AdSense is NOT a get rick quick scheme. In fact, it can take a long time to make more than a few pennies. But it can also pay off big in the long run.
What is AdSense?
AdSense is a program that allows bloggers and website owners to make money by displaying Google ads. You’ve probably seen the ads all over the place, including in Google search results. Basically, Google gets the largest cut and you get a small percentage. There are two ways to make money from AdSense:
Impressions – this is based on the number of pageviews of pages or posts with ads
Clicks – this is based on how many people click on the ads (don’t EVER click your own – more on this later)
To make it as basic as possible, you sign up for an AdSense account and add the code to your blog or website. You can choose how your ads look, where they show up, and even what kind of ads you’ll accept. Once you get to a minimum threshold of $100, Google will either send you a paper check or make a direct deposit into your bank account.
Who’s Eligible?
If you use Blogger, you can use the Monetize tab to set up and manage an AdSense account.
If you use self-hosted WordPress, you can visit the AdSense website and apply for an account. You’ll receive a code that you can place wherever you’d like, or you can use a plugin to help with placement.
*If you use free WordPress, you cannot use AdSense, but you can use WordAds if you have your own custom domain. (Just another reason why self-hosted WordPress is better.)
How Much Can I Make?
As I told you before, you will not get rich quick using AdSense. It took me 9 months to make $2 (yes, two dollars) on my personal blog. However, I made $81 last month. That’s still pathetic compared to many blogs – some people can earn a full-time income from AdSense alone. But it takes a LONG time to get there, and you have to have a ton of traffic.
Some ads are worth more money per click than others. This is also affected by the amount of traffic you get, the keywords the person searched for, the percentage of visitors who click on a particular ad, etc. There are a LOT of factors that determine how much you’ll make, but a rule of thumb is that newer blogs simply won’t make as much money.
My personal blog is about 14 months old. Some days, I don’t get any ad clicks at all and I might still make 10 cents or so just from impressions. Sometimes every click is worth $2 or more. Yesterday the clicks were worth a whopping 26 cents each.
Many people get impatient when they’ve had the code up for a month or two and haven’t made more than a few pennies. If you’re looking for something that will pay TODAY, AdSense may not be for you. And to be honest, I don’t know of anything instant – if I did, you can bet I’d be using it!
How Can I Make More from AdSense?
Basically, your best bet for ad clicks is increasing your search traffic. When people are trying to solve a problem, they usually turn to search engines like Google or Bing. If you have a post that solves that problem, using SEO will help your post rank well in search results. SEO will also help AdSense serve up relevant ads, so when people click on your blog post, the ads may answer the exact question they’re asking. Result? Ad clicks!
Here’s an example. Let’s say I write a post about the health risks of liposuction. I use SEO techniques to help Google realize what my post is about, and my post is the third one when someone searches for “liposuction risks.” AdSense also knows what my post is about, so people reading my post will see an ad that might say something like, “Safe liposuction services in New Hampshire” (or wherever).
If the person is interested in finding the safest place for liposuction, s/he is likely to click that ad. As I said before, the rate per click depends on a lot of factors, but my concern is making sure that people read MY post and not others! If they go to another blog to read about liposuction risks, they’re possibly clicking that person’s ads instead of mine.
IMPORTANT!
There are a few things you need to know about AdSense before you ever put the code on your blog.
1. Never, ever click your own ads. In case you aren’t aware, Google pretty much knows everything. And they can tell if you’re clicking your own ads. It’s very tempting to click about 50 times and make some money, but all it will do is result in being banned.
2. Never, ever encourage friends or family to click your ads. Same as above. You can and will be banned from AdSense, and don’t ever think Google won’t figure it out. I don’t know how they do it, but I have seen it happen to people I know. JUST DON’T.
3. Pay attention to your ad clicks. If you average 2 clicks a month and you suddenly get 100 in a day, chances are that something is wrong. If you’ve pissed someone off and they decide to fight back by clicking all over the place, you can get banned even though you didn’t do anything.
4. Never rely on AdSense as your sole income source. Even if you get really good at SEO and you have 100 websites making thousands of dollars each month in AdSense, you never know when something could happen to trigger Google’s no-no sensors. You can make good money with AdSense, but you should also use other monetization strategies just in case.
5. Don’t use more than 3 ad blocks on a single page. Google allows up to 3 ad blocks on a page. So if you have one in your header, one in your sidebar, and one at the end of your post, that’s the limit for that page. Also, don’t plaster ads all over the place and annoy your regular readers! There are ways to implement the ads without making your site ugly.
What Questions Do You Have?
It’s impossible to cover a topic as broad as AdSense in a single post. This overview gives you an idea of what it’s for and how it works, but it still may not answer enough questions to make sense for you.
Let me know what would be most helpful. Do you want screenshots and step-by-step instructions on inserting the code? More tips on how to improve your earnings? A breakdown of all the acronyms you see in your AdSense account, like CPC, RPM, and CTR? Leave your questions in the comments and I’ll address them in future posts.
Good morning forum followers. So we have been researching about Bond Notes trying to find where this has been implemented before and found out an interesting case of Ecuador. Ecuador abandoned its currency under circumstances similar to Zimbabwe. Both countries adopted the US Dollar and interestingly both countries have introduced own currencies along the USD. In Ecuador they introduced an electronic currency whilst Zim has introduced a Bond Currency facility.
Read below an article on Dollarisation in Ecuador
Examining the Effects of Dollarization on Ecuador
By Sam Wang, Research Associate at the Council on Hemispheric Affairs
Every day since 2015, thousands of Ecuadorians have crossed the bridge from Tulcán, Ecuador to the border town of Ipiales, Colombia to go shopping. Goods they purchase in Colombia include food, cars, television, and even bulldogs. On a holiday weekend between May 27 and 29, more than 50,000 Ecuadorians crossed the border to Ipiales.[1] Some shoppers come from as far as Quito, a five-hour drive south of the border. Ecuadorians purchase goods in Colombia en masse due to a simple fact: prices in Colombia have become significantly cheaper. For example, a 50-inch TV costs $1,300 USD in Ecuador, but less than $800 USD in Colombia.[2] The situation has become of such concern to the Ecuadorian government that last year, President Rafael Correa issued a “call of conscience” to Ecuadorians, asking his compatriots to “offer support to the national production” by buying Ecuadorian products.[3]
In addition to Panama and El Salvador, Ecuador is one of the Latin American countries that uses the U.S. dollar as the only official currency. Ecuador does not print its own bank notes. In recent years, the U.S. dollar has continuously appreciated against other currencies in Latin America, making the price of goods in Ecuador higher than that in neighboring Colombia and Peru. Ecuador abandoned its old currency, the sucre, during a severe economic crisis in 2000 and has been using U.S. dollars ever since. With the appreciation of the U.S. dollar, doubts have emerged regarding the fate of dollarization. A recent Wall Street Journal article stated that Ecuador “has the misfortune to be an oil producer with a ‘dollarized’ economy that uses the U.S. currency as legal tender.”[4] The appreciation of the U.S. dollar against other currencies has decreased the net exports of non-oil commodities from Ecuador, which, coupled with the fall in oil prices, has constrained the country’s potential for economic growth.
The government of Ecuador has also cast doubt on the success of dollarization; as early as 2014, Correa said that “dollarization was a bad idea.”[5] In the same year, he established a parallel electronic currency for domestic use, which some believe is the first step of de-dollarizing the economy. However, proponents of dollarization believe that it has generated considerable macroeconomic benefits to Ecuador in the past 16 years. Through an examination of the impacts of dollarization in the 21st century and the economic principles behind it, this article argues that both the positive and negative impacts of dollarization are perhaps being overstated, and that a de-dollarization process would provide more negative effects than positive outcomes for Ecuador.
Why Dollarize?
Before delving into a discussion of the pros and cons of using dollars, one should first examine the history of dollarization in Ecuador. In the late 1990s, Ecuador experienced a severe economic crisis due to a combination of low oil prices, the low tax base of the non-oil sector, and big public sector wage increases.[6] The value of the sucre fell drastically, and the inflation rate galloped to 96.1 percent in 2000.[7] Ecuadorians first started adopting dollars informally in an effort to avoid losing their purchasing power, and massive capital flowed out of the country due to the exchange rate crisis.[8] In the same year, in order to halt capital outflow and hyperinflation, Ecuador decided to substitute its currency with the U.S. dollar. [9] The decision to dollarize the economy slowed hyperinflation, stopped the free fall of sucre, and stabilized the financial market, all of which significantly helped resolve the economic crisis. Although the exact impact of dollarization on Ecuador’s economic growth is beyond the scope of this study, after dollarization, Ecuador has enjoyed an average annual economic growth of 4.4 percent, higher than many Latin American countries.[10]
Benefits of Dollarization
There are several benefits of dollarization that should be noted. Most evidently, it decreases transaction costs in international trade, which normally occur whenever people exchange one currency for another. Dollarization eliminates this cost in the trade with the United States, Ecuador’s largest trading partner, since businesses do not need to change from one currency to another. It also promotes long-term investment and trade since businesses tend to be reassured by the stability of the exchange rate.[11] In fact, Ecuador’s export to the United States has increased since dollarization, while the exports of neighboring Colombia and Peru, whose economies are both larger than Ecuador’s, have stagnated, although dollarization may not be the only factor of such an increase.
Source: Author’s elaboration with data from UN Comtrade
The second benefit of dollarization is a lower risk of inflation.[12] By using a foreign currency, an officially dollarized country assures itself of a rate of inflation close to that of the issuing country because confidence exists that inflation in the dollar will continue to be low.[13] However, it should be noted that the adjustment to lower rates took several years after the abandonment of the sucre. The inflation rate stayed at double digits in 2001 and 2002, and did not go below five percent until 2004.[14] Some economists predicted that inflation rates in Ecuador in the medium- and long-term would be relatively consistent with U.S. inflation rates, but in 2011 and 2012, it climbed up again to around five percent.[15] In comparison, the U.S. inflation rate since 2000 has never exceeded four percent.[16] Dollarization is not enough for a country to have a stable inflation rate. In the case of Ecuador, a developing country, the associated risk premium is still higher than that of the United States, a developed country with relatively high economic stability.
Proponents of dollarization also refer to another advantage: currency substitution prevents the Central Bank from having its own monetary policy. This seems very counterintuitive, since monetary policy is one of the two instruments that a government can use to influence a state’s economy. Proponents of dollarization argue that the elimination of a national currency means that government deficits must be financed through fiscal policies, which include the fairly transparent methods of raising taxes or accumulating debt, rather than through printing money.[17] Unlike the U.S. Federal Reserve, but similar to many central banks in Latin America, the Central Bank of Ecuador is not an independent institution but an agency of the executive branch. This is explicitly stated in Article 303 of the Constitution of Ecuador.[18] In the United States, the independent Fed is able to institute sound monetary policies that are not subject to the political whims of the administration, but when a central bank is in complete control of the executive branch, there is a possibility that the government would implement expansionary monetary policies intended to provide an economic stimulus before elections or finance a growing government budget deficit. In both situations, an overly aggressive expansionary monetary policy would lead to a rising inflation rate and a falling exchange rate, which would contribute to destabilizing the economy. Such cases have occurred in the past in Argentina and Venezuela.[19] Proponents of dollarization argue that it gets rid of the moral hazard, by which politicians can infinitely finance public spending by increasing the money supply, and instead leads to budgetary discipline and more responsible government spending.
Putting aside the questions regarding whether Latin American governments are capable of developing sensible monetary policies and whether an independent central bank is preferable, dollarization does not fully address its proponents’ concern of growing public spending, since it does not curb expansionary fiscal policies. The government expenditure of Ecuador has increased from 20 percent of the GDP in 2000 to a high 44 percent in 2014.[20] In comparison, the government expenditure of Colombia, Peru, and Mexico has never exceeded 30 percent of their respective GDPs since 2000.[21] Consequently, since the Ecuadorian government cannot print money, it financed spending through debt. In the past decade, the debt-to-GDP ratio has also increased from a low of 16.4 percent to 33.1 percent in 2015.[22] The increasing government debt has not reached an alarming level, but the considerable increase in government spending necessitates caution. The government of Ecuador has taken steps to address the issue; in April, President Correa announced a two percentage point increase in sales tax, a new wealth tax for millionaires, and the possible sale of government assets.[23] These measures will help finance an increasing budget and maintain fiscal sustainability. Nevertheless, dollarization does not impact fiscal policies, and has virtually no effect on the rising budget.
Disadvantages of Dollarization
The biggest advantage of dollarization in the eyes of its supporters is precisely the reason why others are critical of it—the central bank is unable to have its own monetary policy. The use of the U.S. dollar as legal tender means that one of the two instruments for influencing the economy is unavailable to the government. The absence of monetary policy, besides making it harder for the government to intervene during times of recession, has an adverse effect on exports. A weak domestic currency stimulates exports, and a strong domestic currency makes the country’s exports less competitive in the international market compared to goods from other countries.[24] In the past two years, the U.S. dollar has appreciated considerably; the dollar index, which measures the relative value of the U.S. dollar against a basket of foreign currencies, has risen about 25 percent since 2014.[25] This makes Ecuador’s exports less competitive in the international market. In fact, in 2015, Ecuador’s non-oil export value dropped by 5.9 percent from the previous year.[26] In comparison, products from countries such as Colombia and Peru, both of which saw their currency depreciate against the dollar, became relatively cheaper and more competitive.
Even during times when the dollar is not rising, the instrument of monetary policy would give Ecuador an option to stimulate the economy through “competitive devaluation,” which refers to the strategic and large-scale depreciation of a domestic currency to boost export volumes.[27] For example, starting in 2013, the Japanese government deliberately depreciated its currency in order to make Japanese exports more competitive.[28] Without the option of implementing such policy, Ecuador’s exporters are dependent on the fluctuations of the market. Especially in times of economic crisis, countries without monetary policy have to go through internal devaluation, which restores competitiveness by reducing labor costs. and is often a much longer and more painful process.
Despite the benefits of having control on monetary policy, a de-dollarization in Ecuador would not do much to help its export sector, given that the underlying problem is that Ecuador’s economy is dependent on oil. The dependence has been a structural problem ever since Ecuador discovered its oil resources. In 2014, 52 percent of Ecuador’s export value came from petroleum.[29] Since then, oil prices have fallen significantly; the Brent Crude decreased from $100 USD per barrel to less than $50 USD today, which dealt a heavy blow to the economy of Ecuador.[30] The dominance of the oil sector makes it extremely hard to rely upon monetary policies to boost export for two reasons. First, a currency depreciation does not help oil export because oil is priced and traded in a world price denominated in U.S. dollars. A country’s capacity to produce oil is also limited; Ecuador cannot immediately increase oil production even if there is a sudden increase in demand. Second, the revenue brought in by oil exports is in U.S. dollars. If Ecuador de-dollarizes, a large and constant inflow of U.S. dollars would lead the national currency to appreciate because there will be a constant demand for changing the petrodollars to the national currency, whereas export sectors, such as manufacturing gain an advantage when the national currency depreciates. This means that the positive, effect of a currency depreciation on exports would be largely offset by the effect of petrodollars. In order to overcome the petrodollar effect, oil-producing countries have to depreciate their currencies much more than non-oil-producing countries to increase export value. However, a country cannot permanently conduct expansionary monetary policies, since doing so would both lead to a high inflation rate and encourage irresponsible government spending.
Moreover, placing the responsibility of boosting exports solely on currency depreciation would potentially neglect other ways to promote exports. In 2011, Colombia and Peru, Ecuador’s only neighbors, joined the Pacific Alliance with Mexico and Chile. The regional trade block has eliminated tariffs on over 92 percent of goods, eased intra-Alliance visa restrictions, and integrated stock markets of their members.[31] The elimination of tariffs makes goods from those four countries more competitive in other countries of the Alliance. Especially relevant is the advantage afforded to Colombia, whose banana and flower industries are as significant and competitive as Ecuador’s. Ecuadorian exporters will face increasing competition with their Colombian counterparts when they sell goods to Mexico, Peru, and Chile. Instead of fixating on the issue of dollarization, the government of Ecuador and international economists should be more inclined to promote regional economic integration and abolish tariffs between Ecuador and other Latin American countries.
Concluding Remarks
Both supporters and opponents of dollarization have overstated the policy’s effects on the Ecuadorian economy. Dollarization is not a sole remedy for all economic problems, but neither is having a national currency. De-dollarizing the economy today would trigger market uncertainty and lead to economic instability, which would inevitably hurt Ecuador. Furthermore, the fact that Ecuador’s economy is heavily dependent on oil is a sad but unavoidable truth that cannot be changed in the short term. This is not to say that the government should significantly shrink the oil sector—oil revenue is a crucial source of funding for social projects that benefit the lower class. Nevertheless, to offset the negative effects of using U.S. dollars, Ecuador should enact policies that maintain macroeconomic stability, such as setting up a rainy day fund for economic downturns, and promote regional trade and integration to boost its exports within the region.
By Sam Wang, Research Associate at the Council on Hemispheric Affairs
Original Research on Latin America by COHA. Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution. Exclusive rights can be negotiated. For additional news and analysis on Latin America, please go to: LatinNews.com and Rights Action.
So the Bond Note has come? How has it fared during the first day? We hope to track the performance of the new currency, the challenges and the areas that need improvement. For now lets look at the current list of countries that have dollarized and use the United States Dollar as its official currency.
1.Ecuador*
2.East Timor
3.El Salvador
4.Marshall Islands
5.Micronesia
6.Palau
7.Turks and Caicos,
8.British Virgin Islands and
9.Zimbabwe
*Ecuador is an interesting case study which we hope to cover in the coming weeks
Good Morning Investors so the question this morning is ‘Do online opportunities exist for us in Africa?’ Ok to try and answer this question, lets look at a few examples. We hope to make follow ups and stablish whether anyone benefited at all.
Tutors are in high demand whether it’s online or offline. Therefore, if you’ve got a brain and like helping others use theirs, become an e-teacher to earn an extra income in your spare time. The only thing you require is to be proficient in your area of expertise and be willing to give up a few hours each week to help someone else. Sites like Tutor.com and TutorVista are places you can sign up with and build a good reputation over time as a coach. If you’re really good, you can conduct lectures, seminars, or webinars that are transmitted online. University and college students are always willing to pay money to gain access into highly-respected online webinars ( This actually work, did pay last year mock exam fees to a Srilankan Institute giving student support for a UK based exam institute)
Online Affiliate
One of the easiest ways to make a few bucks online is to become an affiliate. An affiliate is essentially someone who receives a commission for selling products for other companies, whether it’s on their own site or through another channel like eBay. The best part is that you don’t have to develop any products yourself, just sell other people’s products.
For example, Amazon affiliates can potentially rake in obscene amounts of commission dollars if they work at it. Simply sign up as an affiliate to sell a company’s products using your special referral link, and you can get a commission for each product sold without lifting a finger.
Also, affiliate networks like Shareasale or Click Bank offer a vast array of products to promote as well. Some of the highly contested niches such as health and gambling can make people millionaires. Being an online affiliate can be a great way to create a passive income for you and your family. (This option is still new to most people, untested territory)
Sell Your Own Brand
If you have a knack for creating unique images, there’s no need to fuss over your own inventory. If your creations can be easily printed onto a product, then you can make money. Upload your designs on a variety of websites like CafePress. If someone likes them, the company prints them up and ships the product. You could create unique designs for calendars, books, T-shirts, bags, hats, greeting cards, or posters and get a commission for each one sold. Some of these sites include Zazzle, Teespring and Lulu. (Have you seen ‘Iam Zimbo T-shirts?)
Build Apps
Because smartphones are everywhere, the demand for new and creative apps is increasing in popularity more than ever before. Between Google’s Android and Apple’s iPhone market, people are using countless apps everyday. And, most of them are selling right and left. Taking the time to develop and sell a smartphone app may be worth your while since it’s a very lucrative way to earn money online. The apps cost almost nothing to actually develop and don’t involve any shipping or storage costs, which works to expand your overall profit margin. Well performing apps can make thousands in ad revenue each month for their creators, making them another great passive income strategy. (Did you know that to build Apps does not require complex knowledge of IT?)
Buying and Selling Domains
Many people buy and sell domains to earn money online since it takes very little time or investment. You can purchase a domain at its registration price or even much cheaper and then resell it for a profit. But, it always pays to do your homework first on websites like Afternic.com, Sedo.co.uk, or other domain auction websites in order to get a good idea of what’s popular in terms of domain names. An ideal way to find really good names is to check out terminated lists that offer many expired names and have made their way back into the pool for people to buy. (Do follow our article on creating websites
Article to be continued….
We have covered many issues this week from the newsletter test run, members meeting in Harare, numerous posts on investment advice and the promotion of Poultry Farmers.
We have realised that everyone can do farming, practically everyone-the only challenge comes when its time for marketing one’s produce. Marketing is the biggest hurdle when it comes to farming, new schools of thoughts have brought the concept of market linkages where farmers are linked with markets first before they even undertake any agricultural activity.
You identify the market first, you sign provisional Memorandum of Understanding before you prepare the land for any agricultural activity. So as ZBIN we have realised this hurdle and in a small way we hope to assist. We are hoping to create one national register of Poultry Farmers whereby farmers can register for free their products. This register will become accessible to potential marketers and buyers. We are starting slowly with just 250 or so farmers from the ZBIN stable and assessing how it goes. If this becomes a success then we will share the stories for replication by anyone who follows ZBIN.
We are also slowly using the same concept in the Holidays Vehicles for Hire program where we are inviting ZBIN members with cars available for hire to register and earn extra income during the Holidays. The idea is that anyone coming to Zimbabwe has few options when it comes to vehicle hiring, ZBIN is therefore creating more options for you by creating a large pool of vehicles for hire. This program is targeted at tourists and returning Diasporans. The uptake has been extremely poor and perhaps this is due to the fact that this is a new initiative and members are still to grasp what this is all about. Just like when we first brought the concept of Online Forex Trading-it looks like we have to do more to highlight the risks and benefits of this scheme. So expect us to cover this several times before it becomes a success.
Resources permitting we would have loved to be trendy and develop Apps for our several forum initiatives. We are therefore inviting members out there to get in touch and help the forum in developing various Business Apps which solve some of the problems that our members encounter.
Our long term vision
Our long term vision is to help improve the income levels of our members! Members should benefit by having free business and investment advice on their fingure tips-no need to pay or say thank you to anyone. You get free business advice and you become empowered to do better decision making, you invest wisely. So we will continue to share free business advice with the ony challenge being that its general business advice. We are hoping to provide you with detailed, statistical based information but our only challenge being that of lack of time on our part. All of the management team of ZBIN is composed of professionals who are busy elsewhere. We only come here on a part time basis.
We hope to continue with more initiatives that promote products and services from members for free. We only have time to help members on Sunday afternoons, so get in touch if you would like to be featured on your website or Facebook Page. Get in touch if you have any business problem or challenge, we promise to do our best when it comes to information.
Bulawayo Meeting
After the Harare meetings-the next focus is on Bulawayo where our Deputy CEO, Mr Polite Ndlovu will be leading the resuscitation of the group in Bulawayo. He will -be ably assisted by Catherine Shava and Theresa Sithole. We are not looking for a meeting with a huge number-just 8-15 should be enough. This group will look at how members can benefit from working together in various ways such as marketing, sharing of ideas and formal registration of their business ventures. In attendance will be members from various ZBIN groups such as Poultry, Transport, Baking, Poultry, Online Forex Trading, Agriculture and Mining. The Poultry group should provide the bulk of the members to attend this event.
Webinars Use
We like to include everyone in our meetings irrespective of location. We do not have facilities to carry out webinars so that our members especially those in the diaspora can participate in our business meetings. This may happen in the next 6 months if all goes well. In the meantime we are ensuring that we keep this key community informed, we also share photos and videos.
Upcoming Posts
Do look forward to an interview with a sister based in Canada whom we will interview so that she can provide members with information in relation to immigration, living in Canada, Education in Canada and other general information about beautiful Canada. Time permitting, we may also cover our Forum Founder based in Tete, Mr Kiva Chiputu. More general posts to come including my pleasant experience at the Passport Office. We will also be actively promoting forum registers especially the Investors, Poultry and Vehicle for hire registers. So register if you would like to be promoted for free.
Wishing you a blessed and productive week
Munemo
Thank you for massive responses, more than 4,000 participants. So which country came tops?
Individual Winners, Fastest Answer to the Quiz : Sec Ezra Chiphiko Chiwala from Malawi
So thank you for the support, you guys are awesome! We will continue with Regional Quiz next Friday.