Yelesani PLC is a clothing retailer, with stores selling mid$-$price clothes and clothing accessories throughout Zambia. It sells its own$-$brand items, which are produced by small manufacturers located in East Africa, who work solely to satisfy Yelesani PLC demand. Zambia has been experiencing a sovereign debt crisis for some time now. Consequently, Yelesani PLC has found trading conditions to be extremely difficult, putting pressure on profits and sales revenue.

The sovereign debt crisis has made it increasingly difficult and expensive for Zambia to issue government bonds to raise funds. Last week Zambia went to the polls and elected a new Government. The President Elect, during his acceptance speech made the assertion that the debt crisis currently being faced in Zambia is due to $""$excessive borrowing of funds, to finance an expansionary fiscal policy as well as the decision by the previous regime to allocate significant sums of money to support Zambian banks".

In order to prevent the country from defaulting on its debt obligations and being downgraded by credit rating agencies, the "new deal" Government, as the new Government is being referred to$,$ have approached the International Monetary Fund $($IMF$)$ with a view of obtaining financial support therefrom.

The IMF has since approved a financial support program for Zambia which has come with strict economic conditions known as austerity measures. These austerity measures, according to Zambia's new Finance Minister "have to be implemented in exchange for receiving financial support". The austerity measures have affected Yelesani PLC negatively.

Required:

$($a$)$ Explain the role and aims of the International Monetary Fund $($IMF$)$ and discuss possible reasons why the austerity measures imposed on Zambia might have affected Yelesani PLC negatively. $(10$ marks$)$

$($b$)$ With the aid ofa diagram show the effect this agreement between the IMF and the Zambia

Government might have on the exchange rate in Zambia.

$8$

$(5$ marks$)$

$($c$)$ The President elect of Zambia made the assertion that the debt crisis has had "a detrimental" effect on the exchange rate in Zambia. With the aid of a diagram, explain the effect of contracting external debt on the exchange rate in Zambia. $(5$ marks$)$

$($d$)$ Discuss the competitive advantages that a global multinational clothing retailer would have over a clothing retailer based in Zambia