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Daily Mirror, Zimbabwe

Crippling street petrol prices

Farirai Machivenyika
issue date :2005-May-19

BLACK market petrol prices have skyrocketed to a whooping $40 000 a litre at
some spots in Harare in the past few days as unscrupulous fuel dealers make
a killing from the acute shortage of the vital commodity.
A visit to one such spot - a taxi rank near the National Oil Company of
Zimbabwe (Noczim) headquarters in Harare - The Daily Mirror last night
witnessed black market fuel traders selling five litres at
$200 000.
The official pump price of petrol is $3 600 a litre.
Last month, the price of petrol on the black market shot up to $18 000 per
litre in Harare and Bulawayo when the shortage of the precious liquid took
root.
When The Daily Mirror visited a spot along Leopold Takawira Street, outlawed
emergency taxi operators plying the City-Avondale route had abandoned
ferrying commuters and were draining petrol to resell on the lucrative
parallel market.
When this reporter posed as a prospective buyer, a tout said he was willing
to budge and sell a litre of petrol to him for $17 000 only if a he bought
in "bulk," but insisted that the going price was $40 000.
"Ndokupayi five litres ne $200 000 here blaz? (Do you want five litres for
$200 000, my brother?)," he asked.
He added that they were mostly
dealing in petrol since it sold faster than diesel.
Other touts stationed about 100 metres away from the scene of the black
market could be seen making gestures to motorists in a bid to lure them.
The fuel shortages have persisted despite assurances by central bank boss
Gideon Gono early this month that they would end
"soon."
The governor attributed the shortages to lack of resources which, he said,
he had been "overstretched" during the March 31 general elections.
Meanwhile, commuters were stranded last night as the transport blues
intensified in the city due to fuel shortages.
Some operators capitalised on the situation by hiking charges well above the
gazetted fares.
Commuters travelling from Harare to Norton are being forced to pay $10 000 -
up from $6 000 - while those going to Warren Park were paying $3 000 - up from $2 000.
Glen View commuters now pay $3 000, while the Tafara route costs $7 000 -
up from $2 000.
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Daily Mirror, Zimbabwe

Armed police descend on flea markets

The Daily Mirror Reporter
issue date :2005-May-19

ARMED police yesterday swooped on flea markets around Harare's Central
Business District, confiscating goods running into millions of dollars and
assaulted people in the process.
When The Daily Mirror news crew visited a flea market at the corner of Angwa
Street and Speke Avenue, police could be seen arbitrarily beating market
operators and
passers-by.
Trunks and boxes containing an assortment of goods, among them pairs of
shoes and clothes, were loaded into police trucks and taken to Harare
Central Police Station.
Some of the flea market operators say they lost money in the process.
From a distance, some affected traders watched haplessly as their goods were
being taken away.
Flea market operators expressed fear that they would not get back their
goods, saying it would be difficult to identify given that they were mixed
during the raids.
The police would at intervals charge at the operators, forcing them to flee
in different directions, with the unlucky ones being assaulted.
In separate interviews with this newspaper, operators said the police
advanced no reason for the swoop.
When contacted for comment, police spokesperson Whisper Bondayi said: "Why
don't you contact (Oliver) Mandipaka? He is the one who can comment on that
issue, but it has to do with cleaning up of the city."
Efforts to get a comment from Mandipaka were in vain last night.
One trader, a retrenchee, said police pounced on the market at around 4 pm
and ordered everyone to carry his or her goods to a waiting truck.
The trader, who refused to be named for fear of retribution, said: "The move
by the police to raid flea markets without warning was very bad and uncalled
for, to say the least.
"I am a retrenchee and some of those affected are widows and single mothers
trying to earn an honesty living in these harsh economic times. Do the
police want us to be thieves or murderers? Do they want widows to turn to
prostitution?" he questioned.
He said he had invested his entire retrenchment package into the
business and wondered how he would pick up the pieces.
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Daily Mirror, Zimbabwe

Fuel stations accused of hoarding

Givemore Nyanhi
issue date :2005-May-19

FEARS mounted yesterday that the chronic fuel shortages that Zimbabwe has
succumbed to in the past few days could be a result of service stations
unilaterally withholding their fuel stocks until the presentation of the
anxiously awaited post election monetary policy statement by the central
bank this afternoon.
The chronic shortages that are affecting mostly urban areas nation-wide,
have been particularly felt in Harare, where the majority of fuel stations
have been dry for days now.
Well-positioned sources in business yesterday revealed that like in the
past, when significant changes expected in the direction of the economy were
about to be announced, the fuel companies predictably hoarded their fuel
stocks.
"Some service stations that have not been selling fuel have the commodity
but they are not selling because they are waiting for the post election
update from the central bank today," the sources said.
"Any major changes on the exchange rate and interest rates will definitely
have an impact on their operations so for them it is better if they hold on
to their stock until the central bank articulates the direction of the
economy," the sources added.
Any devaluation on the exchange rate, even when thinly disguised under any
other name, will make the cost of importing fuel much more than it is now, a
development that would result firstly in fuel price increases, and secondly
in a discretionary increase in the rate of inflation.
The post election update, coming six weeks after the March polls, is
anxiously awaited by industry and commerce.
The general population at large is also keenly interested in knowing whether
the central bank will come up with a new bag of tricks to deal with an
economy that is showing signs that it is not responding to the turnaround
prescription so far.
The implications of the fuel shortages have been widespread while some of
them are still filtering through.
The shortages have seen urban commuter omnibus operators that ply intra-city
routes yesterday hiking their fares in earnest by at least 50 percent, just
a day before today's post election economic update.
Fares for Warren Park D, Kamfinsa, Chikurubi, and Dzivaresekwa were hiked
from an average of $2 000 to $3 000.
There were reports that fares had gone up by more than 100 percent for other
areas such as Mabvuku and Tafara yesterday from $3 000 a trip to $7 000.
Commuter drivers interviewed attributed the sudden fare increases to the
unrealistic price of fuel, both petrol and diesel, on the black market.
A five litre container of fuel has been selling at $100 000 for some time
now compared to less than $20 000 on the official market.
Commuter omnibus operators said the longer the time they were spending in
petrol queues, the more costly black market fuel they were being forced to
buy was stretching their profit margins - and as a result, they were loading
all the increases on the commuter.
But in areas such as Warren Park, the government-run Zimbabwe Passenger
Company (Zupco) has cashed-in on the increase in commuter omnibus fares,
flooding the route with a handful of the Chinese manufactured buses, to deal
with the transport situation.
The scarcity has also had its impact on the tourism sector.

With the sector still learning to come to grips with the radical changes in
the economy that spawned a decline in tourist arrivals due to negative
international perceptions, the resurfacing fuel shortages are an unwelcome
setback.

"For instance national tourist attractions such as the Eastern Highlands
depend absolutely on the availability of fuel," Paul Matamisa, Zimbabwe
Council for Tourism (ZCT) acting chief executive officer said.

"It is very difficult to do business when there is no fuel. We need to make
sure that fuel is available to do business."

Between 2002 and 2003, when fuel shortages first hit the country in
devastating fashion, Matamisa said they had approached government at that
time so that the tourism industry would have specific fuel stations for
tourism players.The deal would have involved the Ministry of Energy and
Power Development, through the National Oil Company of Zimbabwe (Noczim)
operating service stations to provide fuel specifically for the tourism
industry. Today, Noczim is operating more than 50 fuel retail outlets under
the government favoured command economic system, that has seen other
parastatals such as the Grain Marketing Board (GMB) competing with private
sector players under the Silo brand of refined products.

"Yes Noczim now has several service stations but we relaxed in those years
when the fuel situation stabilised a little. It has become intermittent ever
since and we did not push our agenda then. It would be difficult to revive
those discussions now," Matamisa said.

The Business Mirror has been at the offices of Justin Mupamhanga, permanent
secretary in the Ministry of Energy and Power Development for two
consecutive days since Tuesday in order to get governments latest position
on fears of fuel hoarding and whether the situation would return to normal.

"I cannot wait to answer that question from you. I am going to the Minister's
office. If you want to see me, try later," Mupamhanga said outside his
office early yesterday morning.
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Daily Mirror, Zimbabwe

Beverages ferried in refuse trucks

The Daily Mirror Reporter
issue date :2005-May-19

THE shortage of transport has forced Chitungwiza Municipality to ferry
beverages to council outlets in refuse collection vehicles.
The Daily Mirror learnt that 27 council vehicles were down and that the
council could not buy spares because of financial constraints.
Town Clerk Simbarashe Mudunge yesterday acknowledged the transport crisis,
but said that the refuse trucks only ferried empty bottles to suppliers.
"Whoever told you that (the story), did not give you the correct
information. They are not beverages, instead they are empty bottles.
"We cannot wait and see empty bottles piling yet we have other
alternatives," Mudunge said by phone.
He declined further comment, referring all questions to the mayor, Misheck
Shoko, who could not be reached and was reportedly on leave.
A councillor disclosed that the cash-strapped council decided to use refuse
trucks after a wholesaler withdrew transport facility due to unpaid bills.
"The supplier (name supplied) used to provide us with transport, however
they have stopped because the council was failing to pay their bills on
time," said the councillor on condition of
anonymity.
Council finances are expected to improve after government approved the town's
2005 budget, that will see the cost service provision to residents shooting
up by 3 000 percent.
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Daily Mirror, Zimbabwe

MDC resolves to sue govt

The Daily Mirror Reporter
issue date :2005-May-19

THE MDC has resolved to sue the government for allegedly failing to protect
teachers chased away from schools by suspected Zanu PF youths who perceive
them as opposition sympathisers.
MDC spokesperson Paul Themba Nyathi yesterday told The Daily Mirror that
their legal department was handling the case.
"The party's legal department is working on the matter. The person who has
the responsibility to right those wrongs must be held accountable. When you
have people's rights being violated by a party there must be an authority to
right those wrongs," Nyathi said.
The former Gwanda MP, who lost to Zanu PF's Abednico Ncube in the March 31
polls, said reports that nine teachers from Chihota in Marondera district
had been chased away from their schools by suspected ruling party youths
from Mahusekwa had precipitated the MDC move.
The affected teachers were from Mbonje primary and secondary schools.
Mashonaland East provincial education director, Vinah Kimbini said eight of
the teachers had since been redeployed to Marondera, Murehwa and Seke. The
other had expressed willingness to return.
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Daily Mirror, Zimbabwe

State withdraws charges against Bennet firm

Court Reporter
issue date :2005-May-19

THE State yesterday withdrew charges before plea against Bigtall Investments
(Pvt) Limited, a company directed by MDC losing candidate in the March
general elections Heather Bennett, which was facing allegations of illegally
running a radio base station.
The company was charged with contravening the Posts and Telecommunications
Act and Heather appeared in court in her capacity as one of the directors of
the firm.
Heather, whose first name was given in court as Ellen, is the wife of jailed
former Chimanimani legislator Roy Bennett.
Prosecutor Alvis Chimwaradze said the State withdrew the charges after
witnesses became uncooperative.
He was advised by area prosecutor Mirirai Shumba to drop the charges.
The State had alleged that on October 4 2002, police received information
that Bigtall was operating a radio communication station from Delport Farm
in Ruwa without a licence.
A search was allegedly conducted at the farm guardroom and police allegedly
recovered a functioning two-way radio communication station.
Farm manager Peter Norman Gardiner's house was also searched and seven
Motorola radio communication handsets were allegedly found. A further
search led to the recovery of two more stations.
The equipment was sent to the Posts and Telecommunications Regulatory
Authority (POTRAZ) where it was discovered that Ellen was leasing the farm
from one Delport, who was then in South Africa.
It was further alleged that Heather had earlier made an application for a
licence to operate a communication base station in June of the same year on
behalf of Bigtall, but was turned down after the forms were not properly
completed.
Heather, who was represented by Beatrice Mtetwa, of Kantor and Immerman,
appeared before magistrate Marehwanazvo Gofa.
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The Herald

Nation waits anxiously

SO much excitement has been aroused by the impending announcement of the
Post-Election and Drought Mitigation Monetary Policy Framework scheduled for
presentation by the Reserve Bank of Zimbabwe Governor, Dr Gideon Gono, this
afternoon.

I have witnessed a similar wave of excitement and the hype that engulfs the
nation just before the pronouncement over the past year and a half.

This time the anticipation is even greater. Business has almost ground to a
halt in many spheres as everyone awaits the presentation.

The stock market, which had been on a rally in recent weeks, is almost
inactive in anticipation while on the money market investors are not too
sure of which moves to make until they hear what Dr Gono has in store.

The nation has recently been gripped by fears of a derailment of the
economic turnaround process given the negative undercurrents obtaining in
the economy and is thus banking on the central bank governor to normalise
the situation.

The drought, shortage of basic commodities in retail outlets, steep price
increases for goods and services, the re-emerging foreign currency parallel
market, inadequate fuel supplies, foreign currency shortages and the rise in
the rate of inflation have left many in a quandary.

It is for this reason that Zimbabweans, and to a large extent the
international community, are keenly awaiting today's presentation.

The monetary policy statement has become Zimbabwe's economic radar since Dr
Gono took over as central bank governor 17 months ago.

Inflation had been rescinding at an admirable if not miraculous manner since
January last year, fuel was available, the foreign currency parallel market
was almost dead and supplies through official channels had vastly improved
until recently when everything seemed to fall apart.

Shortages of foodstuffs such as sugar and cooking oil were history and
everything was looking up to the extent that even hardliners such as the
International Monetary Fund could not help but warm up to the economic
transformation.

But alas, the story no longer reads as well as that.

What has gone wrong? What needs to be done? Who should do what and how?
These are some of the questions many are asking.

They expect answers from Dr Gono this afternoon. But being the turnaround
expert he is, the governor is expected to live up to expectations. He said
as much last week.

"We are not new to these challenges. They will be dealt with decisively," he
said.

He, however, expressed deep concern on the current state of affairs and
admitted that inflation, which rose to 129,1 percent in April from 123,7
percent, was his biggest challenge.

But he promised that he would this afternoon be armed with right
prescription to get the economy back on track.

It is no mean task but Dr Gono is a man who thrives on challenges.

But as I stated in my instalment last week, sustainable economic revival
will only come about through concerted efforts by all stakeholders.

Most, if not all the challenges facing the economy today are a result of
selfish tendencies that have failed to take cognisance of the effects they
have on the economy.

The challenges I have tabulated above would not be as grave as they are
today had stakeholders remained resolute in their efforts to get the economy
back on track.

In a football match, poor play by any department affects the whole team. If
the defence, midfield, strike force or the goalkeeper is having a bad day,
the entire team fails to click and loses a match because the sport is about
teamwork.

The same applies to our economy. If stakeholders are operating in discord,
the end result is economic deterioration.

The sooner most of us realise this, the better.

Overall, Dr Gono is expected to proffer solutions to the current economic
ills. He has to find the right balance in dealing with issues such as
inflation, which will require him to tighten screws without making life too
difficult for individuals and companies.

But that is not all.

Exporters are calling for his attention. Most of them are clamouring for the
devaluation of the Zimbabwe dollar, arguing it is the best strategy for them
to remain in business.

On the other hand, he has companies seeking an extension of the Productive
Sector Facility to cushion them against market rates. They say the rates
obtaining on the market are too high and will push them out of business.

Will he yield to this or has he given the companies enough time to recover?

Corruption is rearing its ugly head again. What strategies will he employ to
rid the economy of the cancerous trait?

Dr Gono has been accused of destroying some banks and individuals in his
quest to wipe out graft. Threats have been made to his life as a result.

Will he bow down to these pressures and let things go unchecked or will he
be even tougher this time?

All these questions and many more beg answers from the governor. All the
best to him!
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The Herald

Community-based tourism projects fail

By Tsitsi Matope
SOME community-based tourism projects have failed to bear fruit owing to
serious financial constraints and poor management and marketing strategies,
says a tourism official.

In an interview this week, the Zimbabwe Tourism Authority director of
research and product development, Mr Simbarashe Mandinyenya, said several
projects, most of them run by the rural folk, had been experiencing
financial challenges since their inception.

He said lack of elementary business knowledge, such as marketing, had
impacted adversely on their development.

Mr Mandinyenya said inadequate funding had also affected other projects,
some of which had already collapsed.

"Except for a few that managed to set themselves up before the country began
experiencing economic challenges, many have not been able to take off and
start generating any benefits that we had anticipated, such as creating
employment," Mr Mandinyenya said.

ZTA encouraged some rural communities to pursue their ambitions of venturing
into cultural and accommodation enterprises while efforts were being made to
lobby for funding from various stakeholders.

"The members initiating projects of their choice have not able to get any
funding from big financial organisations as they do not meet the
requirements."

About 100 community-based projects have been set up in areas such as Nyanga,
Bulilima, Guruve, Masvingo, Victoria Falls, Mt Darwin, Goromonzi and Hwange.
Mr Mandinyenya said the Chesvingo community tourism project in Masvingo and
Gairezi in Nyanga were among those still battling to market themselves
although they offered excellent accommodation facilities.

He said with the help of other non-governmental organisations, ZTA had been
able to lobby for an improvement in the infrastructure in some of the areas
where projects had been set up.

"In some cases immense development of infrastructure has taken place but in
places like Lower Guruve area were there are vast opportunities of tourism
development, not much has improved."

Meanwhile, the Secretary for Environment and Tourism, Mrs Margaret Sangarwe,
last night said her ministry was aware of the challenges faced by the
community-based tourism sector.

"We are aware that the conditions of repayment of small loans do not tally
with how the industry functions in terms of the generation of profits," Mrs
Sangarwe said.

She noted that benefits from the tourism sector could only be realised after
up to three years.

"It is against this background and other factors that include collateral,
which happens to be a pre-requisite requirement when one wants to borrow
money from large institutions, that discourages communities to venture into
community-based tourism."

A revolving fund to cater for the potential community-based tourism had been
proposed to her ministry while some presentations had been made to the
Reserve Bank of Zimbabwe after it was felt that there was need to boost
operations.

Mrs Sangarwe said community-based tourism played a pivotal role in the
upliftment of rural people's lives and, if properly managed, had the
capacity to generate foreign currency which would benefit the economy.
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The Herald

All eyes on Gono

Business Reporters
MONETARY authorities have been urged to use tools within their control in
the fight against the resurgent inflationary pressures as the central bank
presents the post-election and drought mitigation monetary policy statement
today.

Earlier this week, the Zimbabwe National Chamber of Commerce (ZNCC) - the
country's largest business grouping - called on the central bank to
aggressively deal with the rising parallel markets for both foreign exchange
and basic commodities while at the same time restoring confidence in the
financial services sector.

In an interview with the Herald Business, ZNCC president Mr Luxon Zembe
commended Reserve Bank of Zimbabwe Governor Dr Gideon Gono for his
consistency in the fight against the economic ills bedevilling the country
and urged him to continue in the same spirit.

"Dr Gideon Gono, in his capacity as the governor, should continue in his
fight against inflation which has started to pick up due to unscrupulous
activities by members of the business community.

"He should ensure that the money supply growth and fiscal discipline are
maintained through and through," said Mr Zembe.

On the question of the domestic Government debt, Mr Zembe said it was
imperative to find a long-term solution as the debt was growing by the day.

Turning to the issue of foreign exchange, Mr Zembe said the gap between the
parallel market and official exchange rates needed to be addressed while at
the same time coming up with a rate that was viable to the exporter.

"The gap has become too wide, the official rate stands at around $6 100
against the US dollar whilst the parallel market rate hovers around $20 000.
This needs to be addressed to ensure viability for exporters and also to
ensure that the black market will not be lucrative," added Mr Zembe.

ZNCC, as a body, would want to see a thawing in the strained relations
between Zimbabwe and multilateral lending institutions such as the
International Monetary Fund and the World Bank to ensure that more lines of
credit were opened, he said.

He also indicated that the interest rate regime needed urgent attention
especially the deposit rates, which were on the low side.

"The deposit rates are subdued to such an extent that no one is encouraged
to save as should be the norm and also the bank charges are a bit high for
the ordinary man.

"Minimal lending rates should be minimal for business people to get credits
from the banks which will increase their production capacity," he said.

Such a move will result in increased accessibility of affordable capital.

In the same interview, Mr Zembe said if the Reserve Bank decides to phase
out the Productive Sector Facility in June, it should remain with the
Distressed Companies Fund to ensure that struggling companies are bailed out
in line with the Industrial Policy that the country has embarked on.

As an agriculture-driven economy, there is also need for the central bank to
ensure that there is maximum and timely support for the sector in terms of
inputs.

Mr Zembe also revealed that the Small to Medium Enterprises (SMEs) needed
more State support as they were an engine for economic growth.

"SMEs help in the creation of employment and it is even 10 times cheaper to
set up an SME than to set up a huge company," he said.

He concluded by saying that the fiscal policy should complement efforts
being made by the monetary policy to create a conducive environment for
investment.

Meanwhile, activity on the financial markets has slowed down with investors
adopting a wait-and-see attitude ahead of the monetary policy review.

Apart from the interest rate regime the governor will also be expected to
put in place firm measures to deal with foreign exchange policy which has
posed immense challenges for the economic turnaround efforts.

The markets have been patiently waiting for this much talked about review
pulling the stock market in and out of the red while activity has been
predominantly subdued on the money market due to depressed rates with the
foreign exchange market, on the other hand, being once again dominated by
the parallel market. The risk- averse investors on the stock market have
even started pulling out expecting a hike in interest rates although the
majority of the investing community remains unmoved as they do not expect
the central bank to shift significantly from the current low interest rate
policy regime.

"We expect the stock market to soften as we approach the monetary policy
announcement although we have strong doubts whether the authorities will
increase investment interest rates to positive returns on the money market.

"This was reflected by the continued demand for stocks on the market last
week on Thursday and Friday after the date for the review was announced.

"Some investors are expected to revise their investment allocations in such
a way that whatever the outcome, they will not lose much," said stockbrokers
in Harare.

At the beginning of this week the pre-review panic began with the equities
market opening lower, with the mainstream industrial index shedding 1,14
percent to close at 3 130 577,10 points while the mining index lost 0,97
percent to end at 608 794,56 points.

However, marginal gains were recorded on Tuesday as some investors did not
anticipate a significant rise in interest rates.

Last week the key industrial index gained by 7,73 percent to close the week
at 3 166 749,06 as the reporting season for companies with a March year-end
began to release their earnings.

The money market on Monday opened $23 billion short and was forecast to
close $462 billion in surplus with a total of $152,38 billion maturities
from ZTB OMO Bills outstanding recorded.

Deposit rates softened from their previous positions, with the 90-Day
Negotiable Certificates of Deposit indicated between 30 percent and 60
percent, Call rates were shown at levels around 10 percent and very few
participants were on the overnight market which was quoted at around 20
percent.

Softening of rates is further going to depress activity on the market as
investors are wary of the negative returns on the market which have been
further compounded by the increase in the annual inflation rate for the
month of April 2005 to 129,1 percent from 123 percent in March.

The money market has experienced a significant liquidity improvement through
injections from outstanding ZTB OMO Bills and Treasury bill tender
maturities in the past week.

A total of $1,9 trillion maturities were injected into the money market.

However, tight liquidity management through the central bank's open market
operations (OMO) are being implemented to actively mop up excess liquidity
from the money market. This stance continues to be maintained by the central
bank, as it is a key weapon in the war against inflation.

The liquidity and interest rates issue is not an easy hurdle to overcome for
the central bank and as expected if the rates are kept at minimum levels,
investors will continue to besiege to stock market where they have made
fortunes in the past months.

There were also reports that the RBZ was concerned about the millions of
unproductive money being made on the stock market and was therefore keen to
burst the bubble in a bid to tame inflation by hiking interest rates.

When the reports of the impending RBZ action first filtered through most
analysts welcomed the news as they believed crushing the equity market using
interest rates was the only way to re-establish positive real interest
rates.

Analysts were of the opinion that in the absence of a real increase in
interest rates, the governor's statement might have a temporary effect when
investors adopt a wait-and-see attitude to ascertain whether the governor
really meant what he said.

Since the introduction of the low interest rate policy in August 2000
designed to support the productive and export sectors and assist the
Government to borrow cheaply within the framework of its domestic debt
restructuring exercise, real interest rates have generally been negative to
the detriment of savings and investment.

On the other hand, the negative rates can negate the monetary authorities'
efforts to fight inflation through the implied weak monetary policy that
fuelled speculation, as already noted.

The inevitable food imports to cover the cereal deficit caused by the recent
drought and possible increase in inflation against a background of an
exchange rate that is being controlled to avoid imported inflation could put
more downward pressures on the local unit.
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New Zimbabwe

Gono revises inflation target 100% upwards

By Mduduzi Mathuthu
Last updated: 05/19/2005 10:58:54
ZIMBABWE'S Reserve Bank chief Gideon Gono was expected to radically revise
his inflationary targets for this year when he announces his monetary policy
on Thursday.

Sources told New Zimbabwe.com Gono's targetted 35% percent inflation by the
end of the year had been revised upwards to around 70%.

Gono was also expected to devalue the Zimbabwe dollar, bringing it to
between $9000 to $10000 against the United States dollar, from the current
official rate of 1:$6200.

The country's troubled export market can also look forward to increased
rates for secured and unsecured lending rates, and a reduction to
concessionary lending rates.

Sources told this website last night the hiking of interest rates was
designed to end speculative activities, while the reduction in special
lending rates was seen as a boost to the productive sector which is in
urgent need of cheap funds to sustain industrial activity.

Gono recently told journalists he was having "sleepless nights" trying to
turn around Zimbabwe's economy. Commentators and opponents say Gono's
chances of success are held back by a lack of political backing for his
policies.

From an all-time high of more than 622% in January 2004, the inflation rate
dropped to 123.7% this March, but inflationary pressures are once again high
and there are fears it will soar again. Currently, inflation stands at 129%.

"The governor notices that inflationary pressures are being refuelled by
increased money supply and a wave of wage increases, two things he has to
address," a source told New Zimbabwe.com.

Gono was also expected to attack black market traders, blamed for driving up
exchange rates with the illegal street foreign currency industry.

A source close to the governor said: "The governor is clear that these
people are throwing spanners into his economic turnaround programme. He sees
the parallel market as the biggest challenge to his programme which has so
far failed to go beyond reduced inflation."

However, our sources who have seen the governor's monetary policy document
say there will be no revolutionary measures to address serious shortages of
water, power, fuel, forex and other basic commodities.

"It will just be ringing solutions to our multi-layered problems, nothing
spectacular," New Zimbabwe.com was told.

Gono has been under increased pressure, both political and work related, to
reorganise the economy. He is known to be extremely unhappy with the lack of
political backing for his policies from President Robert Mugabe, but is seen
as too loyal to quit.

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The Telegraph

Mugabe admits he needs food aid to rescue Zimbabwe
By David Blair in Johannesburg
(Filed: 19/05/2005)

President Robert Mugabe yesterday abandoned his confident forecasts of a
bumper harvest in Zimbabwe and confessed that international food aid was
needed to avoid famine.

Mr Mugabe, who declared last year that Zimbabweans would be "choked" if aid
was "foisted" upon them, climbed down and agreed to meet the head of the
United Nations World Food Programme.

Having previously pledged that his seizure of white-owned farms would make
Zimbabwe self-sufficient, Mr Mugabe said he would accept outside help if it
came without conditions.

Renson Gasela, agriculture spokesman for the opposition Movement for
Democratic Change, said the president should "eat humble pie, forget about
the claim of a bumper harvest and accept food from whoever can offer help".

Last year, Mr Mugabe hailed the "success" of his land seizures, saying they
would yield a record maize harvest of 2.4 million tons, more than enough to
supply Zimbabwe with its staple food.

In fact, this year's harvest was below 600,000 tons. The government has
quietly admitted trying to import another 1.2 million tons to meet the
annual demand for 1.8 million tons. But imports on this scale are affordable
and logistically possible only with international help.

Yet Mr Mugabe still refused to ask for food aid. It took a personal
intervention from Kofi Annan, the UN secretary-general, before he agreed to
yesterday's U-turn.

George Charamba, the regime's spokesman, said Mr Mugabe had "acceded to the
secretary-general's request" to meet James Morris, the WFP's director. Mr
Charamba added that food aid would be accepted only if it came without
"political conditions".

He claimed that the sole cause of the food shortages was a drought that had
recently hit Zimbabwe. Critics dismissed this as face-saving.

Mr Gasela pointed out that Zimbabwe avoided a drought last year and a
desperate shortage of seed, fertiliser and farming equipment prevented a
substantial harvest.

The shortfall had been caused by the seizure of white-owned farms, Mr Gasela
said. "Whatever machinery the commercial farmers had was vandalised after
they left," he argued. "You go to those farms today and you find large areas
of land are lying fallow.

"The way the land issue was handled was the prime cause of the problem.
There have always been droughts in Zimbabwe and we have usually been able to
handle them. What is different this time? The land issue is the only
difference."

Mr Mugabe's request for help comes very late. The WFP has already planned
its food distribution in southern Africa for 2005, having been assured by Mr
Mugabe that Zimbabwe did not need help.
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The Scotsman

Geldof is wrong: aid to Africa hasn't worked

GEORGE KEREVAN

PERHAPS I'm just growing old and grumpy but the sight of Bob Geldof parading
his millionaire ego at Holyrood was more than I could bear. Yes, the plight
of sub-Saharan Africa is desperate, but it will be cured by hard economic
logic rather than pop-star emotion.

Geldof thinks African poverty is our fault. He thinks we are not giving
Africa enough free financial aid - an extra 50 billion a year, or roughly
the entire national income of Scotland, would be handy.

He also wants us to forgive all debt interest owed by African governments -
I've seen numerous conflicting estimates, but we're in the billions-a-year
category. And he is anxious that the G8 countries open their economies to
African imports without expecting the same in return. This is called "fair
trade".

Just for a moment, let us ask: what has happened to the half a trillion
dollars lent to the independent African countries since the Sixties? We are
talking your taxes here. The whole point about borrowing is that you invest
and end up richer than you started, even after paying back the loan. How
come most of Africa is now poorer than when the loans began?

The answer has nothing to do with the usurious West demanding interest
payments. During the Eighties alone, there were at least 92 attempted
military takeovers in sub-Saharan Africa, affecting 29 countries. Not to put
too fine a point on it, your money was wasted in civil war and corruption.

Remember Geldof's famous Live Aid concert of 1985, to raise donations to end
famine in Ethiopia? Well, the Ethiopians were starving not because you lent
them money but because their utterly mad dictator, the odious Mengistu Haile
Marium, had butchered at least 100,000 of them in imposing his Marxist
dictatorship. Then he launched a series of external wars, with the help of
Cuban tanks lent by his fellow nutter, Fidel Castro. That bumped off
thousands more, while destroying the local economy. And by the way, much of
the food aid paid for by Live Aid ended up being stolen by Mengistu to feed
his armies. Never mind, it made Geldof famous, even if it didn't help the
Ethiopians.

When your loans were not funding genocide, they were funding Swiss bank
accounts. Western aid has corrupted generations of African politicians as it
is the fastest route to riches for the local elite.

By 1982, the former Belgian colony of Zaire (now the Democratic Republic of
Congo) had accumulated a foreign debt of $5 billion. Not coincidentally, its
president, Mobutu Sese Seko, accumulated a personal fortune of $4 billion. I
know the Belgians ran Zaire in a despicable way. But I also know that the
country is one of the most mineral-rich on the face of the Earth and should
be lending money itself by now. The reason it is one of the saddest
countries on the planet is not because you don't send them charity.

I'm being this provocative because I want people to stop thinking that aid
and writing off debts will, on their own, have any impact. The problem is
how to break the perpetual cycle of charity enfeebling sub-Saharan Africa,
funding its civil wars, corrupting its politicians and making Africans hate
us for our patronising western ways (Geldof, please note).

For the record, given sub-Saharan Africa's current basket-case economies, a
strictly short-term Marshall Plan may be necessary. But it has to be linked
to a vision that says Africa has to help itself through trade, not aid.
Africa needs a bourgeois revolution: the emergence of an entrepreneurial
middle class which will create local jobs by making and selling products
other folk want to buy.

The model is already there in Asia. In the Fifties, Britain left its African
colonies with a solid infrastructure and legal system. GDP per head in many
African countries - Ghana, for instance - was better than in many Asian
states. But these days, while the African economy has actually stagnated in
real terms, much of south-east Asia has undergone an economic revolution and
is now richer than Britain was in the Fifties. And the Asian economies did
this not through aid but through wicked capitalist borrowing and selling us
video recorders.

Consider the contrasting fortunes of Malawi, which the First Minister is
about to visit, and South Korea. In the mid-Fifties, Korea had been
devastated by war. What was left of the economy of this underdeveloped
ex-Japanese colony was based on peasant cultivation of rice. GDP per head
was under $100. Meanwhile in Africa, when it became independent in 1964,
Malawi could count on a decent legal and physical infrastructure, a capable
Asian business class and a modest but thriving economy.

TODAY, Malawi is one of the world's least-developed nations. After decades
of dictatorship from which it only recently escaped, during which the Asian
business class was dispossessed, the economy stagnated. GDP per head is now
roughly 300. Meanwhile, Korea has industrialised and increased its GDP per
capita from virtually nothing to around 9,000.

The first thing the Koreans did was to get rid of their unproductive peasant
agriculture - precisely the kind of backward economy that the "fair trade"
lobby wishes to entrench in Africa.

Of course, it is true that western countries rig their economies to keep out
cheap African agricultural produce. You will get no argument from me against
scrapping our daft western agricultural subsidies, importing cheap food from
Africa and Ukraine, and cutting my taxes into the bargain.

The developed world funnels nearly one billion dollars a day in subsidies to
its own farmers, coincidentally enabling them to dump artificially cheap
food in poor countries, resulting in yet more poverty. The World Bank
estimates that if the rich nations would only stop their farm subsidies and
tariffs, the poor nations would benefit by as much as half a trillion
dollars and lift 150 million people out of poverty by 2015. Of course, there's
a little matter of persuading western farmers to accept this, but then Sir
Bob Geldof has never stood for elected office.

However, why wait for the West? There is an instant solution in Africa's own
hands. The nations of sub-Saharan Africa do very little trading with each
other. Why not form an African Common Market, raise a universal tariff wall
to outsiders, but cut tariffs rapidly between the African states
themselves - very much as Europe did?

Next, rather than abolish African debts, why not turn them over to the
African equivalent of the European Bank for Reconstruction and Development
(owned by the African Union) to use the interest to fund that Marshall Plan?

And by creating a common and interdependent African economy, we begin the
process of eliminating the tribal frictions that underpin Africa's recurrent
civil wars.

Finally, creating a strong, single African currency, issued by an
independent currency board and pegged to the euro, would let individual
African countries such as Malawi start to escape their difficulties in
raising foreign exchange. The IMF could then lend the currency board the
necessary reserves, free in the knowledge the money would not end up in
Zurich.

With that vital political and economic infrastructure in place, foreign
investment and tourism will start to do the rest. And Bob Geldof can go back
to making terrible pop music.
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