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.
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.
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
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.
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.
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.
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.
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.
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.
have witnessed a similar wave of excitement and the hype that engulfs the
nation just before the pronouncement over the past year and a
This time the anticipation is even greater. Business has almost
ground to a halt in many spheres as everyone awaits the
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
The monetary policy statement has become Zimbabwe's
economic radar since Dr Gono took over as central bank governor 17 months
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
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
But alas, the story no longer reads as well as
What has gone wrong? What needs to be done? Who should do what and
how? These are some of the questions many are asking.
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
"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.
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
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
The sooner most of us realise this, the
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
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
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!
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
He said lack of elementary business knowledge, such as
marketing, had impacted adversely on their development.
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
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.
members initiating projects of their choice have not able to get any funding
from big financial organisations as they do not meet the
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
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
"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
"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
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
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
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
"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.
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
He also indicated that the interest rate regime needed urgent
attention especially the deposit rates, which were on the low
"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.
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.
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.
total of $1,9 trillion maturities were injected into the money
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
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.
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
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.
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.
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
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
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
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
Gono was also expected to attack black market traders,
blamed for driving up exchange rates with the illegal street foreign
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
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
"It will just be ringing solutions to our multi-layered
problems, nothing spectacular," New Zimbabwe.com was told.
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.
Mugabe admits he needs food aid to rescue Zimbabwe By
David Blair in Johannesburg (Filed: 19/05/2005)
Mugabe yesterday abandoned his confident forecasts of a bumper harvest in
Zimbabwe and confessed that international food aid was needed to avoid
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.
pledged that his seizure of white-owned farms would make Zimbabwe
self-sufficient, Mr Mugabe said he would accept outside help if it came
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.
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
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
"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
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.
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.
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
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
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
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
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
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.
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
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
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
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
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
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.