FinGaz
Rangarirai Mberi Senior Business
Reporter
IMF demands source of funds
THE visiting International Monetary
Fund (IMF) team has renewed its demands
for Zimbabwe to reveal the source of
its loan repayments, clashed with
officials over new exchange controls and
demanded an end to farm invasions.
This comes as it emerged yesterday
that Zimbabwe paid US$5 million interest
charges on Tuesday, and pledged
yesterday to clear the outstanding US$10
million arrears before early March
ahead of the IMF's board meeting. The
latest payment brings to US $202
million the amount Zimbabwe has so far paid
to the fund.
Impeccable
sources close to the discussions yesterday said that the IMF,
which has been
haggling with Zimbabwe over a number of policy issues, said
if Zimbabwe
cleared the remaining US$10 million before the March meeting, it
would not
be expelled from the institution.
The sources said on Monday this week the
IMF team asked for evidence to
prove that the US$120 million the Reserve
Bank of Zimbabwe (RBZ) paid last
September was in the bank's books, and
insisted on seeing signed facility
contracts and the electronic transfers
printouts.
The IMF mission requested confirmatory correspondence from banks
whose
clients the central bank says had offered free funds to Zimbabwe. The
RBZ
told the team that exporters had in return had the equivalent of their
foreign currency contributions invested in treasury bills, and allowed to
keep higher Foreign Currency Account limits past the statutory time
frame.
The IMF also demanded a copy of Zimbabwe's Exchange Control Act,
details of
the RBZ's offshore bankers and clarification on assertions by
fugitive
businessman Mutumwa Mawere that the RBZ seized his money to pay off
the IMF.
It is however reliably understood that the RBZ "satisfactorily
proved that
there was no single dollar that came from the sale of asbestos
from SMM
Holdings as claimed by Mawere".
IMF executive director Peter
Ngumbullu, in a January 20 letter to Finance
Minister Herbert Murerwa, had
said the IMF was looking to "bring this issue
(of the source of funds) to
closure and focus on more important policy
issues."
Yesterday, the team
met Murerwa, central bank governor Gideon Gono, Economic
Development
Minister Rugare Gumbo and other top government officials.
At that meeting,
government officials agreed to end all new farm occupations
and respect
property rights in order to restore investor confidence, speed
up civil
service reform and transfer the cost of the RBZ's quasi-fiscal
operations to
the budget after the IMF expressed concerns that "fiscal
imbalances have not
been reflected in their numbers largely because a lot of
budgetary burdens
have been shoul-dered by the RBZ following
To Page 23
its intervention in
support of agriculture, parastatals and local
authorities"
The IMF, in
that same meeting, asked the central bank to, among other
things, reduce
money supply growth, maintain positive interest rates as well
as fully
liberalise the exchange rate. However, Murerwa said yesterday that
Zimbabwe
was "a country in transition", and that some control was still
necessary.
"The volume-based exchange rate system has been introduced as
a necessary
transitory step to balance the virtues of exporter viability,
and minimise
the inevitable downsides of cost-push effects of exchange rate
depreciations, especially when unaccompanied by commensurate foreign
exchange inflows," Murerwa said.
Gono last week announced new measures
that will keep the currency within a
tight band by only allowing movement
based on actual volumes traded. Critics
charge that this is essentially
pegging the currency.
The IMF's Ngumbullu, in his letter, said Zimbabwe's
inflation remained the
IMF's major worry. Earlier, a new working paper
authorised for distribution
by Sharmini Coorey, chief of the IMF mission to
Harare, had suggested that
Zimbabwe's measurement of inflation might be
incorrect.
The paper, titled "Suppressed Inflation and Money Demand in
Zimbabwe", casts
doubt on the slowdown in inflation seen in 2004, suggesting
there could
"mismeasurement" of inflation.
However, IMF officials insist
the paper is only meant for debate and does
not represent the views of the
fund.
Earlier this week, the IMF had met the heads of state-owned
enterprises,
into which the RBZ sank $3.4 trillion last year in a bid to end
years of
losses at the companies. But power utility ZESA Holdings still
turned in a
scandalous $8 trillion loss, while fuel importer National Oil
Company of
Zimbabwe made its own $1 trillion loss.
Government yesterday
agreed to cut spending on parastatals.
FinGaz
Kumbirai Mafunda Senior Business
Reporter
ZIMBABWE is projected to harvest between 50 million and 55
million kgs of
tobacco when sales of the country's erstwhile top hard
currency earner begin
in April - its tiniest crop since
independence.
Officials in the tobacco industry said Zimbabwe's
large-scale and
small-scale producers had put 45 000 hectares under both the
irrigated and
dry land crop, which would result in a 31.8 percent plunge
from last year's
harvest of 73.4 million kgs.
They said the industry had
faced a lot of complexities during the cropping
season and would produce a
sixth straight tiny output, in yet another
vicious kick in the teeth of
Zimbabwe's increasingly troubled government.
They said the problems included
erratic supply of critical inputs such as
fertiliser, chemicals and fuel
caused by a six-year-old hard currency crisis
hounding the southern African
country.
"Major shortages of agricultural inputs such as fuel, fertiliser and
chemicals will impact negatively on national production of most crops. Given
these constraints, tobacco production is likely to decline in the coming
season," Tobacco Sales Limited (TSL) said in a market report last
week.
The officials said newly resettled farmers, who form the bulk of
tobacco
growers, had been the hardest hit by the erratic supply and shortage
of
inputs.
"The state of preparedness was slightly worse than the
previous season,"
said Rodney Ambrose, chief executive officer of the
Zimbabwe Tobacco
Association, the country's major tobacco growers' body,
which came up with
the preliminary projection figures.
"They (the
farmers) didn't have fuel for tillage," he added.
Apart from the inputs
shortage, there was not much irrigated crop due to low
levels of water in
most dams during 2005 as a result of a drought that
affected the southern
African region.
"The recent rains are encouraging but agricultural
production, in particular
tobacco volumes, is likely to decline further in
2006 because of shortages
of inputs," packaging company Hunyani said in its
financial results released
last week.
Critics have attributed Zimbabwe's
reduced tobacco yield to the effects of
the seizure of white-owned farms by
the government ostensibly for
redistribution to landless blacks.
The say
since ruling ZANU PF party loyalists and former liberation war
fighters
embarked on unsystematic land seizures in 2000, tobacco has lost
the glory
associated with it six years ago.
At its peak in 2000, a record 237 million
kgs of the golden leaf was
produced in Zimbabwe, raking in US$400
million.
But earnings have been falling since then, plunging to US$137
million in
2004 and US$118 million last year.
In addition to input
shortages, growers say they are facing difficulties
accessing coal supplies
to cure their small crop.
Ambrose confirmed that the majority of the new
farmers had resorted to using
firewood for curing.
With Zimbabwe's
six-year-old foreign currency crisis inreasingly choking its
frail economy,
the harvest of the golden leaf in April - a crucial earner of
hard cash -
was expected to bring relief to President Robert Mugabe's
administration.
The government, without balance of payments support from
the International
Monetary Fund and other global lenders because of
differences over policy
and governance issues, is battling to import grain,
fuel and essential
medical drugs.
But with the drastic drop in tobacco
output, Zimbabwe could experience an
acceleration in of its economic
meltdown, with merchants are reportedly
shifting their attention to nascent
regional tobacco-growing countries such
as Zambia, Malawi and Tanzania,
which are taking steps to boost their
production.
FinGaz
Rangarirai Mberi
Senior Business Reporter
NEW rules governing the operations of primary
dealers could deal a fresh
blow to the financial services sector, which had
received a clean bill of
health from the central bank and other global
lenders.
Central bank governor Gideon Gono last week announced new
regulations that
will compel dealers to subscribe a portion of their
deposits to low yielding
government paper, or face the threat of being
de-licensed as primary
dealers.
The new regulations are an attempt by the
Reserve Bank of Zimbabwe (RBZ) to
force support for government and central
bank long-term paper, which has
been shunned by the market due to the
increasingly weak inflation outlook.
According to Gono, despite the primary
dealership role having been broadened
beyond discount houses eight years
ago, "the primary market for government
securities and central bank
instruments has remained largely
under-subscribed, while the secondary
market has remained shallow and
underdeveloped."
"A number of existing
primary dealers do not participate in all government
or central bank
tenders, resulting in under-subscription of tenders and
tender results that
do not correctly reflect the dictates of market
fundamentals."
Registered
financial institutions, which have previously automatically
qualified to
play as primary dealers, will now have to apply for specific
primary
dealership licences from central bank by mid-March, in time for the
launch
of the new system on April 1.
Analysts say potential harm to bank bottom
lines would likely be suffered as
a result of a requirement that the dealers
sink a determined portion of
their deposits into tenders announced by the
RBZ. The primary tender quotas
shall be based on each institution's
liabilities to the public as at the
previous month.
"The RBZ will advise
each primary dealer of its tender quota at the
beginning of each month,
which will stay fixed until reviewed at the
beginning of the following
month," Gono said.
"Compliance with the stipulated quotas will be assessed on
a daily basis,
and institutions that fail to satisfy their quota by close of
each business
day may be allocated the shortfall of their requirement, at
the weighted
average of the last tender of that day."
For instance, a
bank that has total liabilities of $4.5 trillion will have
to take a massive
19 percent of that into government scrip.
The central bank sees the market's
continued reluctance to take up long-term
state paper as a threat to Finance
Minister Herbert Murerwa's plans to
restructure government debt. In his
budget statement last December, Murerwa
said securities of less than one
year accounted for 93 percent of state
debt, while medium to long-term paper
accounted for only seven percent.
Government anticipates having long term
paper accounting for 60 percent of
its debt, he said.
But the new rules
have raised fears on the market that banks will be stuck
with paper with
yields much lower than inflation. Although Gono is bearish
on inflation over
this quarter, he still sees prices slowing over the
remainder of the year.
This means he could issue paper with rates based on
his expectations of
double-digit inflation by next year - a forecast not
shared by many.
FinGaz
Rangarirai
Mberi Senior Business Reporter
Not so fast, says chairman Shamuyarira
ZANU
PF'S publishing house, Jongwe Printers, has had its two printing
machines
put up for auction over a $300 million debt owed to Print
Originators
(PO).
But Nathan Shamuyarira, who is chairman of Jongwe Printing and
Publishing
and ZANU PF's information and publicity secretary, said the
ruling party's
company would not allow PO to seize any of its
assets.
This is despite PO having a court order to have the machines
attached by the
messenger of court.
"We will not allow them to take
anything. They will be paid. Don't be
excited," Shamuyarira said.
Jongwe
Printers, publisher of ZANU PF's Voice weekly, owes PO $316 021
213.15 in
unpaid printing bills from 2004.
In June last year, High Court Judge
Lawrence Kudya ordered the ZANU PF
company to pay the outstanding amount,
including interest as from January
15 - the date of a final demand PO made
on Jongwe - and the costs of the
suit.
Earlier, on March 15, Jongwe
had proposed an alternative scheme that would
have allowed it to pay $10
million a month towards settling the debt, saying
it was at that time in a
working capital crunch and seeking additional
funds.
"We advise that
we have neither failed nor refused to pay the amount owing
but we have
experienced a transient shortage of working capital due to a
major
recapitalisation exercise which we embarked upon earlier. Print
Originators
is fully aware of this exercise," Jongwe said in court papers
filed last
year.
However, PO rejected Jongwe's offer, resulting in it finally
obtaining a
final writ on Jongwe from the court.
This week, Jongwe's
two printing machines were to be auctioned. The value of
the two machines,
said to have been acquired recently from Germany, could
not immediately be
established.
Jongwe Printers last year received two loans worth a total
$17.5 billion
from the Reserve Bank of Zimbabwe's Productive Sector Facility
to buy a
printing press, but reports said the company had blundered and
spent the
money on machines that could only print school exercise
books.
This had reportedly led to the dismissal of managing director
Tawanda
Murerekwa.
FinGaz
Charles Rukuni
Bureau Chief
Petrol sells for $150 000 per litre
BULAWAYO - Fuel prices in
Bulawayo and surrounding areas have gone haywire.
Petrol is selling for
anything between $150 000 and $160 000 per litre in
Bulawayo, while in
Gwanda it goes for $220 000 per litre.
It is not clear why the price has
suddenly shot up because the towns are
very close to the major sources,
South Africa and Botswana. Bulawayo is only
120 km from Botswana.
The
prices rocketed soon after central bank governor Gideon Gono's monetary
policy statement last week indicating that people were probably taking
advantage of the situation to raise prices after realising that government
had no solution to the nearly year-long crisis.
The price of petrol is
still officially pegged at $22 800 per litre, a price
which Gono said was
unrealistic.
The National Oil Company of Zimbabwe (NOCZIM) had incurred
losses of over $1
trillion.
Gono said this would "ultimately be funded by
all Zimbabweans through costly
printing of money to balance the
fiscus".
He also said that there was critical need to realign the fuel price
to curb
the black market as only a selected few had access to this "cheap"
fuel.
". . . The current arrangements in the fuel sector, under which a
privileged
few access fuel at subsidised prices is fermenting immense
leakages, where
recipients of the subsidised fuel are tempted to make quick
gains through
the disposal of same in parallel markets . . ." Gono
said.
Ironically while the government insists on selling fuel at unrealistic
prices, NOCZIM is failing to provide fuel to selected service stations that
sell it in foreign currency at US$1 a litre.
It is now cheaper to buy the
fuel in foreign currency as the US dollar is
currently selling for $130 000
on the parallel market. The pound is going
for $200 000 while the pula is
pegged at $30 000 and the rand at $26 000.
The US dollar was trading at $99
201.58, the pound at $177 223.62, the pula
at $18 763.98 and the rand at $16
586.12 on the interbank market on Tuesday,
a clear indication that there was
a high demand for the pula and rand.
FinGaz
Kumbirai Mafunda Senior Business
Reporter
STATE Security Minister and ZANU PF secretary for
administration, Didymus
Mutasa is fast consolidating his position as
President Robert Mugabe's most
trusted and powerful Cabinet
minister.
Mutasa has achieved a feat that has never been pulled off by
any of
President Mugabe's trusted lieutenants since independence from
Britain in
1980 by simultaneously assuming charge of three Cabinet
portfolios.
This is thanks to his recent appointment as Home Affairs
Minister since the
beginning of January, albeit in an acting capacity, in
the absence of Kembo
Mohadi, who is on leave.
Mutasa, who at one
point was ruled out of ZANU PF's vexatious succession
jigsaw after his
involvement in political skirmishes in his Makoni North
constituency, is at
present superintending the Lands, Land Reform and
Resettlement, Home Affairs
and State Security portfolios.
He also supervises strategic grain imports
and food distribution and chairs
the powerful Joint Operation Command (JOC),
comprising the top hierarchy of
the country's uniformed forces and the spy
agency.
When approached last week to comment on his seemingly burgeoning
responsibilities, Mutasa, one of the most quotable politicians in
government, chuckled saying: "Kana kudai akaita six hazvina problem. (Even
if I had six portfolios there would be no problem). So far I have been
executing my ministerial roles satisfactorily."
Analysts noted this week
that Mutasa's assumption of three cabinet posts
when President Mugabe has
unlimited options to choose from his 31 cabinet
ministers adds fresh
dimensions to the succession conundrum within the
ruling party.
Mutasa,
who many thought was in the twilight of his political career,
emerged from
the obscure anti-corruption ministry to his current powerful
position and
has openly stated his ambitions for the vice presidency.
"If anyone proffered
my name for that position, I would first thank that
person and readily
accept the offer," he was quoted as saying in the
government controlled
Herald about three years ago.
FinGaz
Njabulo Ncube Chief
Political Reporter
ABIGAIL Damasane, the deputy Women's Affairs Minister
is demanding US$14
309.50 (Z$1.4 billion) from the state-run export
promotion agency ZimTrade
as payment for her participation at an exhibition
held in Germany six years
ago.
A non-constituency Member of
Parliament, Damasane has taken up the matter
with the agency's principals -
the Ministry of Industry and International
Trade - which has ordered
ZimTrade to settle the claim in full.
The bill has caused anxious moments for
the ZimTrade board that has had to
put on hold a number of national projects
due to inadequate funding from the
fiscus and exporters, who are struggling
as a result of the economic
downturn.
Sources said the ZimTrade board
members were keeping their fingers crossed,
hoping the presidium, which
censured Matabelelend North Governor Thokozani
Mathuthu last month for her
extravagant stay at a Bulawayo hotel, might also
come to the rescue of the
export promotion agency.
Documents at hand indicate that Damasane, who worked
for the Education
Ministry prior to her appointment as a non-constituency MP
last year, was
part of a government team that took turns to man the
country's pavilion
during the Hanover Expo in 2000. The exhibition ran from
June 1 to October
31.
ZimTrade, tasked by the government to organise and
coordinate the country's
participation at the expo, provided per diems for
the officers on duty at
the pavilion.
As a cultural officer, Damasane was
responsible for organising and managing
Zimbabwe's cultural programme during
the expo and spent 86 days on the job
at an approved government rate of
US$285 a day.
Due to insufficient funds, ZimTrade could not foot
Damasane's bill in full.
It only paid her US$75 per day, leaving an
outstanding balance of US$14 310,
a figure she has been demanding since her
return from Germany.
Retired colonel Christian Katsande, the Secretary in the
Ministry of
Industry and International Trade, has since ordered the ZimTrade
board to
make good the entire payment claimed by the deputy
minister.
Katsande's directive came after a bilateral trade relation official
in the
ministry vouched for Damasane and pleaded her case in a three-page
letter to
the secretary on December 19 2005.
"The full amount due to her
was US$24 510 for both accommodation and
subsistence. ZimTrade paid a total
of US$3 375 directly to the German Expo
authorities for apartment
accommodation occupied by Honourable Damasane
during the period she was in
Hanover.
"Thus the balance due to Hon Damasane was US$21 135 and she was only
paid
US$6 825. Therefore, the final outstanding figure due to Hon Damasane
is
indeed US$14 310. At the prevailing rate of Z$26 000 to the US$, this
translates to Z$372 060 000.
"It should, however, be noted that not only
Hon Damasane was affected.
Officials from other ministries and departments
were also affected. It is
not clear what was agreed upon between the
individual officers and the
authorities in their ministries/departments,"
reads part of the letter the
bilateral trade relations officer wrote to
Katsande last month.
In a letter dated January 18 2006, Katsande directed the
ZimTrade board
chaired by Daniel Chigaru to deal with the issue urgently as
it had taken
too long to resolve.
The ZimTrade board, which was appointed
last year, is now in a quandary over
the long drawn issue it inherited from
previous boards amid indications that
the trade promotion body's finances
were in a precarious position.
"Although this matter has been outstanding for
some time now, it is
appropriately the board's remit to deal with it
conclusively," said
Katsande.
"Your board is therefore requested to
consider this case and decide
accordingly. I have also attached a copy of
the submission from Hon
Damasane, for more details. I have also been made to
understand that, in
fact, other officials who participated in this national
project were equally
prejudiced, with some having received their dues."
FinGaz
Staff
Reporter
MUTARE - The commission running the affairs of this eastern
border city,
eager to turn around its fortunes, has applied for powers to
borrow $90
billion to undertake major capital projects.
The
commission, appointed by the government last month, wants to complete
three
major projects in the city. The chairman of the commission, Kenneth
Saruchera, said they intend to borrow $40 billion from the Reserve Bank of
Zimbabwe to complete the construction of the Christmas Pass to Sakubva water
pipeline.
Another $50 billion is needed from central government's Public
Sector
Investment Programme funds to complete the construction of a
reservoir
pipeline and a reservoir in Chikanga high-density suburb.
"We
want to change the face of Mutare and bring back its lost glamour,"
Saruchera said. "But for us to achieve this we need the full support of all
stakeholders."
In addition to completing the three capital projects, the
commission also
needs another $40 billion from the central bank to improve
the water
distribution systems and buying gadgets such as water
meters.
Since the Saruchera-led commission took over the running of the city,
the
council's revenue collection base has improved from $600 million a day
to $2
billion daily. Saruchera attributed this to effective systems that the
commission has introduced.
Saruchera said his commission was courting the
National Social Security
Authority (NSSA) to undertake massive housing
schemes in Fernhill and
Gimboki.
He said his commission has installed 300
light bulbs around the city to
ensure residents are safe from
criminals.
He said the commission has also introduced a hotline to enable
residents to
communicate with council officials. But of concern to Saruchera
is the fact
that 85 percent of the council expenditure budget is gobbled up
by salaries
and wages for its workers.
"This is unacceptable," Saruchera
said, "We have to bring the wage and
salary bill to about 40 percent so that
we channel resources to service
delivery and infrastructural
improvements."
FinGaz
Rangarirai Mberi Senior
Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) would never admit
it, but it now appears
to have conceded some ground in its long running
turf-war with Zimbabwe's
vicious army of speculators, accused of fuelling
the inflation scourge.
Take those currency speculators, for instance.
Ahead of RBZ governor Gideon
Gono's statement, they pounded the Zimbabwe
dollar to $120 000 against the
US dollar, before sending the local unit to
new depths as soon as he was
through with his statement.
Then consider
the stock market speculator. Last Tuesday, the stock market
behaved as if to
challenge the central bank governor, rising 3.11 percent to
rest a shade
below 40 million points just hours before he was due to make
his policy
statement. A day later, the Zimbabwe Stock Exchange (ZSE) beat
that 40
million mark for the first time with a 14.2 percent sprint in a
broad
rally.
Previously, Gono would have hit somebody with a rate hike for that
sort of
cheek. But last week, he appeared for the first time to soften his
aggressive rate stance, suggesting that although he would continue to wield
the rate hike, he would only use it sparingly.
He said: "On an ongoing
basis, the bank's accommodation rates will be
revised, consistent with
levels deemed to be appropriate, based on projected
inflation profiles, at
the same time minimising the adverse effects of the
interest rate instrument
to the productive sectors."
In the past he never hesitated to use harsh
policy instruments and threats
to whip speculators into line. But last week,
all he could do was appeal to
their morality and plead with them to "do the
right thing" and to "return to
basics".
He can now only sit back and hope
that the risky black market and the stock
exchange itself will deliver their
own bitter lessons to the carefree
punters who will buy anything at any
price - as long as they figure it will
beat inflation.
Only a few see the
possibility of the stock market suddenly hitting a deep
trough, or the frail
Zimdollar suddenly finding some mysterious source of
energy. And it has
showed in the manner the markets have been treating Gono's
speech.
The
RBZ boss, who has been focused on fighting inflation from the day he set
foot at Number 80 Samora Machel, the bank's headquarters, last week widened
his shooting target in what analysts said was a tacit admission that the
task at hand required more than interest and exchange rate policies to deal
with.
He said: "The common enemy that we have to confront is, therefore,
our lack
of oneness, and the absence of a clear commitment by all to pursue
a path
that produces mutual benefits for both the economy and individuals
alike."
The last time Gono made a policy statement - October 20 last year -
shares
had rammed through 10 million points 24 hours before he was due to
speak.
Compare that to previous times, when the approach of a policy
statement
would send speculators scurrying for cover.
"It's not that
there's some cold war going on between the markets and RBZ.
It's just that
players were able to better gauge where inflation was
heading," a top fund
manager said, declining to be named. His analysis would
confirm comments by
economist James Jowa, who says inflation has now become
self-perpetuating
due to downbeat expectations.
The cautious may suggest that something has to
give some time, both on the
black market and on the stock market. For
instance, the ZSE had by last week
brought home gains of 125 percent since
the beginning of 2006 and there will
be suggestions that valuations may have
become a bit rich and that some
players may be getting ahead of
themselves.
"It is the year in which value investors will make a lot of money
while
punters will buy expensive shares and regret the day they put
everything
into one basket," analyst Nyasha Chasakara said.
But the
fellowship of the feeding trough is quick to make the point - and
they
always bring this one up - that nothing else but stocks, fuel or hard
currency looks like ever beating inflation.
Even if Gono had raised the
bank rate - really the only arrow left in that
old monetary quiver - critics
say it was always unlikely that any rate
increase would have been broad
enough to give above-inflation returns and
take some territory back from the
speculators, especially now that TB rates
no longer track the bank rate.
FinGaz
EDITOR - I
continue to read and hear with concern, the continued vandalism
and plunder
by thugs of ZESA infrastructure (transformers and cables).
Sadly this
happens at the expense of not only ZESA and the immediate
consumers, but of
the whole nation as replacement of this infrastructure
requires foreign
currency which could otherwise be used on expansion or to
pay for imported
electricity.
However this problem does not seem to be peculiar to ZESA. Other
parastatals
like the NRZ and Tel*One face the same problem. The question
that I have for
ZESA particularly is: "Other than publicising these acts of
vandalism and
appealing to the public to report such cases, what security
measures have
you put in place?"
I do not mean to say that you have not
made any effort to try to contain
this problem. Obviously you have done
something to ensure that the loss of
the infrastructure is minimised. This
is why we have lately been reading in
the press James Maridadi's appeals to
the public on the need to join hands
in fighting vandalism.
To revisit
the issue of a number of parastatals being affected by vandalism
of the same
nature, I wish to highlight previous efforts that have been made
in trying
to ensure that valuable infrastructure is secured to enable good
service
delivery.
At one time, industry and government joined hands to curb vandalism
on
infrastructure belonging to these three parastatals. In the same spirit,
the
government, at the behest of the foundry sector, later banned the export
of
all scrap metal - copper and aluminum included (2004 Mid-Term Fiscal
Policy
Review, para 117, pg 23). It generally ensured that instead of
exporting
cheap scrap metal - even "clean scrap metal", beneficiation of
this scrap by
the local metals foundry sector kept the metal foundry
companies in business
while value-addition brought in more foreign currency.
It was also meant to
curtail the export of the scrap which seemed to be the
pull factor to those
who stole copper and aluminum cables for foreign
currency. Effectively, for
the three parastatals, this would minimise losses
and ensure service
delivery.
Without any assessment of these measures put
in place, one would not know
how much has been achieved to date. However,
the fact is that despite the
efforts, vandalism is still rife and the
question that requires an answer is
"Why?"
Clearly, it remains ZESA's
challenge to seek even more solutions to the
vandalism problem. One of the
reasons why I write this letter is that, after
observing and learning about
the cables and transformer vandalism for quite
some time, ZESA may want to
consider the following as strategies to solve
this problem:
lAll
substations should be under tight security during the night either
through
patrols - as there are so many of them - or each one should be
manned. This
certainly would come with costs but I don't think the costs
would be more
than what ZESA incurs by way of replacements to damaged
infrastructure.
lZESA should propose to government that its
infrastructure be accorded the
status that warrants national security. This
means that its establishments
would be under guard by the army. This, I
think, would put an end to the
problem. Besides, I think with our armed
forces having no crucial external
engagements at the moment, this would be a
worthy national cause.
lAbove all, I think our law should be tightened in
order to make it punitive
to vandalise infrastructure for institutions like
ZESA, NRZ and Tel*One.
John Chakasikwa
Harare
FinGaz
Charles Rukuni Bureau
Chief
BULAWAYO - Tomorrow is a do-or-die day for Zimbabwe. The Tripartite
Negotiating Forum (TNF), which comprises the government, business and
labour, will hold crucial talks that will determine whether the country
moves forward, remains stagnant or continues on its downward
slide.
The three groups will discuss the Kadoma Declaration, a document
drafted
five years ago to chart the way forward for the country.
The
government has prevaricated on signing the document, which calls for
far-reaching political, social and economic reforms to reduce the world's
perception of Zimbabwe as a high-risk country.
Zimbabwe has been regarded
as a pariah state since it embarked on its
controversial land reform. It
quit the Commonwealth in unceremonius fashion
and was slapped with smart
sanctions by the European Union and the United
States.
The onslaught has
seen the country's economy shrink by almost half.
Unemployment has surged to
nearly 80 percent. The exchange rate has
plummeted and the local currency,
which was stronger than the United States
dollar during the first three
years of independence, is now the weakest on
the continent.
Inflation is
expected to shoot to 800 percent within the next two to three
months,
according to government officials.
The Kadoma Declaration was mooted at a
meeting of the TNF's technical team
on Zimbabwe's country risk in August
2001. The team said that the country's
problems should be addressed in their
totality for it to move forward.
Central bank governor Gideon Gono expressed
the same sentiments when he
presented his fourth quarter monetary policy
statement for 2005 last week.
The Kadoma Declaration was reaffirmed at a full
meeting of the TNF in
January 2003 but the government has avoided endorsing
it up to now, largely
because it calls for radical reform, especially within
the government
itself.
The partners agreed that they must address
Zimbabwe's country risk factor
and improve its image in order to achieve any
meaningful turnaround.
They defined country risk factor as the "premium
attached by nationals,
residents, foreigners and international bodies on
residing in and/or doing
business with a particular country".
The
problems that the country was facing needed to be addressed urgently
because
the economy was performing poorly. More than three-quarters of the
population was officially classified as poor.
Poverty had led to an
increase in crime. It had also resulted in the
widening of the gap between
the rich and the poor, making it easier for
corruption to thrive.
Because
of the country's poor image, Zimbabweans were regarded as poor
wherever they
went and were ill-treated or abused at immigration points in
some countries.
They were also discriminated against when trying to go into
business
abroad.
The country risk factor had also resulted in lack of patriotism, with
some
Zimbabweans having low confidence in their country.
The country
itself was unable to supply its people with basic human needs,
leading the
population to mistrust any institutional system - opening doors
for a
thriving, uncontrollable black market.
The TNF team identified some of the
causes of the risk factors as failure by
some government institutions to
function effectively. There was also a
discrepancy between policy and action
and delays in implementing policy.
There had also been an increase in
"irresponsible utterances" by politicians
and lack of political tolerance.
This had given rise to political
instability and apprehension among foreign
governments.
Though the Zimbabwe Congress of Trade Unions (ZCTU) was keen to
see the
declaration signed at the beginning of 2003, the government
prevaricated,
blaming the country's economic ills on the West and the
opposition. The
economy took a dive and has been on a slide since.
ZCTU
president Lovemore Matombo said it appeared that the government was now
ready to talk because it was the one that had initiated discussion of the
Kadoma Declaration on February 3.
He said technical committees had been
going through the document before it
is discussed at a full session of the
TNF tomorrow.
It was not clear what prompted the government to initiate the
talks because
the Kadoma Declaration calls for radical changes within
government, which
has over the years tended to act arbitrarily, blaming its
failures on either
British Prime Minister Tony Blair or United States
President George Bush.
A source who attends both the technical and full TNF
meetings said civil
servants were pushing for the talks because they were
now desperate.
"They are frustrated. Things are not moving in government. The
government
has no money. They want to use the TNF to ensure real progress.
They want
the TNF to push real issues," the source said.
The adoption of
the Kadoma Declaration could pave the way for a rapid
economic turnaround
because this is the "defining moment" in the country's
turnaround programme,
as Gono said last week.
He said it was a defining moment in that the country
was standing on the
verge of tremendous opportunities which it should take
advantage of to break
away from the economic setbacks of the past seven
years.
But Gono warned: "Naturally, as with every opportunity, equally true
is the
fact that the country is standing on the edge of a cliff which
threatens to
irreversibly take us downhill if we do not boldly move forward
with speed to
address most of our shortcomings of the past."
The central
bank chief said Zimbabwe's worst enemy was its own people
because they
lacked oneness and clear commitment to a path that produced
mutual benefits
for the country.
"Economic opportunism is now at the heart of everything we
seem to be doing
day in, day out," he said.
For the ordinary Zimbabwean,
opportunism is evident on every street corner
in the cities, with some
people even boasting that they did not come to
"town" to work but to make
money.
FinGaz
Staff Reporter
Gono calls a spade a
spade in monetary policy review
Reserve Bank of Zimbabwe (RBZ) governor
Gideon Gono has long pointed at
corruption and inefficiency, mainly in the
parastatal sector, as the twin
evils that threatened efforts to extricate
the Zimbabwean economy from the
rut.
Last week, although certainly
not in as many words, he added a third -
politics.
While taking the blame
for policy inconsistency - citing the five percent
export support incentive
that was abolished before becoming fully
operational, failure to ring-fence
concessional facilities, which stoked the
flames of inflation through rapid
money supply growth and the continued
maintenance of misaligned interest and
exchange rates - Gono rapped senior
government officials for not only
failing to deal with corruption, but
benefiting from it.
Starting his
policy statement with a caveat that now was the time for
"Operation
Kutaurirana Chokwadi" (time to tell the truth) and warning that
the country
stood "on the edge of a cliff", Gono charged: "If, as a nation,
we do not
resolutely stamp out growing corruption, especially among us
people in
positions of authority and influence, us the so-called 'chefs', if
we do not
stamp out indiscipline in our midst and if we do not appeal to our
conscience as we go about our daily activities as a people, we will soon
discover, too late, that policy formulations, implementation, monitoring and
decisions have been based on self interest, racial overtones, regional and
tribal considerations at the expense of the national good."
The central
bank governor, who has been consistent in his appeals for a
meaningful
rapprochement with international capital so as to restore
Zimbabwe's balance
of payments position, also lamented lack of progress in
that regard.
He
noted that no progress had been made with respect to bilateral
investments
protection agreements, while disruptions persisted on the farms,
issues
which have earned the country pariah status and seen foreign aid and
investment plummeting.
Gono painted a graphic picture of how the central
bank had resorted to
seigniorage "in order to survive" in 2005, when key
utilities queued up for
cash to finance critical operations.
However,
rampant corruption, mismanagement, uneconomic pricing and
entrenched
inefficiencies had seen most parastatals posting record losses,
with Energy
firms ZESA and National Oil Company of Zimbabwe recording a
combined $9
trillion loss.
Government ministries also joined the queue and received
significant amounts
of foreign currency from the Reserve Bank, without
paying a penny in local
currency, Gono revealed, adding that this was
tantamount to "indirect
printing of money as, in real terms, the Reserve
Bank would have funded the
respective entities".
Because the government
is seriously underfunded, the RBZ has assumed
responsibility over
quasi-fiscal operations with the objective of enhancing
key sectors such as
agriculture and broader recovery, drawing criticism,
most notably from the
International Monetary Fund.
Gono said the fiscal budget lacked credibility
and did not have
comprehensive measures to promote investments, rein in
underperformance in
ministries as well as instil good corporate governance
in public enterprises
where "political interference, particularly in the
appointment of chief
executive officers and other key staff, results in
incompetent management
teams".
He slammed the government for its widely
criticised interference in the
operations of local authorities, citing
Harare and Chitungwiza, where
elected mayors have been booted out by Local
Government Minister Ignatius
Chombo.
The governor also made stinging
allegations of gold smuggling by
"high-profile politicians and senior
government officials".
Tendai Biti of the opposition Movement for Democratic
Change said Gono's
statements proved that only comprehensive reform would
set the country back
on course for economic recovery.
"It has taken the
governor three years to agree with us on the need for a
comprehensive,
holistic national plan to address the current crisis. No
country can develop
without one and this is why we led the way by crafting
our RESTART
programme," Biti said, referring to his party's economic
blueprint.
FinGaz
Njabulo Ncube Chief Political
Reporter
The saga continues
EMBATTLED MDC leader Morgan Tsvangirai has
filed a notice of appeal to
defend a $100 billion lawsuit instituted against
him by the pro-senate
faction led by his deputy Gibson
Sibanda.
Tendai Biti, the party's legislator for Harare East, who is
representing
Tsvangirai in the matter, told The Financial Gazette this week
that the
former trade unionist had "filed a notice of appeal to oppose the
action".
"I think it has been about two weeks since we filed the appeal,
which we are
going to defend vigorously," said Biti.
The pro-senate
faction, understood to be searching for a suitable candidate
to lead the
group at its congress next month, was angered by statements
allegedly made
by Tsvangirai at a diplomatic briefing. He is alleged to have
said that the
leaders of the pro-senate camp were plotting to kill him in
collusion with
the ruling ZANU PF.
The pro-senate faction initially filed a $50 billion suit
last year but
revised it upwards a few weeks ago. Nicholas Mathonsi, the
lawyer for the
pro-senate faction, confirmed to The Financial Gazette that
Biti had filed a
notice of appeal to defend Tsvangirai.
"He (Biti) has
filed a notice of appeal to defend but has not filed their
plea. I have not
pushed the issue because I was still yet to serve them with
summons altering
and amending the lawsuit from $50 billion to $100 billion.
I am sure they
have now received the new summons," said Mathonsi.
The plaintiffs in the case
are vice president Gibson Sibanda,
secretary-general Welshman Ncube,
treasurer Fletcher Dulini Ncube, deputy
secretary general Gift Chimanikire
and information secretary Paul Themba
Nyathi all of whom the anti-senate
camp says had been expelled for allegedly
bringing the name of the party
into disrepute.
According to court documents filed at the Bulawayo High
Court, the five
former colleagues of Tsvangirai are demanding payment of $20
billion each,
being damages sustained as a result of the publication of the
statements.
Meanwhile, the Tsvangirai camp said yesterday preparations to
hold their
congress in Harare on 17-19 March 2006 were progressing
well.
"There's going to be one MDC congress. If there is any other congress,
it
will be of another political party which is not the MDC," said Nelson
Chamisa, the spokesman for the anti-senate faction. "The theme of the
congress is going to centre around renewal and re-birth of the MDC in our
endeavor to deal decisively with the dictatorship of (President) Mugabe,"
said Chamisa.
Chamisa said Tsvangirai was open to any initiative designed
to end the rift
within the MDC.
Asked whether the MDC leader had
responded to conditions allegedly tabled by
the Matabeleland-based faction
he said: "The conditions are political
statements which we think are not
committed to a united MDC. The other party
has done nothing since it
revealed those conditions. The President has
remained ready and willing to
make sure whoever is interested in removing
Mugabe from power is
welcome."
The pro-senate factinon said as a condition to reconcile,
Tsvangirai should
abide by the party's constitution and accept collective
decision-making,
embrace non-violence as a core principle and refuse to use
the coercion of
militia.
Another condition was that he should consult the
party's elected officials
when making decisions and not seek the opinions of
a "kitchen cabinet of
unelected officials" and then overrule decisions of
the national executive
and announce the decision as a fait accompli.
FinGaz
Felix Njini
CLOSE to US$10 000 in travellers cheques (about $1
billion at the official
exchange rate) vanished from the Zimbabwe Banking
Corporation (Zimbank)'s
Jason Moyo branch in Bulawayo only to be cashed in
Botswana days later.
Documents in possession of The Financial Gazette
show that two travellers
cheques (TCs) worth US$8 500 and US$1 220, which
were to be deposited in
favour of Famba Safaris and Burmakano Travel
respectively, disappeared
without trace from the branch in September and
were later negotiated at
Barclays Bank Botswana's Kasane branch.
A
female teller (name supplied) has since been suspended, a move insiders
alleged was meant to protect senior bank officials suspected to be involved
in the fraud.
The insiders said an internal probe had revealed the
identity of a Zimbank
and Barclays Bank account holder who allegedly cashed
the TCs in Botswana.
They said the Zimbank account holder had agreed to
reimburse the bank by the
end of February.
"The beneficiary has accepted
that he was given the TCs by an insider and
has agreed to reimburse the bank
by end of February," said one source.
Investigations by The Financial Gazette
have revealed that many Zimbank
branches have been losing money because of a
weak security system.
Minutes of a meeting held on December 29 2004 reveal,
for instance, that the
Juliasdale branch of the bank made a loss of $400
million "arising from an
erroneous revaluation of forex (foreign exchange)
on hand".
They also show that the Zimbank Beitbridge branch had a case of
late
remittance of foreign currency, which was adversely affecting the
bank.
FinGaz
Rangarirai Mberi Senior Business
Reporter
THE Zimbabwe dollar took further knocks this week, battered by
weakened
confidence on the formal market, where the central bank has
introduced fresh
controls that analysts see as a new cap on the
currency.
Dealers who had already bid up the United States dollar to $120
000 ahead of
Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono's statement
were quoting
the greenback at $160 000 early this week, sending the price of
black-market
fuel higher and further dimming prospects of an already
unlikely inflation
slow-down.
Trade has boomed on the black market
since Gono said last Tuesday that he
would only allow the exchange rate to
swing a maximum two percent,
determined by actual volumes traded on the
day.
"Gono's strategy was to have some kind of trade-off; 'you (exporters)
get
more US into the interbank market and the rate moves'. But I think this
has
backfired and there will be some pressure on the RBZ to again make a few
early adjustments," the chief currency dealer of a commercial bank said this
week.
Although Gono says these new measures are intended to halt the
"one-way bet"
trend of the previous weighted average trading system, critics
say he has
effectively re-introduced the controls he partly ended last
October with the
establishment of the interbank trading
system.
Although the new measures temporarily saved the Zimbabwe dollar
from hitting
a new $100 000 low on the formal market, the controls are
unlikely to
successfully defend the currency on the informal market,
analysts say.
"The depreciation will now slow down but at the same time
the parallel
market will become more active. When controls are put in place,
the activity
on the black market picks up. This is exactly what will
happen," said Tony
Hawkins, professor of business at the University of
Zimbabwe.
The central bank last Thursday devalued the Zimbabwe dollar on the
currency
auctions from $26 000 to $30 000, a move that dealers say will have
no
effect on the unit.
The auction rate will now apply to 17.5
percent of export proceeds - down
from 30 percent - under new retention
arrangements also announced last
Tuesday.
FinGaz
Chris Muronzi
Staff Reporter
ZIMBABWE'S central bank governor Gideon Gono says the
government has hired
experts from Israel to investigate possible plunder of
the country's
minerals.
The bank hopes the Israelis, in conjunction
with the local police, would
help curb leakages of the country's mineral
wealth, which the central bank
boss says is being siphoned by companies and
individuals out of the country.
"With respect to the all-important mining
sector, the work underway to
finalise the country's mining laws, including
the issue of government and/or
indigenous participation, monitoring of
mining activities and output is a
monumental piece of unfinished agenda
which, when completed, should drive
our mining sector investments,
productivity and earnings to unprecedented
levels with mutual benefits
flowing to both the country and investors
alike," said Gono during his
fourth quarter monetary policy review
statement last week.
"It is also
imperative that greater surveillance be instituted at the
country's mines so
as to curb the growing incidences of smuggling and side
marketing.
Government surveillance instruments should, thus, be rigorous,
with each
mine submitting detailed reports to the Ministry of Mines, and to
the
Reserve Bank for accounting of extractions and exports. To this end, the
Reserve Bank has over the last quarter been investigating this issue with
the assistance of Israeli experts with collaboration from the Zimbabwe
Republic Police," added Gono.
According to Gono, Zimbabwe lost nine
tonnes of gold worth US$160 million
last year in leakages, a development
which also contributed to the foreign
currency shortages.
Zimbabwe's
mineral exports, via the official market, have been declining
over the years
owing to what officials believe is an orchestrated plunder by
both small and
larger mining corporations.
FinGaz
Munyaradzi Mugowo and
Tinashe Mawerera Own Corresp
LOSS-MAKING parastatals and public
utilities, which last year jostled for
concessionary Reserve Bank of
Zimbabwe (RBZ) financing to turn around their
operations, posted a combined
loss exceeding $12 trillion last year.
In light of the serious bleeding
of the fiscus, RBZ governor Gideon Gono
last week called for urgent action
to stem the haemorrage at Air Zimbabwe,
the National Railways of Zimbabwe
(NRZ), the National Oil Company of
Zimbabwe (NOCZIM), ZISCO and ZESA
Holdings (ZESA) after they showed an
unwillingness to implement prescribed
restructuring and stabilisation
programmes.
"The boards and management of
parastatals should either shape up or be
honourable enough to ship out. We
don't even want to see them coming to the
Reserve Bank any more," Gono
said.
ZESA - whose average output capacity has slumped to about 49
percent,
exposing the country to high electricity import costs due to low
plant
investment and rehabilitation - made an operating loss estimated at
about
Z$8 trillion in December last year.
Statistics show that ZESA
sells electricity at a rate of Z$218.08 per
kilowatt-hour produced at an
average cost of Z$1.386.20 per kilowatt-hour.
The loss, attributed to
sub-economic prices, coupled with high wage costs
accounting for over 55
percent of total revenue, has sunk the public power
utility in foreign debts
amounting to about US$330 million.
Despite receiving a Z$666 billion
stabilisation loan from the RBZ last year,
ZISCO increased its loss from
Z$1.298 trillion in 2004 to about $2.87
trillion cumulatively in the first
nine months of 2005 only and the
revenue-cost gap is expected to widen
month-on-month.
At an annual average output level of 6 736 tonnes, the
iron and steel firm
is still operating below break even output of about 25
000 tonnes, creating
a domestic debt overhang of about $250 billion owed to
Hwange Colliery
Company and the NRZ, whose tonnages fell drastically from 12
million tonnes
in 1999 to less than five million tonnes in 2004.
Owing to
this exposure and in-house corporate governance loopholes and
porous
financial controls, the institution has failed to arrest inexorable
infrastructure decay, which has grounded 4 631 wagons, powered by 66
locomotives, against a market requirement of 8 639.
NOCZIM, whose
assets were almost seized last year by Libyan oil company
Tamoil over
outstanding arrears, also suffered a loss of not less than Z$1
trillion in
2005.
"Such losses will be repaid by (poor) Zimbabweans through the printing
of
money," Gono said.
Air Zimbabwe, the biggest borrower from the
Parastatals and Local
Authorities Reorientation Programme (PLARP) that
debited it to the tune of
Z$1.2 trillion, 60 percent of which was sunk in
overdraft retirement, made
an operating loss of about $317 billion in the
first 10 months of 2005.
The airline, whose fleet has dropped 33 percent
since 1980, is also making
negative profits of about US$980 00 per month to
keep its unviable China and
Dubai routes in which it evidently plunged
without prior market research
last year.
This poor financial performance,
caused by revenue-cost discrepancies where
70 percent of costs are in US
dollars and 60 percent of revenue is in local
dollars, has left the national
carrier in a fix, owing foreign and local
creditors US$19.65 million and
Z$109 billion, respectively.
Gono insists that without proper corporate
governance at parastatals,
proposed turnaround plans through joint ventures
and equity investments,
would be a wild goose chase.
FinGaz
Letter from America
with Ken Mufuka
AN American brother living in Zimbabwe, who loathes
everything I write,
poked fun at me in a recent email: "If you Zimbabweans
are so clever, why is
your country in such a bad state?" This has been part
of my research on
development, and the answer seems to be the need for a new
paradigm.
Mrs Victoria Chitepo once jokingly accused Professor
Terence Ranger of
making the study of history so attractive that well over
half our doctoral
holders are historians - Dr Jokonya, Dr Mudenge, to
mention only the most
illustrious ones. The Mukuru himself holds no less
than seven degrees.
The true paradigm, embedded in these illustrious minds,
as Mrs Chitepo
pointed out is their love of philosophy for its own sake, and
a lack of the
practical. Having never ruled over a village before joining
the guerrillas,
they came back with lofty ideas, which are nothing but empty
sounding
cymbals, signifying nothing.
But there is an African ethos
somewhere, which assumes that if you talk
about a problem, then the problem
will solve itself.
I give my students Dr Simba Makoni's budget speeches for
the sheer joy of
reading the English turn of phrase. Brother Makoni
introduced his budget
speech in 2001 with this lofty sentence. "The 2001
budget will be guided by,
based upon, and targeted at realising the
provisions of the Millennium
Economic Recovery Programme (Merp) whose
objectives are, (1) fiscal
discipline." Did my beloved brother think
seriously that government would
veto any unbudgeted expenditures, say the
President's unbudgeted weekly
travels abroad? The speech was for style
rather than for substance. But that
is not to say that it was a useless
speech. Good words, according to Bishop
Tutu are the essence of Ubuntu
itself.
Our beloved Vice President Simon Muzenda, when approached by
tourism
operators wishing to implement a petrol voucher system for their
clients
from abroad, were met with kindness and understanding. "We were just
talking
about your problem in the presidium the other day."
The fact
that the vice president had talked about their problem was supposed
to be
enough to make them sleep well that night. Their hotel mortgages,
however,
due on the first day of the month, could not be paid by kind words,
if no
tourists showed up.
In order to run any country, one needs a solid middle
class which
understands the implications of rising interest rates and the
attendant
pitfalls of a depreciating currency.
My beloved brothers in
government are so ignorant of the simplest things in
life. They read about
German inflation, a woman carrying a wheelbarrow full
of German marks in
order to buy groceries. Such people are either
intentionally wicked when
they allow the central bank to charge minimum
interest rates of 540 percent,
or they are plain childishly naļve.
Do they know that the great companies
like Walmart and K-Mart in the US are
lucky to make a six percent profit on
their merchandise? These brothers have
no understanding when they depreciate
money by 18 000 percent. If one owed
$100 and the money was devalued by 18
000 times, one would owe $1 800 000.
Apart from their economic ignorance,
my brothers are deliciously naļve. This
naivety, I believe is embedded in
the African ethos as well. Look at the
childish naivety in their welcoming
the World Bank representatives. The
World Bank does not care about
Zimbabweans, or the Zimbabwean veterans. It
wants us to pay our loans to
western lenders. Dr Nyerere asked this
question: "Shall we starve our
children in order to pay you?" The answer is
YES, STUPID. Look at their
naivety in believing that Britain and the US will
come to their aid? The
World Bank is an American bank. It is not going to do
anything against US
policy - and US policy requires that formerly
white-owned land be returned
to its titled owners or there be adequate
compensation.
Unless there is a
new generation of rulers who appreciate the realities of
the modern world,
are not naļve in believing that the western world is out
to save us from
ourselves, who understand that if you build a presidential
house in a
neighbourhood, one's neighbours too have mortgages to pay.
Whispers of
confiscation can squash property values, and thus the life
savings of one's
neighbours.
Now you will say: "Ken, but surely these brothers can learn
this new
paradigm." I did not learn this new paradigm at school. I learned
it by
running a real estate business. The smallest whispers, say, that the
police
are hanging around your restaurant looking for drug dealers, can
cause a
shutdown of the business, and a man's lifetime savings goes down the
drain.
I don't think the brothers have the slightest idea of what they
are doing.
My sister had a life insurance for $240 000 for which she
contributed for 25
years. When she died, it was not enough to buy her
daughter's uniforms. My
nephew, a newspaper editor, had a good pension of $5
000 a month in the year
2000. He cannot buy one banana with it
now.
It is the economy stupid! Mr Blair and Mr Bush are laughing their
lungs out
till hell freezes over.
These foolish brothers don't understand
a thing about economics.
lThis is part of ongoing research on Zimbabwe's
Economic Decline. Readers
are welcome to contact Ken Mufuka at kmufuka@lander.edu.
FinGaz
Comment
ALL and sundry
are unanimous that turning around the country's faltering
economy
increasingly appears more and more like a finite game. But they are
also
agreed that the economic problem is not as complex as a crossword
puzzle
with only half the clues and no black squares!
They - including those who
believe that the country's monetary authorities
have done "well" when there
was no rule book to look to - are only too aware
of the limitations of the
monetary policy if implemented in isolation, no
matter how pragmatic and
well-thought-out it might be. The monetary policy
is not the
be-all-and-end-all for Zimbabwe's once reassuringly resilient
economy to
wiggle out of the awkward scrapes.
In other words, there should be a
well-filled pot of ingredients to be
stirred to brew up measures that will
move through the enfeebled economy
like an electric jolt. This means there
is need for a holistic approach to
the woes besetting Zimbabwe where the
monetary policy is complemented by the
fiscal policy and the politics of the
country, neither of which is the case
at the moment.
Which is why, as we
have stated before, there has been a deafening chorus
for the powers-that-be
to look at the other side of the coin - the politics
of the country which is
to blame for Zimbabwe's increasing isolation. Now,
this is a hot-button
political issue over which those in ZANU PF can get
their knickers in a
twist. But still, it is a cold hard fact which cannot be
wished away.
As
we said in our comment of July 15, 2004, Zimbabwe has been ostracised for
a
long time and it has come out worse off for it. Predictably, Zimbabwe's
delusional politicians, who no one takes seriously anymore, have tried to
make us believe that the country's political and socio-economic life has
remained unshaken even in isolation! But nothing could be further from the
truth. The isolation has caused an unprecedented meltdown with far-reaching
consequences. The erstwhile regional breadbasket has been reduced into a
land of contagion, shunned by international investors. Not only that but the
stagnation and misery in Zimbabwe stands in stark contrast with the other
relatively robust economies in the region.
Metaphorically speaking, no
country is an island and the Reserve Bank of
Zimbabwe governor Gideon Gono
stated as much in his no-holds-barred monetary
policy statement last week
when he said "as Zimbabwe we cannot go it alone
and it is imperative that we
seek to work with other international business
partners". Indeed, we
couldn't agree with him more when he said a key
requirement for the
sustained turnaround of the economy is the restoration
and rebuilding of
Zimbabwe's relations with the international community.
How then does Zimbabwe
rebuild the burnt bridges to be reintegrated into the
broader community of
nations? Among others, it can do this by:
lComing up with a new
people-centred constitution that facilitates a strong
but democratic system
of government and explicitly defines and precludes all
authoritarian traits
and tendencies as well as ensures increased
accountability of the executive
power to the legislative power;
lImproving its human rights record, a major
point of bitter attacks by the
international community;
lEnsuring further
democratisation and expansion of political pluralism where
people are
allowed to freely organise on the basis of their political
convictions
without politically motivated murders, wanton destruction of
property as
well as bullying and intimidation by political attack dogs;
lAllowing freedom
of the press where politically confused and voluble
government spin-doctors
who do not want to hear any contradiction or
discussion do not seek to guide
journalists piercing through self-serving
veils of government secrecy in
search of the truth and information for the
greater good - threatening them
with political backlash. It should be
remembered that among the most vital
concerns in the world today are the
questions of access to information and
the right to free expression as a
cornerstone of the efforts to build
democracy;
lRespecting Bilateral Investment Protection Agreements (BIPA) to
assuage the
general perception that in Zimbabwe agreements are not worth the
paper they
are written on. This will enable the country to attract foreign
capital for
infrastructural investment - a lifebelt that could turn the tide
for the
economy;
lAvoiding policy contradictions and timeously meeting
the country's debt
obligations so that its credit rating will not again be
reduced to junk
status.
Only this way will Zimbabwe, whose needle is well
and truly stuck and is
facing a severe crisis of confidence, regain its
credibility and prestige as
well as acceptance by a whole raft of its lost
friends.
FinGaz
EDITOR - Students of history always
try to understand what makes some people
great leaders. Despite the
misguided rebellion led by Welshman Ncube and his
cronies, Morgan Tsvangirai
has lately reasserted himself as the party's
undisputed leader.
We
believe the Ncube gang, because of its gross political miscalculation,
has
now been consigned to the dustbin of history and the party's congress in
March will confirm this.
Tsvangirai has the people rallying behind him -
from Beitbridge to
Nyamaropa! Why has Tsvangirai been able to mobilise the
people to follow
wherever he leads? Why do the people of Zimbabwe look up to
him and choose
to believe in him? What has enabled him to go where no ne has
gone before
and bring the people of Zimbabwe with him?
Unlike the elitist
Ncube gang, Tsvangirai's personal contribution has been
interpreting the
situation to the mass of the people. He has been speaking
to the people and
inspiring them to do something about it. He is the voice
through whom every
Zimbabwean is speaking his own innermost feelings. And he
has not lost touch
with the common people.
Tsvangirai is the symbol of hope, a better future and
a prosperous new
Zimbabwe despite the howls of protest from ZANU PF and the
Ncube gang.
Nelson Chamisa &
Frank Matandirotya
Harare
FinGaz
EDITOR - On the
ZTV programme, Face the Nation, of January 19 I watched
Minister Ignatius
Chombo essentially passing the buck for the urban decay
from his ministry to
urban councils.
It is my considered opinion that whichever way we look at
it, the buck for
the urban decay stops with the Ministry of Local
Government, Public Works
and Urban Development.
In the case of Harare the
minsiter, as he has done several times before,
cited the growth of Harare's
population as the problem. I don't know if it
has ever crossed the
minister's mind that population growth is a natural
phenomenon which is
largely predictable and easilyplanned for. How can
anyone expect Harare's
population to remain stagnant when the rest of the
country's population is
growing?
If the ministry had been doing an adequate job in monitoring and
supervising
the situation, they should have noticed that Harare City Council
was not
adequately planning for the expansion of the population and they
should then
have intervened.
Let us accept Harare's population growth has
caught the authorities unawares
this time. What are they doing to plan for
future growth. Indeed does
anybody know what Harare's projected population
for 2010, 2015 and maybe
2020 is? After all population growth projection is
the basic information
from which urban planners develop plans.
The
minister also mentioned that Harare has been charging sub-economic
tariffs
for too long. The blame for that lies squarely on the shoulders of
government, because they are the ones who have been controlling the tariffs.
I hope the minister's admission on this suggests new thinking in government,
thinking that takes into account long term considerations rather than
immediate political benefits as has become traditional in our government's
decision-making.
Minister Chombo also pointed out that infrastructure in
Harare is now old
and had reached the end of its lifespan. Rather than
blaming the
infrastructure, the minister should be blaming the planners who
failed to
make sure that the infrastructure was upgraded in time. Again the
buck for
that lack of planning stops squarely in his office, because he has
ultimate
responsibility for supervising them. It would be unfair and
unrealistic to
expect the minister to personally have the expertise to
evaluate the
technical aspects of planning, which is why people in his
position regularly
hire technical experts on short-term consultancies and
evaluation missions.
Harare is now faced with a situation where they have to
spend lots of money
to try and upgrade a large segment of infrastructure in
a short space of
time, when that could have been avoided by having well
planned upgrading
schedules. That kind of planning is meant to ensure that
instead of
requiring massive resources (money, manpower and materials) all
at once, the
financial burden can be spread over several years. In other
words it would
have been much better to charge ratepayers 15 to 30 percent
more from as
long as five years ago than suddenly spring a 1 000 percent
increase in
rates on them this year.
Chombo also pointed out that illegal
structures are resurfacing in Harare
and many other places. Let me point out
that the monitoring of standards is
not a one-off thing to be addressed by a
once-in-25-years-operation like
Murambatsvina but an ongoing exercise.
Entities like the City of Harare
should train staff like meter readers to be
able to identify illegal
structures and activities and report them to their
district offices. Once
informed, appropriate experts can then be dispatched
to examine each case in
detail and recommend remedial action within the law.
The fact that city
authorities often profess not to know what is going on,
when the city
council is paying people who walk to each and every house in
the city at
least once a month (if we include garbage collectors), points to
simple lack
of resourcefulness and innovative thinking by the city
authorities.
In cases of activities like illegal vending and setting up of
illegal market
stalls, the city should conduct a survey and classify
problems areas
according to some monitoring schedule. They could classify
them according to
places which need to be monitored on, say, an hourly basis
(like Ximex Mall
for example), those which need to be monitored once a day,
on a weekly basis
and so on.
However the bottom line to solving this
problem is building adequate and
suitably located infrastructure for vending
activities. The city needs to
plan and build many more market stalls,
encompassing more diversified
vending activities.
At one point Minister
Chombo blamed this year's heavy rains for Harare's
current problems. We have
had seasons with heavy rains before but did not
face similar problems, so
the rains should not be made a scapegoat.
The real problem is the collapse in
Harare's works delivery capacity,
resulting in the city's inability to
collect garbage on time, repair
infrastructure like parking lot and road
surfaces among others.
Jupiter
Harare