|The ZIMBABWE Situation||Our
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Mass panic grips Zimbabwe banks
The panic follows a crackdown on alleged corruption in financial institutions, which has left at least six banks in serious trouble.
A Zimbabwean man said: "I don't want to take chances. Today I am going to withdraw all my money from my bank".
Police have recently arrested lawyers, insurance agents and a top politician implicated in a banking scandal.
Another woman in in the second city of Bulawayo says: "I came here as soon as I heard on the radio that several banks owned by locals would be closed."
A senior official of the ruling Zanu-PF party has been in custody for several days, accused of blocking enquiries.
Philip Chiyangwa says he is a victim of rival factions vying to succeed President Robert Mugabe.
The scandal came to light last week after a financial firm, ENG Capital Management, failed to account for 61 billion Zimbabwe dollars ($74m at the official rate, $13.5m on the black market) of investor's money.
The firm, which has now been liquidated, was being run by three youths.
On Tuesday, a magistrate ruled that Mr Chiyangwa, an MP who spearheads the black empowerment lobby, must remain in custody for another two weeks.
The magistrate said that he might interfere with witnesses.
Police said they had found a dozen cars belonging to the company at Mr Chiyangwa's house.
Police say they are investigating the involvement of several top ruling party politicians in the institution but have not released any other names.
The man behind the crackdown on alleged corruption in financial institutions is Gideon Gono, the new Governor of the Reserve Bank.
Local politicians and economists have praised him for his attempts at cleaning up the industry.
Mr Gono is said to be a no-nonsense administrator and has earned the praise of many Zimbabweans for his new monetary policies.
President Mugabe has commended the governor for a job well done and warned corrupt leaders of his party that the net is closing in on them.
expected mergers and acquisitions frenzy in the financial
sector would most likely involve mostly indigenous institutions seen to be
in tight liquidity positions. Talk of the mergers has also triggered
speculation that the long-awaited consolidation in what has turned out to be
a shaky financial sector would at last be under way.
Impeccable banking sector sources confirmed the developments, which,
however, were being kept under the wraps "until an appropriate time".
They said the modalities for the changes at Century, which was
reportedly given until next week to find a new investor, were still being
worked out before a public announcement is made.
"The RBZ, which dispatched a team of inspectors to Century, has come
out with its position, which the group had to comply with, in return for the
Z$30 billion liquidity support advanced on Tuesday.
"Apparently, Century is amenable to the arrangement, which could see
the entry of a new equity partner as they are now scouting for a potential
investor," the source said.
As the news of the RBZ’s directive broke, market speculation was rife
that a sprawling financial services company which in the past has been
linked to a hostile take-over bid for Century was likely to emerge as the
Should the two financial institutions’ nuptials come through, this
would mark the first step towards a spate of mergers and acquisitions in the
Analysts said the changing environment and stringent new capital
requirements, which require commercial banks to have capital bases of at
least Z$10 billion by September 2004, would trigger a string of mergers
involving the smaller institutions. To date, only a few banks satisfy the
The liquidity support was advanced under the Troubled Banks’ Fund
(TBF), which was established by the RBZ to ring-fence distressed banks to
head off possible contagion.
The support comes with conditions, in line with the central bank’s
policy not to accommodate banks with liquidity problems.
Among the conditions for qualification, the RBZ requires banks to work
out comprehensive programmes to overcome their liquidity problems as well as
solid proof of the ability to reimburse funds availed through the fund.
Sources said it is the latter requirement which might have
necessitated that a new equity partner with financial muscle come on board
to inject some funds into Century.
Century Bank, the group’s flagship retail bank, is one of the five
banks that stood suspended from the Real Time Gross Settlement System
(RTGSS) due to the protracted liquidity crunch. Other banks are Trust,
Agribank, Barbican and Metropolitan.
The RBZ last week offered Trust Bank liquidity aid in return for some
management changes that claimed the scalps of chief executive officer
William Nyemba, executive director for merchant banking Chris Goromonzi and
finance director Nyevero Hlupo.
Trust has also announced that the board would also be restructured "in
cooperation with the central bank".
Century’s case has been made more complex because of its exposure to
the operations of ENG Capital, whose asset management company was the first
high profile casualty of the monetary authorities’ shift from leniency.
ENG, whose executive directors Nyasha Watyoka and Gilbert Muponda were
arrested and have been arraigned before the courts where fraud charges have
been preferred against them, had built up a significant stake in Century
through various investment vehicles.
Although the exact extent of ENG’s holding in Century could not be
ascertained, it is believed to be upwards of 30 percent.
Erstwhile controlling shareholder Jefta Mugweni’s Campion Investments
holds 24.26 percent, while Moses Chingwena’s direct and indirect interest is
just below 20 percent.
Mike Nyamazana, the head of corporate and investment banking at
Century who was in charge of Century Discount House (CDH) at the time of its
demise, recently confirmed in court during the remand hearing of the
arrested ENG directors that firms linked to ENG had bought a significant
stake in Century.
In a related development, the RBZ said Century was liable for CDH’s
obligations to investors.
"The Reserve Bank said it was Century which was supposed to manage the
liability of the closed discount house as the authorities had not sanctioned
the transaction between Century and ENG.
"So the group will also take responsibility for the lot of CDH staff,"
one source revealed.
Century had hitherto denied liability for CDH’s obligations to its
depositors, believed to run close to $100 billion, saying the business
belonged to ENG since April 2003 following its sell-off in a $1.5 billion
"Century Bank and its group operating companies are not affected by
the recent action taken against Century Discount House (CDH).
"The Century Group, having obtained the necessary shareholder
approval, sold CDH to ENG Investments (Pvt) Limited effective 1 April 2003,"
Century said in a statement after the closure of the discount house.
Chiyangwa to stay behind bars for two more weeks
1/15/2004 7:13:30 AM (GMT +2)
SELF-PROCLAIMED black economic empowerment activist and maverick ZANU
PF chairman for Mashonaland West, Philip Chiyangwa, will spend the next two
weeks in custody to facilitate ongoing police investigations into the
collapsed ENG Capital Asset Management, a magistrate ordered yesterday.
The remand in custody of the flamboyant businessman comes after police
had earlier ignored a High Court judgment to have him released, drawing the
ire of human rights lawyers in the country.
Although saying they respected the new pronouncement by the
magistrate, Zimbabwe Lawyers for Human Rights chairman Arnold Chunga said
they strongly condemned the "utter show of impunity and gross disregard for
the rule of law (when) the police contemptuously ignored the order" for the
release of Chiyangwa.
Harare magistrate, Sukai Tongogara, yesterday remanded the Chinhoyi
Member of Parliament in custody, saying the state had shown beyond
reasonable doubt that Chiyangwa, who is facing three criminal charges
involving the obstruction of the course of justice, contempt of court and
perjury, had a high potential of interfering with police investigations.
"After a careful consideration of the arguments from both the defence
and the State, the court is convinced that the accused will interfere with
investigations," said Tongogara.
She said the state had produced sufficient evidence to show that with
Chiyangwa out of custody, investigations into the ENG case would not proceed
"The accused not only failed to disclose all the information on ENG,
but also assisted in hiding some of the assets," Tongogara said. "The
accused is an influential and powerful person in society who, if he is
granted liberty, can interfere with investigations . . . he has threatened
She remanded Chiyangwa in custody to January 28 when his application
for bail may be considered. Police on Tuesday said they needed at least a
month to carry out their investigations free of any interference.
Tongogara, who took exception to the fact that the flamboyant
legislator appeared before her in one of his trademark designer suits
instead of khaki prison garb, ordered Chiyangwa to cooperate with law
enforcement agents carrying out investigations.
Chiyangwa was arrested at the weekend just after appearing as a
defence witness in the case of two ENG directors, Nyasha Watyoka and Gilbert
Muponda, charged with theft and fraud involving $61 billion.
After his arrest, a number of posh cars belonging to ENG and its
directors were found at Chiyangwa’s various premises in the capital.
Chiyangwa’s lawyers have inferred that the legislator’s arrest could
be politically motivated.
Last week, Acting President Msika, in apparent attack on Chiyangwa for
threatening the police, took a swipe at errant politicians who use their
positions to threaten law enforcement agents investigating cases of economic
sabotage and warned that the government would deal sternly with them.
Speculation rife Mudzuri faces the sack
1/15/2004 7:15:41 AM (GMT +2)
A TEAM investigating the operations of Harare City Council, including
mayor Engineer Elias Mudzuri, on allegations of corruption and mismanagement
has deferred the release of the report to next week amid speculation that
the recommendations will result in the mayor being axed.
Local Government, Public Works and National Housing Minister Ignatius
Chombo confirmed that the report, which was supposed to be released this
week, will be made public next week to allow the James Kurasha-led
commission to clarify some of the issues raised in the report.
phoned me to appraise me on the contents of the
preliminary report, which will be handed to me by Friday. Hopefully, on
Monday, the committee will clarify some of the issues to me and thereafter
the report becomes public," he said.
Chombo, however, declained to comment on speculation that the
embattled mudzuri would be shown the exist saying "munogoziva zvandisati
ndaona sei?" (How can you be privy to information I am unaware of?) However,
sources said the recommendations were likely to see Mudzuri being forced out
of the picture permanently.
"The fact that the minister is the custodian of the Act that governs
the operations of the council simply means he has the final decision prior
to the commission’s recommendations. Stakes are very high that he (Mudzuri)
will be fired considering the fact that they had been on the warpath over
the operations of the council," one source said.
Mudzuri, the first opposition mayor of Harare in 23 years, has crossed
paths with Chombo since his election in 2002, leading to a series of court
battles. The High Court last month dismissed an urgent application by
Mudzuri seeking the dissolution of the Kurasha commission and his
Mudzuri insisted this week that the commission was investigating the
operations of the council and not his suspension, as the High Court has
ruled that it was not mandated to investigate him.
Kurasha could not be reached for comment.
Zvobgo out of hospital
1/15/2004 7:16:14 AM (GMT +2)
FIREBRAND Member of Parliament for Masvingo South, Eddison Zvobgo, has
been discharged from a South African hospital where he had been admitted
since October last year.
A close relative told The Financial Gazette this week that the former
ZANU PF legal supremo had been discharged, but is still to fly back home.
Zvobgo was allegedly suffering from a brain tumour and underwent two
operations at a private clinic in Cape Town, South Africa.
"He is out of hospital," said the relative who declined to be named.
Zvobgo was flown to South Africa in October 2003, just before he was
expected to appear before a ZANU PF disciplinary committee on allegations of
de-campaigning President Robert Mugabe during the 2002 presidential
The legislator dismissed the allegations, saying they were trumped up
charges meant to discredit him in relentless efforts to have him booted out
of the ruling party.
High ranking ZANU PF sources have, however, indicated to this
newspaper that it would be detrimental for the party to try Zvobgo,
especially at a time when ZANU PF is consolidating its structures throughout
the country ahead of next year’s parliamentary elections.
Bigwigs frantically scurry for cover
1/15/2004 7:17:40 AM (GMT +2)
THE winds of change sweeping across Zimbabwe’s financial sector, which
have left a trail of agony in the form of the closure of ENG Asset
Management and Century Discount House, are yet to recede and the worst is
yet to come, analysts warned this week.
Turmoil in the financial sector started at the onset of the New Year
and immediately claimed its first casualties — ENG, together with its
subsidiary, Century Discount House.
However, banking industry sources said last week’s ouster of three
executive directors from Trust Holdings Limited (Trust), including founder
and chief executive officer William Nyemba, accentuated the depth and
gravity of problems pervading the banking sector.
The Trust board also wielded the axe on Chris Goromonzi and Nyevero
Hlupo, executive directors responsible for merchant banking and finance,
respectively, at the behest of the Reserve Bank of Zimbabwe (RBZ), which
laid conditions for liquidity support for the distressed bank.
While the RBZ-triggered "whirlwind" is still to depart Trust Towers,
with the Tichaendepi Masaya-led board promising more measures to address the
liquidity crunch, panic has shifted across to Century Towers, where Century
Holdings and its subsidiaries are housed.
Century and First Mutual Limited (FML) are among the major
institutions exposed to ENG.
Century, which had sold off its discount house to ENG last year, has
become a subject of RBZ scrutiny and the central bank has dispatched a team
of auditors to the banking group amid heightened fears that a restructuring
exercise similar to that which took place at Trust Towers, would be
replicated at Century Towers.
Apart from that, it has also emerged that ENG had aggressively bought
into Century Holdings and had thus assumed a significant stake in the
banking group, further compounding the puzzle.
Executives within the financial sector are also busy plugging all the
loopholes they can find in their portfolios to escape the long arm of the
law that has caught up with even the elite members of the ruling ZANU PF and
Such has been the nervousness in the financial sector that certain
institutions have not participated in the foreign currency auction system,
which opened on Monday, fearing it may open a can of worms.
"This shows that the worst is yet to come as more institutions come
under the scrutiny of the RBZ, which has taken an aggressive approach to
forcing banks to revert to their core competency," one analyst said, adding
that what had emerged so far showed that there were some serious corporate
governance anomalies in the sector.
The intensification of the liquidity crunch in the final quarter of
2003, evidenced by rapid rises in interbank accommodation rates to a high of
900 percent at year-end, had always been viewed as the core of the financial
Events since the turn of the year have, however, seemingly given the
lie to these protestations as a worrying trend of sloppy corporate
governance. Last week’s events at Trust and its strategic partner, FML,
would seem to give credence to this view.
When ENG failed to meet its obligations with its depositors leading to
the arrest of the firm’s directors, Nyasha Watyoka and Gilbert Muponda, this
was viewed as an obvious case of profligacy by an inexperienced team of
managers superintending a huge portfolio of depositors’ funds.
However, the ouster of Nyemba et al by the Trust board would
constitute, against all protestations to the contrary, an admission by the
board that management should have run the group differently.
The same would go for FML, where innuendoes over corporate impropriety
were seemingly confirmed by the arrest of senior managers and one executive
director and head of First Mutual Asset Management, Godfrey Jowah, over
Indeed thus far, apart from ENG which, by the lofty standards of local
financial houses, was small, Trust and FML have had their wrists slapped,
giving rise to speculation of the selective application of rules.
Political undertones, never too far away from any major Zimbabwean
event, would point to victimisation.
It would indeed be too much of a coincidence and in fact smack of a
travesty should the scourge fail to extend beyond Trust and FML.
Industry sources say that management at the two sister firms strongly
believes they were being sacrificed.
Apart from the management reshuffle at Trust, FML is currently subject
to a probe by the Zimbabwe Stock Exchange (ZSE) which also suspended trade
in the two counters on Tuesday morning, along with Century Holdings,
presumably in connection with the ENG imbroglio.
Analysts, however, said there was a clear departure from core banking
by the emergent locally-owned banks, hence the current crackdown.
"Quite a number of these newer banks had departed from core banking
activity in the name of innovation, but that has its own risks, which they
had not quite bargained for and that was their undoing. They are now left
with assets they cannot speedily dispose of to enhance liquidity because
rising interest rates depress asset prices.
"You really cannot talk about victimisation here and we expect the
probe, if we can call it that, to spread to other players in the sector as
this had become the norm and only the so-called traditional banks had taken
a conservative approach to expanding their balance sheets," an economist
with a local banking group said.
He, however, said the RBZ needed to put sufficient safety nets in
"The central bank should come forward with liquidity support,
conditionally, of course, as you cannot have too many banks facing a
liquidity crisis. That would not be good for the stability of the whole
Economic commentator Jonathan Kadzura said the banking sector crisis
had blighted the indigenisation drive as the financial sector had, since
deregulation in the early 1990s, been held up as the success story of local
"Indigenisation should be clearly distinguished from corruption. When
you mix the two, you undermine the whole project.
"So all efforts to rectify the situation should never be viewed as
moves to destroy anybody or any institution. I view it as a cleaning out
process not an event, so we will definitely see more developments, that’s
for sure. Banks should seek to achieve what they set out to achieve, which
is to provide a banking service, not to deal," Kadzura said.
He, however, said it was imperative that the central bank retained
control of the situation, adding that the establishment of the Troubled
Banks Fund to bail out distressed institutions was a good sign that the bank
wanted to retain control over the potentially volatile situation.
Amid the problems besetting the financial sector, a clear pattern of
greed is discernible.
As the storm swirling around his beleaguered asset management firm
intensified, ENG’s Muponda acknowledged the greed which pervaded the
"Market participants involved, regulated or otherwise, have to bite
the bullet and this entails accepting reality first and conclude schemes of
arrangement, which leave participants in a win-win situation.
"At the end of the day, market participants in their hearts of hearts
know that inflation was fuelled out of greed," Muponda wrote.
ZANU PF heads for split over Chiyangwa
1/15/2004 7:16:56 AM (GMT +2)
THE humiliating arrest of ZANU PF Mashonaland West provincial chairman
Phillip Chiyangwa at the weekend could further split the ruling party right
through the middle at a crucial moment when it is trying to ward off a
threat posed by the opposition.
Chiyangwa’s defence lawyers have already inferred that the arrest of
the larger than life character and self-proclaimed black indigenisation guru
could be the work of their client’s political foes, coming as it did after
Acting President Joseph Msika had hit out at the legislator’s behaviour in
The boisterous Chiyangwa, with egg on his face, may want to settle his
scores and regain the political ground that could have been lost, which
could cause a major rift within ZANU PF ahead of the crucial 2005
As a ZANU PF provincial chairman, Chiyangwa is seen as an influential
party cadre in the dicey debate to choose President Robert Mugabe’s
successor ahead of the expiry of the Zimbabwean leader’s term of office in
Chiyangwa’s economic muscle and his fearless character could be
another added advantage amid rumours that the legislator had already aligned
himself with Emmerson Mnangagwa’s camp.
Mnangagwa, who is already being touted among President Mugabe’s
possible successors, is ZANU PF’s secretary for administration and Speaker
Mnangagwa’s faction is pitted against other equally powerful factions
from the Manicaland, Mashonaland Central and Masvingo provinces.
In an unprecedented move, police arrested Chiyangwa, who is also the
Member of Parliament for Chinhoyi, on charges of trying to defeat the course
of justice resulting from his involvement in the ENG Capital Asset
Chiyangwa allegedly tried to protect the youthful ENG directors —
Nyasha Watyoka and Gilbert Muponda — who are facing several counts of
defrauding investors of about $61 billion.
Police, who, previously hardly take action against any ruling ZANU PF
officials, moved in quickly to arrest the legislator shortly after Msika
hinted that the government would deal with wayward politicians abusing their
influence and powers.
Analysts said the latest developments could also be a result of
growing factionalism within the party, worsened by the contentious
Most of the factions in ZANU PF are set up along ethnic, tribal and
"There could be some witch-hunting of some sort that could be taking
place among some influential people from different factions within the
party," said political analyst Ernest Mudzengi.
Chiyangwa comes from Zvimba in Mashonaland West, President Mugabe’s
Political analysts this week said it was too early to deduce what
President Mugabe’s government and party may be driving at, but warned that
any purge within both the party and the government could violently split the
party along geo-ethnic lines.
The analysts said although ZANU PF could gain some political mileage
from being seen as applying the law evenly across the political divide, the
arrest and arraignment before the courts of influential ruling party
officials could open a Pandora’s Box that could have consequences on the
"One cannot really say what is happening in ZANU PF," said Mudzengi.
"We don’t know whether this is the beginning of the events of the
likes of Willowgate or it is just a window-dressing act? One can just see it
as a comic theatre taking place."
Willowgate refers to the 1989 motor vehicle scandal at the Willowvale
Mazda Motor Industries which ended the political careers of several Cabinet
ministers who were found to have been abusing a ministerial car-buying
University of Zimbabwe lecturer and chairman of the Zimbabwe
Integrated Programme, Heneri Dzinotyiwei, said it was difficult to say
whether the latest events could be the beginning of a clean up against
government and ruling party officials contributing to the economic mess in
"I don’t think we can as yet call this a clean-up until maybe if it
continues on a wider scale," he said. "We don’t know if there is any motive
behind this but one would naturally assume that the government is just
exercising its duties."
He, however, said if there are other motives behind it, those doing
this should be careful because they could trigger a major shake-up within
the ruling party.
Mudzengi said there could be a number of reasons to possibly explain
the sudden decision by the government to be tough with people from within
the ruling party’s ranks.
"One of them is that since ZANU PF is under a lot of pressure, it
could be doing this in order to get some breathing space and this can be
done by sacrificing some people," Mudzengi said.
Alois Masepe, another political analyst, said knowing the tricks of
the ZANU PF government, it is possible that everything being done — from the
much-publicised land audit to the latest arrests — could be a mere
"political public relations show" specifically aimed at next year’s general
"I think they are play-acting," Masepe said.
"These are mere make-believe schemes being done for the purpose of
next year’s elections … this is what we saw during the Willowgate scandal
when a number of politicians were sacrificed ahead of an election."
Some of the politicians, notably Frederick Shava, have since been
integrated into the top echelons of the party.
The Willowgate scandal coincided with preparations for the 1990
general elections in which the then newly formed opposition party, the
Zimbabwe Unity Movement threatened to end ZANU PF’s rule through its
Masepe said ZANU PF could not afford to sit back and watch official
corruption flourish ahead of an election so it needed to be seen to be doing
something even when there was a risk of splitting the party further.
Indigenisation drive loses momentum
1/15/2004 7:18:26 AM (GMT +2)
THE fight for black economic empowerment, which has had its fair share
of criticism locally, is fast losing its momentum as lobbyists who pioneered
the crusade cling to their positions two decades on, analysts said.
Calls for a renewal of leadership among Zimbabwe’s varied indigenous
pressure groups have started building up on the sidelines of the programme,
now in reverse gear because of the recession blighting the once robust
southern African economy.
While admitting that holding on to influential positions is a trait
not akin to politicians alone, analysts told The Financial Gazette this week
that the tendency was also quite high in institutions central to the
creation of wealth.
After decades of marginalisation at the hands of the British colonial
rulers, most proponents of indigenisation have kept a tight grip on the
reins of power at the pressure groups, ostensibly to empower the previously
While they have succeeded in raising awareness, most of them only
surface when donors or the government dangles heavily subsidised funds or
when there are lucrative tenders floated.
A number of them are also known for whipping up emotions in the local
media whenever opportunities elude them, but they quickly retreat into their
shells after arm-twisting the powers-that-be.
Politics could have had a major influence on the unbridled leadership
of indigenous lobbyists, analysts said, given the latent links that exist
between some of the associations and political parties.
It is for this reason that most leaders from the pressure groups are
always the first to shower praises on government policies even where a bit
of criticism would have helped.
Indigenisation is a mild, but sometimes controversial word referring
to the transfer of wealth from the minority whites to Zimbabwe’s majority
It is normally difficult, analysts said, to note the downside of their
perpetual leadership until the economic wheels come off the rails like is
the case with Zimbabwe at the moment.
It is estimated that at least 75 percent of Zimbabweans are now
classified as poor because of the economic malaise blamed on the ZANU PF
government’s policies, which have ostracised the country from the
Conservative Confederation of Zimbabwe Industries estimates indicate
that about 250 companies, mostly indigenous, have closed shop in 2002. The
turbulence in the banking sector is also threatening to rock mostly wayward
indigenous banks, whose entry into the industry had been touted as a rare
success story for black economic empowerment.
Analysts said renewal of leadership in indigenous pressure groups
could breathe new life into the programme by bringing in fresh ideas.
Jonathan Kadzura, a local analyst, said much more than a major
overhaul of existing indigenous pressure groups was required to take
"To revamp these institutions would be a waste of time because they
were not founded to help anybody, but to uplift those in control," he said.
Indigenous pressure groups, said Kadzura, should be formed through
legislation, where elected officer bearers are given specific mandates with
their performance measured against objectives.
"The question is not whether they (indigenous pressure groups) still
have the same leadership, but whether they have assisted anybody. They have
assisted nobody. They have benefited themselves and those who supported from
the peripherals are still in the peripherals," he said. "If we continue like
this, the future will hold very little for most people, as only a few would
continue to benefit."
Since its formation in the late 1980s, the Indigenous Business
Development Centre (IBDC) has continued to be led by Ben Mucheche, with
banker Enoch Kamushinda as the secretary-general.
The IBDC, probably the oldest lobby group in the country, came on
stream with much promise, but it has suddenly blown cold at a time when most
Zimbabweans are still marginalised.
Kamushinda is the founder and chairman of Metropolitan Bank. He also
chairs the Grain Marketing Board and the Broadcasting Authority of Zimbabwe.
Mucheche is the owner of Mucheche Investments and runs a viable farm
in Beatrice, a few kilometres outside the capital.
Strive Masiyiwa, chief executive of Econet Wireless Holdings Limited,
and Chemist Siziba of the Cosmos Cellular fame, are among a few IBDC
founders who are no longer active participants in the pressure group.
The same old faces are also at the helm of the Indigenous Business
Women’s Organisation where Jane Mutasa is president and Kubi Indi the
There have been some cosmetic changes at the militant Affirmative
Action Group, where controversial legislator Phillip Chiyangwa is still
hovering in the shadows as the honorary president.
Joseph Chipato of the Indigenous Freight Forwarders Agents Association
of Zimbabwe is still holding fort after the association broke away from the
Shipping and Freight Forwarding Agents Association of Zimbabwe.
University of Zimbabwe lecturer, Professor Heneri Dzinotyiwei, said
the pattern in pressure groups has been to follow the example of African
leaders, who have a knack for staying in power for too long. African leaders
also inherited the trait from Eastern Europe, from where they got support
during the liberation struggle.
"It should not be like that. These organisations must have broad
objectives, they should hold annual general meetings to elect new members
and those who drive them must not appear to be the primary beneficiaries of
the ideas the organisations stand for. They should be seen and have pride in
contributing to their community and leave it to others to take over and try
to improve on what they have built over the years," said Dzinotyiwei.
"That kind of dynamism is lacking and in the end, people end up
thinking most of these leaders are conmen. It seemed we had started well and
somehow we have become stagnant."
He said indigenisation picked up momentum at a time when the economy
was beginning to shrink.
Focus was also directed at taking over existing projects, with
indigenous entrepreneurs who had adequate clout and linkages with financial
institutions pouncing on most of the opportunities.
Dzinotyiwei said: "It is vital that indigenisation, if it has to
spread to all parts of the country and to the wider population, should focus
on greenfield projects, otherwise when you focus on existing projects it
would be a question of who has useful contacts and rarely would you get new
Indigenous people have, among others, acquired funeral parlour
Doves-Crocker Morgans and Lobels Holdings, which used to be owned by white
families. They have also purchased significant stakes in Zimbabwe Stock
Exchange-listed counters such as National Foods, Tedco Limited, CFI
Holdings, SeedCo, Bindura Nickel Corporation and TSL Limited among others.
Kadzura said the crackdown on errant banks had created a clean
launching pad for a revitalised indigenisation programme where funding would
be directed at those indigenous people with viable projects.
Make information on banks public
1/15/2004 7:29:31 AM (GMT +2)
THERE is a heightened anxiety over the situation obtaining in the
financial sector, whose honeymoon has been abruptly interrupted by the new
Reserve Bank of Zimbabwe monetary policy.
This anxiety has since translated
into an unprecedented run on certain
banks as depositors, for fear of burning their fingers, pressed the panic
button. Zimbabwe Stock Exchange-listed financial counters, which ranked
amongst the bourse's bell-whether stocks, have come off in a big way. And
very few, if any, equity investors will land on their feet in these falling
Indeed, it is all panic stations in the sector, with some of the
quoted financial companies issuing unscheduled trading updates, sparking
suggestions that they are merely trying to reassure the market and put a
floor under their shares. The panic could trigger a deal-making frenzy in
the sector, where players, seeking consolidation and strategic alliances,
will soon be promiscuously courting prospective partners.
Be that as it may, this will not however ensure that the current
crisis is the last shock to hit the financial sector or that the situation
could not take a turn for the worse. This is why we feel that the central
bank, the country's financial regulator which is now increasingly becoming
more assertive, should, in tightening its monitoring and supervisory role,
ensure that a requirement for transparency is an integral part of its
cocktail of measures to overhaul the whole sector.
Relevant information pertaining to the soundness and stability of
banking institutions should be readily available to the public. This will
ensure that the market imposes discipline on banks as creditors and
depositors would be able to decide whether or not a bank qualifies to
receive their funds. They will be able to assess the banks on the basis of
the information from the central bank on among other factors, size of bad
loans as well as sound risk management processes founded on international
norms and best practices. Capital adequacy should also be included because a
strong capital base acts as a safety buffer necessary to ensure that any
adverse fluctuations on the income statement will not immediately cause
capital to go below the prescribed minimum.
Unfortunately this is not so at the moment. In a typical
jumping-in-the-dark scenario, the public knows very little, if any, about
the banks they do business with. A plethora of banks have violated capital
ratios set out in the governing laws, rely on a few and potentially volatile
depositor concentration, depend on daily accommodation from the market, do
not meet provisioning guidelines, have inadequate credit review methods and
have therefore unsustainably high unsecured or under-secured non-performing
loans, among others.
We believe therefore that the current situation where the public is
deprived of enough financial detail about banks and will have to depend on
the concerned banks' own interpretation of their financial status does not
augur well for the investing community, with or without a depositor
protection scheme.Creditors and depositors should have this information
because the markets can only be expected to reinforce necessary incentives
for banks to operate safely and more competitively by ensuring that poorly
managed banks do not get business.
Then and only then, should the public be justifiably expected to bear
full consequences of doing business with certain institutions!
Banking is a reciprocal relationship
1/15/2004 7:25:51 AM (GMT +2)
EDITOR — I believe that the situation in the banking sector has gone
on for long enough. Such continued instability is not in the best interests
of the economy.
The stand-off between the international banks and the indigenous banks
is detrimental to all stakeholders. I believe its time that all stakeholders
were made aware of what is really at stake so that they can make rational
Firstly, the daily settlement system must work smoothly in order for
funds to flow through the economy. This ensures that sectors requiring funds
are able to access them. The governor of the Reserve Bank has a point in not
giving overnight accommodation to struggling banks. There is more than
enough money in the market to help everybody settle their positions.
By refusing to lend on the inter-bank market, the international banks
are depriving the market of funding, some of which is for the productive
We know for a fact that international banks have not been and are not
willing to lend to certain sectors in this economy due to perceived risk and
policies dictated from abroad. Thus even if they enjoy the "flight to
quality " (where deposits are taken from the indigenous banks and placed
with institutions perceived to be safe), they cannot deploy those deposits
because they are unwilling to lend. The deposits will eventually become an
expense to them. For the depositor this means lower rates for their
investments and eventually the international banks may even have to charge
depositors for keeping money with them since it is a cost to them. All banks
have to pay statutory reserves to the central bank of 50 percent for all
deposits held on a weekly basis. They do not earn interest on this money
kept with the Central Bank. If they do not profitably deploy the other 50
percent they will not be able to pay interest to depositors and make a
profit. The reality is that banks are in business to make money just like
There are stories circulating of depositors with billions being turned
away because they are just not willing to accept the low investment rates
offered by the international banks. So it is not necessarily in the best
interests of depositors to move their funds to an international bank simply
because their indigenous bankers are struggling.
This brings me to my next point.
Banking is a reciprocal relationship. Clients deposit funds, the bank
lends that client and others funds. However, with international banks it is
not that simple. They want the deposits but they are simply not willing to
lend financial support to those sectors in the economy that need it. Thus a
number of them have been labelled fair weather friends.
The indigenous farming sector is an example. Interestingly, some bank
executives borrow from indigenous institutions to fund their farming
ventures because they are more responsive to their needs.
Now they are kicking the same institutions in the teeth by refusing
them loans on the inter-bank market. The liquidity problems among indigenous
financial institutions in the financial sector are partly a result of the
fact that blue chip corporate clients and their executives deposit their
funds with international banks for the perceived safety and prestige while
banging on the doors of indigenous banks to borrow funds for the blue chip
companies as well as their personal interests including speculation.
Naturally, the borrowings are at a premium since they have to be
funded partly from inter-bank borrowings from the international banks they
place deposits with. Essentially they borrow their own money at a higher
premium than necessary. However, this is because international banks are not
willing or take too long to consider requests for funding and they get a
better service from indigenous banks who are anxious to get into and stay in
It is interesting that the same executives and their blue chip
companies were at one time falling over themselves to get seats on the
boards of indigenous banks and were heartily pleased when the banks
published financial results reflecting billions, because they also got to
share in the wealth.
Some of these same executives were able to very easily speculate on
shares including their own blue chip companies using funds borrowed from
indigenous banks because of the lax laws on insider trading, making millions
in the process. Which proceeds were still placed with international banks.
So blue chip companies and their executives are equally at fault. they
want to have their cake and eat it. They too are fair weather friends, now
refusing to accept cheques drawn on the indigenous banks where they have
both corporate and personal borrowings. A shame indeed and the banking
public is none the wiser.
As for the trade in foreign currency, there have been numerous calls
for devaluation for years. The development of the parallel market was simply
a response to the prevailing regime of high inflation and an artificially
low exchange rate. In a normal market, banks do exactly the same thing —
they trade in currency, they take positions. sometimes they do it at a
profit and sometimes markets work against them and they make a loss.
Finance sector crisis: beyond the numbers
1/15/2004 7:23:46 AM (GMT
OTHER than beginning with letter "b" what do banking and
bricks have in common?
with deep sadness to watch the unfolding events in
the finance sector. There is disappointment, anger and pain. Pain for those
that fell victim to the unbridled passions of those they trusted. There is a
sense of betrayal.
Here and there, astronomical
estimates of the amounts at
risk have been mentioned — millions, billions and trillions.
Given the nature of the business world, it is natural for
most people to view the effect of the crisis in money terms. Only what is
measured is normally taken into consideration.
Modern day corporations are currently working at
incorporating ethical and qualitative factors into their published financial
statements. With this in mind, the real and full impact of the "banking
crisis" in Zimbabwe could be viewed as more severe than is currently
It is unimaginable that a handful of individuals took
siege of a nation, abused a system and incidentally spiralled inflation to
unprecedented levels. For all the wrong reasons, the economy made news
headlines around the world. It has been said that we have broken the
Guinness book of records on the inflation front. This is heart-rending. It
has brought tears to a number of people.
Given their level of education, it is impossible to
believe that the persons responsible were not aware of the effects of their
actions. All caution was thrown to the wind for self-enrichment and power.
The result was an arrogant bunch of beings who trampled on
the poor, the widows and the fatherless for their own gain. The nation is
considered a basket case in international economies, a handy example of
"hopeless" black Africa.
How many people lost their lives due to lack of forex to
buy medical supplies? How many children of school-going age are now at home
because of inflation? How many families are going hungry due to the
breadwinners losing their jobs? How much potential investment was lost
because Zimbabwe is a shunned investment destination by international
corporations? How many skills were lost to other countries because of the
shrinking industrial base? How many girls of school-going age are now in
prostitution to support their families? How exposed are they to HIV/AIDS?
How many young men have resorted to crime to put food on
the table? What about families who live in shacks because bricks are now too
What about the stress on the nation as a whole? Will we as
a people ever be able to place monetary value on this pain, loss of dignity
and lost opportunities? It is incumbent on leaders to behold the bigger
picture for their decisions, choices and actions.
While the finance sector is not totally responsible for
the challenges facing the nation, they play a major role. Given the large
sums of money that pass through their hands, the impact of any recklessness
can not be underestimated. They are a trigger point to the welfare of the
nation; hence the territory comes with heavy accountability. It is expected
of bankers to be men of honour. That some of them were caught with their
pants down is unsettling.
It is high time corporate governance included
non-financials to their performance measures. Tools such as the Balanced
Scorecard, which have several Key Performance Indicators (KPI) could be
considered for use by all corporations that pose a risk to stakeholder
funds. Each KPI is auditable and carries a target to be achieved by a given
One such that comes to mind is that each financial
institution could set a minimum target for low income clientele, e.g. 25
percent of the whole client base must be low income earners. This will
coerce banks to cater for all sectors of the economy.
Disclosure of emoluments for directors and senior managers
could also inform the public as to the usage of their funds.
Minimum balances must be a function of people’s earning
capacity, instead of the current "one size fits all" approach. How can
someone who earns Z$150 000 per month pool a minimum balance of Z$450 000?
Why not come up with a tier system with banded minimum balances? This is
what strategic posturing is all about. Companies tailor their services,
pricing and profitability structures to their customers’ billing potentials.
It is as basic as that. Business is about win-win relationships. Companies
should tailor their service offering to meet customer needs not the other
Incentives for meeting the KPIs could be preferential
treatment for state tenders for example. Secondly, such measures can foster
a culture of service to the nation, thereby encouraging a savings culture as
indicated by the central bank. After all business is a calling to serve not
The reluctance to lower minimum balances as per the
central bank directive could imply that the institutions do not have the
money on hand. It is possibly tied up in a fleet of vintage cars, some
Picassos or property number 100.
It is regrettable that national resources at the central
bank are now being used for diversionary processes of relaying and
reinforcing banking foundations. The new governor and his team should be
focusing on value-adding activities; instead they are engaged in changing
diapers. It may be a while before the new team starts creating value for the
nation but it is a relief that the impasse is broken.
However, of this Zimbabwe should be proud that Zimbabwe
herself has initiated the clean-up process. It is a home-grown solution
tailored for a specific situation and not borrowed from those who will never
know our pain. To this, well done Zimbabwe, we have what it takes to arise.
The phoenix in us as nation is very much alive.
Psalms 107 (extracts from verses 28 to 43)
"Then they cry out to the Lord in their trouble, and He
brings them out of their distresses.
He calms the storm, so that its waves are still.
He turns a wilderness into pools of water, and dry land
There He makes the hungry to dwell, that they may
establish a city for a dwelling place,
And sow fields and plant vineyards, that they may yield a
He also blesses them, and they multiply greatly; and He
does not let their cattle decrease.
When they are diminished and brought low through
oppression, affliction and sorrow,
He pours contempt on princes, and causes them to wonder in
the wilderness where there is no way; yet He sets the poor on high, far from
affliction, and makes their families like flock.
The righteous see it and rejoice, and all iniquity stops
Whoever is wise will observe these things, and they will
understand the lovingkindness of the Lord".
Link P. Jongwe is a Chartered Management Accountant. She
has worked on business information systems in Europe and Sub-Saharan Africa.
She is currently based in Johannesburg, South Africa.
Counter invading ZANU PF territory
1/15/2004 7:22:46 AM (GMT +2)
In the revolution of any nation or community of people, there are
certain landmark historical processes an/or events which any political
leader can ignore at their own peril.
In Zimbabwe, the liberation struggle and more recently the
constitutional referendum in February 2000 are such historic processes,
among others, that will continue to serve as reference points in defining
who we are as a people, as Zimbabweans. You ignore that and you perish. That
is the tragedy of political reality in Zimbabwe.
During the liberation struggle, Zimbabweans said "NO" to colonialism,
imperialism, foreign dominance and exploitation.
We demanded to be masters of our own destiny and declared that we
shall lead ourselves, "be it to the sea, to the mountain or to the desert".
These are values that have become entrenched as a core part of our
identity as Zimbabweans and we cherish and hold them in high regard (I for
one do because they arise out of our consciousness and our struggles as a
During the constitutional referendum in February 2000, we said "NO" to
black oppression just as we have said "NO" to white foreign oppression.
We demanded involvement and participation in setting up governmental
structures and in influencing the direction of governmental policy.
That is fundamental. Again these are values, traits and qualities that
constitute a core part of our identity as a people and we are proud of it.
At least I am.
The tragedy of our situation in Zimbabwe is that the two major
political parties are each emphasising, if not over-emphasising, just a part
of our identity as Zimbabweans and they want to negate the other part that
is not in lime with their own interests.
That is going to be major cause of the demise of both parties because
Zimbabweans do not have a split conscience, personality or identity inspite
of our heterogeneity.
We celebrate our diversity as Zimbabweans because we know that
diversity is a source of enrichment. We are Zimbabweans and we are part of
the community, with Zimbabwean conscience, hopes and aspirations.
That’s who we are and we don’t wish or aspire to be anything else, for
to do that will be self-negation.
My contention is that the party that would articulate truly Zimbabwean
aspiration is the one that will win the next general elections, everything
In one of my previous articles entitle,"MDC needs better ideological
clarity" (Financial Gazette November 13-19 2003 page 16-17) I outlined the
sequence of events that led to the co-option of the war veteran into the
status quo at a time when it appeared like they would be on the side of the
Since then, the war veterans association has remained a very powerful
tributary organisation to ZANU PF.
In the article referred to above, I also pointed out that the
co-option of the war veterans into the status quo was accompanied by the
privatisation of the liberation war legacy by ZANU PF and a very powerful
ideological policing operation.
It may be necessary for readers to revisit that article because it
puts this particular contribution in perspective.
The very same tactics are being used again by ZANU PF ahead of the
2005 general elections and the MDC is too daft to see it.
War collaborators, ex-detainees and ex-restrictees who have been left
out when the war veterans get their gratuities and monthly pensions have now
been promised their own share and I can assure you that before the end of
the year, these people would have been given huge sums of money.
They will thus be further patronised and integrated into ZANU PF
structures, and together with the war veterans, they form a formidable force
which I doubt the MDC has the capacity to withstand.
The response of the MDC to this development will determine whether or
not the party can manage to win the loyalty of these groups. Already the war
veterans are clamouring for a review of their monthly pensions from $100 000
to half a million dollars and ZANU PF cannot afford to antagonise the war
veterans, especially now that we are approaching another general election.
It is also very clear that this recent demand by the war veterans is
Already the armed forces have reiterated their earlier controversial
statement that they will not salute a leader who does not have liberation
What is the MDC’s policy vis-a vis the liberation struggle, land, war
veterans and collaborators, ex-detainees, ex-restrictees and so forth?
The fact that there is no such policy at all continues to further
crystallise the perception that the MDC has no respect for the values of the
liberation struggle and that they are a "sell-out" organisation.
I have already said that you cannot afford to ignore the values of the
liberation struggle as a reference point in defining our identity and
aspirations, and survive politically.
Let’s get the facts straight. No-one, and I mean no-one, should be
paid for liberating Zimbabwe.
The fight for freedom is priceless; its reward is freedom itself. In
the liberation war such as we fought, too many sacrificed too much that any
system of material rewards is divisive and a recipe for disaster.
Indeed the liberation struggle in one way or the other involved many
more people than ex-combatants, war collaborators, ex-detainees and
ex-restrictees. In fact the war involve the entire nation.
So, do we reward everybody? Why not? But the problem is that we are
too poor to reward everybody materially. That is the crux of the matter.
One would think the best reward for everybody was to have achieved
That should have settled the matter and a heartful "thank you", as we
took good care of the casualties and destitute would have been the point
route for our country.
This would be an obligation, not a reward.
Basically, what is happening in Zimbabwean is that we are witnessing
the politics of poverty amid plenty for the political class.
I would rather like to believe that if it was a shared poverty, it
would not generate so much tension.
As long as the poverty in our country is not shared between the people
and their leaders, the people shall continue to demand a share in the
conspicuous wealth that the post-independence ruling clique enjoys.
But one cannot help getting the feeling that we are degenerating into
a nation of pressure groups and mercenaries fighting for inclusion into the
The war veterans and their sister organisations must not forget that
their plight is also the plight of the common man.
People have been left out of the "independence dividend" by the
forgetful political class. If these groups feel that they alone have been
singled out for this raw deal, that perception is wrong.
On the other hand, if we also think that the war veterans and their
allies are being naughty and troublesome, that perception is equally wrong.
So, as things stand right now, what is the way forward for the MDC?
In my view, in this particular context, the MDC, small opposition
political parties and civil society must start by reclaiming the liberation
war legacy which has been privatised by ZANU PF.
ZANU PF neither owns the liberation war legacy nor the war veterans.
That legacy and its ex-combatants belong to Zimbabwe, and consequently to
all opposition political parties and civil society as well.
Most Zimbabweans made sacrifices of one kind or the other and fought
in the war in different ways, and no contribution is of lesser value.
All opposition political parties should clearly and actively defend
the liberation war legacy and articulate policies that address the war
veterans, war collaborators, ex-detainees and so forth as an important
section of the Zimbabwean community.
The opposition can even go further to include victims of protected
villages ("keeps") and widows of heroes (who as far as I know from a
personal interaction with many of them, are largely neglected by the
government by being subjected to crippling bureaucratic bungling) or even
much further include Gukurahundi victims and those who were either raped,
maimed or displaced.
Isaya Muriwo Sithole is a Harare-based legal practitioner.
Winter wheat crop hangs in balance
1/15/2004 8:46:43 AM (GMT +2)
ZIMBABWE'S prospects of a successful 2004 winter wheat crop hangs in
the balance as the country's rainfall pattern remains gloomy.Farming experts
this week said the current rainfall patterns spelt a doom for the wheat crop
as its planting depended on the availability of water.
The rains have, however, not been perpetual while efforts of cloud
seeding by the Meteorological Services Department have not produced
An official with the Zimbabwe Commercial Farmers' Union said the
government should capitalise on the situation and improve water bodies into
schemes as a way of supporting the winter crop.
"We haven't received any meaningful rainfall and the dams have low
"The government should mobilise funds and improve the irrigation
"It will not help us if we miss on both the rains and irrigation," the
Agricultural experts have also warned that the shortage of inputs
being experienced in the sector could also threaten the prospects of the
winter crop, whose preparations begin in February.There is no way winter
wheat farmers can farm without applying basal dressing and the shortage of
fertiliser has a negative impact.
Fertiliser firms last year were operating below capacity because of
failure to import raw materials for manufacturing.
The demand for fertiliser in the agricultural sector has shot to above
one million tonnes a year because of the agrarian land reform but the
fertiliser firms are producing quantities below 75 percent due to the
foreign currency constraints, price controls and bottle- necks in the
transportation of the product.
Some farmers this season had to buy the product from the black market
resulting in them being prejudiced of thousand of dollars or falling prey to
No comment could be obtained from the Commercial Farmers' Union and
fertiliser firm officials as they were said to be away.
Zimbabwe consumes about 400 000 tonnes of wheat a year and most of it
is produced locally.Last year less than 150 000 tonnes of wheat were
produced, down from 360 000 tonnes in 2001 and this resulted in severe bread
The cropping area also fell to less than 40 000 hectares because of
changes in the land tenure system and shortage of inputs among new
farmers.About 50 000 tonnes is normally imported as gristling wheat.
Tobacco output to drop to 60mln tons [ internet article ends here]
Will the property market crash?
1/15/2004 7:24:55 AM (GMT +2)
Since the launch of the monetary policy late last year, a lot has been
happening in the financial services sector.
In fact, panic has been the order of the day with many wondering if
the current tide will not make them victims.
Despite the aforesaid, some of the biggest questions gripping the
market surround the bursting of the asset bubble and many have been asking
if the property market will crash.
To adequately answer the above question about the property market, it
is important to note that property classes react differently to market
It would be naïve to assume that residential, commercial, industrial
and agricultural properties would react to economic forces similarly.
Given the said point, this article will be sub-divided into a
This week, the emphasis will be on commercial properties with the
other property classes in the next two articles.
Commercial property is primarily made up of offices and shops and has
been speculative lately with most prices at variance with their actual
In fact, in anticipation of price increases, a number of properties
were being sold at a premium. The premium in this case being the difference
between the selling price and the value of the property.
Ordinarily though, commercial property buyers have always made prudent
investment decisions when buying and would normally equate future earnings
to the price they are willing to pay.
With the speculative disease invading the commercial property, the
sub-market has now become a 55/45 market with sellers enjoying a slight edge
Given the current fundamentals at play, the market is set to stabilise
to a 50/50 market where buyers will buy property at their actual valued
More so, real long-term investors will dominate the market place ahead
of speculators who have been paying huge premiums. Since commercial property
has always been bought as long-term investment, rentals, lease conditions
and terms have always been the guide to values and prices alike.
A crash in this sector can therefore be supported by adverse lease
conditions, scarcity of rental space and a fall in rentals amongst other
However, a rental fall is not anticipated as the acute shortage of
space will continue to move rental prices up.
A rental fall can only come up if any of the following or their
Firstly, a fall can happen if more space is made available to the
market through more construction activity in this property sub-market.
Construction activity, however, is currently constrained by high cost
of construction and more seriously by rapid rise in material prices.
The unstable material prices have of late made it difficult for those
building to plan hence a hindrance.
If inflation comes down to below 200 percent as anticipated by
monetary authorities, the limited activity will be encouraged but this can
stabilise than make the market crash.
Secondly, if there is serious business failure resulting in more than
20 percent net commercial enterprises closing shop then a rental fall could
With the current challenges facing businesses especially the
prohibitive three-digit interest rates more businesses could close down.
However, as more businesses are closed, more small-scale enterprises
mushroom and take up any vacant space and this phenomenon will ensure a
constantly rising demand for space.
Thirdly, if companies fail to pay or no longer can afford total asking
rentals (base rent and building operating expenses) then this situation
could result in a reduction in base rent and subsequently property prices.
With the current sharp increase in rentals a number of companies may
fail to pay their rentals or opt to operate from home offices.
If a failure to pay is of a high magnitude then a reduction or static
rentals become inevitable leading to a fall in prices of properties or at
best a stabilisation of the same.
The current sharp increase in rentals remind this writer of a business
collegue who was paying $290 000 by the end of December 2003 and is now
expected to pay $3,1 million per month rent for the next six months starting
His immediate reaction was " . . . I better look for another space or
at best operate from home because this rent is not sustainable especially
with depressed business."
What worried him the most was that the rent is only for the next six
months after which he is expecting to pay over $15 million per month for his
office space if the current trend persist. If all businesses take a similar
stance or resist these increases, then stability of prices could be a near
Fourthly, if there is re-zoning and quick implementation of the same
resulting in more residential areas being turned into commercial areas, then
one could talk of a rental fall.
Given that residential properties command less rent than commercial
properties, re-zoning would result in an immediate change of land use as
owners try to maximise on their properties.
If this occurs, then more commercial properties would be available
and, hopefully, extinguish the demand and office space shortages.
Having made the above analysis, the question, however, still stands:
will the commercial property market crash?
Maybe at this point one has to define crash in the context of the
A crash in this sector would be a state in which property investment
becomes useless and property prices decline to less than 60 percent of their
current price tags.
With the said possibilities that could lead to a fall in commercial
property prices, it is important to note that a crash is not envisaged in
this property asset class.
In fact, if ever this happens, it would be a derivative of panic in
the market caused possibly by a residential market price depression.
Given the aforesaid, commercial properties prices are set to stabilise
at the valued prices and increase slightly as rental reviews are made.
They will, therefore, continue to be a preferable investment for those
hoping to hedge against inflation especially long term investors not
In the current senario, assuming that the monetary policies objectives
are achieved, commercial property is the best form of investment given that
rentals will still continue to rise while construction is limited.
This is further supported by the fact that if one invests in
commercial property, they will expect rentals and capital appreciation as
return on their investment.
Financial sector must never operate on autopilot again
1/15/2004 7:34:20 AM (GMT
ONE of the major criticisms that has been levelled against
emerging markets is NO LONGER lack of capacity to consult or formulate good
policies, but lack of capacity to boldly implement sound policy measures as
well as ENFORCE relevant legislation.
By coming up with such a comprehensive and
all-encompassing monetary policy statement, Reserve Bank of Zimbabwe
Governor Dr Gono should be congratulated for his boldness, the credibility
and renewed confidence that he has injected into the economy. However, it is
important to note that the market is now closely monitoring the authorities’
capacity to ensure that the visible and tangible benefits that should arise
following the implementation of this policy statement are filtering to the
majority of the people. The purpose of this article is to sound warning
bells on some of the areas that I think could have been overlooked. In the
interim, what is now being asked for is the continued boldness to sustain
discipline in the financial sector, (i.e. no policy reversals please!). The
boldness should not only come from the governor alone but the entire
government and the people of Zimbabwe. Probably what I am asking for is the
political will to let Gono do what he has to do and what he can do best in
his area of expertise. This is the first instalment in a two-part series.
THE majority of the people who have felt the pinch of
hyperinflation are strongly behind the inflation battle but what the people
would like to see are positive results. While the proposed measures to fight
inflation are good, I wish the governor had mentioned no recourse to
seignorage as one of the methods that would help bring down money supply
from around 500 percent to the target of below 200 percent by year-end.
However, should recourse to seignorage be unavoidable, let
it be for financing capital projects. This has been the case with a number
of economies that have been under siege like ours. This alternative, if it
has to be done, has greater potential to bring about positive multiplier
effects to the economy than if the resources are used to finance
unproductive recurrent expenditure.
To ensure a successful fight against the inflation
scourge, warning bells are being rung for those with ears to listen. The
bells are saying watch out for the continued use of exemptions, subsidies
(direct and indirect) etc for these create opportunities for arbitrage.
Monitoring capacity has to be strengthened, otherwise this is another “
accident in waiting”!
The measures adopted on liquidity support are commendable
and this should have been done yesterday. There is no need to use kids
gloves on imprudent behaviour. Frowning at poor balance sheets is not good
enough. All players in the financial sector have to play ball according to
the rules of the game rather than change goal posts for some and confuse
honest and ethical players who only get to know the new rules of the game
when the game is over! As long as the rules keep changing in favour of a
select few, this creates a moral hazard, which is even more difficult to
With the spirit of transparency and good corporate
governance, best international practice calls for the publication of names
of those exhibiting imprudent behaviour - for why protect the devil?
The information that the market is looking forward to as
Gono implements his monetary policy statement includes the following:
lWho gets what liquidity support and how much?
lIs the market going to get regular reports on liquidity
assessment of financial institutions (FI) or how is the market going to be
kept informed of the health of the financial sector since financial
statements alone have proved inadequate?
lWhat is acceptable security? Can the Reserve Bank
diversify options available to FIs for use as “acceptable security”?
lReference is made to “stiffer penalties”. What penalties?
How stiff? If they are to be an effective deterrent, I am sure the public
would like to know how stiff the penalties can be;
lIt’s a common adage that where two elephants fight, the
grass suffers. So when intra-bank lending rates go up beyond the reach of
many, the consumer suffers yet he or she is not part of the fight. Where is
consumer protection, if any, in the governor’s monetary policy statement?
Protection is called for since the consumer may not have
contributed to the liquidity crunch but this could have emanated from poor
internal governance and weak control measures within the bank etc.
Partial liberalisation of interest rates is one of the
best news contained in the monetary policy statement. Best in the sense that
there is evidence of effort to move away from the status quo that has hurt
the economy so badly. A total liberalisation would be tantamount to
devaluation that could shock the economy. While partial liberalisation is
not good enough, it is appreciated that it’s a step forward especially for
an economy under hyperinflation.
Maintaining the status quo where abnormally low interest
rates prevailed in the market was a case of getting Economic Principles 101
upside down. The negative real interest rates were no incentive for any
serious investor in the real economy, but this created an opportunity for
arbitrage for speculators. I believe that in the medium to long term, the
market will find an equilibrium price for money since borrowers will
determine the direction of the rates.
The immediate impact of this partial liberalisation is
that most borrowers have been forced to think twice before signing the loan
agreement. It is thus hoped that the message is making lenders think twice,
especially regarding for how long they can go on asking for rates that
consumers cannot afford. A reasonable price for money has to be established
sooner rather than later since lending is one of the core businesses of
those financial institutions undertaking ethical business practices - rather
than commodity broking!
Dual interest rates create opportunities for arbitrage.
What measures are being put in place to ensure that subsidised funds do not
move to unintended beneficiaries or sectors e.g. from Agribank (30 percent)
into the 900 percent+ lucrative high interest earning financial instruments
on the money market? By the way this gives an indirect subsidy of 830
percent, which represents somebody’s profit margin.
I am simply posing a question on the nature of the
administrative machinery that is in place, and its capacity to administer
the subsidised loan facility to the targeted sectors. How effective and
water-tight is the implementation process and the monitoring system and to
what extent will the infrastructure minimise leakages as well as discourage
For those who remember an earlier article on the
“Impossible Trinity”, the argument was that controlling interest rates does
not necessarily bring about the desired objectives. The market will
definitely take advantage of poor policies and make money out of it, more so
if the responsible authorities in charge of monitoring and enforcement of
prudential rules and regulations in the financial sector decide to sleep,
leaving the sector on autopilot.
Notwithstanding the desired objectives of such a policy, I
believe the market would be interested in receiving regular information
regarding evaluation of this subsidy programe with respect to who gets what,
when, how much, for what purpose etc.
Publications by the Ministry of Lands, Agriculture and
Resettlement regarding land allocations are one such example that can be
emulated ( minus weaknesses in that strategy!). Publication of such
information may induce peer pressure to pay back, to use resources for
intended purposes rather than divert resources to speculative investments
such as marrying more women, luxury vehicles, bricks or refrigerators!
At least the taxpayer, who is the effective financier of
this subsidy, needs to know how his or her hard earned money has been used.
These are public funds that are being used to subsidise targeted economic
sectors so that there will be a win- win situation for all at harvest time,
hence the need to make public all ethical and unethical beneficiaries and
culprits alike. For those market players who end up engaging in criminal
activities, the public desires to see the culprits prosecuted, especially
those operating on the “fringes of illegality”.
Asset management companies
While the governor is honest and bold enough to
acknowledge and make public the observations made on the conduct of asset
management companies, it is very sad and disturbing to note that the
legislation governing the operations and activities of such companies was
gazetted in 1998. Where was the regulator for the past five-six years? Asset
management companies must have had “a real good time” operating on autopilot
without questions being asked. I presume this is a lesson for us all (No
finger pointing please!) with regards to understanding the legislation that
we pass through the House, knowing and understanding who administers that
legislation and more importantly, making sure that the legislation is
meeting the desired objectives. If there is no monitoring taking place, then
there is no way we will get to know the weaknesses in the system and the
areas that require fine-tuning. The governor should be applauded for the
measures introduced in this respect. HOWEVER, warning bells are now ringing
in the other sector that involves money-lenders!
Judith Kateera is a member of the
Despots are fair game like everyone else
1/15/2004 7:21:52 AM (GMT +2)
I HAVE felt aggrieved ever since learning that the Kenyan government
is to let former President Daniel arap Moi off the hook for misdeeds
committed during his marathon 24-year stint as head of state.
I have found the announcement by Kenya’s Permanent Secretary for
Ethics and Governance, John Githongo, that Moi will not be prosecuted rather
disappointing because it could set a bad precedent. I am afraid that
treating the former strongman with kid gloves will send the wrong signal to
corrupt and ruthless despots still holding sway in different parts of Africa
that they can abuse their powers to their hearts’ content with impunity.
Kenya’s decision has the effect of slowing the momentum generated by
the ousting of warlord Charles Taylor from power in Liberia and the ongoing
prosecution of the former President of Zambia, Frederick Chiluba, for
allegedly stealing US$34 million during his 10-year tenure of office.
Developments in the cases of Chiluba and Taylor, who has been indicted
for war crimes by a Human Rights Tribunal in Sierra Leone, have raised the
hopes of ordinary people in other parts of Africa that their own corrupt and
ruthless leaders would one day also be called upon to account for their
sins, which include plunder, graft, genocide, brutality and incompetence.
I am particularly horrified by the reasons given for not targeting
Moi, who is accused of massive theft of state assets. Githongo said one
factor taken into consideration in arriving at the decision was the manner
in which the 79- year-old former Kenyan leader had "graciously conceded
defeat" in elections held in 2002, which swept President Mwai Kibaki into
It is no secret that in Africa, power is not always won and held by
playing by the rules. Selfish and greedy leaders perpetuate their reigns not
by serving their countries but by bringing them to their knees economically.
They do this while building a myth that portrays them as intrepid fighters
for justice on their people’s behalf. But this myth is tarnished by the web
of genocide, civil wars, tyranny, flagrant violations for human rights,
economic mismanagement and lack of accountability that are now the rule
rather than the exception in many African countries. Ex-president Moi was
guilty of a fair number of these horrors in the 24 years that he clung to
I therefore, find it hard to understand that he should be rewarded
with clemency and praise for the fact that the long-suffering people of
Kenya finally got their act together and booted his corrupt regime out of
The statement by Githongo that: "We regard the former president as a
special democratic case for Kenya and therefore for Africa and he will not
be subject to the kind of scrutiny given to others", in my view, altogether
misses the point, i.e to hold errant leaders accountable for their actions.
Graciously conceding defeat in an election should be the norm in a
democratic environment. That on this continent this is the exception rather
than the rule demonstrates how Africa’s erstwhile independence heroes have
turned out to be far worse than the "colonial oppressors" they replaced.
Allowing Moi to go scot-free implies that we Africans are prepared to accept
the lowest common denominator of behaviour with respect to dictators who
have plunged many parts of the continent into chaos. The people of Africa
surely aspire to a higher level of ethical and democratic behaviour for
their leaders and bringing people like Moi to justice would be a powerful
form of deterrence for like-minded Big Men still presiding over the rapid,
backward slide of their countries.
I dispute Githongo’s statement that by agreeing to acknowledge that he
had been resoundingly defeated in the 2002 elections, Moi had acquired
"democratic stature that should be recognised." As far as I am concerned,
the only person who deserves that accolade in Africa so far is Nelson
Mandela of South Africa who voluntarily and actively set in motion the
process for his own relinquishing of power after serving only one term of
office. His action is the more remarkable because despite spending 27 years
in jail fighting for his country’s Uhuru, he did not brandish his long
incarceration as a weapon by which to hold his people to perpetual ransom.
This is unlike some leaders on the continent who spent far shorter
periods in detention but who believe this gives them exclusive entitlement
The reason I am opposed to the mollycoddling of culprits like Moi is
not that I am an unfeeling cynic who wants to see old men approaching the
end of their days being humiliated. I believe that these dictators should be
brought to book simply because they owe their long-suffering people an
explanation. They need to help us understand the paradox they represent in
that despite being grandfathers who should have mellowed with age and become
more humane and compassionate, the opposite has happened. Most of Africa’s
old-style strongmen who cling to power until they are octogenarians or
nonagenarians actually become more tyrannical, more ruthless, more brutal,
more corrupt and greedier in their dotage. If they are still capable of such
horrors in their old age, there is no reason why they should not be required
to take responsibility for their actions.
The second reason given by the Kenyan government for allowing Moi to
get away with murder, namely to avoid a long-drawn out process and a drain
on resources, is equally unconvincing. This is particularly so because while
Moi’s transgressions are to be swept under the carpet, "everyone else will
be fair game," according to Githongo. It seems to me that the Kenyan
government has chosen to take half measures by focusing on "softer" targets
while leaving the main culprit to go scot-free. We are in danger of seeing a
repeat of what happened at the Nuremberg trials when Nazi operatives
chorused that cop-out, "We were following orders" as an explanation for the
part they had played during the holocaust. But in this case the chief
architect of that dark period in human history, Adolf Hitler, had committed
suicide. In the Kenyan situation, Moi is still very much alive. Let him face
the music and do the talking.
January 15, 2004
~~~ Newsletter 047
Soul & inspiratiotn
Remember that you must be connected to the internet to view the pictures in this newsletter.
You can't shake hands with a clenched fist.
~ Indira Gandhi
Human rights are human rights and they are of universal validity or they are nothing. There are no peculiarly African human rights, what has been reported as happening in Zimbabwe is totally unacceptable and reprehensible and we ought to say so regretting that it should have been necessary to condemn erstwhile comrades. The credibility of our democracy demands this. If we are seemingly indifferent to human rights violations happening in a neighbouring country what is to stop us one day being indifferent to that in our own?
~ Archbishop Desmond Tutu, South Africa
It's up to you so . . . choose your New Year Resolutions
|Option One||Option Two|
1. Get Poorer
1. Stop the profiteerers and the elite taking all the your money.
2. Dream of how rich you would be if you earned Kwacha instead of the Zim Dollar.
2. Learn lessons from our neighbours about their political freedoms and economies.
3. Say “But Aah Life is hard” 18 times a day.
3. Learn your rights and learn how to demand your rights.
4. Eat meat once a month – not for health reasons but because you cannot afford it.
4. Teach others to demand their rights.
5. Accept that your children will be less educated than you.
5. Join a civic organisation.
6. Accept that a good job in Zimbabwe is no longer a doctor or a lawyer but is now selling mangoes or mealies on the roadside.
6. Create your own community organisation.
7. Die young because you cannot afford treatment for simple illnesses.
7. Demand better service from the schools, clinics, police, post office, city council, MPs etc.
8. Wait for some foreigner to liberate Zimbabwe
8. Accept that only Zimbabweans can solve, Zimbabwe’s problems.
9. Blame anybody but yourself for your problems.
9.Take responsibility for your own life.
10. Let others steal your future and your childrens’ future.
10. Say Zvakwana, and show that you have had enough.
sees consolidated civic response to the deteriorating crisis in
The zanu pf enforced media blackout does not easily allow for the sharing of positive evidence that resistance forces are alive in Zimbabwe. However it is heart warming to be able to report that a historic meeting recently took place in Mashonaland Central whereby strategic civil society organisations, NGOs and pressure groups met to agree on their consolidated and collective effort to counter zanu pf oppression. It is even that much more admirable that this unification is happening under the extreme repression that we are facing. There is clear evidence that zanu pf has a big fight on its hands. And we at Zvakwana are among those who are committed to encouraging people to Get UP and Stand Up against the regime.
bc desperately seeking licences
Beware people! There are these sad looking dead bc personnel waiting around in car parks and the like. They are after evidence that you have a listener's licence for the radio in your vehicle. This requirement was declared illegal but now it seems things have changed. Inspectors are targeting motorists in shopping centres and fining them for not having licence stickers. Even if you wanted to support moyo's propaganda by willingly buying a licence, these licences are only available at dead bc in Anlaby house or 2nd Floor Eastgate. This is a scam and very inconvenient for the public. In previous years Post Offices were agents and this made buying a licence relatively convenient for the public. Zvakwana is encouraging Zimbabweans to Switch Off The Propaganda! Don't support the dead bc until we see media reform in Zimbabwe. Zvakwana to one party broadcasting.
Mugabe regime ever desperate seeks new ways to quieten people
Zvakwana has been informed that the small dictator verging on his 80th birthday (how much hair dye is that?) has put Operation Nyararai (shut up) into motion starting off in the rural areas. It is obvious that the regime is afraid of the growing rumble of the discontent engulfing this place. He and his henchmen believe that by trying to scare people into silence will mean less resistance. But of course as we have said before: the more you repress the greater the resistance. Watch out for some good things to come as we smack down Operation Nyararai. And of course it is for everyone to help us. Make a commitment to speaking out, and get up and stand up. Do not be beaten by these unfair tactics. Use every way you can think of to keep talking, to keep on finding ways to subvert the regime.
Premier Services (formerly Public Services) Medical Aid Society owes services providers hundreds of millions of dollars for services already provided to their members. Members residing in South Africa are waiting years for payment in Z$. Despite representation in person, in writing and by telephone, PSMAS is not paying these huge debts to providers and members, who are now in financial trouble themselves due to this non payment. PSMAS has opened a laboratory of its own while refusing to pay huge debts to other laboratories. Is this a scam to close quality laboratories down? Service providers are now regretfully having to charge PSMAS patients cash up front before a service can be rendered.
~ Gertrude, Zvakwana subscriber
Church supports violent dictatorship
HEAR the Word Ministries in Borrowdale last month gave President Mugabe a $30 million gift raised through a collection at the church. Members of the congregation this week said there was a danger that the church group - formerly Rhema - could be seen as part of Mugabe's patronage network. Pastor Tom Deuschle, the head of the church, however said the gift was in accordance with the scriptures and should not be interpreted in any way as an endorsement of everything Mugabe is doing. "It wasn't a Christmas present. It was a collection for a gift to the president. It amounted to close to $30 million. The scriptures say that we should honour our leaders," said Deuschle. Zvakwana urges you to email Hear The Word with your comments on supporting mugabe's violent regime: firstname.lastname@example.org
Start 2004 with a bang and set up a community based resistance group!
Education crisis in Zimbabwe
The new school term that has just started in Zimbabwe has caused untold pain for many Zimbabweans who are now struggling to educate their children in the face of high levies. Us hardworking people should not have to consider withdrawing our children because of high costs. Whatever happened to the government's commitment to providing free, or even affordable education? In some cases increases have topped the 2000% mark.
The government's propaganda rag, the herald, pointed out on Jan 12 the following:
"Our Government, in line with the socialist ideology, which seeks to eliminate the caste system from society, proclaimed education for all at independence in 1980 when schools were desegregated. This vision was subsequently enshrined under section 4, subsection (2) of the Education Act (Chapter 25:04) of 1987 which stipulates that "No child in Zimbabwe shall be refused admission to any school on the grounds of race, tribe, colour, religion, creed, place of origin, political opinion or the social status of his parents".
This noble move ensured that Zimbabwe has had one of the highest literacy rates in the world. Standards have dropped badly since those early days of zanu pf governance. These days zanu pf chefs send their children either to expensive private schools within our borders or to external universities and colleges. Zvakwana, with the help of a network of resistance activists located in various countries is compiling a list of zanu pf chef relatives in order to do expose these double standards. The people here will then be given the clear situation through Zvakwana's network of grassroots activists.
I am glad that we can start a good mutual relationship based on the betterment of our country's future politically, socially, and also on the disbursement of the news and now I subscribe. I look forward to a good working relationship with you and I will start henceforth to supply you with news on what is happening in our society. This has nothing to do with money but I feel that it is more of a social obligation than anything else.
~ Brother in arms, Tapiwa - Zvakwana subscriber
Choice channels for the First Family
During the recent postal strike DStv had difficulty getting copies of its Dish magazine to customers. People were encouraged instead to go to DStv offices to collect their copies. But postal addresses had already been stamped on the packets so customers got somebody else's copy. Which is how Muckraker ended up with a copy addressed to Hon RG Mugabe, Zimbabwe House, 7th Avenue, Harare. We don't know whose copy Hon RG Mugabe has, but if he would like the one belonging to him he is free to call Muckraker and ask for it. What intrigues us about this is why the president should want to subscribe to satellite television, with all its subversive British and American stations transmitting "lies" about Zimbabwe, when he could be watching ZTV with its good news about the success of the land programme, not to mention its entertaining gyrating jingles. Zimbabweans will be curious to learn that after a hard day's work, Bob and Grace like nothing better than to put their feet up and watch Will and Grace, and other American or British TV programmes. Perhaps they just have it for the kids, switching across to Newshour once the little ones have gone to bed? Somehow we doubt it. It looks as if, like the rest of us, they can't stomach ZTV! What's the betting they watch BBC World, Star Trek, Outer Limits, The Drew Carey Show, and CSI Miami? Who knows, Grace may even pick up a few tips from Nigella Lawson on the Food Channel!
~ Muckraker's column, The Zimbabwe Independent
"If you refuse to co-operate, we can take you to the army barracks and detain you, and you will see what will happen."
~ Zimbabwe's new defence force boss, general constantine chiwenga, giving the country's doctors and nurses a final order to end their two month strike
This quotation above, is an example of the violence being promoted by mugabe's stooges. It is a clear reminder of what we don't want in Zimbabwe, and what we must vote to get rid of. Zvakwana! Sokwanele! Enough!
Phillip's visit to jail is an indication of zanu pf's in
Yes, it is good to see how mugabe and his ill-fated political party are unravelling. Zvakwana is receiving countless messages from all and sundry saying how pleased they are that a chef like chiyangwa who has gotten rich and fat cheeked on the back of a deteriorating fiscal system is now an inmate. Zvakwana recently received information from activists passing through Harare airport - they saw phillip stride through the airport without even clearing any customs. It is time that the chefs realise that their arrogance will haunt them. Meanwhile Zimbabwe Lawyer's For Human Rights recently issued a statement on the chiyangwa affair. In their statement we note that chiywanga is referred to as the Hon . . . it is time that we reconsidered the use of this title for those who do not deserve it.
To view and play with George Bush action dolls please click here. He can be dressed up, and sometimes he can be seen to be having certain difficulties.
Zvakwana keeps the regime on the hop
It is clear that a regime is rattled when they deploy trucks of riot police to stop activists putting stickers in the central business district. Zvakwana activists were recently harassed by some of the nation's "cop-outs" when they were trying to distribute some stickers. Imagine that mugabe is even so scared of stickers. They are worried. If you want some beautiful stickers so that you can put them on buildings and the like in your local area then email email@example.com and we will send you some.
Trudy Stevenson: fast forward MP!
We are sharply congratulating Trudy for becoming so organised ahead of the parliamentary elections which zanu pf is likely to spring on us in the near future. You can find her office situated in the foyer of Mount Pleasant Hall. There will be some information for you to access including copies of the Hansard that will give you an opportunity to read about what goes on in Parliament. And if you are a carpenter and can help with some partitioning then please do so as she is needing help to make the office that much better. Zvakwana is urging all the other progressive MPs out there to work hard to build local support in preparation for the elections. There have been many complaints that MDC MPs are not seen to be doing so much work in their constituencies. Avoid complacency! People vote you in, and they can vote you out. One time.
Ghosts in zanu pf and . . . making the old man more
While the zanu pf web site clearly states that various politburo and cabinet posts are vacant they continue to list the late muzenda as alive and well. Meanwhile Zvakwana has been receiving notification from subscribers that businesses around Zimbabwe are starting to receive some letters saying that zanu pf are embarking on an effort to replace the presidential portraits that show mugabe from many years back. Apparently government printers are producing another set. However it is not clear whether this is in preparation for a new face altogether as inside zanu pf faction fighting is heard to be saying.
Watch out for Zvakwana papers on the streets!
Make sure you SPEAK OUT - keep discussion alive, keep information flowing.
Please remember Zvakwana welcomes feedback, ideas and support for actions.
Visit our website at www.zvakwana.org
Enough is enough, Zvakwana, Sokwanele.